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As filed with the Securities and Exchange Commission on February 4, 1994
File No. ________
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM U-1
APPLICATION
UNDER
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
CECo Holding Company
37th Floor
10 South Dearborn Street
Post Office Box 767
Chicago, Illinois 60690-0767
(Name of company filing this statement
and address of principal executive office)
R. Todd Vieregg, P.C. Frederic G. Berner, Jr.
Sidley & Austin Nancy Y. Gorman
One First National Plaza Sidley & Austin
Chicago, Illinois 60603 1722 Eye Street, N.W.
(312) 853-7000 Washington, D.C. 20006
(202) 736-8000
(Names and addresses of agents for service)
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ITEM 1. DESCRIPTION OF PROPOSED TRANSACTION.
A. PROPOSED ACQUISITION OF SECURITIES
Pursuant to Sections 9(a)(2) and 10 of the Public Utility Holding Company Act
of 1935 (the "Act" or the "1935 Act"), CECo Holding Company ("Holding Company")
hereby requests the Commission to issue an order approving its acquisition of
all of the outstanding common stock of Commonwealth Edison Company ("Edison")
and, through such acquisition, its indirect acquisition of Edison's holdings of
all of the outstanding common stock of its subsidiary, Commonwealth Edison
Company of Indiana, Inc. (the "Indiana Company"). Holding Company hereby also
applies for an exemption under Section 3(a)(1) of the Act from all provisions of
the Act except Section 9(a)(2) thereof, which exemption would be applicable
following the proposed acquisition of securities.
Holding Company's proposed acquisition of the common stock of Edison and the
Indiana Company ("Acquisition") would be part of a corporate restructuring in
which Holding Company would become a holding company over Edison, an Illinois
electric utility and a holding company which is currently exempt from
registration under Section 3(a)(1) of the Act. The proposed restructuring is
intended to permit Edison affiliates to engage in non-utility businesses while
protecting Edison and its ratepayers from the risks and costs of such
businesses.
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Holding Company, which is presently a wholly-owned subsidiary of Edison, was
incorporated under Illinois law for the purpose of carrying out the proposed
restructuring. Holding Company owns all of the outstanding common stock of CECo
Merging Corporation ("Merging Corp."), an Illinois corporation that has also
been incorporated to accomplish the restructuring. Neither Holding Company nor
Merging Corp. owns any utility assets. Edison and the Indiana Company are
"electric utilities" as defined in Section 2(a)(3) of the Act and "public
utilities" as defined in Section 2(a)(5) of the Act.
The Acquisition would be accomplished through a merger ("Merger") of Edison
and Merging Corp., with Edison as the surviving corporation. As a result of the
Merger, the common stock of Merging Corp. owned by Holding Company would be
converted into common stock of Edison; the outstanding common stock of Edison
would be converted, on a share-for-share basis, into common stock of Holding
Company; and Edison would become a subsidiary of Holding Company.
Holding Company is not currently a "holding company" under the Act because it
does not own, control, or hold with power to vote ten percent or more of the
voting securities of a public-utility company. Holding Company believes that,
following the consummation of the Merger, it will be a public-utility holding
company entitled to an exemption under Section 3(a)(1) of the Act from all of
the provisions of the Act (except for Section
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9(a)(2) thereof) because it and each of its public utility subsidiaries from
which it derives a material part of its income will be predominantly intrastate
in character and will carry on their businesses substantially within the State
of Illinois. The Indiana Company will not provide Holding Company with a
material part of its income.
B. PARTIES TO THE TRANSACTION
1. GENERAL DESCRIPTION
Holding Company, an Illinois corporation that is presently a subsidiary of
Edison, was incorporated on January 28, 1994 to accomplish the proposed
restructuring. It owns all of the outstanding common stock of Merging Corp., an
Illinois corporation that was incorporated on January 28, 1994 for the same
purpose. Neither Holding Company nor Merging Corp. owns any significant assets
or engages in any business, and neither is currently a "holding company" under
the Act.
Edison was organized on October 17, 1913 as a result of the merger of
Cosmopolitan Electric Company into the original corporation named Commonwealth
Edison Company, which had been incorporated under the laws of the State of
Illinois on September 17, 1907. It is a public-utility holding company which is
exempt from regulation by the Commission under the Act (except for Section
9(a)(2) thereof) by order of the Commission under
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Section 3(a)(1) of the Act, Commonwealth Edison Co., Holding Co. Act Release No.
8331, 28 S.E.C. 172 (1948), and by reason of annual exemption statements filed
under Rule 2. SEE Edison's Form U-3A-2, "Statement by Holding Company Claiming
Exemption under Regulation 250.2 from the Provisions of the Public Utility
Holding Company Act of 1935," dated February 25, 1993, incorporated by reference
as Exhibit G-1.
Edison owns all of the outstanding stock of the Indiana Company, an Indiana
corporation that was organized on March 22, 1926. Indiana Company is a public
utility that is engaged in the production of electricity which is sold to
Edison. For the year ended December 31, 1992, the Indiana Company represented
approximately 1.2% of Edison's consolidated operating revenues, 1.0% of
consolidated net income, 0.4% of consolidated net utility plant, and 0.6% of
consolidated total assets.
Edison also has six wholly-owned non-utility subsidiaries:
1. CECo Enterprises Inc. ("CECo Enterprises"), an Illinois corporation, was
recently established by Edison to provide, through subsidiaries, unregulated
energy-related services to Edison's customers and others. An existing
subsidiary of CECo Enterprises, Northwind Inc., is establishing a district
cooling business in Chicago. Following the Acquisition,
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Edison will transfer the stock of CECo Enterprises to Holding Company.
2. Edison Development Company ("Edison Development"), a Delaware corporation,
owns coal land, land rights, and mineral rights to low-sulfur coal and has an
interest in uranium ore deposits for the purpose of furnishing Edison with a
future source of fuel for electric generation. Edison Development also has
certain other real estate investments.
3. Edison Development Canada Inc., a Canadian company, has an interest in
uranium ore deposits which were acquired for the purpose of furnishing Edison
with a future supply of uranium concentrate for its nuclear fuel requirements.
4. Cotter Corporation, incorporated in New Mexico, owns uranium mining
properties in Colorado and other Western states and a mineral processing plant
which furnishes uranium concentrate for Edison's nuclear fuel requirements.
5. Commonwealth Research Corporation, an Illinois corporation, is engaged in
power supply research, development, and testing activities that are undertaken
in support of Edison's utility business.
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6. Concomber, Ltd., a Bermuda company, insures liability risks of Edison's
contractors arising from construction or other work in connection with Edison's
utility business.
2. UTILITY OPERATIONS
Edison is engaged in the production, purchase, transmission, distribution, and
sale of electricity in Illinois. It serves approximately 3.3 million
residential, commercial, and industrial customers in an area of approximately
11,540 square miles. A map of Edison's service territory is attached hereto as
Exhibit E-1.
The Indiana Company owns generation and transmission facilities in Indiana.
It is engaged primarily in the sale of electricity at wholesale to Edison.
The generating facilities of Edison and the Indiana Company are listed below:
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<TABLE>
<CAPTION>
Net Generating
Capability
Station Location (MW)
------- -------- --------------
<S> <C> <C>
Nuclear -
Zion Zion, ILL 2,080
Dresden Near Morris, ILL 1,588
Quad-Cities Near Cordova, ILL 1,183(1)
LaSalle County Near Seneca, ILL 2,156
Byron Near Byron, ILL 2,240
Braidwood Near Braidwood, ILL 2,240
Fossil -
Collins Near Morris, ILL 2,698
Powerton Near Pekin, ILL 1,400
Joliet 6 Near Joliet, ILL 302
Joliet 7 & 8 Near Joliet, ILL 1,025
Kincaid Near Taylorville, ILL 1,108
Will County Near Lockport, ILL 1,092
Waukegan Waukegan, ILL 725
Crawford Chicago, ILL 542
State Line Hammond, IND 490
Fisk Chicago, ILL 321
Fast-Start Peaking
Units(2) Various 1,332
--------
Net non-summer generating capability 22,522
Deduct - Summer limitations 557
--------
Net summer generating capability 21,965
</TABLE>
The net generating capability available for operation at any time may be less
than shown in the table above because of regulatory and fuel restrictions, the
efficiency of cooling facilities, and unit downtime for inspection, maintenance,
refueling, repairs, or modifications required by regulatory authorities.
Edison's highest peak load, experienced on August 27, 1993, was 17,771 MW; the
highest peak load during a winter season was 14,179 MW on January 18, 1994.
During 1993,
_____________
(1) Excluding the 25% undivided interest of Iowa-Illinois Gas and Electric
Company in the Quad-Cities station.
(2) Generating units normally designed for use only during the maximum load
period of a designated time interval.
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the fuel sources for the generating facilities were nuclear (75%), coal (23%),
oil (1%), and natural gas (1%).
The transmission lines of Edison and the Indiana Company, operating from 138
to 765 kilovolts, totaled 5,275 circuit miles as of December 31, 1992. Edison's
distribution system on that date included 36,993 pole line miles of overhead
lines, 28,671 cable miles of underground lines, and approximately 1,311,500
poles. Total operating revenues for the 12 months ended December 31, 1993 were
$5,260,440,000, all of which was derived from electric utility service. As of
December 31, 1993, Edison had consolidated assets of $23,962,652,000, of which
approximately $23,770,981,000 were electric utility assets.
Edison has interconnections for the transmission of electricity with the
Indiana Company, Central Illinois Light Company, Central Illinois Public Service
Company, Illinois Power Company, Indiana Michigan Power Company, Interstate
Power Company, Iowa-Illinois Gas and Electric Company, Northern Indiana Public
Service Company, Wisconsin Electric Power Company, and Wisconsin Power and Light
Company. In addition, Edison and 13 other electric utilities in the Midwest are
members of MAIN, an organization which seeks to ensure the reliability of
electric power production and transmission throughout the area they serve.
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Edison's utility operations are subject to the regulation of the Illinois
Commerce Commission (the "Illinois Commission") under the Illinois Public
Utilities Act ("Illinois Act") with respect to its retail electric rates and
charges, issuance of securities (other than debt securities maturing in not more
than 12 months), services, facilities, classification of accounts, transactions
with "affiliated interests" (as defined in the Illinois Act), and other matters.
Edison is also subject to the jurisdiction of the Federal Energy Regulatory
Commission ("FERC") under the Federal Power Act with respect to certain matters,
including the sale for resale of electric energy and the transmission of
electric energy in interstate commerce. Edison's nuclear generating stations
are also subject to the regulation of the Nuclear Regulatory Commission ("NRC")
under the Atomic Energy Act.
The Indiana Company is subject to regulation by the FERC and is an "affiliated
interest" of Edison within the meaning of the Illinois Act. In addition, the
Indiana Utility Regulatory Commission (the "Indiana Commission") has asserted
jurisdiction to regulate the Indiana Company.
3. NON-UTILITY INTERESTS
Immediately following the Acquisition, the consolidated assets of Holding
Company will include various interests in non-utility businesses. Each such
interest is currently owned or
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held by Edison. See pages 4-6, supra. All such interests are functionally
related and reasonably incidental to Edison's public utility operations.
Following the restructuring, the Illinois Commission will have access to the
books and records of Holding Company and its subsidiaries for certain purposes,
and will have authority to determine, for ratemaking purposes, the proper
allocation to Edison of capital, assets, liabilities, and expenses related to
the ownership, operation, and management of Holding Company and its affiliates.
Illinois law also requires that certain contracts and arrangements between
Edison and its affiliates be filed with, and approved by, the Illinois
Commission. The Illinois Act generally governs the formation of, and provides
for oversight over, certain activities of public-utility holding companies in
Illinois, regulates the transfer of utility resources, and takes into account
that associated companies within a holding company system may engage in or have
interests in non-utility businesses. Illinois rate regulation protects
customers from the costs and liabilities associated with the non-utility
activities of a public utility, as well as its affiliates, by not allowing such
costs to be reflected in rates. In addition, the Illinois Act expressly
prohibits the Illinois Commission, in determining a utility's rate of return,
from including "any incremental risk or increased cost of capital which is the
direct or indirect result of the public utility's
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affiliation with unregulated or non-utility companies." See 220 ILSC 5/9-230.
Amendments to the Illinois Act which became effective on July 13, 1993 (the
"1993 Amendments") permit Edison to form a holding company system (of which
Edison would be a subsidiary) and to establish subsidiaries to engage in certain
non-utility businesses, pending the formation of the holding company system,
without Illinois Commission approval, subject to certain requirements. The
relevant provisions of the Illinois Act are set forth in Exhibit D-4.
C. THE PROPOSED TRANSACTION
Edison and Merging Corp. have entered into an Agreement and Plan of Merger
dated as of January 28, 1994 (the "Merger Agreement"), a copy of which is
attached as Exhibit B-1. In addition, Holding Company, Edison, and Merging
Corp. have entered into a Supplemental Agreement dated as of January 28, 1994
("Supplemental Agreement"), a copy of which is attached as Exhibit B-2.
Consummation of the transactions contemplated by the Merger Agreement and the
Supplemental Agreement is subject to, among other conditions, the approval of
the Commission under Sections 9(a)(2) and 10 of the 1935 Act.
The Merger Agreement contemplates a corporate restructuring that would be
accomplished through the merger of
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Merging Corp. into Edison, with Edison as the surviving corporation. The common
stock of Merging Corp. owned by Holding Company would be converted into common
stock of Edison, and the outstanding common stock of Edison would be converted,
on a share-for-share basis, into common stock of Holding Company. Edison would
thus become a subsidiary of Holding Company, while Edison's present
subsidiaries, except for Holding Company and CECo Enterprises, would remain
subsidiaries of Edison.
The Merger Agreement will be subject to shareholder approval at the regular
annual meeting scheduled for May 10, 1994. Approval of the Merger Agreement
will require the affirmative vote of the holders of at least two-thirds of the
shares of Edison common stock, preferred stock, and preference stock, voting
together as a single class.
On January 31, 1994, Holding Company filed with the Commission the
Registration Statement (File No. 33-52109) on Form S-4 (the "Registration
Statement") under the Securities Act of 1933, as amended (the "1933 Act") for
the purpose of registering the shares of common stock of Holding Company to be
issued in connection with the restructuring and for the purpose of complying
with the requirements of the Securities Exchange Act of 1934, as amended (the
"1934 Act") in connection with the solicitation of proxies of Edison
shareholders. The Registration Statement, Prospectus, and Proxy Statement are
included in Exhibits C-1 and C-2 to this Application. A copy of the
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Prospectus and Proxy Statement will be furnished to each Edison shareholder
whose proxy will be solicited in connection with the restructuring.
The Merger Agreement also provides that the present holders of Edison common
stock will cease to have any rights as Edison shareholders after the
restructuring, except that holders of shares who have perfected their
dissenters' rights in accordance with Illinois law will have the right to be
paid the fair value of such shares under Illinois law. After the Articles of
Merger are filed with the Secretary of State of Illinois, certificates
representing shares of Edison common stock will represent, and be exchangeable
for, certificates representing shares of Holding Company common stock.
Immediately following the restructuring, all of the outstanding common stock
of Holding Company will be owned by the former Edison common shareholders. The
Edison common stock will thereafter cease to be listed on the New York, Chicago,
and Pacific Stock Exchanges, and the common stock of Holding Company will be
listed and traded on those exchanges instead. Holding Company will apply to
have its common stock listed on the New York, Chicago, and Pacific Stock
Exchanges. Following the restructuring, Holding Company will be required to
file reports with the Commission pursuant to Section 13(a) of the 1934 Act.
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There will be no exchange of, or any changes to, the outstanding preferred and
preference stock and debt of Edison in connection with the restructuring.
Following the restructuring, Edison preferred stock will continue to be
convertible at the option of its holders only into Edison common stock.
Immediately following the restructuring, Holding Company will have no authorized
or outstanding securities other than common stock. Holders of Edison preferred
and preference stock and debt securities will continue as security holders of
Edison, except for those holders of Edison preferred and preference stock who
properly exercise statutory appraisal rights.
In accordance with the American Institute of Certified Public Accountants'
"Business Combinations: Accounting Interpretations of APB Opinion No. 16, #39 -
Transfers and Exchanges Between Companies Under Common Control," Holding Company
proposes to account for the Merger at historical cost in a manner similar to
that in "pooling of interests" accounting under generally accepted accounting
principles. Arthur Andersen & Co., the independent public accountants for
Edison, have been selected as the independent public accountants for Holding
Company and have concurred in such accounting treatment. The financial
statements of Edison and Merging Corp. will be combined into a new entity as
though they had always been together; accordingly, the asset, liability, and
equity accounts of each company will be carried forward at existing amounts on
Holding Company's consolidated financial statements. Reported income and
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expense of Edison for prior periods will continue to be the income and expense
of Edison. Because Merging Corp. will not have assets, revenues, income, or
expenses prior to the Merger, there will be no change in the financial
statements of Edison as a result of the Merger.
D. EVENTS LEADING TO THE PROPOSED TRANSACTION
It has become increasingly clear to Edison's Board of Directors and management
in recent months that there is an urgent need to develop non-utility businesses
on a timely basis to provide energy-related services. Until recently, however,
the establishment of such businesses required the prior approval of the Illinois
Commission and sometimes entailed subsequent regulation by the Illinois
Commission. As a result, timely action was difficult to undertake and
regulation threatened to create significant uncertainties and to undermine the
confidentiality of business plans.
Now, however, the 1993 Amendments permit Edison to create a holding company
without any Illinois Commission approval. In addition, the 1993 Amendments
permit Edison, pending the establishment of a holding company, to create
subsidiaries to compete with non-utility businesses, including unregulated
subsidiaries of other public utility holding companies, to provide unregulated
energy-related services to Edison's customers and others. As permitted by this
new
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legislation, Edison has established a new subsidiary, CECo Enterprises, which
has in turn formed a second-tier subsidiary, Northwind Inc., which is developing
a district heating and cooling business in Chicago.
A meeting of the Board of Directors of Edison was held on October 27, 1993 to
consider the Merger Agreement and certain related documents. On that date, the
Board of Directors of Edison unanimously approved the Merger Agreement, which
was executed and delivered on January 28, 1994.
E. REASONS FOR AND ANTICIPATED
EFFECT OF PROPOSED TRANSACTION
As previously explained, the principal purpose of the proposed restructuring
is to permit Edison affiliates to engage in non-utility businesses to compete
with other unregulated companies in providing energy-related services. In
addition, the restructuring will (1) increase financial flexibility, (2)
separate regulated and unregulated businesses in a manner that will protect the
interests of utility ratepayers and security holders, and (3) promote economic
development in Edison's service area. These benefits are described in more
detail at pages 25-33, infra.
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F. ADDITIONAL INFORMATION
No associate company or affiliate of Holding Company or any affiliate of any
such associate company has any direct or indirect material interest in the
proposed transaction except as stated herein. Edison's directors and officers
as a group own less than one percent of the outstanding shares of Edison common
stock.
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ITEM 2. FEES, COMMISSIONS, AND EXPENSES.
The fees, commissions, and expenses to be paid or incurred by Holding Company,
Edison, and Merging Corp. in connection with the restructuring, including the
solicitation of proxies, 1933 Act registration, and other related matters are
estimated as follows:
<TABLE>
<S> <C>
Commission filing fee relating to
Application on Form U-1............ $ 2,000
Commission filing fee for the
Registration Statement on
Form S-4........................... $2,013,557
New York Stock Exchange Listing Fee.. $ 5,300
Chicago Stock Exchange Listing Fee... $ 10,000
Pacific Stock Exchange Listing Fee... $ 2,500
Auditors' Fees
Arthur Andersen & Co............... $ 10,000
Legal Fees
Sidley & Austin.................... $ 500,000
Proxy Solicitation................... $ 95,000
Printing............................. $ 300,000
Stock Certificates................... $ 75,000
Miscellaneous........................ $ 86,643
----------
Total.............................. $3,100,000
</TABLE>
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ITEM 3. APPLICABLE STATUTORY PROVISIONS.
A. STATUTORY PROVISIONS APPLICABLE TO PROPOSED TRANSACTION.
Edison and the Indiana Company are "electric utility companies" as defined in
Section 2(a)(3) of the Act and are thus "public-utility companies" as defined in
Section 2(a)(5) of the Act. Because Holding Company would, as a result of the
restructuring, directly or indirectly acquire more than five percent of the
outstanding voting securities of each of two public-utility companies, the
Acquisition is subject to Section 9(a)(2) of the Act and thus cannot proceed
without Commission approval pursuant to Section 10 of the Act. The statutory
standards that the Commission must consider in deciding whether to approve the
Acquisition are set forth in Sections 10(b), 10(c), and 10(f) of the Act.
As a result of the Acquisition, Holding Company would become a "holding
company" within the meaning of Section 2(a)(7) of the Act. Holding Company is
requesting the Commission to find and conclude under Section 3(a)(1) of the Act
that Holding Company will be exempt from all of the provisions of the Act,
except Section 9(a)(2) thereof, following the Acquisition.
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B. AFFILIATED PUBLIC UTILITY COMPANIES.
Holding Company is presently a wholly-owned subsidiary of Edison and an
affiliate of the Indiana Company, both of which are public utility companies.
Following the Acquisition, Holding Company will be the parent company of Edison,
which will continue to own all of the Indiana Company's common stock and will
remain a holding company that is exempt from registration under Section 3(a)(1)
of the Act.
C. COMPLIANCE WITH APPLICABLE STATUTORY STANDARDS.
For the reasons explained below, Holding Company believes that the Acquisition
complies with the applicable standards of Sections 10(b), 10(c), and 10(f) of
the Act, and that Holding Company will qualify for an exemption from all of the
provisions of the Act (except for Section 9(a)(2) thereof) under Section 3(a)(1)
of the Act following the Acquisition.
1. SECTION 10(b)
Section 10(b) of the Act requires the Commission to approve the Acquisition
unless the Commission finds that:
(1) such acquisition will tend towards interlocking relations or the
concentration of control of public-utility companies, of a kind or to an
extent detrimental to the public interest or the interest of investors or
consumers;
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(2) in case of the acquisition of securities or utility assets, the
consideration, including all fees, commissions, and other remuneration,
to whomsoever paid, to be given, directly or indirectly, in connection
with such acquisition is not reasonable or does not bear a fair relation
to the sums invested in or the earning capacity of the utility assets to
be acquired or the utility assets underlying the securities to be
acquired; or
(3) such acquisition will unduly complicate the capital structure of the
holding-company system of the applicant or will be detrimental to the
public interest or the interest of investors or consumers or the proper
functioning of such holding-company system.
I. SECTION 10(b)(1) - DETRIMENTAL "INTERLOCKING
RELATIONS" OR "CONCENTRATION OF CONTROL"
The proposed restructuring will not tend towards "interlocking relations . . .
of public-utility companies, of a kind or to an extent detrimental to the public
interest or the interest of investors or consumers." The restructuring involves
only the formation of a holding company over Edison and its subsidiaries. The
relationship between Edison and its subsidiaries will not be changed (except
that the stock of CECo Enterprises will be transferred to Holding Company by
Edison following the Acquisition), and both Edison and the Indiana Company will
continue their utility operations in essentially the same manner as prior to the
restructuring.
As in the case of virtually every transaction subject to Section 9(a)(2),
there will be certain common directors and officers of Holding Company and its
public utility subsidiaries. These "interlocking" relations are not "of a kind
or to an extent
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detrimental to the public interest or the interest of investors or consumers,"
however, since such relationships normally exist in public utility holding
company systems among affiliated and associated companies. See CIPSCO, Inc.,
Holding Co. Act Release No. 25152, 47 SEC Docket 174, 178 (1990). The proposed
composition of the Board of Directors of Holding Company and information
concerning the persons designated to be the Directors and officers of Holding
Company are set forth in Exhibit C-1.
Similarly, the restructuring will not tend towards any "concentration of
control of public-utility companies" that is detrimental to the public interest,
consumers, or investors. The proposed restructuring does not involve the
acquisition of any utility assets not already owned by Edison or the Indiana
Company and "will therefore have no effect on the concentration of control of
public-utility companies." Wisconsin Energy Corp., Holding Co. Act Release No.
24267, 37 SEC Docket 296, 300 (1986).
II. SECTION 10(b)(2) - FAIRNESS OF
CONSIDERATION AND FEES
(A) FAIRNESS OF CONSIDERATION
Section 10(b)(2) of the Act requires the Commission to determine whether the
consideration in connection with a proposed acquisition of securities is
reasonable and whether it bears a fair relation to the investment in and earning
capacity of the utility assets underlying the securities being acquired. As
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previously explained, the proposed restructuring involves the conversion of each
share of Edison common stock into a share of Holding Company common stock.
Because the proportion of each shareholder's ownership will be unchanged, the
consideration is fair and reasonable. Wisconsin Energy Corp., supra, 37 SEC
Docket at 300.
(B) REASONABLENESS OF FEES
An estimate of the expenses, fees, commissions, and other remuneration to be
paid in connection with the proposed restructuring is provided at page 18,
supra. Such amounts relate to required fees to be paid to governmental bodies
and stock exchanges, expenses to be incurred to obtain shareholder approval of
the proposed restructuring, fees for professional services rendered in
connection with the proposed restructuring, and other expenses necessary to
carry out the proposed restructuring. Holding Company believes that such fees
and expenses are reasonable and customary for a transaction of this kind and are
not material when measured against Edison's consolidated book value or the
earning capacity of its assets. The standards of Section 10(b)(2) are thus
satisfied.
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III. SECTION 10(b)(3) -- COMPLICATION OF
CAPITAL STRUCTURE
The structure of the holding company system resulting from the proposed
restructuring will not be any different or more complicated than it is now,
except for the interposition of Holding Company as an ownership entity between
Edison and the owners of common stock. The proposed restructuring will not
involve the creation of any ownership interests other than those which are
necessary to maintain the basic corporate relationships of the holding company
system to be established. Control of the system will remain in the hands of the
existing holders of Edison's common stock, who will become the shareholders of
Holding Company.
Holding Company will acquire, by operation of law, all of the common stock of
Edison outstanding at the effective time of the Acquisition and thus there will
initially be no minority common stock interest in Edison. The existing senior
debt and equity securities of Edison will not be affected. The Commission has
previously determined that similar proposed restructurings would not unduly
complicate the applicants' corporate capital structures. See, e.g., CIPSCO,
Inc., supra, 47 SEC Docket at 178.
There are currently outstanding shares of Edison preferred stock and warrants
which are convertible at the option of their holders into Edison common stock.
Such preferred stock
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and warrants will not be affected by the restructuring and thereafter will
continue to be convertible into shares of Edison common stock, creating a
possible minority interest in Edison common stock. If such holders convert
their preferred stock or warrants into Edison common stock, Edison will pay
dividends to holders of such common stock at the same time and at the same rate
as Edison pays dividends to Holding Company on its shares of Edison common
stock. The amount of dividends on Edison common stock following the Acquisition
is expected to be greater than the amount of dividends on Holding Company common
stock, to the extent Holding Company needs funds to pay its expenses and to
invest in its subsidiaries.
2. SECTION 10(c)
Section 10(c) of the Act provides that the Commission shall not approve
(1) an acquisition of securities or utility assets, or of any other
interest, which is unlawful under the provisions of Section 8 or is
detrimental to the carrying out of the provisions of Section 11; or
(2) the acquisition of securities or utility assets of a public-utility or
holding company unless the Commission finds that such acquisition will
serve the public interest by tending towards the economical and the
efficient development of an integrated public-utility system . . . .
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I. SECTION 10(c)(1) -- SIGNIFICANT BENEFITS
Section 10(c)(1) prohibits an acquisition of securities which is "detrimental
to the carrying out of the provisions of Section 11." In turn, Section 11(b)(2)
requires the Commission to find that "the corporate structure . . . of any
company in the holding-company system does not unduly or unnecessarily
complicate the structure . . . of such holding-company system." The Commission
has construed this requirement, in the context of the formation of a new holding
company over an existing public utility, to mean that the structural change must
result in "significant benefits" to the holding company system. CIPSCO, Inc.,
supra, 47 SEC Docket at 178.
In this case, the holding company structure resulting from the reorganization
will yield significant benefits. First, the reorganization will permit Edison
affiliates to engage in non-utility businesses and to compete with other non-
regulated companies in providing energy-related services. Second, the
reorganization will permit increased financial flexibility. Third, the
restructuring will separate utility and non-utility businesses in a manner that
will protect the interests of utility ratepayers and security holders. Fourth,
economic growth in Edison's service area would be promoted. See pages 32-33,
infra.
In cases involving similar corporate reorganizations, the Commission has held
that the existence of such potential
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benefits would satisfy the statutory standard of Section 10(c)(1). See, e.g.,
CIPSCO, Inc., supra, 47 SEC Docket at 178-79; Wisconsin Energy Corp., supra, 37
SEC Docket at 297. There is every reason to believe that the same significant
benefits will be realized by Holding Company and will serve to promote the
interests of investors, consumers, and the public generally.
III. SECTION 10(c)(2) -- ECONOMIES AND EFFICIENCIES
The restructuring will serve the public interest by tending towards the
economical and efficient development of an integrated public-utility system, as
required by Section 10(c)(2) of the Act.
(A) INTEGRATED PUBLIC UTILITY SYSTEM
As applied to electric utility companies, the term "integrated public utility
system" is defined in Section 2(a)(29) of the Act as:
a system consisting of one or more units of generating plants and/or
transmission lines and/or distributing facilities, whose utility assets,
whether owned by one or more electric utility companies, are physically
interconnected or capable of physical interconnection and which under
normal conditions may be economically operated as a single interconnected
and coordinated system confined in its operations to a single area or
region, in one or more States, not so large as to impair (considering the
state of the art and the area or region affected) the advantages of
localized management, efficient operation, and the effectiveness of
regulation.
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Reduced to essentials, four standards must be met for the Commission to find
that there is an integrated public-utility system:
(1) the utility assets of the system are physically interconnected or
capable of physical interconnection;
(2) the utility assets, under normal conditions, may be economically
operated as a single interconnected and coordinated system;
(3) the system is confined in its operations to a single area or region;
and
(4) the system is not so large as to impair (considering the state of
the art and the area or region affected) the advantages of localized
management, efficient operation, and the effectiveness of regulation.
Environmental Action, Inc. v. SEC, 895 F.2d 1255, 1263 (9th Cir. 1990), quoting
In re Electric Energy, Inc., 38 S.E.C. 658, 668 (1958).
Edison's utility system is presently "integrated" and will remain so after the
restructuring, as explained below:
CAPABLE OF PHYSICAL INTERCONNECTION. Edison and the Indiana Company are
"physically interconnected or capable of physical interconnection" within the
meaning of Section 2(a)(29)(A). The two utilities are interconnected at three
points on the Illinois-Indiana state line. See map attached hereto as Exhibit
E-1.
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SINGLE INTERCONNECTED AND COORDINATED SYSTEM. The assets of Edison and the
Indiana Company are operated under normal conditions as a single interconnected,
integrated, and coordinated system. See Exhibit E-1.
SINGLE AREA OR REGION. As Exhibit E-1 shows, the "single integrated system"
of Edison and the Indiana Company is confined in its operations to a single area
or region.
LACK OF IMPAIRMENT. Edison's utility system would not be enlarged as a result
of the proposed restructuring and would not impair localized management,
efficient operations, or utility regulation. The "advantages of localized
management" would not be lost, since Holding Company will be headquartered in
Chicago. Nor would "efficient operation" be adversely affected, since no
changes in utility operations would result from the restructuring. Finally, the
"effectiveness of regulation" would not be impaired: Edison will remain subject
to regulation by the Illinois Commission; the Indiana Company will remain
subject to regulation by the Indiana Commission; and the respective interstate
activities of Edison and the Indiana Company will continue to be regulated by
the FERC.
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(B) ECONOMIES AND EFFICIENCIES
The new holding company structure offers advantages that will tend to produce
economies and efficiencies in the development of Edison's existing integrated
system. First and foremost, the restructuring will permit the timely
establishment of subsidiaries to engage in non-utility businesses and to compete
with other unregulated companies in providing energy-related services. Without
the regulatory delay and uncertainties that were previously involved in the
establishment of non-utility businesses by Edison, timely action can be taken to
meet competition on a "level playing field."
In the past, regulatory uncertainties and delay have dissuaded customers from
contracting to obtain energy-related services from Edison and its subsidiaries.
For example, Edison believes that such uncertainties resulted in the decision of
the Metropolitan Pier and Exposition Authority ("MPEA") to award a contract to
provide district cooling and heating services to its McCormick Place exposition
facilities to a non-utility entity instead of to Edison. While the Edison
proposal would have generated substantial savings by using electricity at low
off-peak rates to produce ice to cool McCormick Place in lieu of using on-peak
electricity to operate conventional air conditioning equipment, the MPEA turned
down Edison's proposal because of delays expected in obtaining Illinois
Commission approval. Instead, the MPEA chose to select the non-utility
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entity's proposal to build an on-site facility that would use natural gas to
heat, cool, and dehumidify the lakefront convention complex. As a result,
Edison will lose a significant customer for electric service. If the Edison
proposal had been accepted, the project would have produced $220 million in
thermal energy sales revenue over a 25-year period.
As the Commission has found in a number of other cases, a holding company
structure could also facilitate the future adjustment of the utility's capital
ratios to appropriate levels through dividends to, or equity investments from,
the holding company. WPL Holdings, Inc., Holding Co. Act Release No. 25377, 49
SEC Docket 1255, 1257 (1991).(3) This ability to adjust the components of
Edison's capital structure "increases general financial flexibility, which
allows the utility to take advantage of lower-cost financing opportunities that
might not otherwise be available." CIPSCO Inc., supra, 47 SEC Docket at 179.
The flexibility associated with a balanced capital structure permits the
issuance of various types of securities and thus increases
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(3) The Illinois Commission oversees the balance of equity and debt in Edison's
capital structure, and has statutory authority to limit or preclude the
declaration and/or payment of dividends under certain circumstances. With
respect to dividends, Section 7-103 of the Illinois Act (220 ILCS 5/7-103)
provides that "[w]henever the Commission finds that the capital of any public
utility has become impaired, or will be impaired by the payment of a dividend,
the Commission shall have power to order said public utility to cease and desist
the declaration and payment of any dividend upon its common and preferred stock
. . . ."
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the potential for cost reduction. As the Commission has noted in similar
circumstances, "Lower-cost financing can enhance efficient utility operations
and benefit ratepayers and senior security holders." KU Energy Corp., Holding
Co. Act Release No. 25409, 50 SEC Docket 294, 296 (1991).
The restructuring should also help to broaden the holding company system's
financial base and its investment appeal by reducing the system's dependence on
its utility businesses. The diversity of businesses should also increase the
system's financing alternatives, since financings may be tailored to the
specific needs and circumstances of the separate businesses. Economies and
efficiencies in financing should result.
The holding company structure will tend to insulate Edison's customers and
security holders from the risks of non-utility activities by placing the non-
utility businesses into separate corporations that will be subsidiaries of
Holding Company. Liabilities incurred by those subsidiaries would not
constitute liabilities of the utility subsidiaries, and Edison's ability to
raise new preferred stock and debt capital should be unaffected by any poor
performance of any of those businesses. This reduced exposure to risk should
enable Edison to raise new preferred and debt capital at a lower cost than would
be possible if such non-utility businesses were direct subsidiaries of Edison.
As the Commission has stated in similar circumstances, "The insulation of the
utility businesses . . . from any risks of
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diversification and the resulting lower costs should tend toward more efficient
and economical operation of the utility businesses . . . ." CIPSCO, Inc.,
supra, 47 SEC Docket at 180.
The holding-company structure also promises to produce efficiencies and
economies through the development of Edison's service area. The non-utility
businesses in which the subsidiaries of Holding Company may become engaged will
likely be located in Edison's service area. Moreover, such new ventures could
generate increased utility sales and thus a more economical and efficient
utilization of Edison's current capacity. Id. at 179.
The Commission has noted in analogous cases that such financial and
organizational advantages will suffice to satisfy Section 10(c)(2). WPL
Holdings, Inc., supra, 49 SEC Docket 1255 at 1257-58. The Commission has also
held that a finding of "efficiencies and economies" may be based "on the
potential for economies presented by the acquisition even where these are not
precisely quantifiable." American Electric Power Co., 46 SEC 1299, 1322 (1978).
In this case, it is clear that the proposed restructuring promises to provide
significant financial and organizational advantages and that the substantial
potential economies and efficiencies meet the standard of Section 10(c)(2) of
the Act.
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3. SECTION 10(f)
Section 10(f) provides that
The Commission shall not approve any acquisition as to which an
application is made under this section unless it appears to the
satisfaction of the Commission that such State laws as may apply in
respect of such acquisition have been complied with, except where the
Commission finds that compliance with such State laws would be
detrimental to the carrying out of the provisions of section [11] . . . .
The restructuring is in full compliance with the laws of Illinois. As
required by the 1993 Amendments, Edison has submitted all required information
regarding the restructuring to the Illinois Commission. A copy of the
information filed to date is appended as Exhibit D-3, and a copy of the 1993
Amendments is included as Exhibit D-4. No approvals of the Illinois Commission
are required.
The laws of Indiana do not apply to the proposed restructuring. SEE OFFICE OF
UTILITY CONSUMER COUNSELOR V. PUBLIC SERVICE COMPANY OF INDIANA, INC., 608 N.E.
2d 1362 (Ind. Supreme Court 1993).
4. SECTION 3(a)(1). Following the proposed Acquisition, Holding Company and
its subsidiaries will meet the requirements for an exemption under Section
3(a)(1) of the Act. Holding Company and Edison are and will continue to be
predominantly intrastate in character and will continue to carry on their
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business substantially in Illinois, the state in which they are both organized.
Holding Company will not derive any material part of its income from the
Indiana Company, which is organized in Indiana and will continue to operate in
Indiana. For the year ended December 31, 1992, the Indiana Company represented
approximately 1.2% of Edison's consolidated operating revenues, 1.0% of
consolidated net income, 0.4% of consolidated net utility plant, and 0.6% of
consolidated total assets.
Holding Company believes that the proposed Acquisition and the granting of an
exemption under Section 3(a)(1) will not be detrimental in any respect to the
public interest or the interest of investors or consumers.
ITEM 4. REGULATORY APPROVALS.
The FERC must approve the proposed restructuring under Section 203 of the
Federal Power Act, and the Nuclear Regulatory Commission ("NRC") must approve
the de jure transfer of NRC licenses pursuant to 10 C.F.R. (S) 50.80. No other
regulatory approvals are required.
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ITEM 5. PROCEDURE.
The Commission is respectfully requested to issue and publish not later than
February 28, 1994, the requisite notice under Rule 23 with respect to the filing
of this Application, such notice to specify a date not later than March 20,
1994, by which comments may be entered and a date not later than April 30, 1994,
as the date after which an order of the Commission granting and permitting this
application to become effective may be entered by the Commission. A form of
notice suitable for publication in the Federal Register is attached hereto as
Exhibit H-1.
Holding Company requests that there be no 30-day waiting period between the
issuance of the Commission's order and the date on which it is to become
effective. Holding Company submits that a recommended decision by a hearing or
other responsible officer of the Commission is not needed with respect to the
proposed transaction and that the Division of Investment Management may assist
with the preparation of the Commission's decision and/or order in this matter
unless such Division opposes the matters covered hereby.
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ITEM 6. EXHIBITS AND FINANCIAL STATEMENTS.
No financial statements are filed for Holding Company because Holding Company
has only nominal assets and has not engaged in any business operations.
Exhibit A-1: Holding Company's Articles of Incorporation (included as Exhibit C
to the Form S-4 Registration Statement filed as Exhibit C-1 hereto)
Exhibit A-2: Edison's Restated Articles of Incorporation
Exhibit A-3: Merging Corp.'s Articles of Incorporation
Exhibit A-4: List of the "constituent instruments defining or limiting the
rights of the holders of each class of securities proposed to be
issued, sold, acquired, guaranteed, assumed, or modified . . ."
(included in Exhibit A-1)
Exhibit B-1: Agreement and Plan of Merger (included as Exhibit A to Form S-4
Registration Statement filed as Exhibit C-1 hereto)
Exhibit B-2: Supplemental Agreement (included as Exhibit B to Form S-4
Registration Statement filed as Exhibit C-1 hereto)
Exhibit C-1: Form S-4 Registration Statement (including all exhibits thereto)
Exhibit C-2: Prospectus and Proxy Statement (included in the Form S-4
Registration Statement filed as Exhibit C-1 hereto)
Exhibit C-3: Omitted: The restructuring would not alter the balance sheets,
income statements, or capital structure of Edison as set forth in
Exhibits G-1, G-2, and G-3 hereto.
Exhibit C-4: Omitted: The restructuring would not alter the balance sheets,
income statements, or capital structure of Edison as set forth in
Exhibits G-1, G-2, and G-3 hereto.
Exhibit D-1: Application for FERC Authorization under Section 203 of the Federal
Power Act
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Exhibit D-2: Order of FERC (to be filed by amendment)
Exhibit D-3: Informational filing with the Illinois Commission
Exhibit D-4: Relevant Sections of Illinois Act (including 1993 Amendments)
Exhibit D-5: Application for NRC Authorizations
Exhibit D-6: Order of NRC (to be filed by amendment)
Exhibit E-1: Map of Edison service territory
Exhibit F-1: Preliminary Opinion of Counsel
Exhibit F-2: Past Tense Opinion of Counsel (to be filed with certificate of
notification)
Exhibit G-1: Edison Form U-3A-2, "Statement by Holding Company Claiming
Exemption under Regulation 250.2 from the Provisions of the Public
Utility Holding Company Act of 1935," dated February 25, 1993, File
No. 69-201 (incorporated by reference pursuant to Section
250.22(b) of the Commission's Regulations)
Exhibit G-2: Form 10-K Annual Report of Edison for the year ended
December 31, 1992, File No. 1-1839 (incorporated by reference
pursuant to Section 250.22(b) of the Commission's Regulations)
Exhibit G-3: Form 10-Q quarterly reports of Edison for the quarters
ended March 31, 1993, June 30, 1993, and September 30, 1993, File
No. 1-1839 (incorporated by reference pursuant to Section 250.22(b)
of the Commission's Regulations)
Exhibit H-1: Form of Notice
ITEM 7. INFORMATION AS TO ENVIRONMENTAL EFFECTS.
The restructuring neither involves a "major federal action" nor "significantly
affects the quality of the human environment" as those terms are used in Section
102(2)(c) of the National Environmental Policy Act. The only federal actions
related to the restructuring pertain to the Commission's
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declaration of the effectiveness of the Registration Statement, Commission
approval of this Application, the FERC's authorization under Section 203 of the
Federal Power Act, and the NRC's authorization under Section 184 of the Atomic
Energy Act. The restructuring will not result in changes in the operations of
Edison or the Indiana Company that would have any impact on the environment. No
federal agency is preparing an Environmental Impact Statement with respect to
this matter.
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SIGNATURES
Pursuant to the requirements of the Public Utility Holding Company Act of
1935, Holding Company has duly caused this Application to be signed on its
behalf by the undersigned thereunto duly authorized.
CECo Holding Company
Dated: February 2, 1994 By: /s/ John C. Bukovski
-------------------------
Name: John C. Bukovski
Title: Vice-President
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EXHIBIT LIST
Exhibit A-1: Holding Company's Articles of Incorporation (included as Exhibit C
to the Form S-4 Registration Statement filed as Exhibit C-1 hereto)
Exhibit A-2: Edison's Restated Articles of Incorporation
Exhibit A-3: Merging Corp.'s Articles of Incorporation
Exhibit A-4: List of the "constituent instruments defining or limiting the
rights of the holders of each class of securities proposed to be
issued, sold, acquired, guaranteed, assumed, or modified . . ."
(included in Exhibit A-1)
Exhibit B-1: Agreement and Plan of Merger (included as Exhibit A to Form S-4
Registration Statement filed as Exhibit C-1 hereto)
Exhibit B-2: Supplemental Agreement (included as Exhibit B to Form S-4
Registration Statement filed as Exhibit C-1 hereto)
Exhibit C-1: Form S-4 Registration Statement (including all exhibits thereto)
Exhibit C-2: Prospectus and Proxy Statement (included in the Form S-4
Registration Statement filed as Exhibit C-1 hereto)
Exhibit C-3: Omitted: The restructuring would not alter the balance sheets,
income statements, or capital structure of Edison as set forth in
Exhibits G-1, G-2, and G-3 hereto.
Exhibit C-4: Omitted: The restructuring would not alter the balance sheets,
income statements, or capital structure of Edison as set forth in
Exhibits G-1, G-2, and G-3 hereto.
Exhibit D-1: Application for FERC Authorization under Section 203 of the Federal
Power Act
Exhibit D-2: Order of FERC (to be filed by amendment)
Exhibit D-3: Informational filing with the Illinois Commission
Exhibit D-4: Relevant Sections of Illinois Act (including 1993 Amendments)
Exhibit D-5: Application for NRC Authorizations
Exhibit D-6: Order of NRC (to be filed by amendment)
<PAGE>
Exhibit E-1: Map of Edison service territory
Exhibit F-1: Preliminary Opinion of Counsel
Exhibit F-2: Past Tense Opinion of Counsel (to be filed with certificate of
notification)
Exhibit G-1: Edison Form U-3A-2, "Statement by Holding Company Claiming
Exemption under Regulation 250.2 from the Provisions of the Public
Utility Holding Company Act of 1935," dated February 25, 1993, File
No. 69-201 (incorporated by reference pursuant to Section
250.22(b) of the Commission's Regulations)
Exhibit G-2: Form 10-K Annual Report of Edison for the year ended December 31,
1992, File No. 1-1839 (incorporated by reference pursuant to
Section 250.22(b) of the Commission's Regulations)
Exhibit G-3: Form 10-Q quarterly reports of Edison for the quarters ended
March 31, 1993, June 30, 1993, and September 30, 1993, File
No. 1-1839 (incorporated by reference pursuant to Section
250.22(b) of the Commission's Regulations)
Exhibit H-1: Form of Notice
2
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Exhibit A-2
RESOLVED: THAT THE PROVISIONS OF THE ARTICLES OF INCORPORATION, AS
HERETOFORE AMENDED, OF COMMONWEALTH EDISON COMPANY ARE HEREBY RESTATED, AS
FOLLOWS:
ARTICLE ONE: The name of the corporation (hereinafter referred to as the
"Company") is:
COMMONWEALTH EDISON COMPANY
ARTICLE TWO: The duration of the Company is perpetual.
ARTICLE THREE: The purposes for which the Company is organized are: To
manufacture, generate, produce, purchase or otherwise acquire, exchange,
distribute and sell electricity and gas for lighting, power, heating, fuel and
any and all other purposes; to purchase or otherwise acquire, distribute and
sell water for any and all purposes; to produce, distribute and sell steam or
hot water for heating or other purposes; to purchase, sell and otherwise dispose
of and deal in apparatus, appliances, commodities, goods, wares and merchandise
necessary or convenient for such purposes or any of them; to acquire, construct,
install, own, manage, maintain and operate plants, buildings, structures, works,
mains, pipes, wires, conduits, conductors, apparatus and any and all other
property necessary or convenient for or incidental to such purposes or any of
them; and to acquire, own, use, convey, and otherwise dispose of and deal in
real property or any interest therein.
ARTICLE FOUR: The Shares which the Company shall have authority to issue
shall consist of:
(a) 850,000 shares of Prior Preferred Stock of the par value of $100 per
share (the "Prior Preferred Stock");
(b) 707,011 shares of $1.425 Convertible Preferred Stock without par value
(the "Convertible Preferred Stock");
(c) 32,889,205 shares of Preference Stock without par value (the
"Preference Stock"); and
(d) 250,000,000 shares of Common Stock of the par value of $12.50 per share
(the "Common Stock").
The term "subordinate stock," when hereinafter used with reference to stock
junior to the Prior Preferred Stock, means the Convertible Preferred Stock, the
Preferred Stock, the Common Stock and stock of any other class, which may
hereafter be authorized, ranking junior to the Prior Preferred Stock with
respect to the payment of dividends or the distribution of assets; when
hereinafter used with reference to stock junior to the Convertible Preferred
Stock, means the Preference Stock, the Common Stock and stock of any class,
which may hereafter be authorized, ranking junior to the Convertible Preferred
Stock with respect to the payment of dividends or the distribution of
<PAGE>
assets; and, when hereinafter used with reference to stock junior to the
Preference Stock, means the Common Stock and stock of any other class, which may
hereafter be authorized, ranking junior to the Preference Stock with respect to
the payment of dividends or the distribution of assets.
The preferences, qualifications, limitations, restrictions, and the
special and relative rights in respect of the shares of each class are as
follows:
DIVISION I
Provisions Relating to Prior Preferred Stock
(a) Issue of Prior Preferred Stock in Series. Authority is hereby
expressly vested in the Board of Directors to divide, and to provide for the
issue from time to time of, the Prior Preferred Stock in series and to fix and
determine as to each such series:
(1) the designation of, and the number of shares to be issuable
in, such series; provided, however, that if the Board of Directors, at any
time after the initial issue of shares of any series issued with the
privilege of conversion into shares of the Common Stock, shall provide for
the issue of additional shares of such series, such additional shares shall
not be offered by the Company at a price per share less than that at which
the shares of such series initially issued shall have been offered;
(2) the dividend rate per annum for the shares of such series,
expressed either as a dollar amount per share or as a percentage of the par
value thereof;
(3) the price or prices at which, and the terms and conditions on
which, such shares may be redeemed;
(4) the amount payable upon each of such shares in the event of
voluntary dissolution, liquidation or winding up of the Company;
(5) the amount payable upon each of such shares in the event of
involuntary dissolution, liquidation or winding up of the Company;
(6) sinking fund provisions, if any, for the redemption or
purchase of such shares (the terms "sinking fund," as used herein,
including any analogous fund, however designated); and
(7) if such shares are to be issued with the privilege of
conversion into shares of the Common Stock, the
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terms and conditions on which such shares may be so converted.
In all other respects shares of the Prior Preferred Stock of all series shall be
identical.
So long as any shares of any series of the Prior Preferred Stock
shall be outstanding, the resolution of the Board of Directors establishing such
series shall not be amended so as to affect any of the preferences or other
rights of the holders of the shares of such series without the affirmative vote
or the written consent of the holders of at least two-thirds of the shares of
such series outstanding at the time or as of a record date fixed by the Board of
Directors, but such resolution may be so amended with such vote or consent.
(b) Dividends. Holders of the Prior Preferred Stock of each series
shall be entitled to receive cash dividends, out of funds legally available
therefor, when and as declared by the Board of Directors, at such rate per annum
as shall have been fixed by the Board of Directors for the shares of such
series. Dividends on the Prior Preferred Stock of all series shall be payable
quarterly on the first day of each of the months of February, May, August and
November in each year, each such quarterly payment to be in respect of the
quarterly period ending with the next preceding the date of such payment, except
in the case of the first dividend payable on shares of any series issued between
quarterly dividend payment dates, in which case such dividend shall be for the
period beginning with the date of issue of such shares or with the next
preceding quarterly dividend payment date for the Prior Preferred Stock, as
determined by the Board of Directors, and ending with the day next preceding
either, as determined by the Board of Directors, the first or the second
quarterly dividend payment date for the Prior Preferred Stock succeeding the
date of issue of such shares. Dividends on the Prior Preferred Stock of each
series shall be cumulative with respect to each share from the beginning date of
the period for which the first dividend thereon was payable. Accumulations of
dividends shall not bear interest. Whenever there shall be paid on the shares
of any series of the Prior Preferred Stock the full amount or any part of the
dividends payable thereon, there shall also be paid at the same time on the
shares of each other series, if any, then outstanding the full amount or a like
proportionate part, as the case may be, of the dividends payable thereon.
No funds shall be paid into or set aside for any sinking fund created
for any series of the Prior Preferred Stock or for any subordinate stock or
stock of any class ranking on a parity with the Prior Preferred Stock with
respect to the payment of dividends or the distribution of assets, unless all
dividends on the Prior Preferred Stock for all past quarterly dividend periods,
and (subject to the limitation hereinafter stated) for the current quarterly
dividend period, shall have been paid or
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shall have been declared and funds sufficient for such payment set aside by the
Company, separate and apart from its other funds.
No dividend shall be paid or other distribution made on any
subordinate stock, other than a dividend or distribution solely of shares of
subordinate stock, and no subordinate stock shall be purchased or otherwise
acquired by the Company for a consideration, unless (1) all dividends on the
Prior Preferred Stock for all past quarterly dividend periods, and (subject to
the limitation hereinafter stated) for the current quarterly dividend period,
shall have been paid or shall have been declared and funds sufficient for such
payment set aside by the Company, separate and apart from its other funds, and
(2) all funds then and theretofore required to be paid into or set aside for any
sinking fund or funds created for one or more series of the Prior Preferred
Stock shall have been so paid or set aside.
If the date of any payment or setting aside of funds, referred to in
the second preceding paragraph, or the date of payment of any dividend or making
of any other distribution or any purchase or other acquisition, referred to in
the next preceding paragraph, shall be a quarterly dividend payment date, the
references in such paragraphs to "the current quarterly dividend period" shall
be inapplicable for all of the purposes thereof.
(c) Redemption of Prior Preferred Stock. Subject to the limitations
stated in subdivision (d) hereof and except as may be otherwise provided by the
Board of Directors in respect of the shares of a particular series, shares of
any one or more series of the Prior Preferred Stock may be called for redemption
and redeemed, at the option of the Company, in whole at any time or in part from
time to time, upon the notice hereinafter provided for, by the payment therefor
in cash of the then applicable optional redemption price or prices fixed by the
Board of Directors for the shares which are to be redeemed.
If at any time less than all shares of any series of the Prior
Preferred Stock shall be called for redemption, the shares so called shall be
selected by lot in such manner, or pro rata, all as may be determined by the
Board of Directors.
Notice of any proposed redemption shall be given by the Company by
mail, or caused by the Company to be so given, not more than 60 nor less than 30
days prior to the redemption date, to the holders of record of the shares to be
redeemed at their respective addresses then appearing on the records of the
Company.
If notice of redemption shall have been duly given as hereinabove
provided and if, on or before the redemption date, the funds necessary for such
redemption shall have been set aside
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by the Company, separate and apart from its other funds, then, on and after the
redemption date, all shares for the redemption of which such funds shall have
been so set aside shall, whether or not the certificates for such shares shall
have been surrendered for cancellation, be deemed to be no longer outstanding
for any purpose and all rights with respect to such shares shall cease and
terminate on the redemption date, except only the right of the holders of the
certificates for such shares to receive, out of the funds so set aside, the
amount payable upon the redemption thereof, without interest.
At any time before the redemption date the Company may deposit in
trust the funds necessary for such redemption with a bank or trust company, to
be designated in the notice of such redemption, doing business in the City of
Chicago, State of Illinois, or in the Borough of Manhattan, The City of New
York, State of New York, and having capital, surplus and undivided profits
aggregating at least $5,000,000. In the event such deposit is made so that the
deposited funds shall be forthwith available to the holders of the shares to be
redeemed upon surrender of the certificates evidencing such shares, then, upon
the giving of the notice of such redemption, as hereinabove provided, or upon
the earlier delivery to such bank or trust company of irrevocable authorization
and direction so to give such notice, all shares with respect to the redemption
of which such deposit shall have been made and the giving of such notice
effected or authorization therefor given shall, whether or not the certificates
for such shares shall have been surrendered for cancellation, be deemed to be no
longer outstanding for any purpose and all rights with respect to such shares
shall thereupon cease and terminate, except only the right of the holders of
the certificates for such shares (1) to receive, out of the funds so deposited
in trust, from and after the time of such deposit, the amount payable upon the
redemption thereof, without interest, or (2) to exercise any privilege of
conversion which shall not theretofore have terminated. Any funds so deposited,
which shall not be required for the payment of the redemption price of such
shares by reason of the exercise of any right of conversion subsequent to the
date such deposit, shall be paid over to the Company forthwith. At the
expiration of six years after the redemption date, any such funds then remaining
on deposit with such bank or trust company shall be paid over to the Company,
free of trust, and thereafter the holders of the certificates for such shares
shall have no claims against such bank or trust company, but only claims as
unsecured creditors against the Company for amounts equal to their pro rata
portions of the funds so paid over, without interest. Any interest on or other
accretions to funds deposited with such bank or trust company shall belong to
the Company.
The provisions of this subdivision (c) with respect to the method and
effect of redemption shall be applicable to the redemption of shares pursuant to
any sinking fund created for any
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series of the Prior Preferred Stock as well as to the optional redemption of
shares, except to the extent, if any, that the terms of such sinking fund, as
fixed and determined by the Board of Directors, shall expressly otherwise
provide.
(d) Limitations on Redemption and Purchase of Prior Preferred Stock.
If and so long as the Company shall be in default in the payment of any
quarterly dividend on shares of any series of the Prior Preferred Stock, or
shall be in default in the payment of funds into or the setting aside of funds
for any sinking fund created for any series of the Prior Preferred Stock, the
Company shall not (other than by the use of unapplied funds, if any, paid into
or set aside for a sinking fund or funds prior to such default):
(1) redeem any shares of the Prior Preferred Stock unless all
shares thereof are redeemed; or
(2) purchase or otherwise acquire for a consideration any shares
of the Prior Preferred Stock, except pursuant to offers of sale made by
holders of the Prior Preferred Stock in response to an invitation for
tenders given simultaneously by the Company by mail to the holders of
record of all shares of the Prior Preferred Stock then outstanding at their
respective addresses then appearing on the records of the Company.
(e) Status of Prior Preferred Stock Redeemed or Purchased. All
shares of the Prior Preferred Stock which shall be redeemed pursuant to any
sinking fund created for any series of the Prior Preferred Stock, all shares of
the Prior Preferred Stock which shall be purchased pursuant to any such sinking
fund or applied in lieu of the payment of funds into or the setting aside of
funds for any such sinking fund, and all shares of the Prior Preferred Stock of
any series, issued with the privilege of conversion into shares of the Common
Stock, which shall be so converted, shall be retired and cancelled and shall not
be reissued. Shares of the Prior Preferred Stock otherwise redeemed,
purchased or acquired by the Company shall have the status of authorized and
unissued shares or shall be retired and cancelled as may be determined by the
Board of Directors.
(f) Liquidation Preferences. In the event of dissolution,
liquidation or winding up of the Company, whether voluntary or involuntary,
holders of the Prior Preferred Stock of each series shall be entitled to receive
out of the assets of the Company, before any payment or distribution shall be
made to the holders of any subordinate stock, such amount per share as shall
have been fixed by the Board of Directors as the voluntary liquidation price or
the involuntary liquidation price, as the case may be, for the shares of such
series. If upon any such dissolution, liquidation or winding up the assets of
the Company available for payment to stockholders are not sufficient to make
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<PAGE>
payment in full to holders of the Prior Preferred Stock, payment shall be made
to such holders ratably in accordance with the numbers of shares held by them
respectively, and, in case there shall be outstanding more than one series of
the Prior Preferred Stock, ratably in accordance with the respective
distributive amounts to which such holders shall be entitled.
Neither a consolidation or merger of the Company with or into any
other corporation, nor a merger of any other corporation into the Company, nor
the redemption or purchase by the Company of all or a part of the outstanding
shares of any class or classes of its stock, nor a sale or transfer of the
property and business of the Company as or substantially as an entirety, shall
be considered a dissolution, liquidation or winding up of the Company within the
meaning of the foregoing provisions.
(g) Restrictions on Certain Corporate Action. So long as any shares
of the Prior Preferred Stock shall be outstanding the Company shall not, without
the affirmative vote or the written consent of the holders of at least two-
thirds of the shares of the Prior Preferred Stock outstanding at the time or as
of a record date fixed by the Board of Directors:
(1) create or authorize any stock of any class ranking prior to
or on a parity with the Prior Preferred Stock with respect to the payment
of dividends or the distribution of assets; or
(2) amend the Articles of Incorporation of the Company so as to
affect any of the preferences or other rights of the holders of the Prior
Preferred Stock; provided, however, that if any such amendment would
affect any of the preferences or other rights of the holders of one or
more, but less than all, of the series of the Prior Preferred Stock then
outstanding, the affirmative vote or the written consent of, and only of,
the holders of at least two-thirds of the shares of each series so affected
shall be required.
So long as any shares of the Prior Preferred Stock shall be
outstanding the Company shall not, without the affirmative vote or the written
consent of the holders of a majority of the shares of the Prior Preferred Stock
outstanding at the time or as of a record date fixed by the Board of Directors:
(1) issue any shares of the Prior Preferred Stock, which may
hereafter be authorized, in addition to the 850,000 shares thereof now
authorized, or any shares of stock of any other class, which may hereafter
be authorized, ranking prior to or on a parity with the Prior Preferred
Stock with respect to the payment of dividends or the distribution of
assets (other than for the purpose of effecting the retirement, by
redemption, exchange or otherwise, of
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<PAGE>
outstanding shares ranking at least on a parity with, and representing an
aggregate amount of stated capital at least equal to the aggregate amount
of the stated capital to be represented by, the shares proposed to be
issued), if the aggregate amount of the stated capital represented by all
Prior Preferred Stock and all prior and parity stock to be outstanding
after the proposed issue, after giving effect to the retirement of any
Prior Preferred Stock of any prior or parity stock to be retired in
connection with such issue, would exceed 75% of the sum of (i) the
aggregate amount of the stated capital represented by all subordinate stock
then outstanding and (ii) the amount of the consolidated retained earnings
of the Company and its consolidated subsidiaries, if any, as of the end of
the preceding fiscal year (the term "stated capital," as used in this
paragraph (1), including any related paid-in surplus); or
(2) consolidate with or merge into any other corporation, under
applicable statutory procedure, or make any sale or transfer of the
property and business of the Company as or substantially as an entirety;
provided, however, that this restriction shall not apply to (i) a consoli-
dation of the Company with or its merger into any corporation 50% or more
of the voting securities of which are owned by the Company directly, or
indirectly through one or more other corporations, or the sale or transfer
of the property and business of the Company as or substantially as an en-
tirety to a corporation 50% or more of the voting securities of which are
so owned by the Company, or (ii) any consolidation of the Company with or
its merger into any other corporation or any sale or transfer of the
property and business of the Company as or substantially as an entirety,
which may be required by order or regulation of any commission or other
governmental agency having jurisdiction in the premises. The term "sale
or transfer," as used in this paragraph (2), includes a lease or exchange
but does not include a mortgage or pledge.
(h) Preemptive Rights. Holders of the Prior Preferred Stock shall
have no preemptive rights.
DIVISION II
Provisions Relating to Convertible Preferred Stock
(a) Dividends. Subject to the preferential rights of the holders of
the Prior Preferred Stock with respect to the payment of dividends, holders of
the Convertible Preferred Stock shall be entitled to receive cash dividends, out
of funds legally available therefor, when and as declared by the Board of Direc-
tors, at the rate of $1.425 per share per annum, payable quarterly on the first
day of each of the months of February, May,
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<PAGE>
August and November of each year, each such quarterly payment to be in respect
of the quarterly period ending with the day next preceding the date of such
payment, except that the first dividend on shares of the Convertible Preferred
Stock shall be for the period beginning either with the date of issue of such
shares or with a specified date subsequent to the date of issue and ending with
the day next preceding either the first or the second succeeding quarterly
dividend payment date, all as determined by the Board of Directors. Dividends
on the Convertible Preferred Stock shall be cumulative with respect to each
share from the beginning date of the period for which the first dividend thereon
was payable. Accumulations of dividends shall not bear interest.
No dividend shall be paid or other distribution made on any
subordinate stock, other than a dividend or distribution solely of shares of
subordinate stock, and no subordinate stock shall be purchased or otherwise
acquired by the Company for a consideration, unless all dividends on the
Convertible Preferred Stock for all past quarterly dividend periods, and
(subject to the limitation hereinafter stated) for the current quarterly
dividend period, shall have been paid or shall have been declared and funds
sufficient for such payment set aside by the Company, separate and apart from
its other funds.
If the date of payment of any dividend or making of any other
distribution or any purchase or other acquisition, referred to in the preceding
paragraph, shall be a quarterly dividend payment date, the reference in such
paragraph to "the current quarterly dividend period" shall be inapplicable for
all of the purposes thereof.
(b) Redemption of Convertible Preferred Stock. Subject to the
limitation stated in subdivision (c) hereof, shares of the Convertible Preferred
Stock may be called for redemption and redeemed, at the option of the Company,
in whole at any time or in part from time to time on or after December 9, 1971,
by the payment therefor in cash of the redemption price of $42 per share, plus
an amount equal to the accrued and unpaid dividends, if any, thereon to the
redemption date, each redemption to be effected upon notice the same as that
provided in subdivision (c) of Division I in respect of the redemption of shares
of the Prior Preferred Stock. All other provisions of said subdivision (c) with
respect to the method and effect of redemption of shares of the Prior Preferred
Stock shall be applicable to the redemption of shares of the Convertible Pre-
ferred Stock in the same manner and with the same force and effect as though
such provisions were set forth in full in this subdivision (b).
(c) Limitation on Redemption and Purchase of Convertible Preferred
Stock. If and so long as the Company shall be in default in the payment of any
quarterly dividend on shares of the Convertible Preferred Stock, the Company
shall not:
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<PAGE>
(1) redeem any shares of the Convertible Preferred Stock unless
all shares thereof are redeemed; or
(2) purchase or otherwise acquire for a consideration any
shares of the Convertible Preferred Stock except pursuant to offers of sale
made by the holders of the Convertible Preferred Stock in response to an
invitation for tenders given simultaneously by the Company by mail to the
holders of record of all shares of the Convertible Preferred Stock then
outstanding at their respective addresses then appearing on the records of
the Company.
(d) Status of Convertible Preferred Stock Converted, Redeemed or
Purchased. All shares of the Convertible Preferred Stock which shall be
converted into shares of the Common Stock, or which shall be redeemed or
purchased, shall be retired and cancelled and shall not be reissued.
(e) Restrictions on Certain Corporate Action. So long as any shares
of the Convertible Preferred Stock shall be outstanding the Company shall not,
without the affirmative vote or the written consent of the holders of at least
two-thirds of the shares of the Convertible Preferred Stock outstanding at the
time or as of a record date fixed by the Board of Directors:
(1) create or authorize any stock of any class, other than the
Prior Preferred Stock, ranking prior to or on a parity with the Convertible
Preferred Stock with respect to the payment of dividends or the
distribution of assets; or
(2) amend the Articles of Incorporation of the Company so as to
affect any of the preferences or other rights of the holders of the
Convertible Preferred Stock.
So long as any shares of the Convertible Preferred Stock shall be
outstanding the Company shall not, without the affirmative vote or the written
consent of the holders of a majority of the shares of the Convertible Preferred
Stock outstanding at the time or as of a record date fixed by the Board of
Directors, consolidate with or merge into any other corporation, under
applicable statutory procedure, or make any sale or transfer of the property
and business of the Company as or substantially as an entirety; provided,
however, that this restriction shall not apply to any consolidation, merger, or
sale or transfer of the character specified in clauses (i) and (ii) of the
second paragraph (2) of subdivision (g) of Division I. The term "sale or
transfer," as above used, includes a lease or exchange but does not include a
mortgage or pledge.
(f) Liquidation Preferences. In the event of dissolution,
liquidation or winding up of the Company, holders of the Convertible Preferred
Stock shall be entitled to receive out of
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<PAGE>
the assets of the Company the amount of $42 per share in the case of voluntary
dissolution, liquidation or winding up, and the amount of $31.80 per share in
the case of involuntary dissolution, liquidation or winding up, in each case
plus an amount equal to the accrued and unpaid dividends, if any, thereon to the
date fixed for payment; provided, however, that no such payment to holders of
the Convertible Preferred Stock shall be made until payment in full shall have
been made to the holders of the Prior Preferred Stock, or funds or other assets
sufficient for such payment shall have been set aside by the Company, separate
and apart from its other assets, in accordance with the provisions of
subdivision (f) of Division I. If upon any such dissolution, liquidation or
winding up the assets of the Company available for payment to stockholders are
not sufficient to make payment in full to holders of the Convertible Preferred
Stock as above provided, payment shall be made to such holders ratably in
accordance with the numbers of shares held by them respectively.
(g) Conversion Provisions. (1) The shares of the Convertible
Preferred Stock shall be convertible at the option of the respective holders
thereof, at any time or from time to time, into fully paid and nonassessable
shares of the Common Stock of the Company, calculated to the nearest (or if
there shall be no nearest, then to the next higher) 1/100th of a share, at the
conversion price of $53 per share of Common Stock, taking the shares of the
Convertible Preferred Stock at $31.80 per share, that is, at the rate of 6/10ths
of a share of Common Stock for each share of Convertible Preferred Stock;
provided, however, that:
(i) as provided in paragraphs (2) and (3) of this subdivision (g),
such conversion price shall be subject to adjustment or change in certain
cases;
(ii) as provided in paragraphs (4) and (5) of this subdivision (g),
shares or other securities or property, other than shares of the Common
Stock, may in certain cases become issuable upon conversion of shares of
the Convertible Preferred Stock;
(iii) whenever the Company shall call for redemption any shares of
the Convertible Preferred Stock, the conversion rights of the holders
thereof shall terminate at the close of business on the tenth day prior to
the redemption date (except that if the funds necessary for such redemption
shall not be set aside or deposited on or before the redemption date, as
provided by subdivision (b) of this Division II, such conversion rights
shall be reinstated on the redemption date); and
(iv) in case of any dissolution, liquidation or winding up of the
Company, whether voluntary or involuntary, or in case the Company shall be
required, by order or regula-
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<PAGE>
tion of any commission or other governmental agency having jurisdiction in
the premises, to consolidate with or merge into another corporation, and
such order or regulation shall not permit the provisions of paragraph (5)
of this subdivision (g) to become effective, then and in any such case the
conversion rights of the holders of shares of the Convertible Preferred
Stock shall terminate on such date as shall be fixed by the Board of
Directors, but not earlier than the close of business on the thirtieth day
following the mailing by the Company to the holders of record of the
shares of the Convertible Preferred Stock of the statement required by
paragraph (8) of this subdivision (g) to be so mailed.
(2) In case the Company shall at any time or from time to time issue
any shares of the Common Stock in addition to the 41,735,174 shares thereof
outstanding at the close of business on January 21, 1966 (other than additional
shares issued upon conversion of shares of the Convertible Preferred Stock and
additional shares which may be issued by the Company pursuant to its existing
employe stock purchase plan or other plan or plans hereafter adopted providing
for the purchase of stock of the Company by employes) and such additional shares
shall be so issued without consideration or for a consideration per share less
than the per share conversion price of the Common Stock in effect immediately
prior to the time of such issue, then upon such issue such conversion price
shall (until a further adjustment thereof shall be required by the provisions
of this paragraph (2)) be reduced to a price, calculated to the nearest (or if
there shall be no nearest, then to the next lower) cent, determined by
dividing:
(i) an amount equal to the sum of (x) the number of shares of the
Common Stock outstanding (determined as hereinafter provided) immediately
prior to such issue multiplied by the per share conversion price of the
Common Stock then effective, and (y) the consideration (determined as
hereinafter provided) received by the Company upon such issue; by
(ii) the total number of shares of the Common Stock outstanding
(determined as hereinafter provided) immediately after such issue;
provided, however, that if such conversion price would, by the application of
the foregoing formula, be reduced by an amount less than 50 cents, no adjustment
of such conversion price shall be made, but in that event the adjustment which,
except for this provision, would be required to be made shall be carried forward
and made at the time of and together with the next subsequent adjustment which,
together with any adjustment or adjustments so carried forward, shall amount to
a reduction of such conversion price by 50 cents or more.
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<PAGE>
The term "employes", as hereinabove used in this paragraph (2), means
employes (including officers) of the Company or of any corporation, designated
by the Board of Directors, 50% or more of the voting securities of which are
owned by the Company directly, or indirectly through one or more other
corporations.
In determining, for the purposes of this paragraph (2), the number of
shares of the Common Stock outstanding at any particular time, there shall be
included, without limiting the generally accepted meaning of the term
"outstanding" (i) any shares issued on conversion of shares of the Convertible
Preferred Stock, (ii) any shares issuable in respect of scrip certificates
evidencing fractional interests in shares of the Common Stock, (iii) any shares
which, pursuant to subparagraph (A) of this paragraph (2), shall be deemed to
have been issued but which shall not actually have been issued, and (iv) any
shares owned or held by the Company.
In determining, for the purposes of this paragraph (2), what constitutes
the issue of additional shares of the Common Stock by the Company and the
consideration received therefor, the following provisions shall be applicable:
(A) In case the Company shall issue any shares (other than
shares of the Convertible Preferred Stock) convertible into shares of
the Common Stock or any obligations so convertible, all shares of the
Common Stock into which such convertible shares or obligations shall
be initially convertible shall, on the earliest date on which such
convertible shares or obligations shall by their terms be convertible,
be deemed to be additional shares of the Common Stock issued as of
such date, and the Company shall be deemed to have received, as of
such date, for such shares of the Common Stock so deemed to have been
issued an aggregate consideration equal to the sum of (i) the
consideration received by the Company for such convertible shares of
obligations, and (ii) such additional consideration, if any, as would
be receivable by the Company for or upon issuance of such shares of
the Common Stock so deemed to have been issued if issued on the
earliest date on which such convertible shares or obligations shall by
their terms be convertible.
(B) In case the Company shall issue any rights to subscribe for
or purchase, or any options to purchase, shares of the Common Stock,
and if any of such rights or options shall be exercised and shares of
the Common Stock shall be issued upon such exercise, the Company shall
be deemed to have received for such shares of the Common Stock so
issued an aggregate consideration equal to the sum of (i) the
consideration received by the Company for such shares upon the
issuance thereof, and
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<PAGE>
(ii) such additional consideration, if any, as shall have been
received by the Company for such rights or options; provided, however,
that if such rights or options shall be exercisable over a stated
period of time, a recomputation of the conversion price by reason of
the exercise thereof need not be made upon each such exercise but may
be made at such time or times as shall be determined by the Board of
Directors, subject only to the condition that if the period of time
during which such rights or options shall be exercisable shall not
exceed 30 days, such recomputation shall be made within 10 days
following the expiration of such period, and that if such period shall
exceed 30 days, such recomputation shall be made at least once in the
month next succeeding each month, within such period, during which any
such exercise shall occur.
(C) In case the Company shall issue or sell, for cash, any
additional shares of the Common Stock or any shares (other than shares
of the Convertible Preferred Stock) convertible into shares of the
Common Stock or any obligations so convertible, or any rights to sub-
scribe for or purchase, or any options to purchase, shares of the
Common Stock, the consideration received by the Company therefor shall
be deemed to be the amount of cash received therefor, plus the amount
of any discount (below the public or other offering price) at which
such issue or sale shall have been made by the Company, and before
deducting the amount of any commissions or other expenses paid or
incurred by the Company for any underwriting of, or otherwise in
connection with, such issue or sale. In case the Company shall issue
or sell, for a consideration other than cash, any such additional
shares of the Common Stock or any such convertible shares or
obligations or any such rights or options, the consideration received
by the Company therefor shall be deemed to be the fair value of such
consideration as determined by the Board of Directors.
(D) In case any shares of the Common Stock shall be issued by
the Company as a dividend on the then outstanding Common Stock or
other subordinate stock, the shares so issued shall be deemed to have
been issued without consideration.
(E) In case any shares of the Common Stock shall, in lieu of a
cash dividend, be issued by the Company as a dividend on the
Convertible Preferred Stock or on shares of stock of any class ranking
prior to or on a parity with the Convertible Preferred Stock with re-
spect to the payment of dividends and the distribution of assets, the
Company shall be deemed to have received
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<PAGE>
for the shares so issued a consideration equal to the amount of cash
otherwise payable as such dividend.
(3) In case the shares of the Common Stock at any time outstanding
shall be subdivided, by reclassification or otherwise, into a greater number of
shares, the per share conversion price of the Common Stock then effective shall
be reduced proportionately. In case the shares of the Common Stock at any time
outstanding shall be combined, by reclassification or otherwise, into a lesser
number of shares, the per share conversion price of the Common Stock then
effective shall be increased proportionately.
(4) In case of any reclassification of the Common Stock or any
capital reorganization of the Company involving a change in the Common Stock,
other than a reclassification or reorganization involving merely a subdivision
or combination of outstanding shares of the Common Stock, the shares of the Con-
vertible Preferred Stock shall thereafter be convertible into the number and
class of shares or other securities or property of the Company to which the
shares of the Common Stock otherwise issuable upon conversion of the shares of
the Convertible Preferred Stock would have been entitled upon such
reclassification or reorganization if outstanding at the time thereof; and in
any such case appropriate adjustment, as determined by the Board of Directors,
shall be made in the application of the provisions of this subdivision (g) with
respect to the conversion rights thereafter of the holders of the shares of the
Convertible Preferred Stock, to the end that such provisions shall thereafter
be applicable, as nearly as reasonably may be, in relation to any shares or
other securities or property thereafter issuable or deliverable upon the
conversion of shares of the Convertible Preferred Stock.
(5) Subject to the limitation hereinafter stated in this paragraph
(5), in case of any consolidation of the Company with or its merger into another
corporation, the shares of the Convertible Preferred Stock (or any shares issued
in exchange therefor upon such consolidation or merger) shall thereafter be
convertible into the number and class of shares or other securities or property
of the corporation resulting from such consolidation or merger to which the
shares of the Common Stock otherwise issuable upon conversion of the shares of
the Convertible Preferred Stock would have been entitled upon such consolidation
or merger if outstanding at the time thereof; and in any such case appropriate
adjustment shall be made in the application of the provisions of this
subdivision (g) with respect to the conversion rights thereafter of the holders
of the shares of the Convertible Preferred Stock, to the end that such
provisions shall thereafter be applicable, as nearly as reasonably may be, in
relation to any shares or other securities or property thereafter issuable or
deliverable upon the conversion of shares of the Convertible Preferred Stock (or
any shares issued in exchange
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<PAGE>
therefor upon such consolidation or merger); and appropriate provision, as
determined by the Board of Directors, shall be made as a part of the terms of
any such consolidation or merger whereby the conversion rights of the holders
of the shares of the Convertible Preferred Stock shall be protected and
preserved in accordance with the provisions of this paragraph (5).
In the case of any such consolidation or merger which may be required by
order or regulation of any commission or other governmental agency having
jurisdiction in the premises, the provisions of this paragraph (5) shall be
effective only if permitted by such order or regulation.
(6) No payment or adjustment with respect to dividends on shares of
the Convertible Preferred Stock or on the Common Stock shall be made in
connection with any conversion.
(7) Whenever the per share conversion price of the Common Stock shall
be adjusted or changed as provided in paragraph (2) or (3) of this subdivision
(g), the Company shall promptly file with each Transfer Agent for the shares of
the Convertible Preferred Stock and, as soon as practicable after such
adjustment or change and in no event later than 10 full business days
thereafter, shall mail to the holders of record of such shares at their
respective addresses then appearing on the records of the Company a statement
signed by an officer of the Company, stating the adjusted or changed conversion
price determined as provided in said paragraph (2) or (3), as the case may be,
and setting forth in reasonable detail the facts requiring such adjustment or
change. Each Transfer Agent for the shares of the Convertible Preferred Stock
shall be fully protected in relying on such statement and shall be under no duty
to examine into the accuracy thereof. If any questions shall at any time arise
with respect to an adjusted or changed conversion price, such question shall be
determined by a firm of independent certified public accountants selected by
the Company and acceptable to the Transfer Agents for the shares of the
Convertible Preferred Stock, and such determination shall be binding upon the
Company and the holders of such shares.
(8) In case:
(i) the Company shall propose to pay any dividend on the Common
Stock payable in shares of the Common Stock or to make any other
distribution, other than cash dividends, to the holders of the Common
Stock; or
(ii) the Company shall propose to offer for subscription to the
holders of the Common Stock any additional shares of any class or any
other rights or options; or
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(iii) the Company shall propose to effect any reclassification of
the Common Stock or any capital reorganization involving a change in
the Common Stock, other than a reclassification or reorganization
involving merely a subdivision or combination of outstanding shares
of the Common Stock; or
(iv) the Company shall propose to consolidate with or merge into
another corporation, or to sell or transfer its property and business
as or substantially as an entirety, or shall propose to dissolve,
liquidate or wind up;
then, in each such case, the Company shall file with each Transfer Agent for
the shares of the Convertible Preferred Stock and shall mail to the holders of
record of such shares at their respective addresses then appearing on the
records of the Company a statement, signed by an officer of the Company, with
respect to the proposed action, such statement to be so filed and mailed at
least 10 days, if subparagraph (i) or (ii) of this paragraph (8) shall be
applicable, and at least 40 days, if subparagraph (iii) or (iv) of this
paragraph (8) shall be applicable, prior to the date of the taking of such
action or the record date for holders of the Common Stock for the purposes
thereof, whichever is earlier. If such statement relates to any proposed
action referred to in subparagraph (iii) or (iv) of this paragraph (8), it
shall set forth such facts with respect thereto as shall reasonably be necessary
to inform each Transfer Agent for the shares of the Convertible Preferred Stock
and the holders of such shares as to the effect of such action upon the
conversion rights of such holders.
(9) In order to effect the conversion of shares of the Convertible
Preferred Stock the holder of the certificate or certificates therefor shall
surrender such certificate or certificates to the Company or to any Transfer
Agent for the shares of the Convertible Preferred Stock, with request for
conversion. If the shares of the Common Stock issuable upon such conversion are
to be issued in a name other than that in which the shares of the Convertible
Preferred Stock to be converted are registered, such certificate or certificates
shall be duly endorsed for transfer or accompanied by a duly executed stock
transfer power, and shall be accompanied by necessary stock transfer stamps, if
any, or equivalent funds.
Upon such surrender of such certificate or certificates, the Company shall
issue and deliver or cause to be issued and delivered to the person entitled
thereto a certificate or certificates for the number of full shares of the
Common Stock issuable upon such conversion, together with, if the shares of the
Convertible Preferred Stock represented by the certificate or certificates
therefor surrendered for conversion are not evenly convertible, cash or a scrip
certificate as provided in paragraph (10) of this
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subdivision (g). The Company shall pay all original issue taxes, if any,
payable upon the issue of such shares of the Common Stock and upon the issue of
any scrip certificates issued in respect of fractions of a share.
Such conversion shall be deemed to have been effected on the date of the
surrender of such certificate or certificates for shares of the Convertible
Preferred Stock, and the person in whose name the certificate or certificates
for the shares of the Common Stock issuable upon such conversion are to be
issued shall be deemed to be the holder of record of such shares as of such
date.
(10) The Company shall not be required to issue a fraction of a share
of the Common Stock upon any conversion of shares of the Convertible Preferred
Stock but in lieu thereof may, at its option, make payment in cash in the amount
obtained by multiplying such fraction by the per share conversion price of the
Common Stock then effective, or issue and deliver a scrip certificate in respect
of such fraction, or may make payment in cash of a portion of such amount and
issue and deliver a scrip certificate in respect of the remaining portion of
such fraction. Such scrip certificate, if issued, shall be in bearer form and,
when surrendered, within a specified time fixed by the Board of Directors, with
other scrip certificates evidencing in the aggregate rights to receive one or
more full shares of the Common Stock, shall be exchangeable for a certificate
representing such full share or shares. Such scrip certificate shall not
entitle the bearer thereof to exercise any voting rights, to receive dividends,
to participate in any distribution of assets of the Company, or to exercise any
other rights as a stockholder of the Company. Such scrip certificate shall
otherwise be in such form and shall contain such provisions as shall be
determined by the Board of Directors consistently with the provisions of
applicable law.
(11) The Company shall at all times have authorized but unissued, or
in its treasury, a number of shares of the Common Stock sufficient for the
conversion of all shares of the Convertible Preferred Stock from time to time
outstanding.
(h) Preemptive Rights. Holders of the Convertible Preferred Stock
shall have no preemptive rights.
DIVISION III
Provisions Relating to Preference Stock
(a) Issue of Preference Stock in Series. Authority is hereby
expressly vested in the Board of Directors to divide, and to provide for the
issue from time to time of, the Preference Stock in series and to fix and
determine as to each such series:
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(1) the designation of, and the number of shares to be issuable in,
such series; provided, however, that if the Board of Directors, at any time
after the initial issue of shares of any series issued with the privilege
of conversion into shares of the Common Stock, shall provide for the issue
of additional shares of such series, such additional shares shall not be
offered by the Company at a price per share less than that at which the
shares of such series initially issued shall have been offered;
(2) the dividend rate per annum for the shares of such series;
(3) the price or prices at which, and the terms and conditions on
which, such shares may be redeemed;
(4) the amount payable upon each of such shares in the event of
voluntary dissolution, liquidation or winding up of the Company;
(5) the amount payable upon each of such shares in the event of
involuntary dissolution, liquidation or winding up of the Company;
(6) sinking fund provisions, if any, for the redemption or purchase of
such shares (the term "sinking fund," as used herein, including any
analogous fund, however designated); and
(7) if such shares are to be issued with the privilege of conversion
into shares of the Common Stock, the terms and conditions on which such
shares may be so converted.
In all other respects the shares of Preference Stock of all series shall be
identical.
So long as any shares of any series of the Preference Stock
established by resolution of the Board of Directors shall be outstanding, such
resolution shall not be amended so as to affect any of the preferences or other
rights of the holders of the shares of such series without the affirmative vote
or the written consent of the holders of at least two-thirds of the shares of
such series outstanding at the time or as of a record date fixed by the Board of
Directors, but such resolution may be so amended with such vote or consent.
(b) Dividends. Subject to the preferential rights of the holders of
the Prior Preferred Stock and the Convertible Preferred Stock with respect to
the payment of dividends, as set forth in subdivision (b) of Division I and
subdivision (a) of Division II, respectively, holders of the Preference Stock of
each series shall be entitled to receive cash dividends, out of funds legally
available therefor, when and as declared by the
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Board of Directors, at such rate per annum as shall have been fixed by the Board
of Directors for the shares of such series, Dividends on the Preference Stock of
all series shall be payable quarterly on the first day of each of the months of
February, May, August and November in each year, each such quarterly payment to
be in respect of the quarterly period ending with the day next preceding the
date of such payment, except in the case of the first dividend payable on shares
of any series issued between quarterly dividend payment dates, in which case
such dividend shall be for the period beginning with the date of issue of such
shares or the next preceding quarterly dividend payment date for the Preference
Stock, as determined by the Board of Directors, and ending with the day next
preceding either, as determined by the Board of Directors, the first or the
second quarterly dividend payment date for the Preference Stock succeeding the
date of issue of such shares. Dividends on the Preference Stock of each series
shall be cumulative with respect to each share from the beginning date of the
period for which the first dividend thereon was payable. Accumulations of
dividends shall not bear interest. Whenever there shall be paid on the shares
of any series of the Preference Stock the full amount or any part of the
dividends payable thereon, there shall also be paid at the same time on the
shares of each other series, if any, then outstanding the full amount or a like
proportionate part, as the case may be, of the dividends payable thereon.
No funds shall be paid into or set aside for any sinking fund created
for any series of the Preference Stock or for any subordinate stock or stock of
any class ranking on a parity with the Preference Stock with respect to the
payment of dividends or the distribution of assets, unless all dividends on the
Preference Stock for all past quarterly dividend periods, and (subject to the
limitation hereinafter stated) for the current quarterly dividend period, shall
have been paid or shall have been declared and funds sufficient for such payment
set aside by the Company, separate and apart from its other funds.
No dividend shall be paid or other distribution made on any
subordinate stock, other than a dividend or distribution solely of shares of
subordinate stock, and no subordinate stock shall be purchased or otherwise
acquired by the Company for a consideration, unless (1) all dividends on the
Preference Stock for all past quarterly dividend periods, and (subject to the
limitation hereinafter stated) for the current quarterly dividend period, shall
have been paid or shall have been declared and funds sufficient for such payment
set aside by the Company, separate and apart from its other funds, and (2) all
funds then and theretofore required to be paid into or set aside for any sinking
fund or funds created for one or more series of the Preference Stock shall have
been so paid or set aside.
If the date of any payment or setting aside of funds, referred to in
the second preceding paragraph, or the date of
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payment of any dividend or making of any other distribution or any purchase or
other acquisition, referred to in the next preceding paragraph, shall be a
quarterly dividend payment date, the references in such paragraphs to "the
current quarterly dividend period" shall be inapplicable for all of the purposes
thereof.
(c) Redemption of Preference Stock. Subject to the limitations stated
in subdivision (d) of this Division III, and except as may be otherwise provided
by the Board of Directors in respect of the shares of a particular series
established by resolution of the Board of Directors, shares of any one or more
series of the Preference Stock may be called for redemption and redeemed, at the
option of the Company, in whole at any time or in part from time to time, by the
payment therefor in cash of the then applicable optional redemption price fixed
by the Board of Directors for the shares of such series, each redemption to be
effected upon notice the same as that provided in subdivision (c) of Division I
in respect of the redemption of shares of the Prior Preferred Stock. All other
provisions of said subdivision (c) with respect to the method and effect of
redemption of shares of the Prior Preferred Stock shall be applicable to the
redemption of shares of the Preference Stock in the same manner and with the
same force and effect as though such provisions were set forth in full in this
subdivision (c).
(d) Limitations on Redemption and Purchase of Preference Stock. If
and so long as the Company shall be in default in the payment of any quarterly
dividend on shares of any series of the Preference Stock, or shall be in default
in the payment of funds into or the setting aside of funds for any sinking fund
created for any series of the Preference Stock, the Company shall not (other
than by the use of unapplied funds, if any, paid into or set aside for a sinking
fund or funds prior to such default):
(1) redeem any shares of the Preference Stock unless all shares
thereof are redeemed; or
(2) purchase or otherwise acquire for a consideration any shares of
the Preference Stock, except pursuant to offers of sale made by holders of
the Preference Stock in response to an invitation for tenders given
simultaneously by the Company by mail to the holders of record of all
shares of the Preference Stock then outstanding at their respective
addresses then appearing on the records of the Company.
(e) Status of Preference Stock Redeemed or Purchased. All shares of
the Preference Stock which shall be redeemed pursuant to any sinking fund
created for any series of the Preference Stock, all shares of the Preference
Stock which shall be purchased pursuant to any such sinking fund or applied in
lieu of the payment of funds into or the setting aside of funds for
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any such sinking fund, and all shares of the Preference Stock of any series,
issued with the privilege of conversion into shares of the Common Stock, which
shall be so converted, shall be retired and cancelled and shall not be
reissued. Shares of the Preference Stock otherwise redeemed, purchased or
acquired by the Company shall have the status of authorized and unissued shares
or shall be retired and cancelled as may be determined by the Board of
Directors.
(f) Liquidation Preferences. In the event of dissolution,
liquidation or winding up of the Company, whether voluntary or involuntary,
holders of the Preference Stock of each series shall be entitled to receive out
of the assets of the Company, before any payment or distribution shall be made
to the holders of any subordinate stock, such amount per share as shall have
been fixed by the Board of Directors as the voluntary liquidation price or the
involuntary liquidation price, as the case may be, for the shares of such
series; provided, however, that no such payment to holders of the Preference
Stock shall be made until payment in full shall have been made to the holders of
the Prior Preferred Stock and the Convertible Preferred Stock, or funds or other
assets sufficient for such payment shall have been set aside by the Company,
separate and apart from its other assets, in accordance with the provisions of
subdivision (f) of Division I and subdivision (f) of Division II. If upon any
such dissolution, liquidation or winding up the assets of the Company avail-
able for payment to stockholders are not sufficient to make payment in full to
holders of the Preference Stock as above provided, payment shall be made to such
holders ratably in accordance with the numbers of shares held by them
respectively, and, in case there shall then be outstanding more than one series
of the Preference Stock, ratably in accordance with the respec-tive distributive
amounts to which such holders shall be entitled.
(g) Restrictions on Certain Corporation Action. So long as any shares
of the Preference Stock shall be outstanding the Company shall not, without the
affirmative vote or the written consent of the holders of at least two-thirds
of the shares of the Preference Stock outstanding at the time or as of a record
date fixed by the Board of Directors:
(1) create or authorize any stock of any class, other than the Prior
Preferred Stock, ranking prior to or on a parity with the Preference Stock
with respect to the payment of dividends or the distribution of assets; or
(2) amend the Articles of Incorporation of the Company so as to affect
any of the preferences or other rights of the holders of the Preference
Stock; provided, however, that if any such amendment would affect any of
the preferences or other rights of the holders of one or more, but less
than all, of the series of the Preference Stock then outstanding,
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the affirmative vote or the written consent of, and only of, the holders of
at least two-thirds of the shares of each series so affected shall be
required.
So long as any shares of the Preference Stock shall be outstanding the
Company shall not, without the affirmative vote or the written consent of the
holders of a majority of the shares of the Preference Stock outstanding at the
time or as of a record date fixed by the Board of Directors, consolidate with or
merge into any other corporation, under applicable statutory procedure, or make
any sale or transfer of the property and business of the Company as or
substantially as an entirety; provided, however, that this restriction shall not
apply to any consolidation, merger, or sale or transfer of the character
specified in clauses (i) and (ii) of the second paragraph (2) of subdivision (g)
of Division I. The term "sale or transfer," as above used, includes a lease or
exchange but does not include a mortgage or pledge.
(h) Preemptive Rights. Holders of the Preference Stock shall have no
preemptive rights.
DIVISION IV
Provisions Relating to Common Stock
(a) Dividends. Subject to the preferential rights of the holders of the
Prior Preferred Stock, the Convertible Preferred Stock and the Preference Stock
with respect to the payment of dividends, as set forth in subdivision (b) of
Division I, subdivision (a) of Division II and subdivision (b) of Division III,
respectively, holders of the Common Stock shall be entitled to receive
dividends, out of funds legally available therefor, when and as declared by the
Board of Directors.
(b) Liquidation Preferences. In the event of dissolution, liquidation or
winding up of the Company, whether voluntary or involuntary, holders of the
Common Stock shall be entitled to receive, ratably in accordance with the
numbers of shares held by them respectively, the assets of the Company,
available for payment to stockholders, remaining after payment in full shall
have been made to holders of the Prior Preferred Stock, the Convertible
Preferred Stock and the Preference Stock in accordance with the provisions of
subdivision (f) of Division I, subdivision (f) of Division II and subdivision
(f) of Division III.
(c) Preemptive Rights. Holders of the Common Stock shall have no
preemptive rights.
ARTICLE FIVE: In order to assure continuity of efficient management, the
Board of Directors (hereinafter called the "Board") is hereby authorized to
establish a Deferred Compensation Plan (hereinafter called the "Plan") for
selected key
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executive and managerial employes of the Company and its wholly-owned
subsidiaries.
The Board shall have complete authority to act upon and determine all
matters related to the establishment, conduct, utilization, terms and conditions
of the Plan, within the following limitations:
(1) Administration. The Board shall provide for the regular
administration of the Plan by a Compensation Committee to be composed of not
less than five Directors chosen by the Board from its members who are not
officers of the Company, and shall empower the Committee to award "current
compensation units," wholly or partly in lieu of salary increases, to key
executive and managerial employes of the Company and its wholly-owned
subsidiaries selected from time to time by the Committee and to award
"retirement compensation units" to qualifying holders of current compensation
units or their spouses as herein provided. The number of active officers and
employes to whom current compensation units may be so awarded in any one
calendar year shall be limited to such number fixed by the Board of Directors
annually, but shall be so limited that the Plan shall remain primarily for the
purpose of providing deferred compensation for a select group of management
employes within the meaning of the Employee Retirement Income Security Act of
1974.
(2) Current Compensation Units. Each current compensation unit shall
entitle the holder to payments following the award and during the continued
employment of the holder by the Company or a wholly-owned subsidiary of the
Company equal to and made on the payment dates of the cash dividends he would
have received if on the day of the award one share of the Company's Common Stock
had been issued to him.
(3) Award of Current Compensation Units. The total number of current
compensation units awarded in any calendar year shall be limited so that the
compensation payable thereon would not exceed one-tenth of one per cent of
consolidated net income on the Common Stock of the Company for the preceding
calendar year. To compute this limitation, the "compensation payable thereon"
shall be deemed to be the amount which would have been paid in the preceding
calendar year either (a) on an equivalent number of units awarded on the record
date for the first cash dividend on the Common Stock paid in that year, or (b)
at a rate per unit equal to five per cent of the book value per share of the
Common Stock at the end of that year, whichever results in the lower number of
available units. No current compensation units shall be awarded in any calendar
year if total payments during the preceding calendar year on current and
retirement compensation units had reduced consolidated net income on the Common
Stock of the Company for such year by as much as two per cent. As herein used,
the term "consolidated net income on the Common Stock of the Company" shall
mean, for any calendar year, such net income
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(after all Federal income and excess profits tax provisions) of the Company and
its subsidiary companies consolidated, or of the Company alone if there be no
consolidated subsidiary Company, as shown in the Annual Report to the
Stockholders of the Company for such year.
(4) Retirement Compensation Units. Each retirement compensation unit
shall entitle the holder to payments following the award and continuing for life
equal to and made on the payment dates of the cash dividends he would have
received if on the day of the award one share of the Company's Common Stock had
been issued to him; provided, however, that payments per retirement compensation
unit in any calendar year shall not in any event be (a) less than the average
amount of the payments per current compensation unit during the five calendar
years preceding the termination of employment which gave rise to the award of
such retirement compensation unit, or (b) more than such average amount (or the
amount of the payments per current compensation unit in the calendar year
preceding such termination, if greater), increased at the compound annual rate
of two per cent to the end of the calendar year of payment.
The foregoing proviso shall not apply to any retirement compensation unit
based upon a current compensation unit awarded prior to April 26, 1973, unless
an election for such application was made before January 1, 1974. The
Compensation Committee shall determine the means of applying the maximum and
minimum limits of such proviso.
(5) Award of Retirement Compensation Units. Upon the termination, by
death or otherwise, of the employment of a holder of current compensation units,
he (or, in the case of death, his surviving spouse) shall be awarded that number
of retirement compensation units equal to the number of current compensation
units held by him immediately prior to such termination, subject to paragraph
(7).
(6) Effect of Stock Dividends, Etc. For the purpose of computing payments
hereunder, fractional shares, as well as full shares, resulting from stock
dividends, stock splits or other changes in the Company's Common Stock shall be
treated as though actually issued.
(7) Effect of Resignation. If any holder of current compensation units
should at any time resign from employ of the Company and all of its wholly-owned
subsidiaries his payments shall thereupon be discontinued and all rights to
receive retirement compensation units under the plan will terminate.
(8) Noncompetition Agreement. If any holder of current or retirement
compensation units should at any time engage in competitive business, his
payments shall thereupon be discontinued.
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(9) Death Benefits. Upon the death of any holder of retirement
compensation units, leaving a spouse surviving, payments on account of such
units shall continue to be made to the spouse for life, but only if (i) such
units had originated from the deceased's employment by the Company or a wholly-
owned subsidiary of the Company and (ii) the surviving spouse was married to
such holder when his period of service with the Company and all of its wholly-
owned subsidiaries terminated.
(10) Amendment and Termination. The Board shall have the right to modify
or discontinue the Plan at any time, and to establish a trust fund to ensure the
payment of benefits thereunder, provided that the rights of persons entitled to
payments on account of compensation units previously awarded shall in nowise be
thereby impaired.
(11) Effective Date and Transition Rules with Respect to Retirement Units.
The Plan, as amended, shall be effective May 3, 1983. Compensation units held
immediately prior to July 1, 1979 shall be deemed to be current compensation
units if originally issued with respect to employment which has not terminated
on such date and to be retirement compensation units if originally issued with
respect to employment which has terminated on or prior to such date.
ARTICLE SIX: The number of directors of the Company shall be as fixed by
the By-Laws of the Company.
____________________
PURSUANT TO AUTHORITY EXPRESSLY VESTED IN THE BOARD OF DIRECTORS BY
SUBDIVISION(a) OF DIVISION 3 OF ARTICLE FOUR, THE BOARD OF DIRECTORS HAS BY
RESOLUTION PROVIDED FOR THE ISSUANCE OF THE FOLLOWING OUTSTANDING SERIES OF
PREFERENCE STOCK:
$1.90 CUMULATIVE PREFERENCE STOCK
THE BOARD OF DIRECTORS OF THE COMPANY ADOPTED THE FOLLOWING RESOLUTION,
EFFECTIVE APRIL 14, 1971:
RESOLVED, that pursuant to authority expressly vested in the Board of
Directors by the Company's Articles of Incorporation, as amended, there be and
there hereby is established a series of the Preference Stock, without par value,
of the Company, the designation of such series, the number of shares to be
issuable therein, and certain of the terms and provisions thereof to be as
follows:
I. Designation of Series and Number of Shares to Be Issuable Therein.
The series of the Preference Stock established hereby shall be designated
$1.90 Cumulative Preference Stock (hereinafter called the "$1.90 Series"),
in which 4,249,549 shares shall be issuable.
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II. Dividends. Dividends shall be payable on the shares of the $1.90
Series at the rate of $1.90 per share per annum, and no more. The first
dividend payable on shares, if any, of the $1.90 Series issued prior to
August 1, 1971, shall accrue from the initial date of issue of any of such
shares, and the first dividend payable on shares, if any, of the $1.90
Series, issued between quarterly dividend payment dates and subsequent to
August 1, 1971, shall accrue from the quarterly dividend payment date next
preceding the date of issue of such shares.
III. Redemption. Prior to May 1, 1976, none of the shares of the
$1.90 Series may be redeemed through refunding, directly or indirectly, by
or in anticipation of the incurring of any debt or the issuance of any
shares of the Preference Stock or of any other stock ranking prior to or on
a parity with the Preference Stock with respect to the payment of dividends
or the distribution of assets, if such debt has an interest cost to the
Company, or such shares have a dividend cost to the Company, less than the
dividend cost to the Company of the shares of the $1.90 Series. The term
"interest cost to the Company", with respect to any debt, means the yield
to stated maturity of such debt at the net price to the Company therefor,
determined by reference to a standard table of bond yields, using straight-
line interpolation if necessary, and the term "dividend cost to the
Company", with respect to any shares, means the percentage yield of such
shares obtained by dividing the annual dividend rate per share by the net
price to the Company per share (in either case "net price to the Company"
is to be determined after allowing for all discounts, commissions, finder's
or negotiator's fees, standby or commitment charges and any other
compensation received or receivable directly from the Company by
underwriters, investment bankers or other financing agents, or purchasers).
Subject to the foregoing, the shares of the $1.90 Series may be called for
redemption and redeemed, at the option of the Company, in whole at any time
or in part from time to time, at the redemption prices hereinafter set
forth and upon the notice and in the manner prescribed in the applicable
provisions of the Company's Articles of Incorporation, as amended,
The per share redemption prices of the shares of the $1.90 Series
shall be $27.50 if redeemed on or before April 30, 1976, $26.00 if redeemed
on or after May 1, 1976 but before May 1, 1981, and $25.25 if redeemed on
or after May 1, 1981, in each case plus the amount of accrued and unpaid
dividends, if any, thereon to the redemption date.
IV. Liquidation Prices. The amount payable on each share of the
$1.90 Series in the event of voluntary dissolution, liquidation or winding
up of the Company shall be an amount equal to the optional redemption price
thereof
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applicable at the date fixed for payment, an no more. The amount payable
on each share of the $1.90 Series in the event of involuntary dissolution,
liquidation or winding up of the Company shall be $25 plus the amount of
accrued and unpaid dividends, if any, thereon to the date fixed for
payment, and no more.
$2.00 CUMULATIVE PREFERENCE STOCK
THE BOARD OF DIRECTORS OF THE COMPANY ADOPTED THE FOLLOWING RESOLUTION,
EFFECTIVE NOVEMBER 16, 1971:
RESOLVED, that pursuant to authority expressly vested in the Board of
Directors by the Company's Articles of Incorporation, as amended, there be and
there hereby is established a series of the Preference Stock, without par value,
of the Company, the designation of such series, the number of shares to be
issuable therein, and certain of the terms and provisions thereof to be as
follows:
I. Designation of Series and Number of Shares to Be Issuable Therein.
The series of Preference Stock established hereby shall be designated
$2.00 Cumulative Preference Stock (hereinafter called the "$2.00 Series"),
in which 2,000,000 shares initially shall be issuable.
II. Dividends. Dividends shall be payable on the shares of the $2.00
Series at the rate of $2.00 per share per annum, and no more. The first
dividend payable on shares, if any, of the $2.00 Series issued on or prior
to February 1, 1972, shall accrue from the date of issue of the first
issued shares of the $2.00 Series and the first dividend payable on
shares, if any, of the $2.00 Series, issued between quarterly dividend
payment dates and subsequent to February 1, 1972, shall accrue from the
quarterly dividend payment date next preceding the date of issue of such
shares.
III. Redemption. Prior to December 1, 1976, none of the shares of
the $2.00 Series may be redeemed through refunding, directly or
indirectly, by or in anticipation of the incurring of any debt or the
issuance of any shares of the Preference Stock or of any other stock
ranking prior to or on a parity with the Preference Stock with respect to
the payment of dividends or the distribution of assets, if such debt has an
interest cost to the Company, or such shares have a dividend cost to the
Company, less than the highest dividend cost to the Company of shares of
the $2.00 Series issued prior to the date shares thereof are called for
redemption. The term "interest cost to the Company," with respect to any
debt, means the yield to stated maturity of such debt at the net price to
the Company therefor, determined by reference to a standard table of bond
yields, using straight-line interpolation if necessary, and the term
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"dividend cost to the Company," with respect to any shares, means the
percentage yield of such shares obtained by dividing the annual dividend
rate per share by the net price to the Company per share (in either case
"net price to the Company" is to be determined after allowing for all dis-
counts, commissions, finder's or negotiator's fees, standby or commitment
charges and any other compensation received or receivable directly from the
Company by underwriters, investment bankers or other financing agents, or
purchasers). Subject to the foregoing, the shares of the $2.00 Series may
be called for redemption and redeemed, at the option of the Company, in
whole at any time or in part from time to time, at the redemption prices
hereinafter set forth and upon the notice and in the manner prescribed in
the applicable provisions of the Company's Articles of Incorporation, as
amended.
The per share redemption prices of the shares of the $2.00 Series
shall be $28.36 if redeemed on or before November 30, 1976, $26.81 if
redeemed on or after December 1, 1976 but before December 1, 1981, and
$26.04 if redeemed on or after December 1, 1981, in each case plus the
amount of accrued and unpaid dividends, if any, thereon to the redemption
date.
IV. Liquidation Prices. The amount payable on each share of the
$2.00 Series in the event of voluntary dissolution, liquidation or winding
up of the Company shall be an amount equal to the optional redemption price
thereof applicable at the date fixed for payment, and no more. The
amount payable on each share of the $2.00 Series in the event of
involuntary dissolution, liquidation or winding up of the Company shall be
$25.00 plus the amount of accrued and unpaid dividends, if any, thereon to
the date fixed for payment, and no more.
V. Amendment of Resolution. The Board of Directors may, from time to
time, amend this resolution to (i) increase the number of shares of
Preference Stock issuable in the $2.00 Series, (ii) substitute later dates
for any or all of the respective dates specified in Division III, (iii)
increase any or all of the redemption prices specified in Division III, and
(iv) increase the amount payable on each share of the $2.00 Series in the
event of the involuntary dissolution, liquidation or winding up of the
Company.
$1.96 CUMULATIVE PREFERENCE STOCK
THE BOARD OF DIRECTORS OF THE COMPANY ADOPTED THE FOLLOWING RESOLUTION,
EFFECTIVE NOVEMBER 13, 1972:
RESOLVED, that pursuant to authority expressly vested in the Board of
Directors by the Company's Articles of Incorporation, as
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amended, there be and there hereby is established a series of the Preference
Stock, without par value, of the Company, the designation of such series, the
number of shares to be issuable therein, and certain of the terms and provisions
thereof to be as follows:
I. Designation of Series and Number of Shares to Be Issuable Therein.
The series of Preference Stock established hereby shall be designated
$1.96 Cumulative Preference Stock (hereinafter called the "$1.96 Series"),
in which 2,000,000 shares shall be issuable.
II. Dividends. Dividends shall be payable on the shares of the $1.96
Series at the rate of $1.96 per share per annum, and no more. The first
dividend payable on shares, if any, of the $1.96 Series issued on or prior
to February 1, 1973, shall accrue from the date of issue of the first
issued shares of the $1.96 Series and the first dividend payable on
shares, if any, of the $1.96 Series issued between quarterly dividend
payment dates and subsequent to February 1, 1973, shall accrue from the
quarterly dividend payment date next preceding the date of issue of such
shares.
III. Redemption. Prior to December 1, 1977, none of the shares of
the $1.96 Series may be redeemed. On or after December 1, 1977, the shares
of the $1.96 Series may be called for redemption and redeemed, at the
option of the Company, in whole at any time or in part from time to time,
at the redemption prices hereinafter set forth and upon the notice and in
the manner prescribed in the applicable provisions of the Company's
Articles of Incorporation, as amended.
The per share redemption prices of the shares of the $1.96 Series
shall be $27.65 if redeemed on or after December 1, 1977 but before
December 1, 1982, and $27.00 if redeemed on or after December 1, 1982, in
each case plus the amount of accrued and unpaid dividends, if any, thereon
to the redemption date.
IV. Liquidation Prices. The amount payable on each share of the
$1.96 Series in the event of voluntary dissolution, liquidation or winding
up of the Company shall be $27.65 prior to December 1, 1982 and $27.11 on
or after December 1, 1982, in each case plus the amount of accrued and
unpaid dividends, if any, thereon to the date fixed for payment, and no
more. The amount payable on each share of the $1.96 Series in the event of
involuntary dissolution, liquidation or winding up of the Company shall be
$25.00 plus the amount of accrued and unpaid dividends, if any, thereon to
the date fixed for payment, and no more.
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V. Amendment of Resolution. The Board of Directors may, from time to
time, amend this resolution to (i) increase the number of shares of
Preference Stock issuable in the $1.96 Series, (ii) substitute later dates
for any or all of the dates specified in Divisions III and IV, and (iii)
increase any or all of the prices specified in Divisions III and IV.
$7.24 CUMULATIVE PREFERENCE STOCK
THE BOARD OF DIRECTORS OF THE COMPANY ADOPTED THE FOLLOWING RESOLUTION,
EFFECTIVE FEBRUARY 13, 1973:
RESOLVED, that pursuant to authority expressly vested in the Board of
Directors by the Company's Articles of Incorporation, as amended, there be and
there hereby is established a series of the Preference Stock, without par value,
of the Company, the designation of such series, the number of shares to be
issuable therein, and certain of the terms and provisions thereof to be as
follows:
I. Designation of Series and Number of Shares to Be Issuable Therein.
The series of Preference Stock established hereby shall be designated
$7.24 Cumulative Preference Stock (hereinafter called the "$7.24 Series"),
in which 750,000 shares shall be issuable.
II. Dividends. Dividends shall be payable on the shares of the $7.24
Series at the rate of $7.24 per share per annum, and no more. The first
dividend payable on shares, if any, of the $7.24 Series issued on or prior
to May 1, 1973, shall accrue from the date of issue of the first issued
shares of the $7.24 Series and the first dividend payable on shares, if
any, of the $7.24 Series, issued between quarterly dividend payment dates
and subsequent to May 1, 1973, shall accrue from the quarterly dividend
payment date next preceding the date of issue of such shares.
III. Redemption. Prior to March 1, 1978, none of the shares of the
$7.24 Series may be redeemed. On or after March 1, 1978, the shares of the
$7.24 Series may be called for redemption and redeemed, at the option of
the Company, in whole at any time or in part from time to time, at the
redemption prices hereinafter set forth and upon the notice and in the
manner prescribed in the applicable provisions of the Company's Articles of
Incorporation, as amended.
The per share redemption prices of the shares of the $7.24 Series
shall be $103.00 if redeemed on or after March 1, 1978 but before March 1,
1983, and $101.00 if redeemed on or after March 1, 1983, in each case plus
the amount of accrued and unpaid dividends, if any, thereon to the redemp-
tion date.
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IV. Liquidation Prices. The amount payable on each share of the
$7.24 Series in the event of voluntary dissolution, liquidation or winding
up of the Company shall be $103.00 prior to March 1, 1983, and $101.00 on
or after March 1, 1983, in each case plus the amount of accrued and unpaid
dividends, if any, thereon to the date fixed for payment, and no more. The
amount payable on each share of the $7.24 Series in the event of
involuntary dissolution, liquidation or winding up of the Company shall be
$99.12 plus the amount of accrued and unpaid dividends, if any, thereon to
the date fixed for payment, and no more.
V. Amendment of Resolution. The Board of Directors may, from time to
time, amend this resolution to (i) increase the number of shares of
Preference Stock issuable in the $7.24 Series, (ii) substitute later dates
for any or all of the dates specified in Divisions III and IV, and (iii)
increase any or all of the prices specified in Divisions III and IV.
$8.40 CUMULATIVE PREFERENCE STOCK
THE BOARD OF DIRECTORS OF THE COMPANY ADOPTED THE FOLLOWING RESOLUTION,
EFFECTIVE JANUARY 24, 1974:
RESOLVED, that pursuant to authority expressly vested in the Board of
Directors by the Company's Articles of Incorporation, as amended, there be and
there hereby is established a series of the Preference Stock, without par value,
of the Company, the designation of such series, the number of shares to be
issuable therein, and certain of the terms and provisions thereof to be as
follows:
I. Designation of Series and Number of Shares to Be Issuable Therein.
The series of Preference Stock established hereby shall be designated
$8.40 Cumulative Preference Stock (hereinafter called the "$8.40 Series"),
in which 750,000 shares shall be issuable.
II. Dividends. Dividends shall be payable on the shares of the $8.40
Series at the rate of $8.40 per share per annum, and no more. The first
dividend payable on shares, if any, of the $8.40 Series issued on or prior
to May 1, 1974, shall accrue from the date of issue of the first issued
shares of the $8.40 Series and the first dividend payable on shares, if
any, of the $8.40 Series, issued between quarterly dividend payment dates
and subsequent to May 1, 1974, shall accrue from the quarterly dividend
payment date next preceding the date of issue of such shares.
III. Redemption. Prior to February 1, 1979, none of the shares of
the $8.40 Series may be redeemed. On or after February 1, 1979, the shares
of the $8.40 Series may be
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called for redemption and redeemed, at the option of the Company, in whole
at any time or in part from time to time, at the redemption prices
hereinafter set forth and upon the notice and in the manner prescribed in
the applicable provisions of the Company's Articles of Incorporation, as
amended.
The per share redemption prices of the shares of the $8.40 Series
shall be $103.00 if redeemed on or after February 1, 1979 but before
February 1, 1984, and $101.00 if redeemed on or after February 1, 1984, in
each case plus the amount of accrued and unpaid dividends, if any, thereon
to the redemption date.
IV. Liquidation Prices. The amount payable on each share of the
$8.40 Series in the event of voluntary dissolution, liquidation or winding
up of the Company shall be $103.00 prior to February 1, 1984, and $101.00
on or after February 1, 1984, in each case plus the amount of accrued and
unpaid dividends, if any, thereon to the date fixed for payment, and no
more. The amount payable on each share of the $8.40 Series in the event of
involuntary dissolution, liquidation or winding up of the Company shall be
$98.90 plus the amount of accrued and unpaid dividends, if any, thereon to
the date fixed for payment, and no more.
V. Amendment of Resolution. The Board of Directors may, from time to
time, amend this resolution to (i) increase the number of shares of
Preference Stock issuable in the $8.40 Series, (ii) substitute later dates
for any or all of the dates specified in Divisions III and IV, and (iii)
increase any or all of the prices specified in Divisions III and IV.
$2.875 CUMULATIVE PREFERENCE STOCK
THE BOARD OF DIRECTORS OF THE COMPANY ADOPTED THE FOLLOWING RESOLUTION,
EFFECTIVE NOVEMBER 6, 1974:
RESOLVED, that pursuant to authority expressly vested in the Board of
Directors by the Company's Articles of Incorporation, as amended, there be and
there hereby is established a series of the Preference Stock, without par value,
of the Company, the designation of such series, the number of shares to be
issuable therein, and certain of the terms and provisions thereof to be as
follows:
I. Designation of Series and Number of Shares to Be Issuable Therein.
The series of Preference Stock established hereby shall be designated
$2.875 Cumulative Preference Stock (hereinafter called the "$2.875
Series"), in which 3,000,000 shares shall be issuable.
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II. Dividends. Dividends shall be payable on the shares of the
$2.875 Series at the rate of $2.875 per share per annum, and no more. The
first dividend payable on shares, if any, of the $2.875 Series issued on
or prior to February 1, 1975, shall accrue from the date of issue of the
first issued shares of the $2.875 Series.
III. Sinking Fund. (a) At or before the opening of business on
November 1 in each year commencing November 1, 1979 (each such November 1
being referred to in this Section III as a "sinking fund payment date"),
the Company shall set aside, separate and apart from its other funds, as a
mandatory sinking fund payment for the retirement of 150,000 shares of the
$2.875 Series, the sum of $3,750,000 ($25 per share), plus a sum equal to
the amount of accrued and unpaid dividends, if any, on such shares to the
redemption date. The requirement in respect of mandatory sinking fund pay-
ments shall be cumulative, so that if the Company shall fail to set aside
in full the amount of any mandatory sinking fund payment, the amount of the
deficiency shall be added to the next succeeding mandatory sinking fund
payment or payments until such deficiency shall be made good.
(b) In addition to the mandatory sinking fund payments provided for
by subsection (a) above, the Company shall have the right, on any sinking
fund payment date, to set aside, separate and apart from its other funds,
as an optional sinking fund payment for the retirement of shares of the
$2.875 Series, at the sinking fund redemption price, a sum not in excess of
$3,750,000, exclusive of accrued and unpaid dividends. The right of the
Company to make optional sinking fund payments shall not be cumulative.
(c) In satisfaction of all or any part of any mandatory sinking fund
payment, the Company may elect to take credit, at the sinking fund
redemption price, for any previously issued shares of the $2.875 Series
acquired or redeemed by the Company (otherwise than through the applica-
tion of mandatory sinking fund payments), which have not theretofore been
used for the purpose of any such credit.
(d) The Company shall apply all cash set aside by it pursuant to
subsections (a) and (b) above and held by it on any sinking fund payment
date to the redemption on such date of outstanding shares of the $2.875
Series at the sinking fund redemption price ($25 per share, plus an amount
equal to accrued and unpaid dividends, if any, on such shares to the
redemption date), such redemption to be effected upon the notice and in the
manner prescribed in the applicable provisions of the Company's Articles of
Incorporation, as amended.
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(e) Notwithstanding any of the other provisions of this Section III,
if any November 1, referred to in subsection (a) above, shall be a
Saturday, a Sunday or a legal holiday for banking institutions in the State
of Illinois, the term "sinking fund payment date", as used in this Section
III, shall be construed to mean the next succeeding day which is not a
Saturday, a Sunday or such a legal holiday.
IV. Optional Redemption. Prior to November 1, 1984, none of the
shares of the $2.875 Series may be redeemed except through sinking fund
payments provided for in Section III above or pursuant to the provisions of
Section V below. On or after November 1, 1984, shares of the $2.875 Series
may be called for redemption and redeemed, at the option of the Company, in
whole at any time or in part from time to time, at the redemption prices
hereinafter set forth and upon the notice and in the manner prescribed in
the applicable provisions of the Company's Articles of Incorporation, as
amended.
Such per share optional redemption prices of the shares of the $2.875
Series shall be $26.50 from November 1, 1984 through October 31, 1989, and
on and after November 1, 1989, $25.25 per share, in each case plus the
amount of accrued and unpaid dividends, if any, thereon to the redemption
date.
V. Special Redemption. The shares of the $2.875 Series may be called
for redemption and redeemed in whole, at the option of the Company, at the
special redemption prices hereinafter set forth and upon the notice and in
the manner prescribed in the applicable provisions of the Company's
Articles of Incorporation, as amended, at any time prior to November 1,
1976, and on and after the effective date of any statute or regulation of
the United States of America, enacted after the date of adoption of this
resolution creating the $2.875 Series, which statute or regulation permits
the deduction by a corporation for Federal income tax purposes of all or
any part of the dividends paid on shares of stock issued by such
corporation which has a preference as to the payment of dividends or the
distribution of assets over capital stock of such corporation junior
thereto, provided that the provisions of such statute or regulation would
not permit such a deduction by the Company with respect to dividends paid
by it on shares of the $2.875 Series, and further provided that the Company
would propose to and could, by appropriate corporate action, issue shares
of its preferred or preference stock now or hereafter authorized on which
all or any part of the dividends payable by the Company would be deductible
for Federal income tax purposes.
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<PAGE>
Such per share special redemption prices of the shares of the $2.875
Series shall be $25.81 through April 30, 1975, $26.70 from May 1, 1975
through October 31, 1975, $27.66 from November 1, 1975 through April 30,
1976, and $28.72 from May 1, 1976 through October 31, 1976, in each case
plus the amount of accrued and unpaid dividends, if any, thereon to the
special redemption date.
VI. Liquidation Prices. The amount payable on each share of the
$2.875 Series in the event of voluntary dissolution, liquidation or
winding up of the Company shall be $26.50 through October 31, 1989, and on
and after November 1, 1989, $25.25, plus the amount of accrued and unpaid
dividends, if any, thereon to the date fixed for payment, and no more. The
amount payable on each share of the $2.875 Series in the event of
involuntary dissolution, liquidation or winding up of the Company shall be
$24.10, plus the amount of accrued and unpaid dividends, if any, thereon
to the date fixed for payment, and no more.
$2.375 CUMULATIVE PREFERENCE STOCK
THE BOARD OF DIRECTORS OF THE COMPANY ADOPTED THE FOLLOWING RESOLUTION,
EFFECTIVE NOVEMBER 6, 1975:
RESOLVED, that pursuant to authority expressly vested in the Board of
Directors by the Company's Articles of Incorporation, as amended, there be and
there hereby is established a series of the Preference Stock, without par value,
of the Company, the designation of such series, the number of shares to be
issuable therein, and certain of the terms and provisions thereof to be as
follows:
I. Designation of Series and Number of Shares to Be Issuable Therein.
The series of Preference Stock established hereby shall be designated
$2.375 Cumulative Preference Stock (hereinafter called the "$2.375
Series"), in which 3,000,000 shares shall be issuable.
II. Dividends. Dividends shall be payable on the shares of the
$2.375 Series at the rate of $2.375 per share per annum, and no more. The
first dividend payable on shares, if any, of the $2.375 Series issued on
or prior to February 1, 1976, shall accrue from the date of issue of the
first issued shares of the $2.375 Series.
III. Sinking Fund. (a) At or before the opening of business on
November 1 in each year commencing November 1, 1980 (each such November 1
being referred to in this Section III as a "sinking fund payment date"),
the Company shall set aside, separate and apart from its other funds, as a
mandatory sinking fund payment for the retirement of 150,000 shares of the
$2.375 Series, the sum of $3,750,000 ($25 per share), plus a sum equal to
the amount of accrued and unpaid
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dividends, if any, on such shares to the redemption date. The requirement
in respect of mandatory sinking fund payments shall be cumulative, so
that if the Company shall fail to set aside in full the amount of any
mandatory sinking fund payment, the amount of the deficiency shall be added
to the next succeeding mandatory sinking fund payment or payments until
such deficiency shall be made good.
(b) In addition to the mandatory sinking fund payments provided for
by subsection (a) above, the Company shall have the right, on any sinking
fund payment date, to set aside, separate and apart from its other funds,
as an optional sinking fund payment for the retirement of shares of the
$2.375 Series, at the sinking fund redemption price, a sum not in excess of
$3,750,000, exclusive of accrued and unpaid dividends. The right of the
Company to make optional sinking fund payments shall not be cumulative.
(c) In satisfaction of all or any part of any mandatory sinking fund
payment, the Company may elect to take credit, at the sinking fund
redemption price, for any previously issued shares of the $2.375 Series
acquired or redeemed by the Company (otherwise than through the applica-
tion of mandatory sinking fund payments), which have not theretofore been
used for the purpose of any such credit.
(d) The Company shall apply all cash set aside by it pursuant to
subsections (a) and (b) above and held by it on any sinking fund payment
date to the redemption of such date of outstanding shares of the $2.375
Series at the sinking fund redemption price ($25 per share, plus an amount
equal to accrued and unpaid dividends, if any, on such shares to the
redemption date), such redemption to be effected upon the notice and in the
manner prescribed in the applicable provisions of the Company's Articles of
Incorporation, as amended.
(e) Notwithstanding any of the other provisions of this Section III,
if any November 1, referred to in subsection (a) above, shall be a
Saturday, a Sunday or a legal holiday for banking institutions in the State
of Illinois, the term "sinking fund payment date", as used in this Section
III, shall be construed to mean the next succeeding day which is not a
Saturday, a Sunday or such a legal holiday.
IV. Optional Redemption. Prior to November 1, 1980, none of the
shares of the $2.375 Series may be redeemed. On or after November 1, 1980,
shares of the $2.375 Series may be called for redemption and redeemed, at
the option of the Company, in whole at any time or in part from time to
time, at the redemption prices hereinafter set forth and upon the notice
and in the manner prescribed in the applicable
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provisions of the Company's Articles of Incorporation, as amended.
Such per share optional redemption prices of the shares of the $2.375
Series shall be $26.50 from November 1, 1980 through October 31, 1985,
$25.75 from November 1, 1985 through October 31, 1990, and on and after
November 1, 1990, $25.25 per share, in each case plus the amount of accrued
and unpaid dividends, if any, thereon to the redemption date.
V. Liquidation Prices. The amount payable on each share of the
$2.375 Series in the event of voluntary dissolution, liquidation or
winding up of the Company shall be $26.50 through October 31, 1985, $25.75
from November 1, 1985 through October 31, 1990, and on and after November
1, 1990, $25.25, plus the amount of accrued and unpaid dividends, if any,
thereon to the date fixed for payment, and no more. The amount payable on
each share of the $2.375 Series in the event of involuntary dissolution,
liquidation or winding up of the Company shall be $24.15, plus the amount
of accrued and unpaid dividends, if any, thereon to the date fixed for
payment, and no more.
$8.38 CUMULATIVE PREFERENCE STOCK
THE BOARD OF DIRECTORS OF THE COMPANY ADOPTED THE FOLLOWING RESOLUTION,
EFFECTIVE MARCH 23, 1977:
RESOLVED, that pursuant to authority expressly vested in the Board of
Directors by the Company's Articles of Incorporation, as amended, there be and
there hereby is established a series of the Preference Stock, without par value,
of the Company, the designation of such series, the number of shares to be
issuable therein, and certain of the terms and provisions thereof to be as
follows:
I. Designation of Series and Number of Shares to Be Issuable Therein.
The series of Preference Stock established hereby shall be designated
$8.38 Cumulative Preference Stock (hereinafter called the "$8.38 Series"),
in which 750,000 shares shall be issuable.
II. Dividends. Dividends shall be payable on the shares of the $8.38
Series at the rate of $8.38 per share per annum, and no more. The first
dividend payable on shares, if any, of the $8.38 Series issued on or prior
to August 1, 1977, shall accrue from the date of issue of the first issued
shares of the $8.38 Series. The first dividend payment date for the shares
of the $8.38 Series shall be August 1, 1977.
III. Optional Redemption. Prior to April 1, 1982, none of the shares
of the $8.38 Series may be redeemed. On or
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after April 1, 1982, shares of the $8.38 Series may be called for
redemption and redeemed, at the option of the Company, in whole at any time
or in part from time to time, at the redemption prices hereinafter set
forth and upon the notice and in the manner prescribed in the applicable
provisions of the Company's Articles of Incorporation, as amended.
Such per share optional redemption prices of the shares of the $8.38
Series shall be $102.15 from April 1, 1982 through March 31, 1987, and
$100.16 on and after April 1, 1987, in each case plus the amount of accrued
and unpaid dividends, if any, thereon to the redemption date.
IV. Liquidation Prices. The amount payable on each share of the
$8.38 Series in the event of voluntary dissolution, liquidation or winding
up of the Company shall be $102.15 through March 31, 1987, and $100.16 on
and after April 1, 1987, plus the amount of accrued and unpaid dividends,
if any, thereon to the date fixed for payment, and no more. The amount
payable on each share of the $8.38 Series in the event of involuntary
dissolution, liquidation or winding up of the Company shall be $98.09, plus
the amount of accrued and unpaid dividends, if any, thereon to the date
fixed for payment, and no more.
$8.20 CUMULATIVE PREFERENCE STOCK
THE BOARD OF DIRECTORS OF THE COMPANY ADOPTED THE FOLLOWING RESOLUTION,
EFFECTIVE SEPTEMBER 21, 1977:
RESOLVED, that pursuant to authority expressly vested in the Board of
Directors by the Company's Articles of Incorporation, as amended, there be and
there hereby is established a series of the Preference Stock, without par value,
of the Company, the designation of such series, the number of shares to be
issuable therein, and certain of the terms and provisions thereof to be as
follows:
I. Designation of Series and Number of Shares to Be Issuable Therein.
The series of Preference Stock established hereby shall be designated
$8.20 Cumulative Preference Stock (hereinafter called the "$8.20 Series"),
in which 750,000 shares shall be issuable.
II. Dividends. Dividends shall be payable on the shares of the $8.20
Series at the rate of $8.20 per share per annum, and no more. The first
dividend payable on shares of the $8.20 Series issued on or prior to
November 1, 1977, shall accrue from the first date of issue of any such
shares and such dividend shall be payable on November 1, 1977.
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<PAGE>
III. Sinking Fund. At or before the opening of business on November
1, 1982, and at or before the opening of business on each November 1
thereafter through November 1, 2001, the Company shall set aside, separate
and apart from its other funds, as a sinking fund payment for the
retirement of 35,715 shares of the $8.20 Series, the sum of $3,571,500, and
at or before the opening of business on November 1, 2002, the Company shall
so set aside as a sinking fund payment for the retirement of 35,700 shares
of the $8.20 Series the sum of $3,570,000, plus, in each case, a sum equal
to the amount of accrued and unpaid dividends, if any, on the shares to be
retired to the redemption date (each such November 1 being referred to in
this Section III as a "sinking fund payment date"). The requirement in
respect of sinking fund payments shall be cumulative, so that if the
Company shall fail to set aside in full the amount of any sinking fund
payment, the amount of the deficiency shall be added to the next
succeeding sinking fund payment or payments until such deficiency shall be
made good.
The Company shall apply all cash set aside by it pursuant to this
Section III and held by it on any sinking fund payment date to the
redemption on such date of outstanding shares of the $8.20 Series at the
sinking fund redemption price ($100 per share, plus an amount equal to
accrued and unpaid dividends, if any, on such shares to the redemption
date), such redemption to be effected upon the notice and in the manner
prescribed in the applicable provisions of the Company's Articles of
Incorporation, as amended.
The Company shall not be entitled to take credit for the satisfaction
of all or any part of any sinking fund payment by the application of any
previously issued shares of the $8.20 Series acquired by the Company or
redeemed by it otherwise than pursuant to this Section III.
Notwithstanding any of the other provisions of this Section III, if
any November 1, referred to above, shall be a Saturday, a Sunday or a legal
holiday for banking institutions in the State of Illinois, the term
"sinking fund payment date", as used in this Section III, shall be con-
strued to mean the next succeeding day which is not a Saturday, a Sunday
or such a legal holiday.
IV. Optional Redemption. Prior to November 1, 1987, none of the
shares of the $8.20 Series may be redeemed except through sinking fund
payments provided for in Section III above. On or after November 1, 1987,
shares of the $8.20 Series may be called for redemption and redeemed,at the
option of the Company, in whole at any time or in part from time to time,
at the redemption prices hereinafter set
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forth and upon the notice and in the manner prescribed in the applicable
provisions of the Company's Articles of Incorporation, as amended.
Such per share optional redemption prices of the shares of the $8.20
Series shall be $105 from November 1, 1987 through October 31, 1992, $103
from November 1, 1992 through October 31, 1997, and $101 on and after
November 1, 1997, in each case plus the amount of accrued and unpaid
dividends, if any, on the shares to be redeemed to the redemption date.
All shares of the $8.20 Series redeemed pursuant to this Section IV or
otherwise acquired shall be retired and cancelled and shall not be
reissued.
V. Pro Rata Redemption. In case of the redemption at any time of
less than all the outstanding shares of the $8.20 Series, pursuant to
Section III or Section IV hereof, the particular shares of the $8.20 Series
to be redeemed shall be selected by the Company from such outstanding
shares as nearly as practicable pro rata according to the respective
numbers of such outstanding shares then held of record by the holders of
shares of the $8.20 Series.
VI. Liquidation Prices. The amount payable on each share of the
$8.20 Series in the event of voluntary dissolution, liquidation or winding
up of the Company shall be $108.20 through October 31, 1987, $105 from
November 1, 1987 through October 31, 1992, $103 from November 1, 1992
through October 31, 1997, and $101 on and after November 1, 1997, in each
case plus the amount of accrued and unpaid dividends, if any, thereon to
the date fixed for payment, and no more. The amount payable on each share
of the $8.20 Series in the event of involuntary dissolution, liquidation or
winding up of the Company shall be $100, plus the amount of accrued and
unpaid dividends, if any, thereon to the date fixed for payment, and no
more.
$8.40 CUMULATIVE PREFERENCE STOCK, SERIES B
THE BOARD OF DIRECTORS OF THE COMPANY ADOPTED THE FOLLOWING RESOLUTION,
EFFECTIVE APRIL 19, 1978:
RESOLVED, that pursuant to authority expressly vested in the Board of
Directors by the Company's Articles of Incorporation, as amended, there be and
there hereby is established a series of the Preference Stock, without par value,
of the Company, the designation of such series, the number of shares to be
issuable therein, and certain of the terms and provisions thereof to be as
follows:
I. Designation of Series and Number of Shares to Be Issuable Therein.
The series of Preference Stock established hereby shall be designated
$8.40 Cumulative Prefer-
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<PAGE>
ence Stock, Series B, (hereinafter called the $8.40 Series B"), in which
750,000 shares shall be issuable.
II. Dividends. Dividends shall be payable on the shares of the $8.40
Series B at the rate of $8.40 per share per annum, and no more. The first
dividend payable on shares, if any, of the $8.40 Series B, issued on or
prior to August 1, 1978, shall accrue from the date of issue of the first
issued shares of the $8.40 Series B.
III. Sinking Fund. (a) At or before the opening of business on May
1 in each year commencing May 1, 1983 (each such May 1 being referred to in
this Section III as a "sinking fund payment date"), the Company shall set
aside, separate and apart from its other funds, as a mandatory sinking fund
payment for the retirement of 30,000 shares of the $8.40 Series B, the sum
of $3,000,000 ($100 per share), plus a sum equal to the amount of accrued
and unpaid dividends, if any, on such shares to the redemption date. The
requirement in respect of mandatory sinking fund payments shall be
cumulative, so that if the Company shall fail to set aside in full the
amount of any mandatory sinking fund payment, the amount of the deficiency
shall be added to the next succeeding mandatory sinking fund payment or
payments until such deficiency shall be made good.
(b) In addition to the mandatory sinking fund payments provided for
by subsection (a) above, the Company shall have the right, on any sinking
fund payment date, to set aside, separate and apart from its other funds,
as an optional sinking fund payment for the retirement of shares of the
$8.40 Series B, at the sinking fund redemption price, a sum not in excess
of $3,000,000, exclusive of accrued and unpaid dividends. The right of the
Company to make optional sinking fund payments shall not be cumulative.
(c) In satisfaction of all or any part of any mandatory sinking fund
payment, the Company may elect to take credit, at the sinking fund
redemption price, for any previously issued shares of the $8.40 Series B
acquired or redeemed by the Company (otherwise than through the applica-
tion of mandatory sinking fund payments), which have not theretofore been
used for the purpose of any such credit.
(d) The Company shall apply all cash set aside by it pursuant to
subsections (a) and (b) above and held by it on any sinking fund payment
date to the redemption on such date of outstanding shares of the $8.40
Series B at the sinking fund redemption price ($100 per share, plus an
amount equal to accrued and unpaid dividends, if any, on such shares to the
redemption date), such redemption to be effected upon the notice and in the
manner prescribed in the applicable
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provisions of the Company's Articles of Incorporation, as amended.
(e) Notwithstanding any of the other provisions of this Section III,
if any May 1, referred to in subsection (a) above, shall be a Saturday, a
Sunday or a legal holiday for banking institutions in the State of
Illinois, the term "sinking fund payment date", as used in this Section
III, shall be construed to mean the next succeeding day which is not a
Saturday, a Sunday or such a legal holiday.
IV. Optional Redemption. Prior to May 1, 1983, none of the shares of
the $8.40 Series B may be redeemed. On or after May 1, 1983, shares of the
$8.40 Series B may be called for redemption and redeemed, at the option of
the Company in whole at any time or in part from time to time, at the
redemption prices hereinafter set forth and upon the notice and in the
manner prescribed in the applicable provisions of the Company's Articles
of Incorporation, as amended.
Such per share optional redemption prices of the shares of the $8.40
Series B shall be $103 from May 1, 1983 through April 30, 1988, and on and
after May 1, 1988, $101 per share, in each case plus the amount of accrued
and unpaid dividends, if any, thereon to the redemption date.
V. Liquidation Prices. The amount payable on each share of the $8.40
Series B in the event of voluntary dissolution, liquidation or winding up
of the Company shall be $103 through April 30, 1988, and on and after May
1, 1988, $101, plus the amount of accrued and unpaid dividends, if any,
thereon to the date fixed for payment, and no more. The amount payable on
each share of the $8.40 Series B in the event of involuntary dissolution,
liquidation or winding up of the Company shall be $99.326, plus the amount
of accrued and unpaid dividends, if any, thereon to the date fixed for
payment, and no more.
$8.85 CUMULATIVE PREFERENCE STOCK
THE BOARD OF DIRECTORS OF THE COMPANY ADOPTED THE FOLLOWING RESOLUTION,
EFFECTIVE JULY 21, 1978:
RESOLVED, that pursuant to authority expressly vested in the Board of
Directors by the Company's Articles of Incorporation, as amended, there be and
there hereby is established a series of the Preference Stock, without par value,
of the Company, the designation of such series, the number of shares to be
issuable therein, and certain of the terms and provisions thereof to be as
follows:
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I. Designation of Series and Number of Shares to Be Issuable Therein.
The series of Preference Stock established hereby shall be designated $8.85
Cumulative Preference Stock (hereinafter called the "$8.85 Series"), in
which 750,000 shares shall be issuable.
II. Dividends. Dividends shall be payable on the shares of the $8.85
Series at the rate of $8.85 per share per annum, and no more. The first
dividend payable on shares of the $8.85 Series issued on or prior to
November 1, 1978, shall accrue from the first date of issue of any such
shares and such dividend shall be payable on November 1, 1978.
III. Sinking Fund. At or before the opening of business on August
1, 1984, and at or before the opening of business on each August 1
thereafter through August 1, 2003, the Company shall set aside, separate
and apart from its other funds, as a sinking fund payment for the
retirement of 37,500 shares of the $8.85 Series, the sum of $3,750,000,
plus in each case, a sum equal to the amount of accrued and unpaid
dividends, if any, on the shares to be retired to the redemption date (each
such August 1 being referred to in this Section III as a "sinking fund
payment date"). The requirement in respect of sinking fund payments shall
be cumulative, so that if the Company shall fail to set aside in full the
amount of any sinking fund payment, the amount of the deficiency shall be
added to the next succeeding sinking fund payment or payments until such
deficiency shall be made good.
The Company shall apply all cash set aside by it pursuant to this
Section III and held by it on any sinking fund payment date to the
redemption on such date of outstanding shares of the $8.85 Series at the
sinking fund redemption price ($100 per share, plus an amount equal to
accrued and unpaid dividends, if any, on such shares to the redemption
date), such redemption to be effected upon the notice and in the manner
prescribed in the applicable provisions of the Company's Articles of
Incorporation, as amended.
The Company shall not be entitled to take credit for the satisfaction
of all or any part of any sinking fund payment by the application of any
previously issued shares of the $8.85 Series acquired by the Company or
redeemed by it otherwise than pursuant to this Section III.
Notwithstanding any of the other provisions of this Section III, if
any August 1, referred to above, shall be a Saturday, a Sunday or a legal
holiday for banking institutions in the State of Illinois, the term
"sinking fund payment date", as used in this Section III, shall be con-
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strued to mean the next succeeding date which is not a Saturday, a Sunday
or such a legal holiday.
IV. Optional Redemption. Prior to August 1, 1988, none of the shares
of the $8.85 Series may be redeemed except through sinking fund payments
provided for in Section III above. On or after August 1, 1988, shares of
the $8.85 Series may be called for redemption and redeemed, at the option
of the Company, in whole at any time or in part from time to time, at the
redemption prices hereinafter set forth and upon the notice and in the
manner prescribed in the applicable provisions of the Company's Articles of
Incorporation, as amended.
Such per share optional redemption prices of the shares of the $8.85
Series shall be $105 from August 1, 1988 through July 31, 1993, $103 from
August 1, 1993 through July 31, 1998, and $101 on and after August 1, 1998,
in each case plus the amount of accrued and unpaid dividends, if any, on
the shares to be redeemed to the redemption date.
All shares of the $8.85 Series redeemed pursuant to this Section IV or
otherwise acquired shall be retired and cancelled and shall not be
reissued.
V. Pro Rata Redemption. In case of the redemption at any time or
less than all the outstanding shares of the $8.85 Series, pursuant to
Section III or Section IV hereof, the particular shares of the $8.85 Series
to be redeemed shall be selected by the Company from such outstanding
shares as nearly as practicable pro rata according to the respective
numbers of such outstanding shares then held of record by the holders of
shares of the $8.85 Series.
VI. Liquidation Prices. The amount payable on each share of the
$8.85 Series in the event of voluntary dissolution, liquidation or winding
up of the Company shall be $108.85 through July 31, 1988, $105 from August
1, 1988 through July 31, 1993, $103 from August 1, 1993 through July 31,
1998, and $101 on and after August 1, 1998, in each case plus the amount of
accrued and unpaid dividends, if any, thereon to the date fixed for
payment, and no more. The amount payable on each share of the $8.85 Series
in the event of involuntary dissolution, liquidation or winding up of the
Company shall be $100, plus the amount of accrued and unpaid dividends, if
any, thereon to the date fixed for payment and no more.
$9.25 CUMULATIVE PREFERENCE STOCK
THE BOARD OF DIRECTORS OF THE COMPANY ADOPTED THE FOLLOWING RESOLUTION,
EFFECTIVE MARCH 29, 1979:
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RESOLVED, that pursuant to authority expressly vested in the Board of
Directors by the Company's Articles of Incorporation, as amended, there be and
there hereby is established a series of the Preference Stock, without par value,
of the Company, the designation of such series, the number of shares to be
issuable therein, and certain of the terms and provisions thereof to be as
follows:
I. Designation of Series and Number of Shares to Be Issuable Therein.
The series of Preference Stock established hereby shall be designated
$9.25 Cumulative Preference Stock (hereinafter called the "$9.25 Series"),
in which 1,500,000 shares shall be issuable.
II. Dividends. Dividends shall be payable on the shares of the $9.25
Series at the rate of $9.25 per share per annum, and no more. The first
dividend payable on shares of the $9.25 Series issued on or prior to May
1, 1979, shall accrue from the first date of issue of any such shares and
such dividend shall be payable on August 1, 1979.
III. Sinking Fund. At or before the opening of business on August
1, 1985, and at or before the opening of business on each August 1
thereafter through August 1, 2004, the Company shall set aside, separate
and apart from its other funds, as a sinking fund payment for the
retirement of 75,000 shares of the $9.25 Series, the sum of $7,500,000,
plus, in each case, a sum equal to the amount of accrued and unpaid
dividends, if any, on the shares to be retired to the redemption date (each
such August 1 being referred to in this Section III as a "sinking fund
payment date"). The requirement in respect of sinking fund payments shall
be cumulative, so that if the Company shall fail to set aside in full the
amount of any sinking fund payment, the amount of the deficiency shall be
added to the next succeeding sinking fund payment or payments until such
deficiency shall be made good.
The Company shall apply all cash set aside by it pursuant to this
Section III and held by it on any sinking fund payment date to the
redemption on such date of outstanding shares of the $9.25 Series at the
sinking fund redemption price ($100 per share, plus an amount equal to
accrued and unpaid dividends, if any, on such shares to the redemption
date), such redemption to be effected upon the notice and in the manner
prescribed in the applicable provisions of the Company's Articles of
Incorporation, as amended.
The Company shall not be entitled to take credit for the satisfaction
of all or any part of any sinking fund payment by the application of any
previously issued shares of the $9.25 Series acquired by the Company or
redeemed by it otherwise than pursuant to this Section III.
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<PAGE>
Notwithstanding any of the other provisions of this Section III, if
any August 1, referred to above, shall be a Saturday, a Sunday or a legal
holiday for banking institutions in the State of Illinois, the term
"sinking fund payment date", as used in this Section III, shall be con-
strued to mean the next succeeding date which is not a Saturday, a Sunday
or such a legal holiday.
IV. Optional Redemption. Prior to August 1, 1989, none of the shares
of the $9.25 Series may be redeemed except through sinking fund payments
provided for in Section III above. On or after August 1, 1989, shares of
the $9.25 Series may be called for redemption and redeemed, at the option
of the Company, in whole at any time or in part from time to time, at the
redemption prices hereinafter set forth and upon the notice and in the
manner prescribed in the applicable provisions of the Company's Articles of
Incorporation, as amended.
Such per share optional redemption prices of the shares of the $9.25
Series shall be $105 from August 1, 1989 through July 31, 1994, $103 from
August 1, 1994 through July 31, 1999, and $101 on and after August 1, 1999,
in each case plus the amount of accrued and unpaid dividends, if any, on
the shares to be redeemed to the redemption date.
All shares of the $9.25 Series redeemed pursuant to this Section IV or
otherwise acquired shall be retired and cancelled and shall not be
reissued.
V. Pro Rata Redemption. In case of the redemption at any time or
less than all the outstanding shares of the $9.25 Series, pursuant to
Section III or Section IV hereof, the particular shares of the $9.25 Series
to be redeemed shall be selected by the Company from such outstanding
shares as nearly as practicable pro rata according to the respective
numbers of such outstanding shares then held of record by the holders of
shares of the $9.25 Series.
VI. Liquidation Prices. The amount payable on each share of the
$9.25 Series in the event of voluntary dissolution, liquidation or winding
up of the Company shall be $109.25 through July 31, 1989, $105 from August
1, 1989 through July 31, 1994, $103 from August 1, 1994 through July 31,
1999, and $101 on and after August 1, 1999, in each case plus the amount of
accrued and unpaid dividends, if any, thereon to the date fixed for
payment, and no more. The amount payable on each share of the $9.25 Series
in the event of involuntary dissolution, liquidation or winding up of the
Company shall be $100, plus the amount of accrued and unpaid dividends, if
any, thereon to the date fixed for payment and no more.
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<PAGE>
$11.70 CUMULATIVE PREFERENCE STOCK
THE BOARD OF DIRECTORS OF THE COMPANY ADOPTED THE FOLLOWING RESOLUTION,
EFFECTIVE NOVEMBER 9, 1979:
RESOLVED, that pursuant to authority expressly vested in the Board of
Directors by the Company's Articles of Incorporation, as amended, there be and
there hereby is established a series of the Preference Stock, without par value,
of the Company, the designation of such series, the number of shares to be
issuable therein, and certain of the terms and provisions thereof to be as
follows:
I. Designation of Series and Number of Shares to Be Issuable Therein.
The series of Preference Stock established hereby shall be designated
$11.70 Cumulative Preference Stock (hereinafter call the "$11.70 Series"),
in which 750,000 shares shall be issuable.
II. Dividends. Dividends shall be payable on the shares of the
$11.70 Series at the rate of $11.70 per share per annum, and no more. The
first dividend payable on shares, if any, of the Series issued on or prior
to February 1, 1980, shall accrue from the date of issue of the first
issued shares of the $11.70 Series. The first dividend payment date for
the shares of the $11.70 Series shall be February 1, 1980.
III. Sinking Fund. (a) At or before the opening of business on
November 1, 1985, and at or before the opening of business on each November
1 thereafter through November 1, 2004, the Company shall set aside,
separate and apart from its other funds, as a sinking fund payment for the
retirement of 37,500 shares of the $11.70 Series, the sum of $3,750,000,
plus, in each case, a sum equal to the amount of accrued and unpaid
dividends, if any, on the shares to be retired to the redemption date (each
such November 1 being referred to in this Section III as a "sinking fund
payment date"). The requirement in respect of sinking fund payments shall
be cumulative, so that if the Company shall fail to set aside in full the
amount of any sinking fund payment, the amount of the deficiency shall be
added to the next succeeding sinking fund payment or payments until such
deficiency shall be made good.
(b) In addition to the mandatory sinking fund payments provided for
by subsection (a) above, the Company shall have the right, on any sinking
fund payment date, to set aside, separate and apart from its other funds,
as an optional sinking fund payment for the retirement of shares of the
$11.70 Series, at the sinking fund redemption price, a sum not in excess of
$3,750,000, exclusive of accrued and unpaid dividends. The right of the
Company to make optional sinking fund payments shall not be cumulative.
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(c) In satisfaction of all or any part of any mandatory sinking fund
payment, the Company may elect to take credit, at the sinking fund
redemption price, for any previously issued shares of the $11.70 Series
acquired or redeemed by the Company (otherwise than through the applica-
tion of mandatory sinking fund payments), which have not theretofore been
used for the purpose of any such credit.
(d) The Company shall apply all cash set aside by it pursuant to this
Section III and held by it on any sinking fund payment date to the
redemption on such date of outstanding shares of the $11.70 Series at the
sinking fund redemption price ($100 per share, plus an amount equal to
accrued and unpaid dividends, if any, on such shares to the redemption
date), such redemption to be effected upon the notice and in the manner
prescribed in the applicable provisions of the Company's Articles of
Incorporation, as amended.
(e) Notwithstanding any of the other provisions of this Section III,
if any November 1, referred to above, shall be a Saturday, a Sunday or a
legal holiday for banking institutions in the State of Illinois, the term
"sinking fund payment date", as used in this Section III, shall be
construed to mean the next succeeding date which is not a Saturday, a
Sunday or such a legal holiday.
IV. Optional Redemption. Prior to November 1, 1989, none of the
shares of the $11.70 Series may be redeemed except through sinking fund
payments provided for in Section III above. On or after November 1, 1989,
shares of the $11.70 Series may be called for redemption and redeemed, at
the option of the Company, in whole at any time or in part from time to
time, at the redemption prices hereinafter set forth and upon the notice
and in the manner prescribed in the applicable provisions of the Company's
Articles of Incorporation, as amended.
Such per share optional redemption prices of the shares of the $11.70
Series shall be $105 from November 1, 1989 through October 31, 1994, $103
from November 1, 1994 through October 31, 1999, and $101 on and after
November 1, 1999, in each case plus the amount of accrued and unpaid
dividends, if any, on the shares to be redeemed to the redemption date.
V. Liquidation Prices. The amount payable on each share of the
$11.70 Series in the event of voluntary dissolution, liquidation or
winding up of the Company shall be $105 through October 31, 1994, $103 from
November 1, 1994 through October 31, 1999, and $101 on and after November
1, 1999, in each case plus the amount of accrued and unpaid dividends, if
any, thereon to the date fixed for payment, and no more. The amount
payable on each share of the $11.70
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Series in the event of involuntary dissolution, liquidation or winding up
of the Company shall be $98.07, plus the amount of accrued and unpaid
dividends, if any, thereon to the date fixed for payment, and no more.
$12.75 CUMULATIVE PREFERENCE STOCK
THE BOARD OF DIRECTORS OF THE COMPANY ADOPTED THE FOLLOWING RESOLUTION,
EFFECTIVE SEPTEMBER 4, 1980:
RESOLVED, that pursuant to authority expressly vested in the Board of
Directors by the Company's Articles of Incorporation, as amended, there be and
there hereby is established a series of the Preference Stock, without par value,
of the Company, the designation of such series, the number of shares to be
issuable therein, and certain of the terms and provisions thereof to be as
follows:
I. Designation of Series and Number of Shares to Be Issuable Therein.
The series of Preference Stock established hereby shall be designated
$12.75 Cumulative Preference Stock (hereinafter called the "$12.75
Series"), in which 500,000 shares shall be issuable.
II. Dividends. Dividends shall be payable on the shares of the
$12.75 Series at the rate of $12.75 per share per annum, and no more. The
first dividend payable on shares, if any, of the Series issued on or prior
to November 1, 1980, shall accrue from the date of issue of the first
issued shares of the $12.75 Series. The first dividend payment date for
the shares of the $12.75 Series shall be November 1, 1980.
III. Sinking Fund. (a) At or before the opening of business on
August 1, 1986, and at or before the opening of business on each August 1
thereafter through August 1, 1995, the Company shall set aside, separate
and apart from its other funds, as a sinking fund payment for the
retirement of 50,000 shares of the $12.75 Series, the sum of $5,000,000,
plus, in each case, a sum equal to the amount of accrued and unpaid
dividends, if any, on the shares to be retired to the redemption date (each
such August 1 being referred to in this Section III as a "sinking fund
payment date"). The requirement in respect of sinking fund payments shall
be cumulative, so that if the Company shall fail to set aside in full the
amount of any sinking fund payment, the amount of the deficiency shall be
added to the next succeeding sinking fund payment or payments until such
deficiency shall be made good.
(b) In addition to the mandatory sinking fund payments provided for
by subsection (a) above, the Company shall have the right, on any sinking
fund payment date, to set aside,
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separate and apart from its other funds, as an optional sinking fund
payment for the retirement of shares of the $12.75 Series, at the sinking
fund redemption price, a sum not in excess of $5,000,000, exclusive of
accrued and unpaid dividends. The right of the Company to make optional
sinking fund payments shall not be cumulative.
(c) In satisfaction of all or any part of any mandatory sinking fund
payment, the Company may elect to take credit, at the sinking fund
redemption price, for any previously issued shares of the $12.75 Series
acquired or redeemed by the Company (otherwise than through the applica-
tion of mandatory sinking fund payments), which have not theretofore been
used for the purpose of any such credit.
(d) The Company shall apply all cash set aside by it pursuant to this
Section III and held by it on any sinking fund payment date to the
redemption on such date of outstanding shares of the $12.75 Series at the
sinking fund redemption price ($100 per share, plus an amount equal to
accrued and unpaid dividends, if any, on such shares to the redemption
date), such redemption to be effected upon the notice and in the manner
prescribed in the applicable provisions of the Company's Articles of
Incorporation, as amended.
(e) Notwithstanding any of the other provisions of this Section III,
if any August 1, referred to above, shall be a Saturday, a Sunday or a
legal holiday for banking institutions in the State of Illinois, the term
"sinking fund payment date", as used in this Section III, shall be
construed to mean the next succeeding date which is not a Saturday, a
Sunday or such a legal holiday.
IV. Optional Redemption. Prior to August 1, 1985, none of the shares
of the $12.75 Series may be redeemed. On or after August 1, 1985, shares
of the $12.75 Series may be called for redemption and redeemed, at the
option of the Company, in whole at any time or in part from time to time,
at the redemption prices hereinafter set forth and upon the notice and in
the manner prescribed in the applicable provisions of the Company's
Articles of Incorporation, as amended.
Such per share optional redemption prices of the shares of the $12.75
Series shall be $103 from August 1, 1985 through July 31, 1990, and $101
on and after August 1, 1990, in each case plus the amount of accrued and
unpaid dividends, if any, on the shares to be redeemed to the redemption
date.
V. Liquidation Prices. The amount payable on each share of the
$12.75 Series in the event of voluntary disso-
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lution, liquidation or winding up of the Company shall be $103 through July
31, 1990, and $101 on and after August 1, 1990, in each case plus the
amount of accrued and unpaid dividends, if any, thereon to the date fixed
for payment, and no more. The amount payable on each share of the $12.75
Series in the event of involuntary dissolution, liquidation or winding up
of the Company shall be $99.21, plus the amount of accrued and unpaid
dividends, if any, thereon to the date fixed for payment, and no more.
$15.00 CUMULATIVE PREFERENCE STOCK
THE BOARD OF DIRECTORS OF THE COMPANY ADOPTED THE FOLLOWING RESOLUTION,
EFFECTIVE JULY 15, 1982:
RESOLVED, that pursuant to authority expressly vested in the Board of
Directors by the Company's Articles of Incorporation, as amended, there be and
there hereby is established a series of the Preference Stock, without par value,
of the Company, the designation of such series, the number of shares to be
issuable therein, and certain of the terms and provisions thereof to be as
follows:
I. Designation of Series and Number of Shares to Be Issuable Therein.
The series of Preference Stock established hereby shall be designated
$15.00 Cumulative Preference Stock (hereinafter called the "$15.00
Series"), in which 340,000 shares shall be issuable.
II. Dividends. Dividends shall be payable on the shares of the
$15.00 Series at the rate of $15.00 per share per annum, and no more. The
first dividend payable on shares, if any, of the $15.00 Series issued on
or prior to November 1, 1982, shall accrue from the date of issue of the
first issued shares of the $15.00 Series. The first dividend payment date
for the shares of the $15.00 Series shall be November 1, 1982.
III. Sinking Fund. (a) At or before the opening of business on
August 1, 1988, and at or before the opening of business on each August 1
thereafter through August 1, 1992, the Company shall set aside, separate
and apart from its other funds, as a sinking fund payment for the
retirement of 68,000 shares of the $15.00 Series, the sum of $6,800,000,
plus, in each case, a sum equal to the amount of accrued and unpaid
dividends, if any, on the shares to be retired to the redemption date (each
such August 1 being referred to in this Section III as a "sinking fund
payment date"). The requirement in respect of sinking fund payments shall
be cumulative, so that if the Company shall fail to set aside in full the
amount of any sinking fund payment, the amount of the deficiency shall be
added to the next succeeding
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sinking fund payment or payments until such deficiency shall be made good.
(b) The Company shall not be entitled to take credit for the
satisfaction of all or any part of any sinking fund payment by the
application of any previously issued shares of the $15.00 Series acquired
by the Company or redeemed by it otherwise than pursuant to this Section
III.
(c) The Company shall apply all cash set aside by it pursuant to this
Section III and subsection (a) of Section IV and held by it on any sinking
fund payment date to the redemption on such date of outstanding shares of
the $15.00 Series at the sinking fund redemption price ($100 per share,
plus an amount equal to accrued and unpaid dividends, if any, on such
shares to the redemption date), such redemption to be effected upon the
notice and in the manner prescribed in the applicable provisions of the
Company's Articles of Incorporation, as amended.
(d) Notwithstanding any of the other provisions of this Section III,
if any August 1, referred to above, shall be a Saturday, a Sunday or a
legal holiday for banking institutions in the State of Illinois, the term
"sinking fund payment date", as used in this Section III, shall be
construed to mean the next succeeding date which is not a Saturday, a
Sunday or such a legal holiday.
IV. Optional Sinking Fund Payments; Repurchase Rights. (a) In
addition to the mandatory sinking fund payments provided for by subsection
(a) of Section III, the Company shall have the right, on any sinking fund
payment date, as defined in Section III, to set aside, separate and apart
from its other funds, as an optional sinking fund payment for the
retirement of shares of the $15.00 Series, at the sinking fund redemption
price specified in subsection (c) of Section III, a sum not in excess of
$6,800,000, exclusive of accrued and unpaid dividends. The right of the
Company to make optional sinking fund payments shall not be cumulative.
(b) If the Company does not exercise in full its option under
subsection (a) of this Section IV in any year, each holder of shares of the
$15.00 Series shall have the right to require the Company to purchase, and
the Company shall purchase, from such holder on the sinking fund payment
date occurring in such year at the sinking fund redemption price a number
of shares of the $15.00 Series not to exceed the number of additional
shares of the $15.00 Series that would have been redeemed from such holder
if the Company had exercised in full its option under said subsection (a).
The right of such holder to require the Company to purchase such shares
shall not be cumulative.
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(c) At or before the opening of business on June 1, 1988, and at or
before the opening of business on each June 1 thereafter, so long as any
shares of the $15.00 Series shall be outstanding, the Company shall give
written notice to each holder of shares of the $15.00 Series of the amount,
if any, to be set aside by the Company on the next following sinking fund
payment date as an optional sinking fund payment pursuant to subsection (a)
of this Section IV. If the Company does not elect to exercise its option
in full under said subsection (a) in any year, such notice shall also
specify the maximum number of shares of the $15.00 Series which each holder
is entitled to require the Company to purchase from such holder under
subsection (b) of this Section IV. Each holder electing to exercise its
right under said subsection (b) shall give notice to the Company not less
than 30 days prior to the applicable sinking fund payment date specifying
the number of shares of the $15.00 Series to be purchased by the Company
from such holder pursuant to said subsection (b).
V. Special Redemption. The shares of the $15.00 Series may be called
for redemption and redeemed in whole at any time, at the option of the
Company, at the sinking fund redemption price specified in subsection (c)
of Section III and upon the notice and in the manner prescribed in the
applicable provisions of the Company's Articles of Incorporation, as
amended, on or after the effective date of any statute of the United States
of America, or any regulation of the Department of the Treasury, or any
ruling, technical advice, finding or determination of the Internal Revenue
Service, of the United States of America (or any successor to the functions
of such Department or such Service), enacted, promulgated, published or
issued after the date of adoption of this resolution creating the $15.00
Series, which statute, regulation, ruling, technical advice, finding or
determination would, in the reasonable and good faith determination of the
Company, cause any corporate holder of shares of the $15.00 Series to lose
the benefit of, lose the right to claim, or suffer disallowance with
respect to, all or any part of the 85% dividend received deduction provided
for by Section 243(a)(1) of the Internal Revenue Code of 1954, as amended,
as in effect on the date of adoption of this resolution creating the $15.00
Series.
VI. Optional Redemption. Prior to August 1, 1987, none of the shares
of the $15.00 Series may be redeemed except pursuant to Section V. On or
after August 1, 1987, shares of the $15.00 Series may be called for
redemption and redeemed, at the option of the Company, in whole at any time
or in part from time to time, at the redemption prices hereinafter set
forth and upon the notice and in the manner prescribed in the applicable
provisions of the Company's Articles of Incorporation, as amended.
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Such per share optional redemption prices of the shares of the $15.00
Series shall be $106.67 from August 1, 1987 through July 31, 1988, $105.00
from August 1, 1988 through July 31, 1989, $103.33 from August 1, 1989
through July 31, 1990, $101.67 from August 1, 1990 through July 31, 1991,
and $100.00 on and after August 1, 1991, in each case plus the amount of
accrued and unpaid dividends, if any, on the shares to be redeemed to the
redemption date.
VII. Liquidation Prices. The amount payable on each share of the
$15.00 Series in the event of voluntary dissolution, liquidation or
winding up of the Company shall be $106.67 through July 31, 1988, plus the
amount of accrued and unpaid dividends, if any, thereon to the date fixed
for payment, and no more and thereafter the amount equal to the then
effective optional redemption price specified in Section VI and no more.
The amount payable on each share of the $15.00 Series in the event of
involuntary dissolution, liquidation or winding up of the Company shall be
$100.00, plus the amount of accrued and unpaid dividends, if any, thereon
to the date fixed for payment, and no more.
$13.25 CUMULATIVE PREFERENCE STOCK
THE BOARD OF DIRECTORS OF THE COMPANY ADOPTED THE FOLLOWING RESOLUTION,
EFFECTIVE NOVEMBER 5, 1982:
RESOLVED, that pursuant to authority expressly vested in the Board of
Directors by the Company's Articles of Incorporation, as amended, there be and
there hereby is established a series of the Preference Stock, without par value,
of the Company, the designation of such series, the number of shares to be
issuable therein, and certain of the terms and provisions thereof to be as
follows:
I. Designation of Series and Number of Shares to Be Issuable Therein.
The series of Preference Stock established hereby shall be designated
$13.25 Cumulative Preference Stock (hereinafter called the "$13.25
Series"), in which 500,000 shares shall be issuable.
II. Dividends. Dividends shall be payable on the shares of the
$13.25 Series at the rate of $13.25 per share per annum, and no more. The
first dividend payable on shares, if any, of the $13.25 Series issued on
or prior to February 1, 1983, shall accrue from the date of issue of the
first issued shares of the $13.25 Series. The first dividend payment date
for the shares of the $13.25 Series shall be February 1, 1983.
III. Sinking Fund. (a) At or before the opening of business on
November 1, 1988, and at or before the opening of business on each November
1 thereafter through November
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1, 1997, the Company shall set aside, separate and apart from its other
funds, as a sinking fund payment for the retirement of 50,000 shares of the
$13.25 Series, the sum of $5,000,000, plus, in each case, a sum equal to
the amount of accrued and unpaid dividends, if any, on the shares to be
retired to the redemption date (each such November 1 being referred to in
this Section III as a "sinking fund payment date"). The requirement in
respect of sinking fund payments shall be cumulative, so that if the
Company shall fail to set aside in full the amount of any sinking fund
payment, the amount of the deficiency shall be added to the next succeeding
sinking fund payment or payments until such deficiency shall be made good.
(b) In addition to the mandatory sinking fund payment provided for by
subsection (a) of this Section III, the Company shall have the right, on
any sinking fund payment date, as defined in said subsection (a), to set
aside, separate and apart from its other funds, as an optional sinking
fund payment for the retirement of shares of the $13.25 Series, at the
sinking fund redemption price specified in subsection (d) of this Section
III, a sum not in excess of $5,000,000, exclusive of accrued and unpaid
dividends; provided, however, that the aggregate amount of such optional
sinking fund payments shall not exceed $10,000,000.
(c) The Company shall take credit for the satisfaction of all or any
part of any mandatory sinking fund payment by the application of any
previously issued shares of the $13.25 Series redeemed by the Company
pursuant to subsection (b) of this Section III or Section IV, any such
shares to be applied in satisfaction of mandatory sinking fund payments in
inverse order of such sinking fund payments.
(d) The Company shall apply all cash set aside by it pursuant to this
Section III and held by it on any sinking fund payment date to the
redemption on such date of outstanding shares of the $13.25 Series at the
sinking fund redemption price ($100 per share, plus an amount equal to
accrued and unpaid dividends, if any, on such shares to the redemption
date), such redemption to be effected upon the notice and in the manner
prescribed in the applicable provisions of the Company's Articles of
Incorporation, as amended.
(e) Notwithstanding any of the other provisions of this Section III,
if any November 1, referred to above, shall be a Saturday, a Sunday or a
legal holiday for banking institutions in the State of Illinois, the term
"sinking fund payment date", as used in this Section III, shall be con-
strued to mean the next succeeding date which is not a Saturday, a Sunday
or such a legal holiday.
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IV. Optional Redemption. Prior to November 1, 1992, none of the
shares of the $13.25 Series may be redeemed except pursuant to Section
III. On or after November 1, 1992, shares of the $13.25 Series may be
called for redemption and redeemed, at the option of the Company, in whole
at any time or in part from time to time, at the redemption prices
hereinafter set forth and upon the notice and in the manner prescribed in
the applicable provisions of the Company's Articles of Incorporation, as
amended.
Such per share optional redemption prices of the shares of the $13.25
Series shall be $103.79 from November 1, 1992 through October 31, 1993,
$102.84 from November 1, 1993 through October 31, 1994, $101.89 from
November 1, 1994 through October 31, 1995, $100.95 from November 1, 1995
through October 31, 1996 and $100.00 on and after November 1, 1996, in each
case plus the amount of accrued and unpaid dividends, if any, on the shares
to be redeemed to the redemption date.
V. Liquidation Prices. The amount payable on each share of the
$13.25 Series in the event of voluntary dissolution, liquidation or
winding up of the Company shall be $113.25 through October 31, 1983,
$112.30 from November 1, 1983 through October 31, 1984, $111.36 from
November 1, 1984 through October 31, 1985, $110.41 from November 1, 1985
through October 31, 1986, $109.46 from November 1, 1986 through October 31,
1987, $108.52 from November 1, 1987 through October 31, 1988, $107.57 from
November 1, 1988 through October 31, 1989, $106.62 from November 1, 1989
through October 31, 1990, $105.68 from November 1, 1990 through October 31,
1991, $104.73 from November 1, 1991 through October 31, 1992, plus the
amount of accrued and unpaid dividends, if any, thereon to the date fixed
for payment, and no more and thereafter the amount equal to the then
effective optional redemption price specified in Section IV and no more.
The amount payable on each share of the $13.25 Series in the event of
involuntary dissolution, liquidation or winding up of the Company shall be
$100.00, plus the amount of accrued and unpaid dividends, if any, thereon
to the date fixed for payment, and no more.
$11.125 CUMULATIVE PREFERENCE STOCK
THE BOARD OF DIRECTORS OF THE COMPANY ADOPTED THE FOLLOWING RESOLUTION,
EFFECTIVE NOVEMBER 9, 1983:
RESOLVED, that pursuant to authority expressly vested in the Board of
Directors by the Company's Articles of Incorporation, as amended, there be and
there hereby is established a series of the Preference Stock, without par value,
of the Company, the designa-
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tion of such series, the number of shares to be issuable therein, and certain of
the terms and provisions thereof to be as follows:
I. Designation of Series and Number of Shares to Be Issuable Therein.
The series of Preference Stock established hereby shall be designated
$11.125 Cumulative Preference Stock (hereinafter called the "$11.125
Series"), in which 400,000 shares shall be issuable.
II. Dividends. Dividends shall be payable on the shares of the
$11.125 Series at the rate of $11.125 per share per annum, and no more.
The first dividend payable on shares, if any, of the $11.125 Series issued
on or prior to February 1, 1984, shall accrue from the date of issue of the
first issued shares of the $11.125 Series. The first dividend payment
date for the shares of $11.125 Series shall be February 1, 1984.
III. Sinking Fund. (a) At or before the opening of business on
November 1, 1989, and at or before the opening of business on each November
1 thereafter through November 1, 1993, the Company shall set aside,
separate and apart from its other funds, as a sinking fund payment for the
retirement of 80,000 shares of the $11.125 Series, the sum of $8,000,000
plus, in each case, a sum equal to the amount of accrued and unpaid
dividends, if any, on the shares to be retired to the redemption date (each
such November 1 being referred to in this Section III as a "sinking fund
payment date"). The requirement in respect of sinking fund payments shall
be cumulative, so that if the Company shall fail to set aside in full the
amount of any sinking fund payment, the amount of the deficiency shall be
added to the next succeeding sinking fund payment or payments until such
deficiency shall be made good.
(b) In addition to the mandatory sinking fund payments provided for by
subsection (a) of this Section III, the Company shall have the right, on
any sinking fund payment date, as defined in said subsection (a), to set
aside, separate and apart from its other funds, as an optional sinking
fund payment for the retirement of shares of the $11.125 Series, at the
sinking fund redemption price specified in subsection (d) of this Section
III, a sum not in excess of $8,000,000 exclusive of accrued and unpaid
dividends. The right of the Company to make optional sinking fund
payments shall not be cumulative.
(c) In satisfaction of all or any part of any mandatory sinking fund
payment, the Company may elect to take credit, at the sinking fund
redemption price, for any previously issued shares of the $11.125 Series
acquired or redeemed by the Company (otherwise than through the application
of
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mandatory sinking fund payments), which have not theretofore been used for
the purpose of any such credit.
(d) The Company shall apply all cash set aside by it pursuant to this
Section III and held by it on any sinking fund payment date to the
redemption on such date of outstanding shares of the $11.125 Series at the
sinking fund redemption price ($100 per share, plus an amount equal to
accrued and unpaid dividends, if any, on such shares to the redemption
date), such redemption to be effected upon the notice and in the manner
prescribed in the applicable provisions of the Company's Articles of
Incorporation, as amended.
(e) Notwithstanding any of the other provisions of this Section III,
if any November 1, referred to above, shall be a Saturday, a Sunday or a
legal holiday for banking institutions in the State of Illinois, the term
"sinking fund payment date", as used in this Section III, shall be con-
strued to mean the next succeeding date which is not a Saturday, a Sunday
or such a legal holiday.
IV. Optional Redemption. Prior to November 1, 1988, none of the
shares of the $11.125 Series may be redeemed. On or after November 1,
1988, shares of the $11.125 Series may be called for redemption and
redeemed, at the option of the Company, in whole at any time or in part
from time to time, at the redemption prices hereinafter set forth and upon
the notice and in the manner prescribed in the applicable provisions of
the Company's Articles of Incorporation, as amended.
Such per share optional redemption prices of the shares of the $11.125
Series shall be $104.95 from November 1, 1988 through October 31, 1989,
$103.71 from November 1, 1989 through October 31, 1990, $102.47 from
November 1, 1990 through October 31, 1991, $101.24 from November 1, 1991
through October 31, 1992 and $100.00 on and after November 1, 1992, in each
case plus the amount of accrued and unpaid dividends, if any, on the shares
to be redeemed to the redemption date.
V. Liquidation Prices. The amount payable on each share of the
$11.125 Series in the event of voluntary dissolution, liquidation or
winding up of the Company shall be $111.13 through October 31, 1984,
$109.89 from November 1, 1984 through October 31, 1985, $108.66 from
November 1, 1985 through October 31, 1986, $107.42 from November 1, 1986
through October 31, 1987, $106.18 from November 1, 1987 through October 31,
1988, $104.95 from November 1, 1988 through October 31, 1989, $103.71 from
November 1, 1989 through October 31, 1990, $102.47 from November 1, 1990
through October 31, 1991, $101.24 from November 1, 1991
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through October 31, 1992, and thereafter at $100.00 per share, plus the
amount of accrued and unpaid dividends, if any, thereon to the date fixed
for payment, and no more. The amount payable on each share of the $11.125
Series in the event of involuntary dissolution, liquidation or winding up
of the Company shall be $99.15, plus the amount of accrued and unpaid
dividends, if any, thereon to the date fixed for payment, and no more.
$10.875 CUMULATIVE PREFERENCE STOCK
THE BOARD OF DIRECTORS OF THE COMPANY ADOPTED THE FOLLOWING RESOLUTION,
EFFECTIVE DECEMBER 15, 1983:
RESOLVED, that pursuant to authority expressly vested in the Board of
Directors by the Company's Articles of Incorporation, as amended, there be and
there hereby is established a series of the Preference Stock, without par value,
of the Company, the designation of such series, the number of shares to be
issuable therein, and certain of the terms and provisions thereof to be as
follows:
I. Designation of Series and Number of Shares to Be Issuable Therein.
The series of Preference Stock established hereby shall be designated
$10.875 Cumulative Preference Stock (hereinafter called the "$10.875
Series"), in which 350,000 shares shall be issuable.
II. Dividends. Dividends shall be payable on the shares of the
$10.875 Series at the rate of $10.875 per share per annum, and no more.
The first dividend payable on shares, if any, of the $10.875 Series issued
on or prior to February 1, 1984, shall accrue from the date of issue of the
first issued shares of the $10.875 Series. The first dividend payment
date for the shares of the $10.875 Series shall be February 1, 1984.
III. Sinking Fund. (a) At or before the opening of business on
November 1, 1989, the Company shall set aside, separate and apart from its
other funds, as a sinking fund payment for the retirement of all the
outstanding 350,000 shares of the $10.875 Series, the sum of $35,000,000
plus a sum equal to the amount of accrued and unpaid dividends, if any, on
the shares to be retired on the redemption date (such November 1 being
referred to in this Section III as the "sinking fund payment date").
(b) In satisfaction of all or any part of the mandatory sinking fund
payment, the Company shall take credit, at the sinking redemption price,
for any previously issued shares of the $10.875 Series acquired by the
Company prior to November 1, 1989.
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(c) The Company shall apply all cash set aside by it pursuant to this
Section III and held by it on the sinking fund payment date to the
redemption on such date of all of the outstanding shares of the $10.875
Series at the sinking fund redemption price ($100 per share, plus an amount
equal to accrued and unpaid dividends, if any, on such shares to the
redemption date), such redemption to be effected upon the notice and in the
manner prescribed in the applicable provisions of the Company's Articles
of Incorporation, as amended.
(d) Notwithstanding any of the other provisions of this Section III,
if the November 1 referred to above shall be a legal holiday for banking
institutions in the State of Illinois, the term "sinking fund payment
date," as used in this Section III, shall be construed to mean the next
succeeding date which is not a legal holiday and which is not a Saturday
or a Sunday.
IV. Liquidation Prices. The amount payable on each share of the
$10.875 Series in the event of voluntary dissolution, liquidation or
winding up of the Company shall be $100.88 through October 31, 1984,
$108.70 from November 1, 1984 through October 31, 1985, $106.53 from
November 1, 1985 through October 31, 1986, $104.35 from November 1, 1986
through October 31, 1987, $102.18 from November 1, 1987 through October 31,
1988, and $100.00 per share thereafter, plus the amount of accrued and
unpaid dividends, if any, thereon to the date fixed for payment, and no
more. The amount payable on each share of the $10.875 Series in the event
of involuntary dissolution, liquidation or winding up the Company shall be
$99.01, plus the amount of accrued and unpaid dividends, if any, thereon to
the date fixed for payment, and no more.
$13.25 CUMULATIVE PREFERENCE STOCK, SERIES B
THE BOARD OF DIRECTORS OF THE COMPANY ADOPTED THE FOLLOWING RESOLUTION,
EFFECTIVE SEPTEMBER 7, 1984:
RESOLVED, that pursuant to authority expressly vested in the Board of
Directors by the Company's Articles of Incorporation, as amended, there is
established a series of the Preference Stock, without par value, of the Company,
the designation of such series, the number of shares to be issuable therein and
certain of the terms and provisions thereof to be as follows:
I. Designation of Series and Number of Shares to Be Issuable Therein.
The series of Preference Stock established hereby shall be designated
$13.25 Cumulative Prefer-
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ence Stock, Series B (hereinafter called the "$13.25 Series B"), in which
400,000 shares shall be issuable.
II. Dividends. Dividends shall be payable on the shares of $13.25
Series B at the rate of $13.25 per share per annum, and no more. The first
dividend payable on shares, if any, of the $13.25 Series B issued on or
prior to November 1, 1984, shall accrue from the date of issue of the first
issued shares of the $13.25 Series B. The first dividend payment date for
the shares of the $13.25 Series B shall be November 1, 1984.
III. Sinking Fund. (a) At or before the opening of business on
November 1 in each year, commencing November 1, 1990 (each such November 1
being referred to in this Section III as a "sinking fund payment date"),
the Company shall set aside, separate and apart from its other funds, as a
mandatory sinking fund payment for the retirement of 80,000 shares of
the $13.25 Series B, the sum of $8,000,000 ($100 per share) plus a sum
equal to the amount of accrued and unpaid dividends, if any, on such shares
to the redemption date. The requirement in respect of mandatory sinking
fund payments shall be cumulative, so that if the Company shall fail to set
aside in full the amount of any mandatory sinking fund payment, the amount
of the deficiency shall be added to the next succeeding mandatory sinking
fund payment or payments until such deficiency shall be made good.
(b) In addition to the mandatory sinking fund payments provided for
by subsection (a) of this Section III, the Company shall have the right, on
any sinking fund payment date, to set aside, separate and apart from its
other funds, as an optional sinking fund payment for the retirement of
shares of the 13.25 Series B, at the sinking fund redemption price
specified in subsection (d) of this Section III, a sum not in excess of
$8,000,000, exclusive of accrued and unpaid dividends. The right of the
Company to make optional sinking fund payments shall not be cumulative.
(c) In satisfaction of all or any part of any mandatory sinking fund
payment, the Company may elect to take credit, at the sinking fund
redemption price specified in subsection (d) of this Section III, for any
previously issued shares of the $13.25 Series B acquired or redeemed by
the Company (otherwise than through the application of mandatory sinking
fund payments), which have not theretofore been used for the purpose of any
such credit.
(d) The Company shall apply all cash set aside by it pursuant to
subsections (a) and (b) of this Section III and held by it on any sinking
fund payment date to the redemption on such date of outstanding shares of
the $13.25 Series B at the sinking fund redemption price ($100 per share,
plus
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an amount equal to accrued and unpaid dividends, if any, on such shares to
the redemption date), such redemption to be effected upon the notice and in
the manner prescribed in the applicable provisions of the Company's
Articles of Incorporation, as amended.
(e) Notwithstanding any of the other provisions of this Section III,
if any November 1, referred to in subsection (a) above, shall be a
Saturday, a Sunday or a legal holiday for banking institutions in the State
of Illinois, the term "sinking fund payment date", as used in this Section
III, shall be construed to mean the next succeeding day which is not a
Saturday, a Sunday or such a legal holiday.
IV. Optional Redemption. Prior to November 1, 1990, none of the
shares of the $13.25 Series B may be redeemed. On or after November 1,
1990, shares of the $13.25 Series B may be called for redemption and
redeemed, at the option of the Company, in whole at any time or in part
from time to time, at the redemption prices hereinafter set forth and upon
the notice and in the manner prescribed in the applicable provisions of
the Company's Articles of Incorporation, as amended.
Such per share option redemption prices of the shares of the $13.25
Series B shall be $104.42 from November 1, 1990 through October 31, 1991,
$102.94 from November 1, 1990 through October 31, 1992, $101.47 from
November 1, 1992 through October 31, 1993, and $100 on and after November
1, 1993, in each case plus the amount of accrued and unpaid dividends, if
any, thereon to the redemption date.
IV. Liquidation Prices. The amount payable on each share of the
$13.25 Series B in the event of voluntary dissolution, liquidation or
winding up the Company shall be $113.25 through October 31, 1985, $111.78
from November 1, 1985 through October 31, 1986, $110.31 from November 1,
1986 through October 31, 1987, $108.83 from November 1, 1987 through
October 31, 1988, $107.36 from November 1, 1988 through October 31, 1989,
$105.89 from November 1, 1989 through October 31, 1990, $104.42 from
November 1, 1990 through October 31, 1991, $102.94 from November 1, 1991
through October 31, 1992, $101.47 from November 1, 1992 through October 31,
1993, and $100 on and after November 1, 1993, in each case plus the amount
of accrued and unpaid dividends, if any, thereon to the date fixed for
payment, and no more. The amount payable on each share of the $13.25
Series B in the event of involuntary dissolution, liquidation or winding
up the Company shall be $99.039, plus the amount of accrued and unpaid
dividends, if any, thereon to the date fixed for payment, and no more.
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$9.30 CUMULATIVE PREFERENCE STOCK
THE BOARD OF DIRECTORS OF THE COMPANY ADOPTED THE FOLLOWING RESOLUTION,
EFFECTIVE DECEMBER 10, 1985:
RESOLVED: That pursuant to authority expressly vested in the Board of
Directors by the Company's Restated Articles of Incorporation, there is
established a series of the Preference Stock, without par value, of the Company,
the designation of such series, the number of shares to be issuable therein and
certain of the terms and provisions thereof to be as follows:
I. DESIGNATION OF SERIES AND NUMBER OF SHARES TO BE ISSUABLE THEREIN.
The series of Preference Stock established hereby shall be designated
$9.30 Cumulative Preference Stock (hereinafter called the "$9.30 Series"),
in which 350,000 shares shall be issuable.
II. DIVIDENDS. Dividends shall be payable on the shares of the $9.30
Series at the rate of $9.30 per share per annum, and no more. The first
dividend payable on shares, if any, of the $9.30 Series issued on or prior
to February 1, 1986, shall accrue from the date of issue of the first
issued shares of the $9.30 Series. The first dividend payment date for the
shares of the $9.30 Series shall be February 1, 1986.
III. SINKING FUND. (a) At or before the opening of business on
November 1 in each year, commencing November 1, 1991 (each such November 1
being referred to in this Section III as a "sinking fund payment date"),
the Company shall set aside, separate and apart from its other funds, as a
mandatory sinking fund payment for the retirement of 70,000 shares of the
$9.30 Series, the sum of $7,000,000 ($100.00 per share) plus a sum equal to
the amount of accrued and unpaid dividends, if any, on such shares to the
redemption date. The requirement in respect of mandatory sinking fund
payments shall be cumulative, so that if the Company shall fail to set
aside in full the amount of any mandatory sinking fund payment, the amount
of the deficiency shall be added to the next succeeding mandatory sinking
fund payment or payments until such deficiency shall be made good.
(b) In addition to the mandatory sinking fund payments provided for
by subsection (a) of this Section III, the Company shall have the right, on
any sinking fund payment date, to set aside, separate and apart from its
other funds, as an optional sinking fund payment for the retirement of
shares of the $9.30 Series, at the sinking fund redemption price specified
in subsection (d) of this Section III, a sum not in excess of $7,000,000,
exclusive of accrued and unpaid dividends. The right of the Company to
make optional sinking fund payments shall not be cumulative.
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(c) In satisfaction of all or any part of any mandatory sinking fund
payment, the Company may elect to take credit, at the sinking fund
redemption price specified in subsection (d) of this Section III, for any
previously issued shares of the $9.30 Series acquired or redeemed by the
Company (otherwise than through the application of mandatory sinking fund
payments), which have not theretofore been used for the purpose of any such
credit.
(d) The Company shall apply all cash set aside by it pursuant to
subsections (a) and (b) of this Section III and held by it on any sinking
fund payment date to the redemption on such date of outstanding shares of
the $9.30 Series at the sinking fund redemption price ($100.00 per share,
plus an amount equal to accrued and unpaid dividends, if any, on such
shares to the redemption date), such redemption to be effected upon the
notice and in the manner prescribed in the applicable provisions of the
Company's Restated Articles of Incorporation.
(e) Notwithstanding any of the other provisions of this Section III,
if any November 1, referred to in subsection (a) above, shall be a
Saturday, a Sunday or a legal holiday for banking institutions in the State
of Illinois, the term "sinking fund payment date", as used in this Section
III, shall be construed to mean the next succeeding day which is not a
Saturday, a Sunday or such a legal holiday.
IV. OPTIONAL REDEMPTION. Prior to November 1, 1991, none of the
shares of the $9.30 Series may be redeemed. On or after November 1, 1991,
shares of the $9.30 Series may be called for redemption and redeemed, at
the option of the Company, in whole at any time or in part from time to
time, at the redemption prices hereinafter set forth and upon the notice
and in the manner prescribed in the applicable provisions of the Company's
Restated Articles of Incorporation.
Such per share optional redemption prices of the shares of the $9.30
Series shall be $103.10 from November 1, 1991 through October 31, 1992,
$102.07 from November 1, 1992 through October 31, 1993, $101.03 from
November 1, 1993 through October 31, 1994, and $100.00 on and after
November 1, 1994, in each case plus the amount of accrued and unpaid
dividends, if any, thereon to the redemption date.
V. LIQUIDATION PRICES. The amount payable on each share of the $9.30
Series in the event of voluntary dissolution, liquidation or winding up of
the Company shall be $109.30 through October 31, 1986, $108.27 from
November 1, 1986 through October 31, 1987, $107.23 from November 1, 1987
through October 31, 1988, $106.20 from November 1, 1988 through October 31,
1989, $105.17 from November 1, 1989 through October 31, 1990, $104.13 from
November 1, 1990
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through October 31, 1991, $103.10 from November 1, 1991 through October 31,
1992, $102.07 from November 1, 1992 through October 31, 1993, $101.03 from
November 1, 1993 through October 31, 1994 and $100.00 on and after November
1, 1994, in each case plus the amount of accrued and unpaid dividends, if
any, thereon to the date fixed for payment, and no more. The amount payable
on each share of the $9.30 Series in the event of involuntary dissolution,
liquidation or winding up of the Company shall be $99.10, plus the amount
of accrued and unpaid dividends, if any, thereon to the date fixed for
payment, and no more.
$9.00 CUMULATIVE PREFERENCE STOCK
THE BOARD OF DIRECTORS OF THE COMPANY ADOPTED THE FOLLOWING RESOLUTION,
EFFECTIVE JULY 25, 1990:
RESOLVED, that, pursuant to authority expressly vested in the Board of
Directors by the Company's Restated Articles of Incorporation, as amended, there
be, and there hereby is, established a series of the Preference Stock, without
par value, of the Company, the designation of such series, the number of shares
to be issuable therein, and certain of the terms and provisions thereof to be as
follows:
I. Designation of Series and Number of Shares to Be Issuable Therein.
The series of Preference Stock established hereby shall be designated
$9.00 Cumulative Preference Stock (hereinafter called the "$9.00 Series"),
in which 650,000 shares shall be issuable.
II. Dividends. Dividends shall be payable on the shares of the $9.00
Series at the rate of $9.00 per share per annum, and no more. The first
dividend payable on shares, if any, of the $9.00 Series issued on or prior
to November 1, 1990, shall accrue from the date of issue of the first
issued shares of the $9.00 Series. The first dividend payment date for the
shares of the $9.00 Series shall be November 1, 1990.
III. Sinking Fund. (a) At or before the opening of business on
August 1, 1996, and at or before the opening of business on each August 1
thereafter through August 1, 2000, the Company shall set aside, separate
and apart from its other funds, as a sinking fund payment for the
retirement of 130,000 shares of the $9.00 Series, the sum of $13,000,000
plus, in each case, a sum equal to the amount of accrued and unpaid
dividends, if any, on the shares to be retired to the redemption date (each
such August 1 being referred to in this Section III as a "Sinking fund
payment date"). The
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<PAGE>
requirement in respect of sinking fund payments shall be cumulative, so
that if the Company shall fail to set aside in full the amount of any
sinking fund payment, the amount of the deficiency shall be added to the
next succeeding sinking fund payment or payments until such deficiency
shall be made good.
(b) In addition to the mandatory sinking fund payments provided for
by subsection (a) above, the Company shall have the right, on any sinking
fund payment date, to set aside, separate and apart from its other funds,
as an optional sinking fund payment for the retirement of shares of the
$9.00 Series, at the sinking fund redemption price, a sum not in excess of
$13,000,000, exclusive of accrued and unpaid dividends. The right of the
Company to make optional sinking fund payments shall not be cumulative.
(c) In satisfaction of all or any part of any mandatory sinking fund
payment, the Company may elect to take credit, at the sinking fund
redemption price, for any previously issued shares of the $9.00 Series
acquired or redeemed by the Company (otherwise than through the application
of mandatory sinking fund payments), which have not theretofore been used
for the purpose of any such credit.
(d) The Company shall apply all cash set aside by it pursuant to this
Section III and held by it on any sinking fund payment date to the
redemption on such date of outstanding shares of the $9.00 Series at the
sinking fund redemption price ($100 per share, plus an amount equal to
accrued and unpaid dividends, if any, on such shares to the redemption
date), such redemption to be effected upon the notice and in the manner
prescribed in the applicable provisions of the Company's Restatement
Articles of Incorporation, as amended.
(e) Notwithstanding any of the provisions of this Section III, if any
August 1, referred to above, shall be a Saturday, a Sunday or a legal
holiday for banking institutions in the State of Illinois, the term
"sinking fund payment date" as used in this Section III, shall be con-
strued to mean the next succeeding date which is not a Saturday, a Sunday
or such a legal holiday.
IV. Liquidation Prices. The amount payable on each share of the
$9.00 Series in the event of voluntary dissolution, liquidation or winding
up the Company shall be $109.00 through July 31, 1991, $108.00 from August
1, 1991 through July 31, 1992, $107.00 from August 1, 1992 through July 31,
1993, $106.00 from August 1, 1993 through July 31, 1994, $105.00 from
August 1, 1994 through July 31, 1995, $104.00 from August 1, 1995 through
July 31, 1996, $103.00 from August 1, 1996 through July 31, 1997, $102.00
from August 1,
-67-
<PAGE>
1997 through July 31, 1998, $101.00 from August 1, 1998 through July 31,
1999, and $100.00 on and after August 1, 1999, in each case plus the amount
of accrued and unpaid dividends, if any, thereon to the date fixed for
payment, and no more. The amount payable on each share of the $9.00 Series
in the event of involuntary dissolution, liquidation or winding up of the
Company shall be $99.125, plus the amount of accrued and unpaid dividends,
if any, thereon to the date fixed for payment, and no more.
$6.875 CUMULATIVE PREFERENCE STOCK
THE BOARD OF DIRECTORS OF THE COMPANY ADOPTED THE FOLLOWING RESOLUTION,
EFFECTIVE MAY 21, 1993:
RESOLVED, that, pursuant to authority expressly vested in the Board of
Directors by the Company's Restated Articles of Incorporation, as amended, there
be, and there hereby is, established a series of the Preference Stock, without
par value, of the Company, the designation of such series, the number of shares
to be issuable therein, and certain of the terms and provisions thereof to be as
follows:
I. Designation of Series and Number of Shares to Be Issuable Therein.
The series of Preference Stock established hereby shall be designated
$6.875 Cumulative Preference Stock (hereinafter called the "$6.875
Series"), in which 700,000 shares shall be issuable.
II. Dividends. Dividends shall be payable on the shares of the
$6.875 Series at the rate of $6.875 per share per annum, and no more. The
first dividend payable on shares, if any, of the $6.875 Series issued on
or prior to August 1, 1993, shall accrue from the date of issue of the
first issued shares of the $6.875 Series. The first dividend payment date
for the shares of the $6.875 Series shall be August 1, 1993.
III. Sinking Fund. (a) At or before the opening of business on May
1, 2000, the Company shall set aside, separate and apart from its other
funds, as a sinking fund payment for the retirement of all the outstanding
700,000 shares of the $6.875 Series, the sum of $70,000,000 plus a sum
equal to the amount of accrued and unpaid dividends, if any, on the shares
to be retired on the redemption date (such May 1 being referred to in this
Section III as the "sinking fund payment date").
(b) In satisfaction of all or any part of the mandatory sinking fund
payment, the Company shall take credit, at the sinking fund redemption
price, for any previously issued
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<PAGE>
shares of the $6.875 Series acquired by the Company prior to May 1, 2000.
(c) The Company shall apply all cash set aside by it pursuant to this
Section III and held by it on the sinking fund payment date to the
redemption on such date of all of the outstanding shares of the $6.875
Series at the sinking fund redemption price ($100 per share, plus an amount
equal to accrued and unpaid dividends, if any, on such shares to the
redemption date), such redemption to be effected upon the notice and in the
manner prescribed in the applicable provisions of the Company's Restated
Articles of Incorporation, as amended.
(d) Notwithstanding any of the other provisions of this Section III,
if the May 1 referred to above shall be a legal holiday for banking
institutions in the State of Illinois, the term "sinking fund payment
date" as used in this Section III, shall be construed to mean the next suc-
ceeding date which is not a legal holiday and which is not a Saturday or a
Sunday.
IV. Liquidation Prices. The amount payable on each share of the
$6.875 Series in the event of voluntary dissolution, liquidation or
winding up of the Company shall be $106.875 through April 30, 1994, $105.75
from May 1, 1994 through April 30, 1995, $104.625 from May 1, 1995 through
April 30, 1996, $103.50 from May 1, 1996 through April 30, 1997, $102.375
from May 1, 1997 through April 30, 1998, $101.25 from May 1, 1998 through
April 30, 1999, and $100 on and after May 1, 1999, in each cash plus
accrued and unpaid dividends, if any, thereon to the date fixed for
payment, and no more. The amount payable on each share of the $6.875
Series in the event of the involuntary dissolution, liquidation or winding
up of the Company shall be $99.25, plus the amount of accrued and unpaid
dividends, if any, thereon to the date fixed for payment, and no more.
____________________
ADDITIONAL INFORMATION PURSUANT TO SECTION 10.30
OF THE BUSINESS CORPORATION ACT OF 1983
Commonwealth Edison Company was formed by the consolidation of Chicago
Edison Company and Commonwealth Electric Company, pursuant to Articles of
Consolidation effective September 17, 1907. The following companies were
subsequently merged into Commonwealth Edison Company: Cosmopolitan Electric
Company, pursuant to An Agreement of Consolidation effective October 17, 1913;
Public Service Company of Northern Illinois, pursuant to Articles of Merger
effective March 17, 1953; and Central Illinois
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<PAGE>
Electric and Gas Co., pursuant to Articles of Merger effective December 9, 1966.
The address of the Company's registered office on the date hereof is One
First National Plaza, Chicago, Illinois, 60690. The Company's registered agent
on the date hereof is Klaus H. Wisiol.
The number of shares of each class issued on the date hereof is a follows:
(a) Prior Preferred Stock of the par value of $100 per share: none;
(b) $1.425 Convertible Preferred Stock without par value: 707,011 shares;
(c) Preference Stock without par value: 21,378,754 shares; and
(d) Common Stock of the par value of $12.50 per share: 176,209,643 shares.
The amount of paid in capital on the date hereof is $5,005,438,913.56.
-70-
<PAGE>
EXHIBIT A-3
CECO MERGING CORPORATION
ARTICLES OF INCORPORATION
ARTICLE ONE The name of the corporation is CECo Merging Corporation.
ARTICLE TWO The name and address of the registered agent and its registered
office are:
Registered Agent: David A. Scholz
Registered Office: 10 South Dearborn Street
Post Office Box 767
Chicago, Illinois 60690-0767
Cook County
ARTICLE THREE The purpose or purposes for which the corporation is organized
are to transact any or all lawful businesses for which
corporations may be incorporated under the Business Corporation
Act of 1983, as amended from time to time.
ARTICLE FOUR Paragraph 1. The number of shares which the corporation is
authorized to issue is 100 shares of Common Stock, without par
value.
Paragraph 2. The corporation proposes to issue 100 shares of
Common Stock for an aggregate consideration of $1,000.
Paragraph 3. The shares of Common Stock shall entitle the
holders thereof to one vote for each share upon all matters upon
which shareholders have the right to vote and to cumulative
voting in all elections of directors by vote of shareholders.
ARTICLE FIVE Paragraph 1. A director of the corporation shall not be
personally liable to the corporation or its shareholders for
monetary damages for breach of fiduciary duty as a director,
except for liability (i) for any breach of the director's duty
of loyalty to the corporation or its shareholders, (ii) for acts
or omissions not in good faith or that involve intentional
misconduct or a knowing violation of law, (iii) under Section
8.65 of the Business Corporation Act of the State of Illinois,
or (iv) for any transaction from which the director derived an
improper personal benefit. If the Business Corporation Act of
the State of Illinois is amended to authorize corporate action
further eliminating or limiting the personal liability of
Directors, then the liability of a
<PAGE>
director of the corporation shall be eliminated or limited to
the full extent permitted by the Business Corporation Act of the
State of Illinois, as so amended. Any repeal or modification of
this Paragraph 1 by the shareholders of the corporation shall
not adversely affect any right or protection of a director of
the corporation existing at the time of such repeal or
modification.
Paragraph 2. Each person who is or was or had agreed to become a
director or officer of the corporation, and each person who is
or was serving or who had agreed to serve at the request of the
Board of Directors or an officer of the corporation as an
employe or agent of the corporation or as a director, officer,
employe, or agent, trustee or fiduciary of another corporation,
partnership, joint venture, trust or other enterprise (including
the heirs, executors, administrators or estate of such person),
shall be indemnified by the corporation to the full extent
permitted by the Business Corporation Act of the State of
Illinois or any other applicable laws as presently or hereafter
in effect. Without limiting the generality of the foregoing,
the corporation may enter into one or more agreements with any
person which provide for indemnification greater or different
than that provided in this Paragraph 2. Any repeal or
modification of this Paragraph 2 shall not adversely affect any
right or protection existing hereunder immediately prior to such
repeal or modification.
ARTICLE SIX The undersigned incorporator hereby declares, under penalties of
perjury, that the statements made in the foregoing Articles of
Incorporation are true.
Dated January 28, 1994
-2-
<PAGE>
EXHIBIT C-1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 31, 1994
REGISTRATION NO. 33-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------
FORM S-4
REGISTRATION STATEMENT
Under
The Securities Act of 1933
----------------
CECO HOLDING COMPANY
(Exact name of registrant as specified in its charter)
----------------
Illinois 6719 Applied For
(State or other (Primary Standard Industrial (I.R.S. Employer
jurisdiction Classification Code Number)
Identification No.)
of incorporation or
organization)
37th Floor John C. Bukovski
10 South Dearborn Street Vice President
Post Office Box 767 CECo Holding Company
Chicago, Illinois 60690-0767 37th Floor
(312) 394-4321 10 South Dearborn Street
(Address, including zip code, and Post Office Box 767
telephone number, including area code, Chicago, Illinois 60690-0767
of registrant's principal executive (312) 394-3117
offices) (Name, address, including zip code,
and telephone number, including area
code, of agent for service)
Copies to:
R. Todd Vieregg, P.C.
Sidley & Austin
One First National Plaza
Chicago, Illinois 60603
(312) 853-7470
----------------
Approximate date of commencement of proposed sale to the public: As soon as
practicable after this Registration Statement becomes effective and all other
conditions to the merger ("Merger") of CECo Merging Corporation with and into
Commonwealth Edison Company pursuant to the Merger Agreement described in the
enclosed Prospectus and Proxy Statement have been satisfied or waived.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [_]
CALCULATION OF REGISTRATION FEE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PROPOSED
PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT MAXIMUM AGGREGATE AMOUNT OF
SECURITIES TO BE TO BE OFFERING PRICE OFFERING PRICE REGISTRATION
REGISTERED REGISTERED PER UNIT (1) (1) FEE
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, without 215,770,000 $27.0625 $5,839,275,625 $2,013,557.41
par value............. Shares
- -----------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
(1) Estimated pursuant to Rule 457(f)(1) of the Securities Act of 1933, based
upon the market value of the shares of Commonwealth Edison Company Common
Stock to be converted in the Merger ($27.0625 per share, which is the
average of the high and low sales prices of a share of Commonwealth Edison
Company Common Stock on the New York Stock Exchange, Inc. Composite Tape on
January 25, 1994).
----------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
EXPLANATORY NOTE
The number of shares of CECo Holding Company Common Stock to be issued in the
conversion of Commonwealth Edison Company Common Stock in the Merger described
herein cannot be precisely determined at the time this Registration Statement
becomes effective because shares of Commonwealth Edison Company Common Stock
may be issued thereafter and until the effective time of the Merger under the
Commonwealth Edison Company Employe Savings and Investment Plan and Employe
Stock Purchase Plan. This Registration Statement covers a number of shares of
CECo Holding Company Common Stock which is estimated to be at least as large as
the number of shares of Commonwealth Edison Company Common Stock which is
expected to be outstanding at the effective time of the Merger. See the
undertaking in Item 22(4) in Part II of this Registration Statement.
-i-
<PAGE>
CECO HOLDING COMPANY
CROSS REFERENCE SHEET
PURSUANT TO ITEM 501(B) OF REGULATION S-K
<TABLE>
<CAPTION>
FORM S-4--ITEM NO. AND CAPTION PROSPECTUS AND PROXY STATEMENT
------------------------------ ------------------------------
<S> <C>
A. INFORMATION ABOUT THE TRANSACTION
1. Forepart of Registration Statement and
Outside Front Cover Page of Prospectus.... Facing Page of Registration Statement;
Cross Reference Sheet; Outside Front Cover
Page of Prospectus
2. Inside Front and Outside Back Cover Pages
of Prospectus............................. Available Information; Incorporation of
Certain Information by Reference; Table of
Contents
3. Risk Factors, Ratio of Earnings to Fixed
Charges and Other Information............. Summary of Restructuring Proposal; Outside
Front Cover Page of Prospectus
4. Terms of the Transaction................. Summary of Restructuring Proposal;
Corporate Restructuring Plan
5. Pro Forma Financial Information ......... Not Applicable
6. Material Contacts with the Company Being
Acquired.................................. Not Applicable
7. Additional Information Required for
Reoffering by Persons and Parties Deemed
to be Underwriters........................ Not Applicable
8. Interests of Named Experts and Counsel... Not Applicable
9. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities............................... Not Applicable
B. INFORMATION ABOUT THE REGISTRANT
10. Information with Respect to S-3
Registrants............................... Not Applicable
11. Incorporation of Certain Information by
Reference................................. Not Applicable
12. Information with Respect to S-2 or S-3
Registrants............................... Not Applicable
13. Incorporation of Certain Information by
Reference................................. Not Applicable
14. Information with Respect to Registrants
Other Than S-2 or S-3 Registrants......... Not Applicable
C. INFORMATION ABOUT THE COMPANY BEING
ACQUIRED
15. Information with Respect to S-3
Companies................................. Incorporation of Certain Information by
Reference
16. Information with Respect to S-2 or S-3
Companies................................. Not Applicable
17. Information with Respect to Companies
Other than S-2 or S-3 Companies........... Not Applicable
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FORM S-4--ITEM NO. AND CAPTION PROSPECTUS AND PROXY STATEMENT
------------------------------ ------------------------------
<S> <C>
D. VOTING AND MANAGEMENT INFORMATION
18. Information if Proxies, Consents or
Authorizations Are to be Solicited........ Incorporation of Certain Information by
Reference; Introduction--Voting;
Introduction--Security Ownership of
Certain Beneficial Owners and Management;
Corporate Restructuring Plan--Rights of
Dissenting Shareholders; Item A. Election
of Directors; Item B. Corporate
Restructuring Plan--Management; Proxy
Statement
19. Information if Proxies, Consents or
Authorizations Are Not to be Solicited in
an Exchange Offer......................... Not Applicable
</TABLE>
<PAGE>
LOGO
COMMONWEALTH EDISON
10 SOUTH DEARBORN STREET
P.O. BOX 767
CHICAGO, ILLINOIS 60690-0767
To the Shareholders of Commonwealth Edison Company:
The regular annual meeting of the shareholders of Commonwealth Edison Company
("Edison") will be held on May 10, 1994, to act upon a proposed corporate
restructuring in which Edison will become a subsidiary of a new holding company
currently named "CECo Holding Company" ("Holding Company"), and to act upon
other items of business as set forth in the Proxy Statement that follows.
Your Board of Directors unanimously believes that the proposed restructuring
into a holding company system is beneficial to Edison and its shareholders. The
restructuring will permit timely responses to competitive activities which
could adversely affect the Edison utility business, and will allow Holding
Company to provide a broad array of energy services through its utility
subsidiary (Edison) and its unregulated subsidiaries. If approved, affiliates
of Edison will be able to engage in non-utility businesses without the prior
approval of, or being regulated by, the Illinois Commerce Commission.
To accomplish the restructuring, Holding Company has been organized. The name
"CECo Holding Company" will be changed prior to the effectiveness of the
restructuring to a permanent name which has not yet been determined.
It is proposed that outstanding shares of Edison Common Stock be converted in
a merger, on a share-for-share basis, into shares of Holding Company Common
Stock. As a result, the holders of Edison Common Stock will become the owners
of Holding Company Common Stock, and Holding Company will become the owner of
the Edison Common Stock. The outstanding shares of Edison Preferred Stock and
Preference Stock will continue to be outstanding securities of Edison after the
merger.
In addition, it is contemplated that on the day of the merger, Edison will
transfer ownership of certain of its non-utility subsidiaries to Holding
Company.
If the restructuring is effected, it will not be necessary for you to turn in
your Edison Common Stock certificates in exchange for Holding Company Common
Stock certificates. The certificates for Edison Common Stock you now hold will
automatically represent shares of Holding Company Common Stock. New
certificates bearing the name of the Holding Company will be issued in the
future as certificates for presently outstanding shares of Edison Common Stock
are presented for transfer.
Even if you plan to attend the annual meeting, please sign, date and return
the accompanying proxy in the enclosed addressed, postage-paid envelope. (You
may revoke your proxy at any time before it is voted by delivering written
notice of such revocation to Edison, executing a subsequent proxy or attending
the annual meeting and voting in person).
Sincerely,
James J. O'Connor
Chairman
<PAGE>
LOGO
COMMONWEALTH EDISON
10 SOUTH DEARBORN STREET
P.O. BOX 767
CHICAGO, ILLINOIS 60690-0767
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
MAY 10, 1994
The regular annual meeting of shareholders of Commonwealth Edison Company
("Edison") will be held in the Grand Ballroom of the Chicago Hilton and Towers,
720 South Michigan Avenue, Chicago, Illinois, on Tuesday, May 10, 1994, at
10:30 A.M., Chicago time, for the following purposes, which are described in
the accompanying Proxy Statement, and to transact such other business as may
properly be brought before the meeting:
Item A: To elect a Board of eleven Directors.
Item B: To consider and act upon approval of an Agreement and Plan of
Merger, a copy of which is attached as Exhibit A to the
accompanying Proxy Statement, pursuant to which CECo Merging
Corporation, a subsidiary of CECo Holding Company ("Holding
Company"), will be merged into Edison, with the result that Edison
will become a subsidiary of Holding Company, and the holders of
Edison Common Stock will become the holders of Holding Company
Common Stock.
Item C: To consider and act upon a proposed Amendment to the Edison
Restated Articles of Incorporation, as amended, to limit the
liability of Edison Directors and to provide for indemnification by
Edison of its Directors, officers, employes and agents.
Item D: To consider and act upon approval of the appointment by the Edison
Board of Directors of Arthur Andersen & Co., independent public
accountants, as Auditors for 1994.
Shareholders of record on the books of Edison at 4:00 P.M., Chicago time,
March 11, 1994, will be entitled to vote at the meeting.
PLEASE FILL IN, SIGN, DATE AND RETURN THE ENCLOSED PROXY PROMPTLY.
David A. Scholz
Secretary
March , 1994
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
PRELIMINARY PROSPECTUS AND PROXY STATEMENT DATED JANUARY 31, 1994
PROXY STATEMENT
FOR
COMMONWEALTH EDISON COMPANY
PROSPECTUS
FOR
CECO HOLDING COMPANY
COMMON STOCK
This Prospectus, including the Proxy Statement forming a part hereof, has
been prepared in connection with the issuance of up to 215,770,000 shares of
Common Stock, without par value, of CECo Holding Company, an Illinois
corporation ("Holding Company"), (i) upon the consummation of the proposed
merger of CECo Merging Corporation, an Illinois corporation ("Merging Corp."),
which is a wholly-owned subsidiary of Holding Company, with and into
Commonwealth Edison Company, an Illinois corporation ("Edison"), and (ii) under
certain stock plans of Edison.
At the effective time of such merger, each share of Edison Common Stock,
$12.50 par value, will automatically be converted into and, without action on
the part of the holder thereof, become one share of Common Stock, without par
value, of Holding Company. The difference in par value will not affect the
market value of such stock.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
The executive offices of Holding Company are located at 10 South Dearborn
Street, P.O. Box 767, Chicago, Illinois 60690-0767, and its telephone number at
such address is (312) 394-4321.
This Prospectus and Proxy Statement and the form of proxy were first mailed
to shareholders on or about March , 1994.
-----------
The date of this Prospectus and Proxy Statement is March , 1994.
<PAGE>
THIS PROSPECTUS AND PROXY STATEMENT INCORPORATES DOCUMENTS BY REFERENCE WHICH
ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS ARE AVAILABLE
UPON REQUEST FROM DAVID A. SCHOLZ, SECRETARY, COMMONWEALTH EDISON COMPANY, 37TH
FLOOR, 10 SOUTH DEARBORN STREET, POST OFFICE BOX 767, CHICAGO, ILLINOIS 60690-
0767 (TELEPHONE NUMBER 312/394-8817). IN ORDER TO ENSURE TIMELY DELIVERY OF THE
DOCUMENTS, ANY REQUEST SHOULD BE MADE BY MAY 3, 1994.
AVAILABLE INFORMATION
Edison is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended ("1934 Act"), and in accordance therewith
files reports and other information with the Securities and Exchange Commission
("SEC"). Reports, proxy statements and other information filed by Edison can be
inspected and copied at the public reference facilities maintained by the SEC
at 450 Fifth Street, N.W., Washington, D.C. 20549, and at its Regional Offices
located at Citicorp Center, 500 West Madison Street, Chicago, IL 60661 and
Seven World Trade Center, New York, NY 10048. Copies of such material can be
obtained from the Public Reference Section of the SEC, 450 Fifth Street, N.W.,
Washington, D.C. 20549 at prescribed rates. In addition, reports, proxy
statements and other information concerning Edison may be inspected at the
offices of the New York Stock Exchange, 20 Broad Street, New York, NY, the
Chicago Stock Exchange, 440 South LaSalle Street, Chicago, IL and the Pacific
Stock Exchange, 301 Pine Street, San Francisco, CA, the exchanges on which
certain of Edison's securities are listed. Holding Company has filed with the
SEC a Registration Statement on Form S-4 under the Securities Act of 1933, as
amended ("1933 Act"), with respect to the shares of Holding Company common
stock, without par value ("Holding Company Common Stock"), offered hereby. This
Prospectus and Proxy Statement does not contain all of the information set
forth in such Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the SEC. For further information,
reference is made to such Registration Statement.
Holding Company will become subject to the same informational requirements as
Edison following the merger described in this Prospectus and Proxy Statement,
and will file reports, proxy statements and other information with the SEC in
accordance with the 1934 Act.
----------------
No person has been authorized to give any information or to make any
representation not contained in this Prospectus and Proxy Statement in
connection with the offer contained in this Prospectus and Proxy Statement,
and, if given or made, such information or representation must not be relied
upon as having been authorized.
Neither the delivery of this Prospectus and Proxy Statement nor any
distribution of shares of Holding Company Common Stock made hereunder shall,
under any circumstances, create any implication that there has not been any
change in the affairs of Edison or Holding Company since the respective dates
as of which information is given herein.
REGISTRATION STATEMENT
This Prospectus and Proxy Statement is a prospectus delivered in compliance
with the 1933 Act with respect to the shares of Holding Company Common Stock
offered hereby. A Registration Statement under the 1933 Act has been filed with
the SEC, with respect to the shares of Holding Company Common Stock offered
hereby. As permitted by the rules and regulations of the SEC, this Prospectus
and Proxy Statement omits certain information contained in the Registration
Statement on file with the SEC. The omitted information can be inspected and
copied at the above-described reference facilities maintained by the SEC.
2
<PAGE>
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents filed by Edison with the SEC (File No. 1-1839) are
incorporated in this Prospectus and Proxy Statement by reference and made a
part hereof:
(a) The Edison Annual Report on Form 10-K for the year ended December 31,
1992 ("1992 Form 10-K");
(b) The Edison Quarterly Reports on Form 10-Q for the quarterly periods
ended March 31, 1993 (the "March 31, 1993 Form 10-Q"), June 30, 1993 (the
"June 30, 1993 Form 10-Q") and September 30, 1993 (the "September 30, 1993
Form 10-Q"); and
(c) The Edison Current Reports on Form 8-K dated January 28, 1993 (the
"January 28, 1993 Form 8-K"), May 21, 1993 and September 24, 1993.
All documents subsequently filed by Edison pursuant to Section 13(a), 13(c),
14 or 15(d) of the 1934 Act, after the date of this Prospectus and Proxy
Statement and prior to the termination of the offer made by this Prospectus and
Proxy Statement, shall be deemed to be incorporated in this Prospectus and
Proxy Statement by reference and to be a part hereof from the respective dates
of filing of such documents. Any statement contained in a document incorporated
or deemed to be incorporated by reference in this Prospectus and Proxy
Statement shall be deemed to be modified or superseded for purposes of this
Prospectus and Proxy Statement to the extent that a statement contained in this
Prospectus and Proxy Statement or in any other subsequently filed document
which also is or is deemed to be incorporated by reference in this Prospectus
and Proxy Statement modifies or supersedes such statement. Any statement so
modified or superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this Prospectus and Proxy Statement.
Edison will provide without charge to each person, including any beneficial
owner, to whom this Prospectus and Proxy Statement is delivered, upon written
or oral request of such person, a copy of any or all of the documents that have
been or may be incorporated in this Prospectus and Proxy Statement by
reference, other than certain exhibits to such documents, unless such exhibits
are specifically incorporated by reference into the information that this
Prospectus and Proxy Statement incorporates. Such requests should be directed
to David A. Scholz, Secretary, Commonwealth Edison Company, 37th Floor, 10
South Dearborn Street, Post Office Box 767, Chicago, IL 60690-0767 (telephone
number 312/394-8817).
3
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Summary of Restructuring Proposal......................................... 5
Introduction.............................................................. 9
Solicitation and Revocation of Proxies.................................. 9
Manner and Cost of Solicitation......................................... 9
Voting.................................................................. 9
Security Ownership of Certain Beneficial Owners and Management.......... 10
Item A. Election of Directors............................................. 12
Nominees................................................................ 12
Additional Information Concerning Board of Directors.................... 14
Executive Compensation.................................................. 16
Summary Compensation Table.............................................. 16
Service Annuity System Plan............................................. 17
Employment Agreement.................................................... 18
Compensation Committee Report on Executive Compensation................. 18
Shareholder Return Performance.......................................... 19
Item B. Corporate Restructuring Plan...................................... 20
Reasons for the Restructuring........................................... 20
Merger Agreement........................................................ 22
Supplemental Agreement.................................................. 22
Required Regulatory Approvals........................................... 23
Illinois Public Utilities Act........................................... 23
Transfer of Edison Assets to Holding Company............................ 24
Dividend Policy......................................................... 24
Treatment of Preferred and Preference Stock............................. 25
Possible Minority Interest.............................................. 25
Amendment or Termination................................................ 26
Rights of Dissenting Shareholders....................................... 26
Effectiveness of the Restructuring...................................... 27
Exchange of Stock Certificates.......................................... 27
Federal Income Tax Consequences......................................... 28
Listing of Holding Company Common Stock................................. 28
Regulation of Holding Company........................................... 28
Management.............................................................. 29
Holding Company Capital Stock........................................... 29
Comparative Shareholders' Rights........................................ 29
Stock Plans............................................................. 31
Transfer Agent and Registrar............................................ 31
Edison Common Stock Market Prices and Dividends......................... 31
Edison Preferred Stock and Edison Preference Stock Market Information... 32
Legal Opinions.......................................................... 33
Experts................................................................. 33
Item C. Amendment of the Edison Restated Articles of Incorporation........ 33
Background.............................................................. 33
Text of the Proposed Amendment.......................................... 33
Reasons for the Proposed Amendment...................................... 34
Effect of the Proposed Amendment........................................ 34
Item D. Approval of Auditors.............................................. 35
Transaction of Other Business............................................. 35
Exhibit A--Agreement and Plan of Merger................................... A-1
Exhibit B--Supplemental Agreement......................................... B-1
Exhibit C--Articles of Incorporation of CECo Holding Company.............. C-1
Exhibit D--Provisions of the Illinois Business Corporation Act Relating to
Rights of Dissenting Shareholders................................. D-1
</TABLE>
4
<PAGE>
SUMMARY OF RESTRUCTURING PROPOSAL
The following is a summary of certain information regarding the restructuring
proposal contained or incorporated by reference in this Prospectus and Proxy
Statement and is qualified in its entirety by the more detailed information
contained or incorporated by reference herein.
PROPOSED RESTRUCTURING
Holding Company has been organized to become the holding company for, and the
direct owner of, Edison and a newly formed subsidiary of Edison named "CECo
Enterprises Inc." ("CECo Enterprises"). The formation of the holding company
structure will be achieved by the merger ("Merger") of a newly formed
subsidiary of Holding Company, Merging Corp., into Edison. In the Merger, the
holders of Edison Common Stock, par value $12.50 per share ("Edison Common
Stock"), immediately prior to the Merger will become the holders of Holding
Company Common Stock immediately after the Merger, and immediately after the
Merger Holding Company will become the sole holder of Edison Common Stock.
Holders of Edison $1.425 Convertible Preferred Stock, without par value
("Edison Preferred Stock"), Edison Cumulative Preference Stock, without par
value ("Edison Preference Stock"), and Warrants will continue to hold such
Stock and Edison Warrants following the Merger, which will not change any
rights of such holders. See "Treatment of Preferred and Preference Stock" and
"Possible Minority Interest."
Edison is principally engaged in the production, purchase, transmission,
distribution and sale of electricity to approximately 3.3 million customers.
Its electric service territory has an area of approximately 11,540 square miles
and an estimated population of 8.1 million, and includes the city of Chicago,
an area of about 225 square miles with an estimated population of three million
from which Edison derives approximately one-third of its ultimate consumer
revenues.
CECo Enterprises is a holding company which will have no assets other than
those involved in its ownership of stock of its subsidiaries; currently, its
only subsidiary is Northwind Inc., which was formed in 1993 to provide district
cooling services to office and other buildings from central locations in
Chicago. Northwind Inc. is currently seeking customers for its services,
creating plans for its facilities and negotiating contracts to procure its
business assets. On the day of the Merger, Edison will transfer the stock of
CECo Enterprises to Holding Company. See "Transfer of Edison Assets to Holding
Company."
Holding Company will have no assets other than those involved in its
ownership of stock of its subsidiaries, which at the effective time of the
Merger will consist of all of the Edison Common Stock and the common stock of
CECo Enterprises. Holding Company will conduct no business other than the
ownership of the stock of its subsidiaries. The principal executive offices of
Holding Company and Edison are located at 10 South Dearborn Street, Post Office
Box 767, Chicago, Illinois 60690-0767, and their telephone number is 312-394-
4321.
Merging Corp. has nominal assets and has been formed for the sole purpose of
effecting the Merger, at which time it will cease to exist.
5
<PAGE>
The following diagrams illustrate the present and proposed corporate
structures of (i) Edison and its subsidiaries before the Merger and (ii)
Holding Company and its subsidiaries following the Merger and the Edison
transfer of CECo Enterprises to Holding Company. Edison will retain its other
subsidiaries, which provide goods and services to Edison.
PRESENT STRUCTURE
Commonwealth Edison Company
-------------------------------------------------
Commonwealth Edison - CECo Enterprises Inc. CECo Holding Company
Company of Indiana, Inc.
Northwind Inc. CECo Merging
Corporation
Edison Development -
Company
Cotter Corporation -
Commonwealth Research -
Corporation
Concomber, Ltd. -
Edison Development -
Canada Inc.
PROPOSED STRUCTURE
CECo Holding Company
-------------------------------------------------
Commonwealth Edison CECo Enterprises Inc.
Company
Northwind Inc.
- --------------------------
Commonwealth Edison -
Company of Indiana,
Inc.
Edison Development -
Company
Cotter Corporation -
Commonwealth Research -
Corporation
Concomber, Ltd. -
Edison Development -
Canada Inc.
6
<PAGE>
EXCHANGE OF CERTIFICATES
It will not be necessary for shareholders to turn in their certificates for
Edison Common Stock in exchange for certificates for Holding Company Common
Stock. The certificates which presently represent outstanding shares of Edison
Common Stock will automatically represent shares of Holding Company Common
Stock following the effectiveness of the Merger. New certificates bearing the
name of the Holding Company will be issued in the future, if, and as,
certificates for presently outstanding shares of Edison Common Stock are
presented for exchange or transfer.
STOCK EXCHANGE LISTINGS
Holding Company will apply to list its Common Stock on the New York, Chicago
and Pacific Stock Exchanges. It is expected that such listings will become
effective on the effective date of the Merger, subject to the rules of such
Exchanges. See "Listing of Holding Company Common Stock."
DIVIDEND POLICY
Dividends on Holding Company Common Stock will depend primarily on the
earnings, financial condition and capital requirements of Edison, and its
ability to pay dividends on the Edison Common Stock owned by Holding Company.
It is currently contemplated that Holding Company will initially pay quarterly
dividends on Holding Company Common Stock at the same rate, and on
approximately the same schedule, as dividends most recently have been paid on
Edison Common Stock. See "Dividend Policy."
REASONS FOR THE RESTRUCTURING
The management and the Board of Directors of Edison unanimously believe that
the proposed restructuring is beneficial because it will permit affiliates of
Edison to engage in non-utility businesses without the prior approval of, or
being regulated by, the Illinois Commerce Commission. The restructuring is
intended to permit timely responses to competitive activities which could
adversely affect the Edison utility business, to insulate the Edison utility
business from the business risks and obligations of other Holding Company
subsidiaries, to provide financial flexibility and to facilitate capital
allocation and managerial accountability. See "Reasons for the Restructuring."
VOTE REQUIRED
Only holders of shares of Edison Common Stock, Edison Preferred Stock and
Edison Preference Stock at 4:00 P.M., Chicago time, on March 11, 1994 ("Record
Date"), will be entitled to notice of and to vote at the regular annual meeting
to consider approval of the Merger Agreement to effect the restructuring. As of
March 11, 1994, there were shares of Edison Common Stock,
shares of Edison Preferred Stock and shares of Edison Preference Stock
outstanding. The affirmative votes of the holders of two-thirds of the
outstanding shares of Edison Common Stock, Edison Preferred Stock and Edison
Preference Stock, voting together as a single class, are required to approve
the Merger Agreement. See "Voting."
REGULATORY APPROVALS
Applications for approval of the restructuring have been filed with the SEC
under the Public Utility Holding Company Act of 1935 ("1935 Act"), the Federal
Energy Regulatory Commission ("FERC") under the Federal Power Act and the
Nuclear Regulatory Commission ("NRC") under the Atomic Energy Act. Amendments
to the Illinois Public Utilities Act which became effective on July 13, 1993,
permit the restructuring to occur without the prior approval of the Illinois
Commerce Commission, subject to certain conditions. See "Required Regulatory
Approvals" and "Illinois Public Utilities Act."
7
<PAGE>
CERTAIN TAX CONSEQUENCES
It is intended that the conversion of Edison Common Stock into Holding
Company Common Stock in the Merger will not be taxable under Federal income tax
laws, and it is a condition for the Merger to become effective that Edison
receive either an opinion of counsel or a ruling from the Internal Revenue
Service satisfactory to the Edison Board of Directors with respect to the
Federal income tax consequences of the Merger. Edison has received a ruling
concerning certain tax consequences of the Merger, and it has received an
opinion of Sidley & Austin, counsel to Edison, with respect to certain other
tax consequences of the Merger. See "Federal Income Tax Consequences."
RIGHTS OF DISSENTING SHAREHOLDERS
The holders of Edison Common Stock, Edison Preferred Stock and Edison
Preference Stock have the right to dissent from consummation of the Merger and,
upon compliance with the procedural requirements of the Illinois Business
Corporation Act, to receive the "fair value" of their shares if the Merger is
effected. Any such holders electing to exercise their right of dissent must
deliver to Edison before the vote is taken a written demand for payment of such
holder's shares if the Merger is consummated, and not vote to approve the
Merger Agreement. See "Rights of Dissenting Shareholders" and Exhibit D.
8
<PAGE>
INTRODUCTION
SOLICITATION AND REVOCATION OF PROXIES
The Proxy Statement forming a part hereof is furnished in connection with the
solicitation by the Board of Directors of Edison of proxies for use at the
regular annual meeting of Edison shareholders to be held on May 10, 1994.
Any shareholder giving a proxy will have the right to revoke it at any time
prior to the time it is voted. A proxy may be revoked by written notice to
Edison, execution of a subsequent proxy or attendance at the annual meeting and
voting in person. Attendance at the meeting will not automatically revoke the
proxy. All shares represented by properly executed and unrevoked proxies
received in the accompanying form in time for the annual meeting will be voted
at the meeting or at any adjournment thereof. A ticket is not required for
attendance at the annual meeting; however, confirmation of stock ownership will
be made prior to admission to the meeting.
The Edison 1993 Annual Report, including financial statements, was mailed to
each Edison shareholder on or about February 15, 1994.
MANNER AND COST OF SOLICITATION
The cost of soliciting proxies will initially be borne by Edison. If the
Merger becomes effective, Holding Company will reimburse Edison for all of the
expenses it incurs in the restructuring, including the cost of soliciting
proxies for approval of the Merger. See "Illinois Public Utilities Act." In
addition to solicitation by mail, officers and employes of Edison may solicit
proxies by telephone or in person. Edison has arranged for Morrow & Co., Inc.
to assist in the solicitation of proxies, at an estimated cost (excluding
reimbursement of out of pocket costs) of $25,000.
VOTING
Shareholders of record on the books of Edison at 4:00 P.M., Chicago time,
March 11, 1994, will be entitled to vote at the regular annual meeting. On
March 11, 1994, there were outstanding shares of Edison Common Stock,
outstanding shares of Edison Preferred Stock and
outstanding shares of Edison Preference Stock (issued in twelve series). Each
share entitles the holder to one vote on each matter submitted to a vote at the
meeting, except that in the election of Directors each shareholder has the
right to vote the number of shares owned by such shareholder for as many
persons as there are Directors to be elected, or to cumulate such votes and
give one candidate as many votes as shall equal the number of Directors to be
elected multiplied by the number of such shares or to distribute such
cumulative votes in any proportion among any number of candidates.
The holders of a majority of the outstanding shares entitled to vote on a
particular matter and represented in person or by proxy will constitute a
quorum for the consideration of such matter at the meeting, except that the
holders of two-thirds of the outstanding shares of Edison Common Stock, Edison
Preferred Stock and Edison Preference Stock (a) entitled to vote on the
proposal to approve the Agreement and Plan of Merger ("Merger Agreement")
between Edison and Merging Corp., and represented in person or by proxy will
constitute a quorum for the consideration of such proposal, and (b) entitled to
vote on the proposed Amendment to the Edison Restated Articles of Incorporation
and represented in person or by proxy will constitute a quorum for the
consideration of such proposal.
With respect to the election of Directors, a shareholder may mark the
accompanying form of proxy to (i) vote for the election of all eleven nominees
named in this Proxy Statement as Directors, (ii) withhold authority to vote for
all such Director nominees or (iii) vote for the election of all such Director
nominees other than any nominee with respect to whom the shareholder withholds
authority to vote. Assuming that a quorum is present at the meeting, the eleven
persons receiving the greatest number of votes shall be elected as Directors.
Withholding authority to vote for a Director nominee will not
9
<PAGE>
prevent such Director nominee from being elected. The proxy holders will
cumulate votes of shares represented by proxies only if a shareholder gives
them specific written instructions to do so.
With respect to the appointment of Auditors, a shareholder may mark the
accompanying form of proxy to (i) vote for the matter, (ii) vote against the
matter or (iii) abstain from voting on the matter. If a quorum to vote on such
matter is present at the meeting, the affirmative vote of a majority of the
shares of stock represented at the meeting and entitled to vote on such matter
is required for approval of the Auditors.
Under Illinois law, the affirmative votes of the holders of two-thirds of the
outstanding shares of Edison Common Stock, Edison Preferred Stock and Edison
Preference Stock, voting together as a single class, are required to approve
(i) the Merger Agreement, and (ii) the Amendment to the Edison Restated
Articles of Incorporation.
The shares represented by the proxy of each shareholder include shares owned
by such shareholder and shares credited to such shareholder's account under the
Edison Dividend Reinvestment and Stock Purchase Plan and Employe Savings and
Investment Plan.
Proxies submitted by brokers for shares beneficially owned by other persons
may indicate that all or a portion of the shares represented by such proxies
are not being voted with respect to approval of the Merger Agreement or the
proposed Amendment to the Edison Restated Articles of Incorporation. This is
because the rules of the New York Stock Exchange do not permit a broker to vote
shares held in street name with respect to such matters in the absence of
instructions from the beneficial owner of such shares. The shares represented
by broker proxies which are not voted with respect to any such matter will not
be counted in determining whether a quorum is present for consideration of such
matter and will not be considered represented at the meeting and entitled to
vote on approval of such matter.
The shares represented by properly executed and unrevoked proxies received in
the accompanying form in time for the meeting will be voted at the meeting and
will be voted as directed in the proxies. IN THE ABSENCE OF SPECIFIC DIRECTION,
THE SHARES REPRESENTED BY THE PROXIES WILL BE VOTED AT THE MEETING AND WILL BE
VOTED FOR THE ELECTION OF THE NOMINEES NAMED IN THIS PROXY STATEMENT AS
DIRECTORS, FOR APPROVAL OF THE MERGER AGREEMENT, FOR APPROVAL OF THE PROPOSED
AMENDMENT TO THE EDISON RESTATED ARTICLES OF INCORPORATION AND FOR APPOINTMENT
OF ARTHUR ANDERSEN & CO. AS AUDITORS. In the event any nominee for Director
shall be unable to serve, which is not now contemplated, the proxies may or may
not be voted for a substitute nominee.
Proxies marked to abstain from voting with respect to the Merger Agreement,
the proposed Amendment to the Edison Restated Articles of Incorporation or the
approval of Auditors will have the legal effect of voting against approval of
such matter.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL DIRECTOR NOMINEES NAMED IN
ITEM A, FOR APPROVAL OF THE MERGER AGREEMENT AS DISCUSSED IN ITEM B, FOR
APPROVAL OF THE AMENDMENT TO THE EDISON RESTATED ARTICLES OF INCORPORATION AS
DISCUSSED IN ITEM C AND FOR APPOINTMENT OF ARTHUR ANDERSEN & CO. AS AUDITORS AS
DISCUSSED IN ITEM D.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table lists the beneficial ownership, as of December 31, 1993,
of persons known to Edison to be the beneficial owner of more than five percent
of Edison Common Stock. The table also lists the beneficial ownership, as of
March 1, 1994, of Edison Common Stock by each of the Directors, each of the
executive officers named in the Summary Compensation Table on page 16 and the
Edison Directors and executive officers as a group.
10
<PAGE>
<TABLE>
<CAPTION>
AMOUNT OF
BENEFICIAL
OWNERSHIP PERCENT
OF COMMON OF
NAME STOCK CLASS
- ---- ---------- -------
<S> <C> <C>
The Capital Group, Inc.. 17,700,460(1) 8.30%
Capital Research and
Management Company..... 17,023,300(1) 7.98
Wellington Management
Company................ 14,764,543(2) 6.92
Jean Allard............. 1,060 *
James W. Compton........ 1,101 *
Sue L. Gin.............. 1,000 *
Donald P. Jacobs........ 2,015 *
George E. Johnson....... 1,100 *
Harvey Kapnick.......... 4,000 *
Byron Lee, Jr.(3)....... 2,826 *
Edward A. Mason......... 1,018 *
James J. O'Connor....... 16,698(4) *
Frank A. Olson.......... 1,000 *
Samuel K. Skinner....... 1,000 *
Lando W. Zech, Jr....... 3,000 *
Cordell Reed............ 1,676(5) *
............ *
............ *
Directors and executive
officers as a group (30
persons)............... 66,507(6) *
</TABLE>
- --------
*Less than one percent
(1) The Capital Group, Inc. ("Capital Group") is the parent company of several
investment management companies, including Capital Research and Management
Company ("CRMC"), and the shares reported as beneficially owned by it
include the shares reported as beneficially owned by CRMC. According to
their Schedule 13G dated February 11, 1993, Capital Group exercises sole
voting power with respect to 593,310 shares and sole dispositive power with
respect to 17,700,460 shares, and CRMC exercises sole dispositive power
with respect to 17,023,300 shares (included within the total shares for
Capital Group). Their address is 333 South Hope Street, Los Angeles,
California 90071.
(2) Wellington Management Company ("Wellington") is also an investment
management company. According to their Schedule 13G dated February 10,
1993, Wellington exercises shared voting power with its investment
counseling clients with respect to 1,373,800 shares and shared dispositive
power with such clients with respect to 14,764,543 shares. Its address is
75 State Street, Boston, Massachusetts 02109.
(3) Mr. Lee also beneficially owns 8 shares of Edison Preference Stock,
representing less than one percent of such class.
(4) Includes 1,372 shares owned by family members.
(5) Includes 317 shares owned by spouse.
(6) Includes: 317 shares owned by spouses; 355 shares held in custodial
accounts for family members; 1,150 shares jointly owned by spouse and in-
laws; 1,392 shares owned by family members; and 2,562 shares jointly owned
with family members. Such persons also beneficially own 77 shares of Edison
Preference Stock, representing less than one percent of such class.
11
<PAGE>
ITEM A. ELECTION OF DIRECTORS
NOMINEES
Admiral Lando W. Zech, Jr., whose current term as a Director expires at the
1994 annual meeting of shareholders, has reached the mandatory retirement age
for Directors and is not standing for re-election. Admiral Zech has served as a
Director since 1989. His contributions were many and are gratefully
appreciated.
Eleven Directors are to be elected at the annual meeting to serve terms of
one year and until their respective successors have been elected. The nominees
for Director, all of whom are now serving as Directors of Edison, are listed
below together with certain biographical information. Except as otherwise
indicated, each nominee for Director has been engaged in his or her present
principal occupation for at least the past five years.
JEAN ALLARD, age 69. Director since 1975. President of the
Metropolitan Planning Council since October 1991. Partner in the
law firm of Sonnenschein Nath & Rosenthal for more than five
years prior to October 1991. Chair of Finance Committee and
[Photo] member of Compensation, Executive and Regulatory and
Environmental Affairs Committees. Other directorships: Axel
Johnson, Inc., LaSalle National Bank, LaSalle National
Corporation, LaSalle National Trust, N.A. and LaSalle Talman
FSB.
JAMES W. COMPTON, age 55. Director since 1989. President and
Chief Executive Officer of the Chicago Urban League. Chairman of
[Photo] Audit Committee and member of Compensation, Executive and
Nominating Committees. Other directorships: Drexel National
Bank, Independence Bank of Chicago and MATRA Transit, Inc.
SUE L. GIN, age 52. Director since 1993. Founder, Owner,
[Photo] Chairman and Chief Executive Officer of Flying Food Fare, Inc.
Member of Audit, Compensation and Finance Committees. Other
directorship: Michigan National Bank.
DONALD P. JACOBS, age 66. Director since 1979. Dean of the J. L.
Kellogg Graduate School of Management, Northwestern University.
Chairman of Regulatory and Environmental Affairs Committee and
[Photo] member of Compensation, Finance and Nominating Committees. Other
directorships: First Chicago Corporation, The First National
Bank of Chicago, Hartmarx Corp., Pet, Incorporated, UDC Homes,
Inc., Unocal Corp. and Whitman Corp.
12
<PAGE>
GEORGE E. JOHNSON, age 66. Director since 1971. Chairman of
Indecorp, Incorporated (holding company for Drexel National Bank
and Independence Bank of Chicago). Founder and retired Chairman,
[Photo] Johnson Products Company, Inc. Member of Audit, Compensation and
Nominating Committees. Other directorships: Drexel National
Bank, Indecorp, Incorporated, Independence Bank of Chicago and
Burrell Communications, Inc.
HARVEY KAPNICK, age 68. Director since 1980. Vice Chairman of
General Dynamics Corporation since April 1991. President of
Kapnick Investment Co. Inc. from February 1989 to March 1991.
[Photo] Chairman of Compensation Committee and member of Audit, Finance
and Regulatory and Environmental Affairs Committees. Other
directorships: General Dynamics Corporation and Maytag
Corporation.
BYRON LEE, JR., age 64. Director since 1985. Retired. President
and Chief Executive Officer of Nuclear Management and Resources
[Photo] Council (NUMARC) for more than five years prior to August 1992.
Member of Finance and Nuclear Operations Committees. Other
directorship: Canonie Environmental Services Corp.
EDWARD A. MASON, age 69. Director since 1980. Retired. Vice
President, Research, of Amoco Corporation for more than five
[Photo] years prior to July 1989. Chairman of Nuclear Operations
Committee and member of Compensation and Regulatory and
Environmental Affairs Committees. Other directorship: Symbollon
Corporation.
JAMES J. O'CONNOR, age 57. Director since 1978. Chairman of
Edison. Chairman of Executive Committee and member of Nominating
[Photo] Committee. Other directorships: Corning Incorporated, First
Chicago Corporation, The First National Bank of Chicago,
Scotsman Industries, Inc., Tribune Company and UAL Corporation.
13
<PAGE>
FRANK A. OLSON, age 61. Director since 1992. Chairman and Chief
Executive Officer of The Hertz Corporation. Chairman of
[Photo] Nominating Committee and member of Audit, Compensation and
Regulatory and Environmental Affairs Committees. Other
directorships: Becton, Dickinson and Company, Cooper Industries
and UAL Corporation.
SAMUEL K. SKINNER, age 55. Director since 1993. President of
Edison since February 1993. General Chairman of the Republican
National Committee from August 1992 to January 1993. Chief of
[Photo] Staff to the President of the United States from December 1991
to August 1992. Secretary of the United States Department of
Transportation from February 1989 to December 1991. Member of
Executive Committee. Other directorships: Chicago and
Northwestern Holdings Corporation and LTV Corporation.
ADDITIONAL INFORMATION CONCERNING BOARD OF DIRECTORS
Compensation of Directors--Directors who are not employes of Edison receive
an annual retainer of $20,000, a fee of $1,000 for each Board and Committee
meeting attended and an additional annual retainer of $2,500 for chairing a
Committee of the Board. Any non-employe Director who is also a member of the
Nuclear Operations Committee receives an additional annual retainer of $5,000.
Directors who are full-time employes of Edison receive no fees for service on
the Board of Directors. Directors' fees may be deferred. Directors, who have
never been an officer or an employe of Edison and who have attained at least
age 65 and completed the required period of Board service, are eligible for
retirement benefits upon retirement. Such benefits are paid to the retired
Director or a surviving spouse for a period equal to such Director's years of
service in an amount per year equal to the annual retainer for Board members as
in effect at the time of payment.
Audit Committee--The Audit Committee consists of five Directors who are not
employes of Edison. Members serve three-year staggered terms. It is the
responsibility of the Audit Committee to review with Edison's independent
Auditors Edison's financial statements and the scope and results of such
Auditors' examinations, to monitor the internal accounting controls and
practices of Edison, to review the Annual Report to shareholders and to
recommend the appointment, subject to shareholder approval, of independent
Auditors. The Committee met two times during 1993. Members of the Committee are
James W. Compton (Chairman), Sue L. Gin, George E. Johnson, Harvey Kapnick, and
Frank A. Olson.
Compensation Committee--The Compensation Committee consists of all Directors
who are not and have never been employes of Edison. Members serve one-year
terms. The Committee reviews management and executive compensation programs and
administers awards under Edison's Deferred Compensation Plan, Management
Incentive Compensation Plan and 1993 Long-Term Incentive Plan. The Committee
met two times during 1993. Members of the Committee are Harvey Kapnick
(Chairman), Jean Allard, James W. Compton, Sue L. Gin, Donald P. Jacobs, George
E. Johnson, Edward A. Mason, Frank A. Olson and Lando W. Zech, Jr.
Executive Committee--The Executive Committee consists of five Directors.
Members serve one-year terms. The remaining Directors constitute alternates to
serve temporarily, in rotation, in place of
14
<PAGE>
any member unable to serve. The Committee has and may exercise all the
authority of the Board of Directors when the Board is not in session, subject
to limitations set forth in the By-Laws. The Committee met six times during
1993. Members of the Committee are James J. O'Connor (Chairman), Jean Allard,
James W. Compton, Samuel K. Skinner and Lando W. Zech, Jr.
Finance Committee--The Finance Committee consists of five Directors. Members
serve one-year terms. The Committee reviews the scope and results of Edison's
financing program. The Committee met three times during 1993. Members of the
Committee are Jean Allard (Chair), Sue L. Gin, Donald P. Jacobs, Harvey Kapnick
and Byron Lee, Jr.
Nominating Committee--The Nominating Committee consists of five Directors, a
majority of whom are not employes of Edison. Members serve one-year terms. The
Committee reviews the qualifications of potential candidates and proposes
nominees for Director to the Board. The Committee will consider nominees
recommended by shareholders if such recommendations are submitted in writing,
accompanied by a description of the proposed nominee's qualifications and other
relevant biographical information and evidence of the consent of the proposed
nominee. The recommendations should be addressed to the Nominating Committee,
in care of the Secretary of Edison. Nominations also may be presented by
shareholders at Edison's annual meeting of shareholders. The Committee met one
time during 1993. Members of the Committee are Frank A. Olson (Chairman), James
W. Compton, Donald P. Jacobs, George E. Johnson and James J. O'Connor.
Nuclear Operations Committee--The Nuclear Operations Committee consists of
three Directors. Members serve one-year terms. The Committee reviews Edison's
nuclear operations. The Committee met nine times during 1993. Members of the
Committee are Edward A. Mason (Chairman), Byron Lee, Jr. and Lando W. Zech, Jr.
Regulatory and Environmental Affairs Committee--The Regulatory and
Environmental Affairs Committee consists of five Directors. Members serve one-
year terms. The Committee reviews Edison's relationships with economic and
environmental regulatory agencies and reviews matters involving Edison before
such agencies. The Committee met four times in 1993. Members of the Committee
are Donald P. Jacobs (Chairman), Jean Allard, Harvey Kapnick, Edward A. Mason
and Frank A. Olson.
Attendance at Meetings--During 1993, there were fifteen meetings of the Board
of Directors. The average attendance of all incumbent Directors, expressed as a
percent of the aggregate total of Board and Board Committee meetings in 1993,
was 95%. Each incumbent Director attended at least 83% of the meetings of the
Board and Board Committees of which the Director was a member.
15
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth certain information relating to the
compensation during the past three calendar years of those persons who were, at
December 31, 1993, the Chief Executive Officer and the other four most highly
compensated executive officers of Edison.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
--------------------------- ALL OTHER
NAMES AND PRINCIPAL SALARY(1) BONUS(2) COMPENSATION(3)
POSITION YEAR $ $ $
------------------- ---- --------- -------- ---------------
<S> <C> <C> <C> <C>
James J. O'Connor 1993 668,126
Chairman (Chief 1992 739,084 0 77,332
Executive Officer) 1991 662,738 0
Samuel K. Skinner(4) 1993 442,884
President
Cordell Reed 1993 205,934
Senior Vice President 1992 216,654 0 19,901
1991 205,227 10,261 --
1993
Vice President 1992
1991
1993
Vice President 1992
1991
</TABLE>
- --------
(1) Amounts shown include salary and compensation paid under the Edison
Deferred Compensation Plan.
(2) Amounts shown include compensation earned under the Edison Management
Incentive Compensation Plan.
(3) Amounts shown include matching contributions made by Edison pursuant to the
Edison Employe Savings and Investment Plan ("ESIP") and premiums and
administrative service fees paid by Edison on behalf of the named
individuals under various group life insurance plans. For the year 1993,
contributions made to the ESIP amounted to $ , $ , $ ,
$ and $ on behalf of Messrs. O'Connor, Skinner, Reed,
, and , respectively. Premiums paid during 1993 for Split Dollar
Life, Accidental Death and Travel Accident insurance policies for Messrs.
O'Connor, Skinner, Reed, , and , respectively, are as follows:
$ , $ and $ ; $ , $ and $ ; $ ,
$ and $ ; $ , $ and $ ; and $ , $
and $ . Edison is entitled to recover the premiums and administrative
service fees from any amounts paid by the insurer on such Split Dollar Life
policies and has retained a collateral interest in each policy to the
extent of the premiums and administrative service fees paid with respect to
such policy.
(4) Mr. Skinner became employed by Edison in February 1993.
16
<PAGE>
SERVICE ANNUITY SYSTEM PLAN
The following table sets forth the annual retirement benefits payable under
the Service Annuity System Plan (including payments under the unfunded
equalization benefit plan) to employes who retire at age 65 at stated levels of
compensation and years of service at retirement (in 1994).
PENSION PLAN TABLE
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
HIGHEST
5-YEAR
AVERAGE ANNUAL NORMAL RETIREMENT BENEFITS AFTER SPECIFIED YEARS OF
EARNINGS SERVICE*
-------- --------------------------------------------------------------------
15 20 25 30 35 40
-------- -------- -------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
$ 100,000 $ 35,410 $ 45,018 $ 53,967 $ 62,423 $ 70,511 $ 73,825
200,000 70,821 90,036 107,934 124,847 141,023 147,649
300,000 106,231 135,055 161,901 187,270 211,534 221,474
400,000 141,641 180,073 215,868 249,693 282,046 295,298
500,000 177,052 225,091 269,835 312,116 352,557 369,123
600,000 212,462 270,109 323,802 374,540 423,069 442,948
700,000 247,872 315,128 377,769 436,963 493,580 516,772
800,000 283,283 360,146 431,736 499,386 564,092 590,597
900,000 318,693 405,164 485,703 561,809 634,603 664,421
1,000,000 354,103 450,182 539,670 624,233 705,114 738,246
1,100,000 389,514 495,201 593,637 686,656 775,626 812,071
1,200,000 424,924 540,219 647,604 749,079 846,137 885,895
1,300,000 460,334 585,237 701,571 811,502 916,649 959,720
1,400,000 495,745 630,255 755,538 873,926 987,160 1,033,544
1,500,000 531,155 675,274 809,505 936,349 1,057,672 1,107,369
</TABLE>
- --------
*An employe may elect a marital annuity for a surviving spouse which would
reduce the employe's normal retirement benefits. The amounts shown reflect
certain assumptions as to total earnings, but do not reflect the reduction
for Social Security benefits described below.
Service Annuity System Plan--Edison maintains a non-contributory Service
Annuity System Plan for all regular employes of Edison. The Plan provides
benefits upon retirement at age 65 which are based upon years of service and
percentages of the employe's (a) total earnings and (b) highest consecutive
five-year average annual base pay, reduced by 25% (less one percentage point
for each year of service less than 35 years) of the employe's estimated Social
Security benefits. An employe may retire prior to attaining age 60 and
generally will receive actuarially reduced benefits. A non-executive employe
may work beyond age 65 with additional benefits accruing for earnings and
service after age 65. Contributions to the Plan by Edison are based upon
actuarial determinations that take into account the amount deductible for
income tax purposes and the minimum contribution required under the Employe
Retirement Income Security Act of 1974, as amended. The compensation used in
the computation of annual retirement benefits under the Plan is substantially
equivalent to salary compensation as reported in the Summary Compensation Table
but is limited by the Internal Revenue Code as of January 1, 1994 to $150,000
for any one employe. Any reduction in the annual retirement benefits payable to
management employes under the Plan as a result of any limitations imposed by
the Internal Revenue Code is restored by an unfunded equalization benefit plan
maintained by Edison. Credited years of service under the Plan for the persons
named in the Summary Compensation Table are as follows: James J. O'Connor, 30
years; Samuel K. Skinner, 1 year; Cordell Reed, 33 years; ,
years; and , years.
17
<PAGE>
EMPLOYMENT AGREEMENT
Edison has an agreement with Mr. Skinner providing for a base salary of
$490,000 and an unfunded supplemental retirement benefit. The supplemental
retirement benefit does not vest until the completion of five years of
employment and provides a benefit, together with any benefits payable under the
Service Annuity System Plan and a social security supplement, equal to one-
third of Mr. Skinner's highest base salary during the preceding five years,
after five years of service, and increasing ratably annually to one-half of
such salary after ten years. The agreement also provides for a severance
payment equal to two years of base salary, payable over three years, and a
three year continuation of health and life insurance benefits in the event that
Mr. Skinner's employment is terminated by Edison for reasons other than death,
fraud or willful misconduct. The severance payment is subject to reduction to
the extent that Mr. Skinner receives compensation from another full-time
employer during the payment period.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
[To Be Filed By Amendment]
Compensation Committee
Harvey Kapnick George E. Johnson
Jean Allard Edward A. Mason
James W. Compton Frank A. Olson
Sue L. Gin Lando W. Zech, Jr.
Donald P. Jacobs
18
<PAGE>
SHAREHOLDER RETURN PERFORMANCE
Set forth below is a line graph comparing the quarterly percentage change in
the cumulative total shareholder return on Edison Common Stock ("CWE") against
the cumulative total return of the S&P 500 Composite Stock Index and the Dow
Jones Utility Stock Index for the five-year period ending December 31, 1993.
CUMULATIVE PERFORMANCE SINCE JANUARY 1, 1989
ASSUMING REINVESTMENT OF DIVIDENDS
(JANUARY 1, 1989 = $100)
<TABLE>
[GRAPH APPEARS HERE]
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMONG CWE COMMON STOCK, DJ UTIL AND S&P 500 COMPOSITE
<CAPTION>
Measurement Period CWE COMMON S&P 500
(Fiscal Year Covered) STOCK DJ UTIL COMPOSITE
- ------------------- ---------- ------- ---------
<S> <C> <C> <C>
Measurement Pt-
12/31/88 $100 $100 $100
FYE 12/31/89 $124 $135 $132
FYE 12/31/90 $125 $129 $127
FYE 12/31/91 $155 $149 $166
FYE 12/31/92 $ 98 $155 $179
FYE 12/31/93 $126 $170 $197
</TABLE>
19
<PAGE>
ITEM B. CORPORATE RESTRUCTURING PLAN
The management and the Board of Directors of Edison unanimously believe it is
in the best interest of Edison and its shareholders to change the corporate
structure of Edison so that it will become a separate subsidiary of a new
parent holding company, with the present holders of Edison Common Stock
becoming the holders of the common stock of the new parent.
To carry out such restructuring, Edison has caused to be incorporated a new
Illinois corporation, Holding Company, which has a nominal amount of stock
outstanding and no present business or properties of its own. Holding Company,
in turn, has caused to be incorporated a new Illinois corporation, Merging
Corp. The outstanding Holding Company stock is presently owned by Edison, and
the outstanding Merging Corp. stock is presently owned by Holding Company.
Edison and Merging Corp. have entered into the Merger Agreement under which,
subject to shareholder and regulatory approvals and the satisfaction or waiver
of certain conditions, Edison will become a subsidiary of Holding Company
through the Merger of Merging Corp. into Edison. In the Merger, the outstanding
shares of Edison Common Stock will be converted on a share-for-share basis into
Holding Company Common Stock. A copy of the Merger Agreement is attached to
this Prospectus and Proxy Statement as Exhibit A and is incorporated herein by
reference.
In addition, Edison, Holding Company and Merging Corp. have entered into a
Supplemental Agreement which provides for the issuance of Holding Company
Common Stock in the Merger and pursuant to plans under which participants
currently receive Edison Common Stock. A copy of the Supplemental Agreement is
attached to this Prospectus and Proxy Statement as Exhibit B and is
incorporated herein by reference.
It is intended that the restructuring will not have any adverse Federal
income tax consequences to the current holders of Edison Common Stock, Edison
Preferred Stock or Edison Preference Stock. See "Federal Income Tax
Consequences."
REASONS FOR THE RESTRUCTURING
General. The primary purpose of the proposed restructuring into a holding
company system for Edison is to permit Edison affiliates to engage in non-
utility businesses without the prior approval of, or being regulated by, the
Illinois Commerce Commission ("Illinois Commission"), in part to permit timely
responses to competitive activities which could adversely affect the Edison
utility business, to insulate the Edison utility business from the business
risks and obligations of its non-utility affiliates and to provide financial
flexibility and facilitate capital allocation and managerial accountability.
Competition. The demand for electricity provided by Edison and other utility
companies is becoming increasingly affected adversely by competition from non-
utility entities which seek to provide energy services to users of large
quantities of electricity, such as educational, health care and governmental
institutions, and industrial, commercial and wholesale customers.
Such competition results in part from, among other things:
(i) cogeneration facilities developed under the Public Utility Regulatory
Policies Act of 1978 ("PURPA"), which produce electricity which may be used
by the cogenerator or, as required by PURPA, purchased by the local
electric utility; such facilities are qualifying facilities ("QFs");
20
<PAGE>
(ii) generation facilities which may be developed in accordance with the
Energy Policy Act of 1992 ("Energy Act") by non-utility entities which sell
electricity at wholesale to electric utilities; such facilities are exempt
wholesale generators ("EWGs");
(iii) generation facilities which provide electricity to a single user of
large quantities of electricity; such facilities are typically situated on
the property where such electricity is used;
(iv) the use of natural gas and other forms of energy to satisfy energy
needs which historically have been supplied primarily or exclusively by
electricity;
(v) FERC orders under the Energy Act which could require an electric
utility, such as Edison, to transmit or "wheel" on its own transmission
system power generated for wholesale sale by other electric utilities, QFs
and EWGs; and
(vi) unregulated energy services provided to users of large quantities of
electricity by independent entities or affiliates of utility companies,
any of which may reduce the quantity, or change the use, of electricity sold by
an electric utility, such as Edison, and thereby reduce its revenues and
profits.
Prior to recent amendments to the Illinois Public Utilities Act, Edison was
unable to take any action, either directly or through an Edison subsidiary, to
mitigate or prevent Edison revenue losses from competitive activities of others
without the prior approval of the Illinois Commission. Historically, many
Edison proceedings before the Illinois Commission have been lengthy and
contentious. In such proceedings, Illinois Commission staff, Edison competitors
and customers, special interest advocates and others often seek to obtain some
advantage at the expense of Edison generally, as conditions to such approval.
The probable lengthy duration of Illinois Commission proceedings, potentially
restrictive conditions in any Illinois Commission order, subsequent reversal or
modification by the Illinois Commission of such order, and the possible legal
appeal, stay or reversal of any such order could prevent Edison, either
directly or through subsidiaries, from taking timely and effective competitive
action to mitigate or prevent revenue loss.
Furthermore, the uncertainties about whether and when the Illinois Commission
might issue an order permitting Edison or its subsidiaries to provide energy
services to a particular customer, the results of any legal appeal of such
order and the possibility that such services could be regulated by the Illinois
Commission, could dissuade such customer from contracting to obtain such
services from Edison or its subsidiaries. Edison believes that such
uncertainties were the primary, and perhaps only, reason that the Metropolitan
Pier and Exposition Authority ("MPEA") awarded the contract to provide district
cooling and heating services to its McCormick Place exposition facilities in
Chicago, to a non-utility entity and an unregulated subsidiary of a public
utility holding company, instead of to Edison. Instead of using electricity at
peak daytime rates to operate conventional air conditioning equipment at
McCormick Place, the Edison proposal would have used electricity to produce ice
at low off-peak rates to cool McCormick Place, whereas the proposal selected by
the MPEA will use natural gas to operate equipment to cool McCormick Place. The
result is the loss of a significant customer for Edison electricity, instead of
merely shifting electricity sales from peak daytime hours to off-peak hours.
Consequently, Edison proposes to create a holding company which could create
subsidiaries to compete with non-utility businesses, including unregulated
subsidiaries of other public utility holding companies, to provide unregulated
energy and other services and products to Edison customers and others. Some of
such activities could reduce energy costs of users of large quantities of
electricity and thereby reduce or eliminate incentives for such users to obtain
electricity from other sources, or to switch from using electricity to natural
gas or another form of energy.
21
<PAGE>
See "Illinois Public Utilities Act."
Other. The Edison holding company system will clearly separate its electric
utility business from the non-utility businesses of other Holding Company
subsidiaries. Operating management of Edison will continue to maintain its
focus on meeting its public utility responsibilities. The separation of utility
and non-utility activities will (i) facilitate the allocation of expenses, (ii)
protect Edison from any adverse effects of non-utility operations, (iii)
facilitate the regulation of the Edison utility operations by the Illinois
Commission and (iv) permit the Edison capital structure to be managed
efficiently.
The non-utility subsidiaries of Holding Company would have the flexibility to
use various financing techniques suitable for non-utility businesses, without
any impact on the capital structure or credit of Edison. Such non-utility
businesses could pursue business opportunities which potentially could enhance
the financial strength and operating results of Holding Company.
The Edison electric utility business is expected to constitute the
predominant part of Holding Company's earning power for the foreseeable future.
Edison operations will continue to be subject to the jurisdiction of the
Illinois Commission, FERC and NRC, and conducted with the same assets and
management. The management and Board of Directors of Edison believe that the
restructuring will have no adverse effect on Edison, its security holders or
its customers.
MERGER AGREEMENT
The Merger Agreement has been unanimously approved by the Boards of Directors
of Edison and Merging Corp., and they have executed the Merger Agreement,
subject to its approval by the holders of the outstanding Edison Common Stock,
Edison Preferred Stock and Edison Preference Stock as described under "Voting."
In the Merger,
(1) each outstanding share of Edison Common Stock will be converted into
one new share of Holding Company Common Stock;
(2) each outstanding share of Edison Preferred Stock and each outstanding
share of Edison Preference Stock will remain outstanding and unchanged (see
"Treatment of Preferred and Preference Stock");
(3) the outstanding shares of Merging Corp. common stock will be
converted into the same number of shares of Edison Common Stock which are
outstanding immediately prior to the effective time of the Merger, and all
of the Edison Common Stock will then be owned by Holding Company; and
(4) the shares of Holding Company Common Stock presently held by Edison
will be cancelled.
As a result, Edison will become a subsidiary of Holding Company, and all of the
Holding Company Common Stock outstanding immediately after the Merger will be
owned by the holders of Edison Common Stock outstanding immediately prior to
the Merger. See Exhibit A.
The Edison Preferred Stock, Edison Preference Stock, Warrants, first mortgage
bonds, debentures and other long-term debt of Edison will be unchanged and will
continue to be outstanding securities and obligations of Edison after the
Merger. The Edison first mortgage bonds will continue to be secured by a first
mortgage lien on all properties of Edison which are currently subject to such
lien. The Edison Restated Articles of Incorporation as then in effect will not
be changed as a result of the Merger.
SUPPLEMENTAL AGREEMENT
Holding Company, Edison and Merging Corp. have entered into a Supplemental
Agreement in which (a) Holding Company has agreed to issue Holding Company
Common Stock in the Merger and under the Edison Stock Plans (see "Stock
Plans"), (b) Edison and Merging Corp. have agreed to merge pursuant to the
Merger Agreement and (c) Edison and Merging Corp. have agreed not to amend the
Merger Agreement without the consent of Holding Company. See Exhibit B.
22
<PAGE>
REQUIRED REGULATORY APPROVALS
Public Utility Holding Company Act of 1935. Commonwealth Edison Company of
Indiana, Inc. ("Indiana Company"), is a public utility company and a wholly-
owned subsidiary of Edison, which is thus a public utility holding company as
well as a public utility company. As a result of the Merger, Holding Company
will become an affiliate of both Edison and the Indiana Company. Section
9(a)(2) of the 1935 Act requires the prior approval of the SEC under Section 10
of the 1935 Act for any person to become an affiliate of more than one public
utility company, and Holding Company has applied for such approval. Holding
Company has also applied to the SEC for an order exempting Holding Company from
all provisions of the 1935 Act, except Section 9(a)(2) thereof. The basis for
such exemption is that Holding Company and Edison are each organized and carry
on their business substantially in Illinois, and that Holding Company derives
no material part of its income from the Indiana Company.
Federal Power Act. The FERC has held that the transfer of common stock of a
public utility company, such as Edison, from its existing shareholders to a
holding company in a transaction such as the Merger constitutes a transfer of
the "ownership and control" of the facilities of such utility which is subject
to FERC jurisdiction under the Federal Power Act ("FPA"), and is thus a
"disposition of facilities" subject to FERC review and approval under Section
203 of the FPA; Edison has applied for such approval.
Atomic Energy Act. A provision in the Atomic Energy Act requires NRC consent
for the transfer of control of NRC licenses. In response to an inquiry from
another utility, the NRC Staff has asserted that this provision applies to the
creation of a holding company by an NRC-licensed utility company in a
transaction such as the Merger. Edison holds several NRC licenses, including
operating licenses for its nuclear generating stations, and has applied for NRC
approval under the Atomic Energy Act of the transfer of control of such
licenses in the Merger.
Conditions. The Merger is conditioned on the receipt of orders satisfactory
to Edison and Holding Company from the SEC, FERC and NRC in response to the
applications described above.
ILLINOIS PUBLIC UTILITIES ACT
The Illinois Public Utilities Act ("Illinois Act") requires prior Illinois
Commission approval of reorganizations of Illinois public utilities, such as
Edison, and the Merger is such a reorganization. However, Amendments ("1993
Amendments") to the Illinois Act which became effective on July 13, 1993,
permit certain Illinois electric utilities, including Edison, to create and
become a subsidiary of a holding company on or before January 14, 1995, without
the approval or consent of the Illinois Commission, except that such date would
be extended by a petition for such extension filed with the Illinois Commission
on such date, until the Illinois Commission makes certain findings and denies
such petition.
The 1993 Amendments were adopted to enable Edison and any other qualifying
Illinois electric utility to reorganize into a holding company system without
the approval or consent of the Illinois Commission in order to avoid the delays
which are inherent in Illinois Commission proceedings on utility reorganization
applications; Illinois Commission proceedings on another recent and very
similar Illinois utility reorganization application endured for more than two
and two-thirds years before the Illinois Commission approved such
reorganization. The 1993 Amendments recognize that it is important for Illinois
electric utilities to form holding companies expeditiously to enable them to
respond quickly to current and expected competitive activities of non-utility
entities, as described under "Reasons for the Restructuring--Competition."
The restructuring of Edison into a holding company system which is described
in this Prospectus and Proxy Statement is a reorganization permitted by the
1993 Amendments and will not require the approval or consent of the Illinois
Commission.
23
<PAGE>
The 1993 Amendments also permit an Illinois electric utility which has
initiated certain actions to create and become a subsidiary of a holding
company pursuant to the 1993 Amendments, to form, invest in, and guarantee
obligations of subsidiaries which engage in specified energy related
businesses, without the approval or consent of the Illinois Commission.
The 1993 Amendments also (i) require Holding Company to pay or reimburse
Edison for all costs incurred by Edison in connection with the Merger, if it
occurs; (ii) permit Edison to make a loan to Holding Company of up to the
lesser of $10 million or 2.5% of Edison's retained earnings as reported in the
most recent Annual Report filed by Edison with the Illinois Commission, bearing
interest at the rate of 10% per annum, and require that such loan be repaid not
later than 240 days after the Merger occurs; (iii) require Holding Company and
Edison to file certain information with the Illinois Commission; (iv) require
the Illinois Commission to reduce Edison's rates to reflect additional revenues
it would have earned if subsidiaries of Edison or Holding Company had not
provided services specified in the 1993 Amendments, if the Illinois Commission
finds that there was no reasonable probability that customers for such services
would have obtained such services from other sources or provided such services
for themselves; (v) limit the amount of Edison investments in and guarantees of
obligations of subsidiaries formed pursuant to the 1993 Amendments, including
CECo Enterprises and its subsidiaries; (vi) require Edison to transfer or
liquidate its interest in subsidiaries formed pursuant to the 1993 Amendments,
including CECo Enterprises and its subsidiaries, if Edison is not a subsidiary
of Holding Company on January 14, 1995, or such later date as may be determined
in an Illinois Commission order which makes certain findings and denies a
petition to extend such date; (vii) provide for Illinois Commission hearings on
contracts or arrangements pursuant to which Edison provides services and
facilities to its affiliates, including CECo Enterprises; and (viii) require
Edison to make any portion of its electric distribution and transmission
facilities which would be used by an Edison affiliate to make an unregulated
sale of electricity, available at the same price and under the same terms and
conditions to any other person who offers to make such sale.
TRANSFER OF EDISON ASSETS TO HOLDING COMPANY
CECo Enterprises has been formed by Edison pursuant to the 1993 Amendments,
and will engage through subsidiaries, including Northwind Inc., only in energy
related businesses permitted by the 1993 Amendments until CECo Enterprises is
transferred to Holding Company. The 1993 Amendments require that Edison
transfer or liquidate its interest in CECo Enterprises on the date that Edison
becomes a subsidiary of Holding Company; consequently, Edison intends to
transfer to Holding Company on such date, the stock of CECo Enterprises as a
dividend on the Edison Common Stock held by Holding Company.
Except for dividends or other distributions with respect to Edison Common
Stock held by Holding Company, it is expected that Edison will not transfer
without adequate consideration any of its assets to Holding Company or any
Holding Company subsidiaries. Any transactions, other than dividends on Edison
Common Stock held by Holding Company and transactions permitted by the 1993
Amendments, between Edison and any of its affiliates, including Holding
Company, would require the prior approval of the Illinois Commission.
DIVIDEND POLICY
Holding Company does not now, nor will it after the Merger, conduct directly
any business operations from which it will derive any revenues. Holding Company
plans to obtain funds for its own operations from dividends paid to Holding
Company on the stock of its subsidiaries, and from sales of securities or debt
incurred by Holding Company. Dividends on Holding Company Common Stock will
initially depend upon the earnings, financial condition and capital
requirements of Edison, and its ability to pay dividends on the Edison Common
Stock owned by Holding Company. It is currently contemplated
24
<PAGE>
that Holding Company will pay quarterly dividends on Holding Company Common
Stock at the same rate, and on approximately the same schedule as, dividends
have most recently been paid on Edison Common Stock. The quarterly dividend
most recently declared by the Edison Board of Directors on Edison Common Stock
was 40c per share payable February 1, 1994, to holders of record of such stock
on December 31, 1993.
TREATMENT OF PREFERRED AND PREFERENCE STOCK
The Merger and restructuring will not result in any change in the outstanding
shares of Edison Preferred Stock or Edison Preference Stock. The decision to
have the Edison Preferred Stock and Edison Preference Stock continue as
securities of Edison is based upon, among other factors, a desire not to alter
or potentially alter the nature of the investment represented by such stock, as
well as the need of Edison not to foreclose future issuances of Preferred Stock
and Preference Stock to help meet its capital requirements. The electric
utility operations of Edison presently constitute and are expected to continue
to constitute, the predominant part of the consolidated assets and earning
power of Holding Company. Accordingly, it is believed that the investment
ratings of the Edison Preferred Stock and Edison Preference Stock will not be
affected by the Merger, and that such shares will retain their qualification
for legal investment for certain investors, by remaining as capital stock of
Edison. Edison Preferred Stock and Edison Preference Stock will continue to
rank senior to Edison Common Stock as to dividends and as to assets of Edison
upon any liquidation.
The restructuring is not expected to affect adversely the holders of Edison
Preferred Stock or Edison Preference Stock. However, neither will the assets or
earnings of the Holding Company subsidiaries (other than Edison) be of any
potential benefit to the holders of such stock if the restructuring is
consummated. See "Transfer of Edison Assets to Holding Company."
After the Merger, Edison will continue to be subject to the informational
requirements of the 1934 Act, and will be required to hold annual meetings of
its Preferred, Preference and Common shareholders. However, Edison may decide
not to solicit proxies from its Preferred and Preference shareholders for the
election of Directors and other actions not requiring class votes of such
shareholders, because the shares of Edison Common Stock to be held by Holding
Company will have sufficient voting power to elect Edison Directors and to take
such action.
POSSIBLE MINORITY INTEREST
As of January 21, 1994, there were outstanding (i) 285,806 shares of Edison
Preferred Stock which are convertible at the option of their holders into an
aggregate of 291,522 shares of Edison Common Stock, and (ii) 128,550 Warrants
which are convertible at the option of their holders into an aggregate of
42,850 shares of Edison Common Stock. Such Edison Preferred Stock and Warrants
will not be changed in the Merger, and thereafter will continue to be
convertible into shares of Edison Common Stock. Immediately after the Merger,
Holding Company will own all of the outstanding shares of Edison Common Stock.
Shares of Edison Common Stock issued upon conversion of Edison Preferred
Stock and Warrants prior to the effective time of the Merger will be converted
in the Merger into shares of Holding Company Common Stock, which will be listed
and traded on the New York, Chicago and Pacific Stock Exchanges.
Following the Merger the Edison Common Stock will no longer be listed or
traded on any stock exchange and there will be no other public market for any
shares of Edison Common Stock into which Edison Preferred Stock or Warrants are
converted after the Merger.
The minority interest in Edison Common Stock which would be created by the
conversion of Edison Preferred Stock or Warrants into shares of Edison Common
Stock after the effective time of the Merger, would require Edison to pay to
the holders of such shares of Edison Common Stock dividends at the same times
and in the same amounts as Edison pays dividends to Holding Company on its
shares of Edison Common Stock. The amount of dividends on Edison Common Stock
following the Merger is expected to be greater than the amount of dividends on
Holding Company Common Stock to the extent Holding Company needs funds to pay
its expenses and to invest in its subsidiaries.
25
<PAGE>
AMENDMENT OR TERMINATION
By mutual consent of their respective Boards of Directors, Edison and Merging
Corp. may amend any of the terms of the Merger Agreement at any time before or
after its approval by their respective shareholders, but not after the time
that the Articles of Merger are filed with the Illinois Secretary of State, but
no such amendment may, in the sole judgment of the Board of Directors of
Edison, materially and adversely affect the rights of the holders of Edison
stock.
The Merger Agreement may be terminated and the Merger abandoned at any time
before or after the shareholders of Edison and Merging Corp. have approved the
Merger Agreement, by action of the Board of Directors of Edison if it
determines that consummation of the transactions provided for in the Merger
Agreement would, for any reason, be inadvisable or not in the best interests of
Edison or its shareholders.
RIGHTS OF DISSENTING SHAREHOLDERS
Sections 11.65 and 11.70 of the Illinois Business Corporation Act of 1983
("Illinois Business Corporation Act") are set forth in Exhibit D and provide
that the holders of Edison Common Stock, Edison Preferred Stock and Edison
Preference Stock entitled to vote at the regular annual meeting have the right
to dissent from consummation of the Merger and obtain the "fair value" of their
shares if the Merger is effected.
In order to perfect such dissenters' rights, a shareholder must (a) deliver
to Edison at the Office of the Corporate Secretary, 37th Floor, 10 South
Dearborn Street, P.O. Box 767, Chicago, Illinois 60690-0767, prior to the
taking of the vote of the shareholders upon the approval of the Merger
Agreement, a written demand for payment for his or her shares if the Merger is
consummated; and (b) not vote his or her shares in favor of the approval of the
Merger Agreement.
Within 10 days after the Merger becomes effective or 30 days after delivery
of the written demand for payment, whichever is later, Edison will advise each
shareholder who perfects his or her right to dissent of the opinion of Edison
as to the estimated fair value of the shareholder's shares. "Fair value" with
respect to a dissenter's shares means the value of such shares immediately
before the consummation of the Merger, excluding any appreciation or
depreciation in anticipation of the Merger, unless such exclusion would be
inequitable. At such time, Edison must elect to (a) make a commitment to
purchase such shares at such estimated fair value or (b) instruct such
dissenting shareholder to sell his or her shares (which, with respect to Edison
Common Stock, will have been converted into shares of Holding Company Common
Stock) within 10 days thereafter. Edison may instruct the shareholder to sell
shares only if there is a public market on which such shares may be readily
sold. Such a market will exist for Edison Common Stock (which will have been
converted into Holding Company Common Stock at the Effective Time of the
Merger) because the Holding Company Common Stock will be listed on the New
York, Chicago and Pacific Stock Exchanges immediately following the Merger.
Such a public market will exist for Edison Preferred Stock and for only certain
Series of Edison Preference Stock. See "Edison Preferred Stock and Edison
Preference Stock Market Information." If Edison elects to direct the dissenting
shareholder to sell his or her shares and the shareholder does not sell them
within such 10-day period, the shareholder shall be deemed to have sold such
shares of Holding Company Common Stock or Edison Preferred Stock, or Series of
Edison Preference Stock which are listed on the New York Stock Exchange, at the
average closing price of such Stock on such Exchange during such 10-day period,
or to have sold his or her shares of other Series of publicly traded Edison
Preference Stock at the average of the bid and asked price for such shares
quoted by a principal market maker during such 10-day period, as the case may
be.
A shareholder who perfects his or her right to dissent retains all rights of
a shareholder until the Merger is consummated, at which time Edison will pay to
each dissenter, if Edison has not instructed the dissenting shareholders to
sell their shares in the public market, the amount Edison estimates to be the
fair value of such dissenter's shares, plus interest from the date the Merger
was consummated until the date of payment, upon receipt by Edison of the
certificates representing such shares. Edison will include with such payment a
written explanation of the manner by which the interest was calculated.
26
<PAGE>
If the shareholder does not agree with the Edison estimated fair value or
amount of interest, the shareholder must notify Edison in writing, within 30
days after delivery of the Edison statement of fair value, of the shareholder's
estimated fair value of such shares and amount of interest, and demand payment
of the difference between the shareholder's estimate and (a) the amount paid by
Edison or (b) the proceeds (or the amount deemed to be proceeds) of the sale by
the shareholder, whichever is applicable because of the option selected by
Edison, as described above. If, within 60 days after delivery to Edison of the
shareholder's notification of estimated fair value and amount of interest,
Edison and the shareholder have not agreed in writing on the fair value of the
shares or amount of interest, Edison shall either pay the shareholder the
difference between the respective estimated values or file a petition in the
Circuit Court of Cook County, Illinois, requesting the Court to determine the
fair value of the shares and amount of interest. If the Court determines that
the fair value of the shares plus interest exceeds the amount paid by Edison or
the proceeds of the sale of shares, as the case may be, the dissenting
shareholder shall be entitled to judgment for the amount of the excess. The
Court may also assess the costs of the proceeding against either Edison or one
or more dissenting shareholders, upon making certain findings.
In connection with the Merger, Edison intends to reserve the right to elect,
with respect to Common Stock and Preferred Stock, and Preference Stock for
which there is a public market, (a) to offer to pay to dissenting shareholders
the original estimate of Edison of the fair value of such shares and to pay any
additional amount agreed upon by Edison and the shareholder or ordered by the
Court to be paid by Edison to the shareholder as provided in the Illinois
Business Corporation Act, or (b) to direct a dissenting shareholder to sell his
or her shares and to pay only that amount, if any, in excess of the proceeds of
such sale (or the amount of proceeds deemed to have been received) as may be
agreed upon by Edison and the shareholder or ordered by the Court to be paid by
Edison to the shareholder as provided in the Illinois Business Corporation Act.
With respect to Edison Preference Stock for which there is no public market,
Edison does not have the option described in (b) of the preceding sentence and
it will pay to dissenting holders of such shares the fair value of such shares
determined as described herein.
In perfecting a shareholder's right to dissent, neither a vote against
approval of the Merger Agreement nor a proxy directing such a vote will be
deemed to satisfy the requirement that a written demand for payment be
delivered to Edison prior to the taking of the vote thereon. However, a
shareholder who has delivered such written demand before the taking of the vote
thereon will not be deemed to have waived his or her right to dissent either by
failing to vote against approval of the Merger Agreement or by failing to
furnish a proxy directing such vote.
Under the Merger Agreement, the Edison Board of Directors has the right to
abandon the Merger for any reason (even after shareholder approval but before
the time the Articles of Merger are filed with the Illinois Secretary of
State), and such right may be exercised if the Edison Board of Directors
considers the aggregate cost of purchasing dissenting shares to be
unacceptable.
EFFECTIVENESS OF THE RESTRUCTURING
After the Edison shareholders have approved the Merger Agreement,
satisfactory orders of the SEC, FERC and NRC have been received, and all other
conditions to the Merger have been satisfied or waived, Edison and Merging
Corp. will file Articles of Merger with the Illinois Secretary of State. The
Merger will thereafter become effective on the date that the Illinois Secretary
of State issues a Certificate of Merger in accordance with the Illinois
Business Corporation Act.
EXCHANGE OF STOCK CERTIFICATES
If the Merger is effected, it will not be necessary for holders of Edison
Common Stock to exchange their existing stock certificates for certificates for
Holding Company Common Stock. The certificates which presently represent
outstanding shares of Edison Common Stock will automatically represent shares
of Holding Company Common Stock. New certificates bearing the name of the
Holding Company will be issued in the future if, and as, certificates
representing presently outstanding shares of Edison Common Stock are presented
for exchange or transfer.
27
<PAGE>
FEDERAL INCOME TAX CONSEQUENCES
The Merger Agreement provides that the proposed restructuring will not occur
unless Edison receives either a ruling from the Internal Revenue Service or an
opinion of counsel, satisfactory to the Board of Directors, with respect to the
Federal income tax consequences of the Merger. Edison has received a ruling
from the Internal Revenue Service regarding the continuation of the Edison
affiliated group of corporations following the Merger. This ruling ensures,
among other matters, that Holding Company, Edison and all current Edison
subsidiaries will be entitled to file a consolidated Federal income tax return
following the Merger and that the distribution by Edison of the stock of CECo
Enterprises to Holding Company on the date of the Merger will not be a
currently taxable event. Edison has received an opinion from its counsel,
Sidley & Austin, regarding certain Federal income tax consequences of the
Merger, to the effect that:
(1) no gain or loss will be recognized by non-dissenting holders of
Edison Common Stock upon the conversion of Edison Common Stock into Holding
Company Common Stock in the Merger;
(2) no gain or loss will be recognized by non-dissenting holders of
Edison Preferred Stock or Edison Preference Stock as a result of the
Merger;
(3) the basis of the Holding Company Common Stock deemed received in the
Merger by non-dissenting holders of Edison Common Stock will be the same as
the basis of the Edison Common Stock converted into such Holding Company
Common Stock in the Merger;
(4) the holding period of Holding Company Common Stock deemed received in
the Merger by non-dissenting holders of Edison Common Stock will include
the period during which they held the Edison Common Stock converted into
such Holding Company Common Stock in the Merger, provided such Edison
Common Stock is held as a capital asset by such holders at the effective
time of the Merger; and
(5) no gain or loss will be recognized by Holding Company or Edison as a
result of the Merger.
Holders of Edison Common Stock, Edison Preferred Stock or Edison Preference
Stock who contemplate dissenting from the Merger should consult their tax
advisors concerning the tax consequences thereof.
LISTING OF HOLDING COMPANY COMMON STOCK
Holding Company will apply to have its Common Stock listed on the New York,
Chicago and Pacific Stock Exchanges. It is expected that such listings will
become effective on the effective date of the Merger, subject to the rules of
the New York, Chicago and Pacific Stock Exchanges.
REGULATION OF HOLDING COMPANY
Holding Company, as the owner of the Edison Common Stock and, indirectly, the
Indiana Company common stock, will be a holding company under the 1935 Act.
However, Holding Company will be exempt from all provisions of the 1935 Act
except Section 9(a)(2) thereof, which would require prior SEC approval of the
direct or indirect acquisition by Holding Company of 5% or more of the voting
securities of any other electric or gas utility company. There are also limits
on the extent to which Holding Company and its non-utility subsidiaries can
enter into businesses which are not "functionally related" to the electric
utility business without raising questions about Holding Company's exempt
status. SEC policies regarding the scope of permissible non-utility activities
of a public utility holding company are subject to change but guidelines
established in prior decisions of the SEC would require Holding Company to
remain engaged primarily and predominantly in the electric utility business and
to limit the size of its activities outside of such business relative to
Holding Company as a whole.
Holding Company has no present intention of becoming a registered holding
company subject to regulation by the SEC under the 1935 Act.
28
<PAGE>
MANAGEMENT
The Directors of Edison will also become the Directors of Holding Company at
the effective time of the Merger, and they will thereafter serve as the
Directors of both companies. If the Edison shareholders approve the Merger
Agreement, they will be considered also to have ratified the election of such
persons as the Directors of Holding Company. Until the Merger becomes
effective, James J. O'Connor, Chairman and a Director of Edison, and Samuel K.
Skinner, President and a Director of Edison, will be the only Directors of
Holding Company.
The current executive officers of Holding Company are also executive officers
of Edison. The Holding Company executive officers are:
<TABLE>
<S> <C>
James J. O'Connor Chairman
Samuel K. Skinner President
John C. Bukovski Vice President
Roger F. Kovack Comptroller
Dennis F. O'Brien Treasurer
David A. Scholz Secretary
</TABLE>
HOLDING COMPANY CAPITAL STOCK
Authorized. The authorized capital stock of Holding Company consists of 400
million shares of Common Stock, without par value, the provisions of which are
included in the Holding Company Articles of Incorporation attached to this
Prospectus and Proxy Statement as Exhibit C.
Common Stock. Holders of Holding Company Common Stock are entitled to receive
(a) dividends when, as and if declared by its Board of Directors, and (b) all
of the assets of Holding Company available for distribution on a pro rata basis
upon its liquidation, dissolution or winding up, after the payment of all debts
and other obligations.
Each share of Holding Company Common Stock entitles its holder to one vote on
matters properly submitted to a vote of Holding Company shareholders, and, like
the holders of Edison Common Stock, they have the right to cumulate their votes
in elections of Directors.
Except for differences described under "Comparative Shareholders' Rights,"
the provisions of the Articles of Incorporation of Holding Company which
establish the rights of the holders of its Common Stock are essentially the
same as those in the Restated Articles of Incorporation of Edison.
No holder of Holding Company Common Stock has any preemptive or preferential
right to subscribe for any additional issue of Holding Company Common Stock or
to subscribe for any security convertible into Holding Company Common Stock. No
redemption, conversion or sinking fund provisions are applicable to shares of
Holding Company Common Stock.
The Holding Company Common Stock issued in the Merger will be fully paid and
nonassessable.
COMPARATIVE SHAREHOLDERS' RIGHTS
Edison and Holding Company are both Illinois corporations. When the Merger
becomes effective, holders of Edison Common Stock will become holders of
Holding Company Common Stock, and their rights will be governed by the Articles
of Incorporation of Holding Company ("Holding Company Articles") instead of the
Restated Articles of Incorporation of Edison ("Edison Articles"). Holding
Company Articles have been prepared in accordance with the Illinois Business
Corporation Act and give the Holding Company broad corporate powers to engage
in any lawful activity for which a corporation may be formed under the laws of
the State of Illinois. A copy of Holding Company Articles is attached as
Exhibit C to this Prospectus and Proxy Statement.
29
<PAGE>
Certain differences between the rights of holders of Holding Company Common
Stock and those of holders of Edison Common Stock are summarized below.
(a) Preferred and Preference Stock. Holding Company Articles do not
authorize any class of stock other than Common Stock. In addition to the
presently outstanding shares of Edison Preferred Stock and Edison
Preference Stock, as of January 21, 1994, there were 850,000 and 9,810,451
authorized but unissued shares of Edison Prior Preferred Stock and Edison
Preference Stock, respectively, which may be issued in series having such
rights and preferences as may be designated by the Edison Board of
Directors. There are no restrictions upon the issuance of any of such
authorized shares except for any actions required by Illinois law to be
taken by the Edison Board of Directors.
(b) Common Stock. Holding Company Articles authorize the issuance of
400,000,000 shares of Common Stock whereas the Edison Articles presently
authorize the issuance of 250,000,000 shares of Common Stock. As of January
21, 1994, there were 213,765,354 shares of Edison Common Stock issued and
outstanding, and 5,988,171 shares of Edison Common Stock reserved for
issuance under certain Stock Plans. There will be the same number of shares
of Holding Company Common Stock issued, outstanding and reserved for
issuance under such Stock Plans immediately after the Merger as the number
of shares of Edison Common Stock which are issued, outstanding and reserved
for such issuance immediately prior to the Merger. The additional
authorized but unissued shares of Holding Company Common Stock could be
used for stock splits or for acquisitions.
Indemnification. Holding Company Articles require Holding Company in certain
circumstances to indemnify its Directors, officers, employes, agents and
certain other persons who serve Holding Company, to the full extent permitted
by the Illinois Business Corporation Act. Holding Company Articles also
authorize it to enter into agreements with its Directors, officers, employes
and others to provide for such indemnification.
Although the Edison Articles currently contain no provisions relating to
indemnification, its By-Laws contain provisions requiring Edison in certain
circumstances to indemnify its Directors, officers, employes, agents and
certain other persons who serve Edison. The Edison shareholders at their
regular annual meeting will consider a proposal to add to the Edison Articles,
provisions relating to indemnification which are the same as those included in
the Holding Company Articles. See "Item C. Amendment of the Edison Restated
Articles of Incorporation."
Limitation on Director Liability. Holding Company Articles include a
provision which limits the personal liability of Holding Company Directors for
monetary damages arising from breach of fiduciary duty, as authorized by a
change to the Illinois Business Corporation Act which became effective January
1, 1994.
Although the Edison Articles currently contain no provisions limiting the
personal liability of Edison Directors for monetary damages, the Edison
shareholders at their regular annual meeting will consider a proposal to add to
the Edison Articles, provisions limiting the liability of Edison Directors
which are the same as those included in the Holding Company Articles. See "Item
C. Amendment of the Edison Restated Articles of Incorporation."
Purpose Clause. The corporate purposes for which Edison may engage in
business are those related to electric, gas and certain other utility
businesses and related activities. Holding Company is authorized by its
Articles, as permitted by the Illinois Business Corporation Act, to engage in
any and all lawful businesses.
Deferred Compensation Plan. Edison Articles permit the Edison Board of
Directors to establish a Deferred Compensation Plan for selected key executive
and management employes of Edison and its wholly-owned subsidiaries; Holding
Company Articles do not provide for any such Plan. The Holding Company Board of
Directors could establish a similar Plan even though the Holding Company
Articles do not specifically provide for such a Plan.
30
<PAGE>
STOCK PLANS
If the Merger is consummated, the Edison Employe Savings and Investment Plan,
1993 Long-Term Incentive Plan, Employe Stock Purchase Plan and Dividend
Reinvestment and Stock Purchase Plan will be amended to provide that Holding
Company Common Stock will be delivered instead of Edison Common Stock pursuant
to such Plans. By approving the Merger Agreement, the Edison shareholders will
be considered also to have ratified the amendment of such Plans to provide for
the delivery of Holding Company Common Stock thereunder.
TRANSFER AGENT AND REGISTRAR
The Transfer Agent and Registrar for Edison Common Stock is First Chicago
Trust Company of New York. The Transfer Agent and Registrar for Holding Company
Common Stock is First Chicago Trust Company of New York.
EDISON COMMON STOCK MARKET PRICES AND DIVIDENDS
Edison Common Stock is listed and principally traded on the New York, Chicago
and Pacific Stock Exchanges. The table below sets forth the dividends declared
and the high and low sales prices of Edison Common Stock for the periods
indicated as reported in The Wall Street Journal as New York Stock Exchange--
Composite Transactions.
<TABLE>
<CAPTION>
PRICE RANGE
DIVIDENDS ---------------------------------
DECLARED HIGH LOW
--------- ------- -------
<S> <C> <C> <C>
1992
First Quarter $0.75 $40 1/8 $33 3/4
Second Quarter 0.75 34 1/4 26 5/8
Third Quarter 0.40 27 5/8 22 7/8
Fourth Quarter 0.40 26 21 3/4
1993
First Quarter $0.40 $28 1/4 $22 7/8
Second Quarter 0.40 29 7/8 25 5/8
Third Quarter 0.40 31 5/8 27 3/8
Fourth Quarter 0.40 30 5/8 27 3/8
1994
First Quarter
(through March , 1994)
</TABLE>
31
<PAGE>
EDISON PREFERRED STOCK AND EDISON PREFERENCE STOCK MARKET INFORMATION
The Edison Preferred Stock and six Series of Edison Preference Stock are
listed and principally traded on the New York, Chicago and Pacific Stock
Exchanges. The table below sets forth the high and low sales prices of Edison
Preferred Stock and Preference Stock of such Series for the periods indicated
as reported in The Wall Street Journal as New York Stock Exchange--Composite
Transactions.
<TABLE>
<CAPTION>
EDISON
PREFERRED STOCK
---------------
HIGH LOW
------- -------
<S> <C> <C>
1992
First Quarter $39 3/4 $34 1/2
Second Quarter 34 3/4 27 1/4
Third Quarter 29 26 1/8
Fourth Quarter 28 3/4 26 1/2
1993
First Quarter $28 1/2 $25 3/4
Second Quarter 28 7/8 26 1/2
Third Quarter 31 3/4 27 3/8
Fourth Quarter 30 3/4 28 1/8
1994
First Quarter
(through
March ,
1994)
<CAPTION>
EDISON PREFERENCE STOCK
------------------------------------------------------------------------------------------------------
$1.90 SERIES $2.00 SERIES $7.24 SERIES $8.40 SERIES $8.38 SERIES $8.40 SERIES B
--------------- --------------- ---------------- ----------------- ----------------- -----------------
HIGH LOW HIGH LOW HIGH LOW HIGH LOW HIGH LOW HIGH LOW
------- ------- ------- ------- -------- ------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1992
First Quarter $24 1/2 $22 7/8 $25 7/8 $24 1/8 $ 91 $87 1/2 $100 1/2 $ 97 7/8 $100 $ 96 1/2 $103 $100
Second Quarter 23 7/8 22 25 23 1/4 90 1/4 85 100 3/4 96 1/8 99 1/4 95 1/2 102 101
Third Quarter 24 22 1/8 25 3/4 23 1/2 90 85 1/2 101 97 1/4 100 95 1/2 102 1/8 100 3/4
Fourth Quarter 24 22 1/2 25 1/4 23 1/8 88 85 99 3/4 95 97 1/2 94 102 1/2 101 1/2
1993
First Quarter $25 1/2 $22 3/8 $26 $23 5/8 $ 95 1/4 $85 1/2 $102 $ 94 5/8 $102 $ 94 $102 $ 98
Second Quarter 25 1/2 24 26 3/8 25 3/8 97 93 103 99 5/8 102 1/2 99 103 98
Third Quarter 26 3/8 24 3/4 27 25 1/2 102 1/2 93 1/2 105 101 1/4 105 100 1/2 101 3/4 101 3/4
Fourth Quarter 25 7/8 24 1/4 26 1/4 25 101 3/4 94 1/2 104 1/2 101 1/4 103 101 102 3/4 101
1994
First Quarter
(through
March ,
1994)
</TABLE>
The $8.20, $8.85 and $9.25 Series of Edison Preference Stock are held by
institutional investors and are not publicly traded. The $1.96, $6.875, and
$9.00 Series of Edison Preference Stock are traded on a limited and sporadic
basis in the over-the-counter market, but prices are not quoted in any
automated quotation system. The following table sets forth the average of the
high and low per share bid prices of each such Series for the periods indicated
based on information provided to Edison by firms which deal in shares of such
Series.
<TABLE>
<CAPTION>
EDISON PREFERENCE STOCK
---------------------------------------------------
$1.96 SERIES $6.875* SERIES $9.00 SERIES
--------------- ----------------- -----------------
HIGH LOW HIGH LOW HIGH LOW
------- ------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
1992
First Quarter $27 1/8 $26 5/8 $108 1/2 $106 3/8
Second Quarter 27 1/8 26 3/4 108 1/4 106 3/8
Third Quarter 26 3/4 25 3/8 109 106 3/8
Fourth Quarter 26 3/4 24 109 7/8 107 7/8
1993
First Quarter $25 1/8 $24 $112 $108 1/2
Second Quarter 25 3/4 25 1/4 $101 $100 112 1/4 110 5/8
Third Quarter 26 1/8 25 3/8 105 1/2 101 1/4 112 1/8 110 1/4
Fourth Quarter 27 1/4 26 1/8 106 1/4 100 3/4 112 7/8 110 5/8
1994
First Quarter
(through March ,
1994)
</TABLE>
- --------
*Issued in May 1993
The foregoing average bid prices do not reflect retail mark-ups, mark-downs
or commissions and do not necessarily reflect actual transactions.
32
<PAGE>
LEGAL OPINIONS
Certain legal matters relating to the issuance of the Holding Company Common
Stock in the Merger will be passed upon by Sidley & Austin, One First National
Plaza, Chicago, Illinois 60603.
EXPERTS
The financial statements and schedules included or incorporated by reference
in the 1992 Form 10-K, the March 31, 1993 Form 10-Q, the June 30, 1993 Form 10-
Q, the September 30, 1993 Form 10-Q and the January 28, 1993 Form 8-K,
incorporated by reference herein, have been audited by Arthur Andersen & Co.,
independent public accountants, as indicated in their reports with respect
thereto, and are incorporated herein in reliance upon the authority of said
firm as experts in accounting and auditing in giving their reports.
ITEM C. AMENDMENT OF THE EDISON RESTATED ARTICLES OF INCORPORATION
The Edison Board of Directors recommends that the shareholders approve a
proposal to amend the Edison Restated Articles of Incorporation by adding
Article SEVEN (i) to limit the personal liability of the Edison Directors to
Edison or its shareholders for monetary damages arising from breach of
fiduciary duty and (ii) to indemnify Edison Directors, officers, agents and
other persons who provide services to Edison, to the full extent permitted by
the Illinois Business Corporation Act. The proposed amendment to limit the
personal liability of Edison Directors is authorized by a change to the
Illinois Business Corporation Act that became effective on January 1, 1994. The
proposed amendment will assist Edison in attracting and retaining qualified
individuals to serve Edison.
BACKGROUND
Until the amendment of the Illinois Business Corporation Act in July 1993,
Illinois was one of the few states that had not taken action to protect
corporate Directors who acted in good faith but were nevertheless threatened
with substantial liability from negligence claims. As a result of the change in
the law, an Illinois corporation is now able to provide its Directors with
liability protection similar to that available from companies incorporated in
the vast majority of other states, including Delaware. Liability is not limited
under Illinois law if the acts or omissions of Directors are in bad faith,
involve intentional wrongdoing, violate certain statutory provisions, or result
in profit or other advantage to which they are not legally entitled.
The By-Laws of Edison currently provide for indemnification of Edison
Directors, officers, agents and other persons who serve Edison, to the full
extent permitted by the Illinois Business Corporation Act, and the proposed
amendment would add such a provision to the Edison Restated Articles of
Incorporation.
Edison currently maintains liability insurance policies which indemnify
Edison's Directors and officers, the Directors and officers of subsidiaries of
Edison, and the trustees of Edison's Service Annuity Funds, against loss
arising from claims by reason of their legal liability for acts as such
Directors, officers or trustees, subject to limitations and conditions as set
forth in the policies. Among other limitations, the primary policy states that
no coverage is provided for loss representing "amounts which are deemed
uninsurable under the law pursuant to which this policy shall be construed".
TEXT OF THE PROPOSED AMENDMENT
The text of Article SEVEN proposed to be added to the Edison Restated
Articles of Incorporation is as follows:
(a) A director of the Company shall not be personally liable to the
Company or its shareholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of the
director's duty of loyalty to the Company or its shareholders, (ii) for
acts or omissions not in
33
<PAGE>
good faith or that involve intentional misconduct or a knowing violation of
law, (iii) under Section 8.65 of the Business Corporation Act of the State
of Illinois, or (iv) for any transaction from which the director derived an
improper personal benefit. If the Business Corporation Act of the State of
Illinois is amended to authorize corporate action further eliminating or
limiting the personal liability of directors, then the liability of a
director of the Company shall be eliminated or limited to the full extent
permitted by the Business Corporation Act of the State of Illinois, as so
amended. Any repeal or modification of this paragraph (a) by the
shareholders of the Company shall not adversely affect any right or
protection of a director of the Company existing at the time of such repeal
or modification.
(b) Each person who is or was or had agreed to become a director or
officer of the Company, and each person who is or was serving or who had
agreed to serve at the request of the Board or an officer of the Company as
an employe or agent of the Company or as a director, officer, employe, or
agent, trustee or fiduciary of another corporation, partnership, joint
venture, trust or other enterprise (including the heirs, executors,
administrators or estate of such person), shall be indemnified by the
Company to the full extent permitted by the Business Corporation Act of the
State of Illinois or any other applicable laws as presently or hereafter in
effect. Without limiting the generality of the foregoing, the Company may
enter into one or more agreements with any person which provide for
indemnification greater or different than that provided in this paragraph
(b). Any repeal or modification of this paragraph (b) shall not adversely
affect any right or protection existing hereunder or under any such
agreement immediately prior to such repeal or modification.
REASONS FOR THE PROPOSED AMENDMENT
Limitation of Director Liability. Directors of Illinois corporations are
required, under Illinois law, to perform their duties in good faith and with
that degree of care that an ordinarily prudent person in a like position would
use under similar circumstances. A Director may rely upon information, opinions
and reports prepared by certain offices or employes, professional advisors, or
committees of the Board. Decisions made on that basis are protected by the
"business judgment rule" and should not be questioned by a court in the event
of a lawsuit challenging such decisions. However, the expense of defending such
lawsuits and the inevitable uncertainties of applying the business judgment
rule to particular facts and circumstances mean, as a practical matter, that
Directors are not relieved of the threat of monetary damage awards. The Board
of Directors of Edison, therefore, believes that the proposed amendment should
be adopted in order to ensure that Edison will continue to be able to attract
and retain competent, qualified and talented persons to serve as its Directors.
Indemnification. Although the Edison By-Laws currently provide for the
indemnification of Edison Directors, officers, agents and other persons who
serve Edison, such By-Laws could be changed unilaterally and without notice by
the Edison Board of Directors. The proposed amendment would add such provisions
to the Edison Restated Articles of Incorporation which can only be changed by
action of the Edison shareholders after notice. Indemnification provisions in
the Edison Restated Articles of Incorporation are thus less likely to be
changed than similar provisions in its By-Laws, and the enhanced stability,
predictability and security which result from including such provisions in the
Edison Restated Articles of Incorporation are expected to enhance the ability
of Edison to attract and retain qualified persons to serve it.
EFFECT OF THE PROPOSED AMENDMENT
Limitation of Director Liability. The proposed amendment would protect the
Edison Directors against personal liability to Edison or its shareholders for
any breach of duty unless a judgment or other final adjudication adverse to
them establishes (i) a breach of duty of loyalty to Edison, (ii) acts or
omissions in bad faith or involving intentional misconduct or a knowing
violation of the law, (iii) acts violating the prohibitions contained in
Section 8.65 of the Illinois Business Corporation Act against certain improper
distributions of assets, or (iv) an improper personal benefit to a Director to
which he or she was not legally entitled.
34
<PAGE>
The amendment as proposed would not reduce the fiduciary duty of a Director;
it merely limits monetary damage awards to Edison and its shareholders arising
from certain breaches of the duty. It does not affect the availability of
equitable remedies, such as the right to enjoin or rescind a transaction, based
upon a Director's breach of fiduciary duty. The amendment also does not affect
a Director's liability for acts taken or omitted prior to the time it becomes
effective (after shareholder approval and upon filing with the Illinois
Secretary of State). The limitation of liability afforded by the proposed
amendment affects only actions brought by Edison or its shareholders, and does
not preclude or limit recovery of damages by third parties.
Indemnification. The proposed amendment would not change the rights of Edison
Directors, officers, agents and other persons who serve Edison, to be
indemnified by it to the full extent permitted by the Illinois Business
Corporation Act, but would give them such rights under the Edison Restated
Articles of Incorporation as well as under the Edison By-Laws.
ITEM D. APPROVAL OF AUDITORS
Subject to approval of the shareholders, the Board of Directors of Edison has
appointed Arthur Andersen & Co., independent public accountants, as Auditors to
examine the annual and quarterly consolidated financial statements of Edison
and its subsidiary companies for 1994. The shareholders will be asked at the
meeting to approve such appointment. The firm of Arthur Andersen & Co. has
audited the accounts of Edison since 1932. A representative of Arthur Andersen
& Co. will be present at the meeting to make a statement, if such
representative so desires, and to respond to shareholders' questions.
* * *
Any shareholder proposal intended to be presented at the 1995 annual meeting
of Edison shareholders must be received at the principal executive offices of
Edison by November 28, 1994, in order to be considered for inclusion in any
proxy materials of Edison relating to that meeting. Any such proposal should be
directed to the Secretary of Edison located on the 37th Floor, First National
Bank Building, 10 South Dearborn Street, Chicago, Illinois. If mailed, it
should be sent to Secretary, Commonwealth Edison Company, 10 South Dearborn
Street, Post Office Box 767, Chicago, Illinois 60690-0767.
TRANSACTION OF OTHER BUSINESS
As of the date of this Prospectus and Proxy Statement, management knows of no
matters to be brought before the annual meeting other than the matters referred
to in this Prospectus and Proxy Statement. If, however, further business is
presented, the proxy holders will act in accordance with their best judgment.
By order of the Edison Board of Directors.
David A. Scholz
Secretary
March , 1994
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EXHIBIT A
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER ("Agreement") is dated as of January 28,
1994, between Commonwealth Edison Company, an Illinois corporation ("Edison"),
and CECo Merging Corporation, an Illinois corporation ("Merging Corp.").
WITNESSETH
WHEREAS, Edison has an authorized capitalization consisting of:
(i) 250,000,000 shares of Common Stock, par value $12.50 per share
("Edison Common Stock"), of which 213,765,354 shares were issued and
outstanding at January 21, 1994;
(ii) 850,000 shares of Prior Preferred Stock, par value $100 per share
("Edison Prior Preferred Stock"), none of which were issued and outstanding
at January 21, 1994;
(iii) 285,806 shares of $1.425 Convertible Preferred Stock, without par
value ("Edison Preferred Stock"), of which 285,806 shares were issued and
outstanding at January 21, 1994; Edison Preferred Stock is convertible into
Edison Common Stock at the rate of 1.02 shares of Edison Common Stock for
each share of Edison Preferred Stock, subject to future adjustment; and
(iv) 13,789,839 shares of Preference Stock, without par value ("Edison
Preference Stock"), of which 13,789,839 shares were issued and outstanding
at January 21, 1994; and
WHEREAS, Merging Corp. has an authorized capitalization consisting of 100
shares of Common Stock, without par value ("Merging Corp. Common Stock"), all
of which are issued and outstanding and owned beneficially and of record by
CECo Holding Company, an Illinois corporation ("Holding Company"); and
WHEREAS, Holding Company has an authorized capitalization consisting of
400,000,000 shares of Common Stock, without par value ("Holding Company Common
Stock"), of which 100 shares are issued and outstanding and owned beneficially
and of record by Edison; and
WHEREAS, the Boards of Directors of Edison, Merging Corp. and Holding
Company, deem it advisable for Merging Corp. to merge with and into Edison
("Merger") in accordance with the Illinois Business Corporation Act of 1983, as
amended ("Act"), and this Agreement; and
WHEREAS, Edison, Merging Corp. and Holding Company have entered into a
Supplemental Agreement dated as of January 28, 1994 ("Supplemental Agreement"),
pursuant to which Holding Company has agreed, among other things, to issue
shares of Holding Company Common Stock upon the conversion of Edison Common
Stock in the Merger.
NOW THEREFORE, in consideration of the premises and the representations,
warranties and agreements herein contained, Edison and Merging Corp. agree that
Merging Corp. shall merge with and into Edison, Edison shall be the corporation
surviving the Merger and the terms and conditions of the Merger, the mode of
carrying it into effect and the manner and basis of converting shares in the
Merger shall be as follows:
ARTICLE I
THE MERGER
(a) Subject to and in accordance with the provisions of this Agreement,
Articles of Merger shall be executed by Edison and Merging Corp. and filed in
the Office of the Secretary of State of Illinois as provided in Sections
11.25(a) and 1.10 of the Act.
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(b) The Merger shall become effective at the time ("Effective Time") the
Secretary of State of Illinois issues a Certificate of Merger in accordance
with Sections 11.25(b) and 11.40 of the Act.
(c) At the Effective Time, Merging Corp. shall be merged with and into
Edison, Edison shall be and is designated as the surviving corporation and
shall continue its corporate existence under the laws of the State of Illinois
and the separate existence of Merging Corp. shall cease (Edison and Merging
Corp. are referred to herein as the "Constituent Corporations" and Edison, the
corporation designated as the surviving corporation, is referred to herein as
the "Surviving Corporation").
(d) Prior to and after the Effective Time, Edison and Merging Corp.,
respectively, shall take all such action as may be necessary or appropriate in
order (i) to effect the Merger, and (ii) thereafter to carry out the purposes
of this Agreement to vest in the Surviving Corporation all the rights,
privileges, immunities and franchises, as of a public or a private nature, of
each Constituent Corporation; and all property, real, personal and mixed, and
all debts and all choses in action, and all and every other interest, of or
belonging to or due to, each Constituent Corporation, and the officers and
Directors of each Constituent Corporation as of the Effective Time shall take
all such action.
ARTICLE II
TERMS OF CONVERSION OF SHARES
At the Effective Time:
(a) Each share of Edison Common Stock issued and outstanding immediately
prior to the Effective Time shall thereupon, and without the surrender of
the stock certificate therefor or any other action on the part of the
holder thereof, be changed and converted into one fully paid and
nonassessable share of Holding Company Common Stock;
(b) The shares of Edison Prior Preferred Stock, if any, and Edison
Preferred Stock and Edison Preference Stock issued and outstanding
immediately prior to the Effective Time shall not be changed, converted or
otherwise affected by the Merger, and each such share shall continue to be
issued and outstanding and to be one fully paid and nonassessable share of
the particular series of Edison Prior Preferred Stock, Edison Preferred
Stock or Edison Preference Stock of the Surviving Corporation;
(c) The shares of Merging Corp. Common Stock issued and outstanding
immediately prior to the Effective Time shall be changed and converted into
the number of shares of Edison Common Stock issued and outstanding
immediately prior to the Effective Time, which shall thereupon be issued
and fully paid and nonassessable shares of the Surviving Corporation;
(d) Each share of Holding Company Common Stock issued and outstanding
immediately prior to the Effective Time shall be cancelled and retired and
all rights in respect thereof shall cease; and
(e) As provided in the Supplemental Agreement, (i) the Edison Employe
Savings and Investment Plan, 1993 Long-Term Incentive Plan, Employe Stock
Purchase Plan and Dividend Reinvestment and Stock Purchase Plan
(collectively the "Plans") will be amended to provide for the delivery of
Holding Company Common Stock instead of Edison Common Stock thereunder;
each right to acquire shares of Edison Common Stock, including, without
limitation, rights (including stock options) to acquire Edison Common Stock
pursuant to any of the Plans, granted and outstanding immediately prior to
the Effective Time shall, by virtue of the Merger and without any action on
the part of the holder thereof, be converted into and become a right to
acquire the same number of shares of Holding Company Common Stock at the
same price per share, and upon the same terms and subject to the same
conditions as were applicable immediately prior to the Effective Time under
the relevant right; and (ii) Holding Company shall reserve such number of
shares of Holding Company Common Stock for purposes of the Plans as is
equal to the number of shares of Edison Common Stock so reserved as of the
Effective Time.
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ARTICLE III
ARTICLES OF INCORPORATION AND BY-LAWS
(a) From and after the Effective Time, and until thereafter amended as
provided by law, the Restated Articles of Incorporation of Edison as in effect
immediately prior to the Effective Time shall be and continue to be the
Restated Articles of Incorporation of the Surviving Corporation.
(b) From and after the Effective Time, the By-Laws of Edison as in effect
immediately prior to the Effective Time shall be and continue to be the By-Laws
of the Surviving Corporation until amended.
ARTICLE IV
DIRECTORS AND OFFICERS
The persons who are Directors and officers of Edison immediately prior to the
Effective Time shall continue as Directors and officers, respectively, of the
Surviving Corporation and shall continue to hold office as provided in the By-
Laws of the Surviving Corporation. If, at or following the Effective Time, a
vacancy shall exist in the Board of Directors or in the position of any officer
of the Surviving Corporation, such vacancy may be filled in the manner provided
in the By-Laws of the Surviving Corporation.
ARTICLE V
STOCK CERTIFICATES
Following the Effective Time, each holder of an outstanding certificate or
certificates theretofore representing shares of Edison Common Stock may, but
shall not be required, to surrender the same to Holding Company for
cancellation and exchange or transfer, and each such holder or transferee
thereof will be entitled to receive a certificate or certificates representing
the same number of shares of Holding Company Common Stock as the number of
shares of Edison Common Stock previously represented by the stock certificate
or certificates surrendered. Until so surrendered for cancellation and exchange
or transfer, each outstanding certificate which, prior to the Effective Time,
represented shares of Edison Common Stock shall be deemed and treated for all
corporate purposes to represent the ownership of the same number of shares of
Holding Company Common Stock as though such surrender for cancellation and
exchange or transfer thereof had taken place. The stock transfer books for
Edison Common Stock shall be deemed to be closed at the Effective Time, and no
transfer of shares of Edison Common Stock outstanding immediately prior to the
Effective Time shall thereafter be made on such books. Following the Effective
Time, the holders of certificates representing Edison Common Stock outstanding
immediately before the Effective Time shall cease to have any rights with
respect to stock of the Surviving Corporation and their sole rights shall be
with respect to the Holding Company Common Stock into which their shares of
Edison Common Stock shall have been converted in the Merger.
ARTICLE VI
CONDITIONS TO THE MERGER
Consummation of the Merger is subject to the satisfaction of the following
conditions:
(a) The Merger shall have received such approval of the shareholders of
each Constituent Corporation entitled to vote thereon as is required by the
Act and the Articles of Incorporation of each Constituent Corporation.
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(b) There shall have been obtained either a ruling of the Internal
Revenue Service satisfactory to the Board of Directors of Edison and its
counsel, or an opinion of counsel satisfactory to the Board of Directors of
Edison, with respect to the tax consequences of the Merger and other
transactions incident thereto.
(c) The Holding Company Common Stock to be issued and to be reserved for
issuance as a result of the Merger shall have been approved for listing,
upon official notice of issuance, by the New York, Chicago and Pacific
Stock Exchanges.
(d) A registration statement or registration statements relating to the
shares of Holding Company Common Stock to be issued or reserved for
issuance as a result of the Merger, shall be effective under the Securities
Act of 1933, as amended, and shall not be the subject of any "stop order."
(e) Edison shall have received all consents, approvals and legal opinions
in form and substance satisfactory to Edison, that are necessary or
appropriate for the consummation of the Merger and all other transactions
contemplated thereby.
(f) There shall be no litigation, proceedings or actions pending or
threatened concerning the Merger which in the judgment of the Board of
Directors of Edison renders consummation of the Merger inadvisable.
ARTICLE VII
AMENDMENT, WAIVER AND TERMINATION
(a) Edison and Merging Corp. by mutual consent of their respective Boards of
Directors may amend, modify or supplement this Agreement or waive any condition
set forth in Article VI hereof in such manner as may be agreed upon by them in
writing, at any time before or after approval of this Agreement by the
shareholders of Edison, but not after the time that the Articles of Merger are
filed with the Illinois Secretary of State ("Filing Time"); provided, however,
that no such amendment, modification, supplement or waiver shall, in the sole
judgment of the Board of Directors of Edison, materially and adversely affect
the rights of the shareholders of Edison.
(b) Consummation of the Merger may be deferred by the Board of Directors of
Edison or any authorized officer of Edison for a reasonable period of time if
said Board or officer determines such deferral would be in the best interest of
Edison or its shareholders.
(c) This Agreement may be terminated and the Merger and other transactions
herein provided for abandoned at any time prior to the Filing Time, whether
before or after approval of this Agreement by the shareholders of Edison, by
action of the Board of Directors of Edison if said Board of Directors
determines for any reason that the consummation of the transactions herein
provided for would for any reason be inadvisable or not in the best interests
of Edison or its shareholders.
ARTICLE VIII
MISCELLANEOUS
(a) This Agreement may be executed in counterparts, each of which when so
executed shall be deemed to be an original, and such counterparts shall
together constitute but one and the same instrument.
(b) This Agreement shall be governed by, and construed in accordance with,
the laws of the State of Illinois.
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IN WITNESS WHEREOF, Edison and Merging Corp., pursuant to approval and
authorization duly given by resolutions adopted by their respective Boards of
Directors, have each caused this Agreement and Plan of Merger to be executed by
its Chairman of the Board, its President or one of its Vice Presidents and
attested by its Secretary or one of its Assistant Secretaries.
Commonwealth Edison Company
/s/ James J. O'Connor
By __________________________________
James J. O'Connor
Chairman
/s/ David A. Scholz
Attest: _____________________________
David A. Scholz
Secretary
CECo Merging Corporation
/s/ James J. O'Connor
By __________________________________
James J. O'Connor
Chairman
/s/ David A. Scholz
Attest: _____________________________
David A. Scholz
Secretary
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EXHIBIT B
SUPPLEMENTAL AGREEMENT
THIS SUPPLEMENTAL AGREEMENT ("Agreement") is dated as of January 28, 1994,
between Commonwealth Edison Company, an Illinois corporation ("Edison"), CECo
Holding Company, an Illinois corporation ("Holding Company") and CECo Merging
Corporation, an Illinois corporation ("Merging Corp.").
WITNESSETH
WHEREAS, Edison has an authorized capitalization consisting of:
(i) 250,000,000 shares of Common Stock, par value $12.50 per share
("Edison Common Stock"), of which 213,765,354 shares were issued and
outstanding at January 21, 1994;
(ii) 850,000 shares of Prior Preferred Stock, par value $100 per share,
none of which were issued and outstanding at January 21, 1994;
(iii) 285,806 shares of $1.425 Convertible Preferred Stock, without par
value ("Edison Preferred Stock"), of which 285,806 shares were issued and
outstanding at January 21, 1994; Edison Preferred Stock is convertible into
Edison Common Stock at the rate of 1.02 shares of Edison Common Stock for
each share of Edison Preferred Stock, subject to future adjustment; and
(iv) 13,789,839 shares of Preference Stock, without par value, of which
13,789,839 shares were issued and outstanding at January 21, 1994; and
WHEREAS, Merging Corp. has an authorized capitalization consisting of 100
shares of Common Stock, without par value ("Merging Corp. Common Stock"), all
of which are issued and outstanding and owned beneficially and of record by
Holding Company; and
WHEREAS, Holding Company has an authorized capitalization consisting of
400,000,000 shares of Common Stock, without par value ("Holding Company Common
Stock"), of which 100 shares are issued and outstanding and owned beneficially
and of record by Edison; and
WHEREAS, the Boards of Directors of Edison, Merging Corp. and Holding
Company, deem it advisable for Merging Corp. to merge with and into Edison
("Merger") in accordance with the Illinois Business Corporation Act of 1983, as
amended ("Act"), and the Agreement and Plan of Merger dated as of January 28,
1994 ("Merger Agreement"), between Edison and Merging Corp. in which they have
agreed to merge.
NOW THEREFORE, in consideration of the premises and the representations,
warranties and agreements herein contained, Edison and Merging Corp. agree that
Merging Corp. shall merge with and into Edison, Edison shall be the corporation
surviving the Merger and the terms and conditions of the Merger, the mode of
carrying it into effect and the manner and basis of converting shares in the
Merger shall be as set forth in the Merger Agreement.
ARTICLE I
TERMS OF CONVERSION OF SHARES
At the time that the Merger becomes effective ("Effective Time"):
(a) Each share of Edison Common Stock issued and outstanding immediately
prior to the Effective Time shall thereupon, and without the surrender of
the stock certificate therefor or any other action on the part of the
holder thereof, be changed and converted into one fully paid and
nonassessable share of Holding Company Common Stock;
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(b) The shares of Merging Corp. Common Stock issued and outstanding
immediately prior to the Effective Time shall be changed and converted into
the number of shares of Edison Common Stock issued and outstanding
immediately prior to the Effective Time, which shall thereupon be issued
and fully paid and nonassessable shares of Edison Common Stock;
(c) Each share of Holding Company Common Stock issued and outstanding
immediately prior to the Effective Time shall be cancelled, retired, and
revert to an authorized but unissued share of Holding Company Common Stock,
all rights in respect thereof shall cease, and the accounts of Holding
Company shall be reduced by the $1,000 of capital and surplus applicable to
such shares;
(d) Holding Company shall deliver shares of Holding Company Common Stock
pursuant to the Edison Employe Savings and Investment Plan, 1993 Long-Term
Incentive Plan, Employe Stock Purchase Plan and Dividend Reinvestment and
Common Stock Purchase Plan (collectively the "Plans"). Each right to
purchase shares of Edison Common Stock, including, without limitation,
rights (including stock options) to acquire Edison Common Stock pursuant to
any of the Plans, granted and outstanding immediately prior to the
Effective Time shall, by virtue of the Merger and without any action on the
part of the holder thereof, be converted into and become a right to acquire
the same number of shares of Holding Company Common Stock at the same price
per share, and upon the same terms and subject to the same conditions as
were applicable immediately prior to the Effective Time under the relevant
right; and
(e) Holding Company shall reserve such number of shares of Holding
Company Common Stock for purposes of the Plans as is equal to the number of
shares of Edison Common Stock so reserved as of the Effective Time.
ARTICLE II
DIRECTORS
The persons who are Directors of Edison immediately prior to the Effective
Time shall at the Effective Time become Directors of Holding Company, and shall
continue to hold office as provided in the By-Laws of Holding Company, and if,
at or following the Effective Time, a vacancy shall exist in the Board of
Directors of Holding Company, such vacancy may be filled in the manner provided
in the By-Laws of Holding Company.
ARTICLE III
STOCK CERTIFICATES
Following the Effective Time, each holder of an outstanding certificate or
certificates theretofore representing shares of Edison Common Stock may, but
shall not be required, to surrender the same to Holding Company for
cancellation and exchange or transfer, and each such holder or transferee
thereof will be entitled to receive a certificate or certificates representing
the same number of shares of Holding Company Common Stock as the number of
shares of Edison Common Stock previously represented by the stock certificate
or certificates so surrendered. Until so surrendered for cancellation and
exchange or transfer, each outstanding certificate which, prior to the
Effective Time, represented shares of Edison Common Stock shall be deemed and
treated for all corporate purposes to represent the ownership of the same
number of shares of Holding Company Common Stock as though such surrender for
cancellation and exchange or transfer thereof had taken place.
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ARTICLE IV
MISCELLANEOUS
(a) This Agreement may be terminated and the transactions herein provided for
and the Merger abandoned at any time, whether before or after approval of the
Merger Agreement by the shareholders of Edison, by action of the Board of
Directors of Edison if said Board of Directors determines for any reason that
the consummation of the transactions herein provided for would for any reason
be inadvisable or not in the best interests of Edison or its shareholders.
(b) The Merger Agreement shall not be amended by Edison and Merging Corp.
without the written consent of Holding Company.
(c) This Agreement may be executed in counterparts, each of which when so
executed shall be deemed to be an original, and such counterparts shall
together constitute but one and the same instrument.
(d) This Agreement shall be governed by, and construed in accordance with,
the laws of the State of Illinois.
IN WITNESS WHEREOF, Edison, Holding Company and Merging Corp., pursuant to
approval and authorization duly given by resolutions adopted by their
respective Boards of Directors, have each caused this Supplemental Agreement to
be executed by its Chairman of the Board, its President or one of its Vice
Presidents and attested by its Secretary or one of its Assistant Secretaries.
Commonwealth Edison Company
/s/ James J. O'Connor
By __________________________________
James J. O'Connor
Chairman
/s/ David A. Scholz
Attest: _____________________________
David A. Scholz
Secretary
CECo Holding Company
/s/ James J. O'Connor
By __________________________________
James J. O'Connor
Chairman
/s/ David A. Scholz
Attest: _____________________________
David A. Scholz
Secretary
CECo Merging Corporation
/s/ James J. O'Connor
By __________________________________
James J. O'Connor
Chairman
/s/ David A. Scholz
Attest: _____________________________
David A. Scholz
Secretary
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EXHIBIT C
CECO HOLDING COMPANY
ARTICLES OF INCORPORATION
ARTICLE ONE The name of the corporation is CECo Holding Company
ARTICLE TWO The name and address of the registered agent and its registered
office are:
Registered Agent:
David A. Scholz
Registered Office:
10 South Dearborn Street
Post Office Box 767
Chicago, Illinois 60690-0767
Cook County
ARTICLE THREE The purpose or purposes for which the corporation is organized
are to transact any or all lawful businesses for which
corporations may be incorporated under the Business Corporation
Act of 1983, as amended from time to time.
ARTICLE FOUR Paragraph 1. The number of shares which the corporation is
authorized to issue is 400,000,000 shares of Common Stock,
without par value.
Paragraph 2. Initially, the corporation proposes to issue 100
shares of Common Stock for an aggregate consideration of $1,000.
Paragraph 3. The shares of Common Stock shall entitle the
holders thereof to one vote for each share upon all matters upon
which shareholders have the right to vote and to cumulative
voting in all elections of directors by vote of shareholders.
ARTICLE FIVE Paragraph 1. A director of the corporation shall not be
personally liable to the corporation or its shareholders for
monetary damages for breach of fiduciary duty as a director,
except for liability (i) for any breach of the director's duty
of loyalty to the corporation or its shareholders, (ii) for acts
or omissions not in good faith or that involve intentional
misconduct or a knowing violation of law, (iii) under Section
8.65 of the Business Corporation Act of the State of Illinois,
or (iv) for any transaction from which the director derived an
improper personal benefit. If the Business Corporation Act of
the State of Illinois is amended to authorize corporate action
further eliminating or limiting the personal liability of
Directors, then the liability of a director of the corporation
shall be eliminated or limited to the full extent permitted by
the Business Corporation Act of the State of Illinois, as so
amended. Any repeal or modification of this Paragraph 1 by the
shareholders of the corporation shall not adversely affect any
right or protection of a director of the corporation existing at
the time of such repeal or modification.
Paragraph 2. Each person who is or was or had agreed to become a
director or officer of the corporation, and each person who is
or was serving or who had agreed to serve at the request of the
Board of Directors or an officer of the corporation as an
employe or agent of the corporation or as a director, officer,
employe, or agent, trustee or fiduciary of another corporation,
partnership, joint venture, trust or other enterprise (including
the heirs, executors, administrators or estate of such person),
shall be indemnified by the corporation to the full extent
permitted by the Business Corporation Act of the State of
Illinois or any other applicable laws as presently or hereafter
in effect. Without limiting the generality of the foregoing, the
corporation may enter into one or more agreements with any
person which provide for indemnification greater or different
than that provided in this Paragraph 2. Any repeal or
modification of this Paragraph 2 shall not adversely affect any
right or protection existing hereunder immediately prior to such
repeal or modification.
ARTICLE SIX The undersigned incorporator hereby declares, under penalties of
perjury, that the statements made in the foregoing Articles of
Incorporation are true.
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EXHIBIT D
PROVISIONS OF THE ILLINOIS BUSINESS CORPORATION ACT
RELATING TO RIGHTS OF DISSENTING SHAREHOLDERS
SECTION 11.65. RIGHT TO DISSENT.
(a) A shareholder of a corporation is entitled to dissent from, and obtain
payment for his or her shares in the event of any of the following corporate
actions:
(1) consummation of a plan of merger or consolidation or a plan of share
exchange to which the corporation is a party if
(i) shareholder authorization is required for the merger or
consolidation or the share exchange by Section 11.20 or the articles of
incorporation or
(ii) the corporation is a subsidiary that is merged with its parent
or another subsidiary under Section 11.30;
(2) consummation of sale, lease or exchange of all, or substantially all,
of the property and assets of the corporation other than in the usual and
regular course of business;
(3) an amendment of the articles of incorporation that materially and
adversely affects rights in respect of a dissenter's shares because it:
(i) alters or abolishes a preferential right of such shares;
(ii) alters or abolishes a right in respect of redemption, including
a provision respecting a sinking fund for the redemption or repurchase,
of such shares;
(iii) in the case of a corporation incorporated prior to January 1,
1982, limits or eliminates cumulative voting rights with respect to
such shares; or
(4) any other corporate action taken pursuant to a shareholder vote if
the articles of incorporation, by-laws, or a resolution of the board of
Directors provide that shareholders are entitled to dissent and obtain
payment for their shares in accordance with the procedures set forth in
Section 11.70 or as may be otherwise provided in the articles, by-laws or
resolution.
(b) A shareholder entitled to dissent and obtain payment for his or her
shares under this Section may not challenge the corporate action creating his
or her entitlement unless the action is fraudulent with respect to the
shareholder or the corporation or constitutes a breach of a fiduciary duty owed
to the shareholder.
(c) A record owner of shares may assert dissenters' rights as to fewer than
all the shares recorded in such person's name only if such person dissents with
respect to all shares beneficially owned by any one person and notifies the
corporation in writing of the name and address of each person on whose behalf
the record owner asserts dissenters' rights. The rights of a partial dissenter
are determined as if the shares as to which dissent is made and the other
shares were recorded in the names of different shareholders. A beneficial owner
of shares who is not the record owner may assert dissenters' rights as to
shares held on such person's behalf only if the beneficial owner submits to the
corporation the record owner's written consent to the dissent before or at the
same time the beneficial owner asserts dissenters' rights. Amended by P.A. 85-
1269, eff. Jan. 1, 1989.
SECTION 11.70. PROCEDURE TO DISSENT.
(a) If the corporate action giving rise to the right to dissent is to be
approved at a meeting of shareholders, the notice of meeting shall inform the
shareholders of their right to dissent and the procedure to dissent. If, prior
to the meeting, the corporation furnishes to the shareholders material
information with respect to the transaction that will objectively enable a
shareholder to vote on the transaction and to determine whether or not to
exercise dissenters' rights, a shareholder may assert
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dissenters' rights only if the shareholder delivers to the corporation before
the vote is taken a written demand for payment for his or her shares if the
proposed action is consummated, and the shareholder does not vote in favor of
the proposed action.
(b) If the corporate action giving rise to the right to dissent is not to be
approved at a meeting of shareholders, the notice to shareholders describing
the action taken under Section 11.30 or Section 7.10 shall inform the
shareholders of their right to dissent and the procedure to dissent. If, prior
to or concurrently with the notice, the corporation furnishes to the
shareholders material information with respect to the transaction that will
objectively enable a shareholder to determine whether or not to exercise
dissenters' rights, a shareholder may assert dissenter's rights only if he or
she delivers to the corporation within 30 days from the date of mailing the
notice a written demand for payment for his or her shares.
(c) Within 10 days after the date on which the corporate action giving rise
to the right to dissent is effective or 30 days after the shareholder delivers
to the corporation the written demand for payment, whichever is later, the
corporation shall send each shareholder who has delivered a written demand for
payment a statement setting forth the opinion of the corporation as to the
estimated fair value of the shares, the corporation's latest balance sheet as
of the end of a fiscal year ending not earlier than 16 months before the
delivery of the statement, together with the statement of income for that year
and the latest available interim financial statements, and either a commitment
to pay for the shares of the dissenting shareholder at the estimated fair value
thereof upon transmittal to the corporation of the certificate or certificates,
or other evidence of ownership, with respect to the shares, or instructions to
the dissenting shareholder to sell his or her shares within 10 days after
delivery of the corporation's statement to the shareholder. The corporation may
instruct the shareholder to sell only if there is a public market for the
shares at which the shares may be readily sold. If the shareholder does not
sell within that 10 day period after being so instructed by the corporation,
for purposes of this Section the shareholder shall be deemed to have sold his
or her shares at the average closing price of the shares, if listed on a
national exchange, or the average of the bid and asked price with respect to
the shares quoted by a principal market maker, if not listed on a national
exchange, during that 10 day period.
(d) A shareholder who makes written demand for payment under this Section
retains all other rights of a shareholder until those rights are cancelled or
modified by the consummation of the proposed corporate action. Upon
consummation of that action, the corporation shall pay to each dissenter who
transmits to the corporation the certificate or other evidence of ownership of
the shares the amount the corporation estimates to be the fair value of the
shares, plus accrued interest, accompanied by a written explanation of how the
interest was calculated.
(e) If the shareholder does not agree with the opinion of the corporation as
to the estimated fair value of the shares or the amount of interest due, the
shareholder, within 30 days from the delivery of the corporation's statement of
value, shall notify the corporation in writing of the shareholder's estimated
fair value and amount of interest due and demand payment for the difference
between the shareholder's estimate of fair value and interest due and the
amount of the payment by the corporation or the proceeds of sale by the
shareholder, whichever is applicable because of the procedure for which the
corporation opted pursuant to subsection (c).
(f) If, within 60 days from delivery to the corporation of the shareholder
notification of estimate of fair value of the shares and interest due, the
corporation and the dissenting shareholder have not agreed in writing upon the
fair value of the shares and interest due, the corporation shall either pay the
difference in value demanded by the shareholder, with interest, or file a
petition in the circuit court of the county in which either the registered
office or the principal office of the corporation is located, requesting the
court to determine the fair value of the shares and interest due. The
corporation shall make all dissenters, whether or not residents of this State,
whose demands remain unsettled parties to the proceeding as an action against
their shares and all parties shall be served with a copy of the
D-2
<PAGE>
petition. Nonresidents may be served by registered or certified mail or by
publication as provided by law. Failure of the corporation to commence an
action pursuant to this Section shall not limit or affect the right of the
dissenting shareholders to otherwise commence an action as permitted by law.
(g) The jurisdiction of the court in which the proceeding is commenced under
subsection (f) by a corporation is plenary and exclusive. The court may appoint
one or more persons as appraisers to receive evidence and recommend decision of
the question of fair value. The appraisers have the power described in the
order appointing them, or in any amendment to it.
(h) Each dissenter made a party to the proceeding is entitled to judgment for
the amount, if any, by which the court finds that the fair value of his or her
shares, plus interest, exceeds the amount paid by the corporation or the
proceeds of sale by the shareholder, whichever amount is applicable.
(i) The court, in a proceeding commenced under subsection (f), shall
determine all costs of the proceeding, including the reasonable compensation
and expenses of the appraisers, if any, appointed by the court under subsection
(g), but shall exclude the fees and expenses of counsel and experts for the
respective parties. If the fair value of the shares as determined by the court
materially exceeds the amount which the corporation estimated to be the fair
value of the shares or if no estimate was made in accordance with subsection
(c), then all or any part of the costs may be assessed against the corporation.
If the amount which any dissenter estimated to be the fair value of the shares
materially exceeds the fair value of the shares as determined by the court,
then all or any part of the costs may be assessed against that dissenter. The
court may also assess the fees and expenses of counsel and experts for the
respective parties, in amounts the court finds equitable, as follows:
(1) Against the corporation and in favor of any or all dissenters if the
court finds that the corporation did not substantially comply with the
requirements of subsections (a), (b), (c), (d), or (f).
(2) Against either the corporation or a dissenter and in favor of any
other party if the court finds that the party against whom the fees and
expenses are assessed acted arbitrarily, vexatiously, or not in good faith
with respect to the rights provided by this Section.
If the court finds that the services of counsel for any dissenter were of
substantial benefit to other dissenters similarly situated and that the fees
for those services should not be assessed against the corporation, the court
may award to that counsel reasonable fees to be paid out of the amounts awarded
to the dissenters who are benefited. Except as otherwise provided in this
Section, the practice, procedure, judgment and costs shall be governed by the
Code of Civil Procedure.
(j) As used in this Section:
(1) "Fair Value", with respect to a dissenter's shares, means the value
of the shares immediately before the consummation of the corporation action
to which the dissenter objects excluding any appreciation or depreciation
in anticipation of the corporate action, unless exclusion would be
inequitable.
(2) "Interest" means interest from the effective date of the corporate
action until the date of payment, at the average rate currently paid by the
corporation on its principal bank loans or, if none, at a rate that is fair
and equitable under all the circumstances.
D-3
<PAGE>
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Certain provisions of the Illinois Business Corporation Act of 1983, as
amended, provide that the Registrant may, and in some circumstances must,
indemnify the Directors and officers of the Registrant and of each subsidiary
company against liabilities and expenses incurred by such person by reason of
the fact that such person was serving in such capacity, subject to certain
limitations and conditions set forth in the statute. The Registrant's Articles
of Incorporation and By-Laws provide that the Registrant will indemnify its
Directors and officers, and may indemnify any person serving as director or
officer of another business entity at the Registrant's request, to the extent
permitted by the statute.
The Registrant maintains liability insurance policies which indemnify the
Registrant's Directors and officers, the Directors and officers of subsidiaries
of the Registrant, and the trustees of the Service Annuity Funds, against loss
arising from claims by reason of their legal liability for acts as such
Directors, officers or trustees, subject to limitations and conditions as set
forth in the policies. Among other limitations, the primary policy states that
no coverage is provided for loss representing "amounts which are deemed
uninsurable under the law pursuant to which this policy shall be construed".
The Registrant indemnifies assistant officers and certain other employes
against liabilities and expenses incurred by reason of acts performed in
connection with the operations of the various employe benefit systems of the
Registrant and its subsidiaries.
ITEM 21. EXHIBITS.
The following exhibits are filed herewith or incorporated herein by
reference.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
------- -----------------------
<C> <S>
2(a) Agreement and Plan of Merger (attached as Exhibit A).
2(b) Supplemental Agreement (attached as Exhibit B).
3(a) Articles of Incorporation of CECo Holding Company (at-
tached as Exhibit C).
3(b) By-Laws of CECo Holding Company.
4 Rights of CECo Holding Company Common Shareholders (in-
cluded in 3(a)).
5 Opinion of Sidley & Austin.
8 Opinion of Sidley & Austin.
23(a) Consent of Sidley & Austin (included in (5)).
23(b) Consent of Experts.
99(a) Form of Proxy/Direction.
99(b) Consents of Persons to be Directors of CECo Holding Com-
pany at the Effective Time of the Merger.
</TABLE>
ITEM 22. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) That, for purposes of determining any liability under the Securities
Act of 1933, each filing of the registrant's annual report pursuant to
section 13(a) or section 15(d) of the Securities Exchange Act of 1934 that
is incorporated by reference in the registration statement shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
II-1
<PAGE>
(2) To respond to requests for information that is incorporated by
reference into the prospectus pursuant to Items 4, 10(b), 11 or 13 of this
form, within one business day of receipt of such request, and to send the
incorporated documents by first class mail or other equally prompt means.
This includes information contained in documents filed subsequent to the
effective date of the registration statement through the date of responding
to the request.
(3) To supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved therein,
that was not the subject of and included in the registration statement when
it became effective.
(4) To remove from registration by means of a post-effective amendment
any shares of Holding Company Common Stock which are not issued in the
Merger, except shares which are issuable thereafter upon the conversion of
Commonwealth Edison Company $1.425 Convertible Preferred Stock and
Warrants.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to Directors, officers and controlling persons of the
registrant pursuant to the provisions described in Item 20, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
II-2
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF CHICAGO, STATE OF
ILLINOIS ON JANUARY 31, 1994.
CECo HOLDING COMPANY
/s/ James J. O'Connor
By: _________________________________
James J. O'Connor
Chairman
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS REGISTRATION
STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE CAPACITIES
INDICATED, ON JANUARY 31, 1994.
SIGNATURE AND TITLE
/s/ James J. O'Connor /s/ Samuel K. Skinner
- ------------------------------------- -------------------------------------
James J. O'Connor Samuel K. Skinner
Chairman and Director President and Director
(principal executive officer)
/s/ John C. Bukovski /s/ Roger F. Kovack
- ------------------------------------- -------------------------------------
John C. Bukovski Roger F. Kovack
Vice President Comptroller
(principal financial officer) (principal accounting officer)
II-3
<PAGE>
GRAPHICS APPENDIX LIST
PHOTOS OF THE DIRECTORS AND NOMINEES FOR DIRECTORS APPEAR TO THE LEFT
OF EACH RESPECTIVE NAME ON PAGES 12, 13 AND 14.
<PAGE>
EXHIBIT INDEX
The following exhibits are filed herewith or incorporated herein by
reference.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
------- ------------------------------------------------------------------
<C> <S>
2(a) Agreement and Plan of Merger (attached as Exhibit A).
2(b) Supplemental Agreement (attached as Exhibit B).
Articles of Incorporation of CECo Holding Company (attached as
3(a) Exhibit C).
3(b) By-Laws of CECo Holding Company.
4 Rights of CECo Holding Company Common Shareholders (included in
3(a)).
5 Opinion of Sidley & Austin.
8 Opinion of Sidley & Austin.
23(a) Consent of Sidley & Austin (included in (5)).
23(b) Consent of Experts.
99(a) Form of Proxy/Direction.
99(b) Consents of Persons to be Directors of CECo Holding Company at the
Effective Time of the Merger.
</TABLE>
<PAGE>
Exhibit 3(b)
CECo Holding Company
Form S-4
File No. 33-
CECO HOLDING COMPANY
BY-LAWS
EFFECTIVE JANUARY 28, 1994
<PAGE>
CONTENTS
<TABLE>
<CAPTION>
Page
Number
------
<S> <C> <C>
ARTICLE I. Stock...................................... 1
ARTICLE II. Meetings of Shareholders................... 3
ARTICLE III. Board of Directors......................... 5
ARTICLE IV. Committees of the Board of Directors....... 7
ARTICLE V. Officers................................... 10
ARTICLE VI. Indemnification............................ 13
ARTICLE VII. Miscellaneous.............................. 14
ARTICLE VIII. Alteration, Amendment or Repeal of By-Laws. 15
</TABLE>
<PAGE>
CECO HOLDING COMPANY
BY-LAWS
_____
ARTICLE I.
STOCK.
SECTION 1. Each holder of fully paid stock shall be entitled to a
certificate or certificates of stock stating the number and class of shares, and
the designation of the series, if any, which such certificate represents. All
certificates of stock shall at the time of their issuance be signed either
manually or by facsimile signature by the Chairman, the President or a Vice
President and by the Secretary or an Assistant Secretary. All certificates of
stock shall be sealed with the seal of the Company or a facsimile of such seal,
shall be countersigned either manually or by facsimile signature by a Transfer
Agent and shall be authenticated by manual signature and registered by a
Registrar. The Board of Directors shall appoint one or more Transfer Agents,
none of whom shall be officers of the Company authorized to sign certificates of
stock, and one or more Registrars, each of which Registrars shall be a bank or
trust company. Certificates of stock shall not be valid until countersigned by
a Transfer Agent and authenticated and registered by a Registrar in the manner
provided by the Board of Directors.
SECTION 2. Shares of stock shall be transferable only on the books of the
Company and, except as hereinafter provided or as otherwise required by law,
shall be transferred only upon proper endorsement and surrender of the
certificates issued therefor. If an outstanding certificate of stock shall be
lost, destroyed or stolen, the holder thereof may have a new certificate upon
producing evidence satisfactory to the Board of Directors of such loss,
destruction or theft, and upon furnishing to the Company, the Transfer Agents
and the Registrars a bond of indemnity deemed sufficient by the Board of
Directors against claims under the outstanding certificate.
SECTION 3. The certificates for each class or series of stock shall be
numbered and issued in consecutive order and a record shall be kept of the name
and address of the person to whom each certificate is issued, the number of
shares represented by the certificate and the number and date of the
certificate. All certificates exchanged or returned to the Company or the
Transfer Agent for transfer shall be canceled and filed.
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<PAGE>
SECTION 4. For the purpose of determining shareholders entitled to notice
of or to vote at any meeting of shareholders, or shareholders entitled to
receive payment of any dividend, or in order to make a determination of
shareholders for any other proper purpose, the Board of Directors may fix in
advance a date as the record date for any such determination of shareholders,
such date in any case to be not more than sixty days and, for a meeting of
shareholders, not less than ten days, or in the case of a merger, consolidation,
share exchange, dissolution or sale, lease or exchange of assets, not less than
twenty days, immediately preceding such meeting.
SECTION 5. If any subscription for stock in the Company or any installment
of such subscription shall be unpaid when due, as the Board of Directors shall
have determined the time for payment, and shall continue unpaid for twenty days
after demand for the amount due, made either in person or by written notice duly
mailed to the last address, as it appears on the records of the Company, of the
subscriber or other person by whom the subscription or installment shall be
payable, the stock or subscription upon which payment shall be so due shall,
upon the expiration of said twenty days, become and be forfeited to the Company
without further action, demand or notice, and such stock or subscription may be
sold at public sale, subject to payment of the amount due and unpaid, plus all
costs and expenses incurred by the Company in that connection, at a time and
place to be stated in a written notice to be mailed to the recorded address of
the delinquent subscriber or other person in default on the subscription at
least ten days prior to the time fixed for such sale; provided, that the excess
of proceeds of such sale realized over the amount due and unpaid on said stock
or subscription shall be paid to the delinquent subscriber of other person in
default on the subscription, or to his or her legal representative; and,
provided further, that no forfeiture of stock, or of any amounts paid upon a
subscription therefor, shall be declared as against the estate of any decedent
before distribution shall have been made of the estate.
The foregoing provisions for the forfeiture and sale of stock or
subscriptions shall not exclude any other remedy which may lawfully be
enforceable at any time, by forfeiture of stock or of amounts theretofore paid
or otherwise, against any person for nonpayment of a subscription or of any
installment thereof.
SECTION 6. Transfers of shares shall be made only on the books of the
Company by the registered holder thereof or by his or her legal representative,
who shall furnish proper evidence of authority to transfer, or by his or her
attorney or successor thereunto authorized by power of attorney or by documents
duly executed and filed with the Secretary or Transfer Agent of the Company, and
upon surrender for cancellation of the certificate for such shares. The person
in whose name shares stand on the
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<PAGE>
books of the Company shall be deemed the owner thereof for all purposes as
regards the Company.
SECTION 7. The Company shall be entitled to treat the holder of record of
any share or shares of stock as the holder in fact thereof and accordingly,
shall not be bound to recognize any equitable or other claim to or interest in
such share or shares on the part of any other person, whether or not it shall
have express or other notice thereof, except as otherwise provided by the laws
of the State of Illinois.
ARTICLE II.
MEETINGS OF SHAREHOLDERS.
SECTION 1. The regular annual meeting of the shareholders of the Company
for the election of Directors and for the transaction of such other business as
may come before the meeting shall be held on such day in April or May of each
year as the Board of Directors may by resolution determine. Each such regular
annual meeting and each special meeting of the shareholders shall be held at
such place as may be fixed by the Board of Directors and at such hour as the
Board of Directors shall order.
SECTION 2. Special meetings of the shareholders may be called by the
Chairman, by the Board of Directors, by a majority of the Directors individually
or by the holders of not less than one-fifth of the total outstanding shares of
capital stock of the Company.
SECTION 3. Written notice stating the place, day and hour of the meeting
of the shareholders and, in the case of a special meeting, the purpose or
purposes for which the meeting is called shall be delivered not less than ten
nor more than sixty days before the date of the meeting, or in the case of a
merger, consolidation, share exchange, dissolution or sale, lease or exchange of
assets not less than twenty nor more than sixty days before the date of the
meeting, either personally or by mail, by or at the direction of the Chairman,
the Secretary or the persons calling the meeting, to each shareholder of record
entitled to vote at such meeting. If mailed, such notice shall be deemed to be
delivered when deposited in the United States mail addressed to the shareholder
at the shareholder's address as it appears upon the records of the Company, with
postage thereon prepaid.
SECTION 4. At all meetings of the shareholders, a majority of the
outstanding shares of stock, entitled to vote on a matter, represented in person
or by proxy, shall constitute a quorum for consideration of such matter, but the
shareholders represented at any meeting, though less than a quorum, may adjourn
the meeting to some other day or sine die. If a quorum is present, the
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<PAGE>
affirmative vote of the majority of the shares of stock represented at the
meeting and entitled to vote on a matter shall be the act of the shareholders,
unless the vote of a greater number or voting by classes is required by law or
the articles of incorporation.
SECTION 5. At every meeting of the shareholders, each outstanding share of
stock shall be entitled to one vote on each matter submitted for a vote. In all
elections for Directors, every shareholder shall have the right to vote the
number of shares owned by such shareholder for as many persons as there are
Directors to be elected, or to cumulate such votes and give one candidate as
many votes as shall equal the number of Directors to be elected multiplied by
the number of such shares or to distribute such cumulative votes in any
proportion among any number of candidates. A shareholder may vote either in
person or by proxy. A shareholder may appoint a proxy to vote or otherwise act
for him or her by signing an appointment form and delivering it to the person so
appointed.
SECTION 6. Any meeting at which a quorum of shareholders is present, in
person or by proxy, may adjourn from time to time without notice, other than
announcement at such meeting, until its business is completed. At the adjourned
meeting, the Company may transact any business which might have been transacted
at the original meeting. If the adjournment is for more than thirty days, a
notice of the adjourned meeting shall be given to each shareholder of record
entitled to vote at the meeting.
SECTION 7. The Secretary of the Company shall make or cause to be made,
within twenty days after the record date for a meeting of shareholders of the
Company or ten days before such meeting, whichever is earlier, a complete list
of the shareholders entitled to vote at such meeting, arranged in alphabetical
order, with the address of and the number of shares held by each, which list,
for at least ten days prior to such meeting, shall be kept on file at the
registered office of the Company and shall be subject to inspection by any
shareholder, and to copying at such shareholder's expense, at any time during
usual business hours. Such list shall also be produced and kept open at the
time and place of the meeting and shall be subject to the inspection of any
shareholder during the whole time of the meeting.
SECTION 8. The Chairman and the Secretary of the Company shall, when
present, act as chairman and secretary, respectively, of each meeting of the
shareholders.
SECTION 9. At any meeting of shareholders, the chairman of the meeting
may, or upon the request of any shareholder shall, appoint one or more persons
as inspectors for such meeting, unless an inspector or inspectors shall have
been previously appointed for such meeting by the Chairman. Such inspectors
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<PAGE>
shall ascertain and report the number of shares of stock represented at the
meeting, based upon their determination of the validity and effect of proxies,
count all votes and report the results and do such other acts as are proper to
conduct the election and voting with impartiality and fairness to all the
shareholders.
SECTION 10. Voting on any question or in any election may be viva voce
unless the presiding officer shall order or any shareholder shall demand that
voting be by ballot.
ARTICLE III.
BOARD OF DIRECTORS.
SECTION 1. The business and affairs of the Company shall be managed by or
under the direction of the Board of Directors. The number of Directors of the
Company shall be not less than eleven nor more than sixteen. The Directors
shall be elected at each annual meeting of the shareholders, but if for any
reason the election shall not be held at an annual meeting, it may be
subsequently held at any special meeting of the shareholders called for that
purpose after proper notice. The Directors so elected shall hold office until
the next annual meeting and until their respective successors, willing to serve,
shall have been elected and qualified. Directors need not be residents of the
State of Illinois or shareholders of the Company. No person shall be eligible
for nomination or renomination as a Director by the management of the Company
who, prior to the date of election, shall have attained age seventy. No person
who is an employe or a former employe of the Company or of a subsidiary of the
Company shall be eligible for nomination or renomination as a Director by the
management of the Company for a term commencing after such person ceases to be
such an employe; provided, however, that any Director of the Company who was a
Director of Commonwealth Edison Company, an Illinois corporation, in office on
June 15, 1989 who is or has been such an employe may be renominated as a
Director unless such person shall have attained age sixty-five on or before the
date of election of Directors.
SECTION 2. Any vacancy occurring in the Board of Directors, including a
vacancy created by an increase in the number of directors, may be filled by
election at an annual meeting or at a special meeting of shareholders called for
that purpose; provided, however, that any vacancy in the Board of Directors
arising between meetings of shareholders by reason of an increase in the number
of directors or otherwise may be filled by the vote of a majority of the
directors then in office, although less than a quorum. Any directors so elected
shall serve until the next annual meeting of shareholders.
-5-
<PAGE>
SECTION 3. A meeting of the Board of Directors shall be held immediately,
or as soon as practicable, after the annual election of Directors in each year,
provided a quorum for such meeting can be obtained. Notice of every meeting of
the Board, stating the time and place at which such meeting will be held, shall
be given to each Director personally, by telephone or by other means of
communication at least one day, or by depositing the same in the mails properly
addressed at least two days before the day of such meeting. A meeting of the
Board of Directors may be called at any time by the Chairman or by any two
Directors and shall be held at such place as shall be specified in the notice
for such meeting.
SECTION 4. A majority of the number of Directors then in office, but not
less than six, shall constitute a quorum for the transaction of business at any
meeting of the Board, but a lesser number may adjourn the meeting from time to
time until a quorum is obtained, or may adjourn sine die. The act of the
majority of the Directors present at a meeting at which a quorum is present
shall be the act of the Board of Directors.
SECTION 5. Each member of the Board not receiving a salary from the
Company or a subsidiary of the Company shall be paid such fees as the Board of
Directors may from time to time, by resolution adopted by the affirmative vote
of a majority of the Directors then in office, and irrespective of any personal
interest of any of its members, determine. The Directors shall be paid their
reasonable expenses, if any, of attendance at each meeting of the Board of
Directors. Members of any committee of the Board of Directors may be allowed
like fees and expenses for service on or attendance at meetings of such
committee. No such payment shall preclude any Director from serving the Company
in any other capacity and receiving compensation therefor.
SECTION 6. A Director of the Company who is present at a meeting of the
Board of Directors at which action is taken on any corporate matter shall be
conclusively presumed to have assented to the action taken unless his or her
dissent shall be entered in the minutes of the meeting or unless he shall file
his or her written dissent to such action with the person acting as Secretary
of the meeting before the adjournment thereof or shall forward such dissent by
registered mail to the Secretary of the Company immediately after the
adjournment of the meeting. Such right to dissent shall not apply to a director
who voted in favor of such action.
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<PAGE>
ARTICLE IV.
COMMITTEES OF THE BOARD OF DIRECTORS
SECTION 1. There shall be an Executive Committee of the Board consisting
of five members. The Board of Directors shall, at its first meeting after the
annual meeting of the shareholders in each year, elect a chairman and the four
other members of the Executive Committee. The remaining Directors shall
constitute alternates to serve temporarily, and as far as practicable in
rotation (in such order as shall be established by the Board), in the place of
any member who may be unable to serve. The Chairman or the Directors calling a
meeting of the Executive Committee shall call upon alternates, in rotation, to
serve as herein provided. When any alternate serves, the minutes of the meeting
shall record the name of the member in whose place such alternate serves. The
Directors elected as members of the Executive Committee shall serve as such for
one year and until their respective successors, willing to serve, shall have
been elected. The Executive Committee shall, when the Board is not in session,
have and may exercise all of the authority of the Board of Directors, subject to
the limitations set forth in Section 10 of this Article IV. Vacancies in the
membership of the Executive Committee shall be filled by the Board of Directors.
The Executive Committee shall keep minutes of the proceedings at its meetings.
SECTION 2. There shall be an Audit Committee of the Board consisting of
not less than three nor more than five members who are not employes of the
Company. The Directors elected as members of the Audit Committee shall serve as
such for three years and until their respective successors, willing to serve,
shall have been elected, provided that, to the extent practicable, the members
of the Audit Committee shall be elected for staggered terms. The Board of
Directors shall, at its first meeting after the annual meeting of shareholders
in each year, elect the successors of the members whose terms shall then expire.
The Board of Directors shall designate from time to time the member who is to
serve as chairman of the Audit Committee. The Audit Committee shall meet with
the Company's independent auditors at least once each year to review the
Company's financial statements and the scope and results of such auditors'
examinations, monitor the internal accounting controls and practices of the
Company, review the annual report to shareholders and make recommendations as
to its approval to the Board and recommend, subject to shareholder approval, the
appointment of independent auditors, and shall report its findings at least once
each year to the Board. The Audit Committee shall have such powers as it shall
deem necessary for the performance of its duties. Vacancies in the membership
of the Audit Committee shall
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<PAGE>
be filled by the Board of Directors. The Audit Committee shall keep minutes of
the proceedings at its meetings.
SECTION 3. There shall be a Compensation Committee of the Board consisting
of those Directors who are not employes or former employes of the Company. The
Board of Directors shall, at its first meeting after the annual meeting of
shareholders in each year, elect a chairman of the Compensation Committee. The
Directors serving as members of the Compensation Committee shall serve as such
for one year and until their respective successors, willing to serve, shall have
been elected. The Compensation Committee shall administer awards under the
Company's Deferred Compensation Plan. The Compensation Committee shall have
such power as it shall deem necessary for the performance of its duties.
Vacancies in the membership of the Compensation Committee shall be filled by
the Board of Directors. The Compensation Committee shall keep minutes of the
proceedings at its meetings.
SECTION 4. There shall be a Finance Committee of the Board consisting of
not less than three nor more than five members. The Board of Directors shall,
at its first meeting after the annual meeting of shareholders in each year,
elect a chairman and the other members of the Finance Committee. The Directors
elected as members of the Finance Committee shall serve as such for one year and
until their respective successors, willing to serve, shall have been elected.
The Finance Committee shall review the scope and results of the Company's
financing program and review the Company's financial statements, construction
budgets and cash budgets as they relate to the Company's financing program, and
shall report its findings at least once each year to the Board. The Finance
Committee shall have such power as it shall deem necessary for the performance
of its duties. Vacancies in the membership of the Finance Committee shall be
filled by the Board of Directors. The Finance Committee shall keep minutes of
the proceedings at its meetings.
SECTION 5. There shall be a Nominating Committee of the Board consisting
of not less than three nor more than five members, a majority of whom are not
employes of the Company. The Board of Directors shall, at its first meeting
after the annual meeting of shareholders in each year, elect a chairman and the
other members of the Nominating Committee. The Directors elected as members of
the Nominating Committee shall serve as such for one year and until their
respective successors, willing to serve, shall have been elected. The
Nominating Committee shall review the requirements for serving as Director,
review potential candidates for Director, propose nominees for Director to the
Board and recommend to the Board the successor to the Chairman when a vacancy
occurs in that position. The Nominating Committee shall have such power as it
shall deem necessary for the performance of its duties. Vacancies in the
membership of the Nominating Committee shall be filled by the Board of
Directors. The
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<PAGE>
Nominating Committee shall keep minutes of the proceedings at its meetings.
SECTION 6. The Board of Directors may from time to time create other
committees, standing or special, appoint Directors to serve on such committees
and confer such powers upon such committees and revoke such powers and terminate
the existence of such committees, as the Board at its pleasure may determine,
subject to the limitations set forth in Section 8.40(c) of the Illinois Business
Corporation Act of 1983, as amended from time to time.
SECTION 7. Meetings of any committee of the Board may be called at any
time by the Chairman, by any two Directors or by the chairman of the committee
the meeting of which is being called and shall be held at such place as shall be
designated in the notice of such meeting. Notice of each committee meeting
stating the time and place at which such meeting will be held shall be given to
each member of the committee personally, or by telegraph, or by depositing the
same in the mails properly addressed, at least one day before the day of such
meeting. A majority of the members of a committee shall constitute a quorum
thereof but a lesser number may adjourn the meeting from time to time until a
quorum is obtained, or may adjourn sine die. A majority vote of the members of
a committee present at a meeting at which a quorum is present shall be necessary
for committee action.
SECTION 8. The Board of Directors may from time to time designate from
among the Directors alternates to serve on one or more committees as occasion
may require. Whenever a quorum cannot be secured for any meeting of any
committee from among the regular members thereof and designated alternates, the
member or members of such committee present at such meeting and not dis-
qualified from voting thereat, whether or not he or they constitute a quorum,
may unanimously appoint another member of the Board of Directors to act at the
meeting in place of such absent or disqualified member.
SECTION 9. Every Director of the Company, or member of any committee
designated by the Board of Directors pursuant to authority conferred by these
By-Laws, shall, in the performance of his or her duties, be fully protected in
relying in good faith upon the records of the Company and upon such information,
opinions, reports or statements presented to the Company by any of the Company's
officers or employees, or committees of the Board of Directors, or by any other
person as to matters the Director or member reasonably believes are within such
other person's professional or expert competence and who has been selected with
reasonable care by or on behalf of the Company.
-9-
<PAGE>
ARTICLE V.
OFFICERS.
SECTION 1. There shall be elected by the Board of Directors, at its first
meeting after the annual election of Directors in each year if practicable, the
following principal officers of the Company, namely: a Chairman, a President,
such number of Executive Vice Presidents, Senior Vice Presidents and Vice
Presidents as the Board at the time may decide upon, a Secretary, a Treasurer
and a Comptroller; and the Board may also provide for a Vice Chairman and such
other officers, and prescribe for each of them such duties, as in its judgment
may from time to time be desirable to conduct the affairs of the Company. No
officer shall be elected for a term extending beyond the first day of the month
following the month in which such officer attains the age of 65 years, on which
date such officer shall be retired. The Chairman shall be a Director of the
Company; any other officer above named may, but need not, be a Director of the
Company. Any two or more offices may be held by the same person. All officers
shall hold their respective offices until the first meeting of the Board of
Directors after the next succeeding annual election of Directors and until their
successors, willing to serve, shall have been elected, but any officer may be
removed from office by the Board of Directors whenever in its judgment the best
interests of the Company will be served thereby. Such removal, however, shall
be without prejudice to the contract rights, if any, of the person so removed.
Election of an officer shall not of itself create contract rights.
SECTION 2. The Chairman shall be the chief executive officer of the
Company and shall have general authority over all the affairs of the Company,
including the power to appoint and discharge any and all officers, agents and
employes of the Company not elected or appointed directly by the Board of Direc-
tors. The Chairman shall, when present, preside at all meetings of the
shareholders and of the Board of Directors. The Chairman shall have authority
to call special meetings of the shareholders and meetings of the Board of
Directors, and of any committee of the Board of Directors and, when neither the
Board of Directors nor the Executive Committee is in session, to suspend the
authority of any other officer or officers of the Company, subject, however, to
the pleasure of the Board of Directors or of the Executive Committee at its next
meeting. The Chairman, or such other officer as the Chairman may direct, shall
be responsible for all internal audit functions, and the internal audit person-
nel shall report directly to the Chairman or to such other officer.
SECTION 3. In the absence or disability of the Chairman, the powers and
duties of the Chairman shall be performed by the
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<PAGE>
President or, in the President's absence or disability, by such other principal
officer as the Board of Directors or the Executive Committee may designate.
SECTION 4. Except insofar as the Board of Directors, the Executive
Committee or the Chairman shall have devolved responsibilities on the other
principal officers, the President shall be responsible for the general
management and direction of the affairs of the Company, subject to the control
of the Board of Directors, the Executive Committee and the Chairman. The Presi-
dent shall have such other powers and duties as usually devolve upon the
President of a corporation and such further powers and duties as may be
prescribed by the Board of Directors, the Executive Committee or the chairman.
The President shall report to the Chairman.
SECTION 5. The Executive Vice Presidents, the Senior Vice Presidents and
the Vice Presidents shall have such powers and duties as may be prescribed for
them, respectively, by the Board of Directors, the Executive committee or the
Chairman. Each of such officers shall report to the Chairman or such other
officer as the Chairman shall direct.
SECTION 6. The Secretary shall attend all meetings of the shareholders, of
the Board of Directors and of each committee of the Board of Directors, shall
keep a true and faithful record thereof in proper books and shall have the
custody and care of the corporate seal, records, minute books and stock books of
the Company and of such other books and papers as in the practical business
operations of the Company shall naturally belong in the office or custody of the
Secretary or as shall be placed in the Secretary's custody by order of the Board
of Directors or the Executive Committee. The Secretary shall keep or cause to
be kept a suitable record of the addresses of shareholders and shall, except as
may be otherwise required by statute or the by-laws, sign and issue all notices
required for meetings of shareholders, of the Board of Directors and of the
committees of the Board of Directors. Whenever requested by the requisite number
of shareholders or Directors, the Secretary shall give notice, in the name of
the shareholder or shareholders or Director or Directors making the request, of
a meeting of the shareholders or of the Board of Directors or of a committee of
the Board of Directors, as the case may be. The Secretary shall sign all papers
to which the Secretary's signature may be necessary or appropriate, shall affix
and attest the seal of the Company to all instruments requiring the seal, shall
have the authority to certify the by-laws, resolutions of the shareholders and
Board of Directors and committees of the Board of Directors and other documents
of the Company as true and correct copies thereof and shall have such other
powers and duties as are commonly incidental to the office of Secretary and as
may be prescribed by the Board of Directors, the Executive Committee or the
Chairman. The
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<PAGE>
Secretary shall report to the Chairman or such other officer as the Chairman
shall direct.
SECTION 7. The Treasurer shall have charge of and be responsible for the
collection, receipt, custody and disbursement of the funds of the Company. The
Treasurer shall deposit the Company's funds in its name in such banks, trust
companies or safe deposit vaults as the Board of Directors may direct. Such
funds shall be subject to withdrawal only upon checks or drafts signed or
authenticated in such manner as may be designated from time to time by
resolution of the Board of Directors or of the Executive Committee. The
Treasurer shall have the custody of such books and papers as in the practical
business operations of the Company shall naturally belong in the office or
custody of the Treasurer or as shall be placed in the Treasurer's custody by
order of the Board of Directors or the Executive Committee. The Treasurer shall
have such other powers and duties as are commonly incidental to the office of
Treasurer or as may be prescribed for the Treasurer by the Board of Directors,
the Executive Committee or the Chairman. Securities owned by the Company shall
be in the custody of the Treasurer or of such other officers, agents or
depositaries as may be designated by the Board of Directors or the Executive
Committee. The Treasurer may be required to give bond to the Company for the
faithful discharge of the duties of the Treasurer in such form and in such
amount and with such surety as shall be determined by the Board of Directors.
The Treasurer shall report to the Chairman or such other officer as the Chairman
shall direct.
SECTION 8. The Comptroller shall be responsible for the executive
direction of the accounting organization and shall have functional supervision
over the records of all other departments pertaining to revenues, expenses,
money, securities, properties, materials and supplies. The Comptroller shall
prescribe the form of all vouchers, accounts and accounting procedures, and
reports required by the various departments. The Comptroller shall be
responsible for the preparation and interpretation of all accounting reports
and financial statements as required and for the proper review and approval of
all bills received for payment. No bill or voucher shall be so approved unless
the charges covered by the bill or voucher shall have been previously approved
through job order, requisition or otherwise by the head of the department in
which it originated, or unless the Comptroller shall otherwise be satisfied of
its propriety and correctness. The Comptroller shall have such other powers and
duties as are commonly incidental to the office of Comptroller or as may be
prescribed for the Comptroller by the Board of Directors, the Executive
Committee or the Chairman. The Comptroller may be required to give bond to the
Company for the faithful discharge of the duties of the Comptroller in such form
and in such amount and with such surety as shall be determined by the Board of
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<PAGE>
Directors. The Comptroller shall report to the Chairman or such other officer
as the Chairman shall direct.
SECTION 9. Assistant Secretaries, Assistant Treasurers and Assistant
Comptrollers, when elected or appointed, shall respectively assist the
Secretary, the Treasurer and the Comptroller in the performance of the
respective duties assigned to such principal officers, and in assisting such
principal officer, each of such assistant officers shall for such purpose have
the powers of such principal officer. In case of the absence, disability,
death, resignation or removal from office of any principal officer, such
principal officer's duties shall, except as otherwise ordered by the Board of
Directors or the Executive Committee, temporarily devolve upon such assistant
officer as shall be designated by the Chairman.
ARTICLE VI.
INDEMNIFICATION.
SECTION 1. (a) A Director of the Company shall not be personally liable to
the Company or its shareholders for monetary damages for breach of fiduciary
duty as a Director, except for liability (i) for any breach of the Director's
duty of loyalty to the Company or its shareholders, (ii) for acts or omissions
not in good faith or that involve intentional misconduct or a knowing violation
of law, (iii) under Section 8.65 of the Illinois Business Corporation Act of
1983, as amended, or (iv) for any transaction from which the Director derived an
improper personal benefit. If the Illinois Business Corporation Act of 1983 is
amended to authorize corporate action further eliminating or limiting the
personal liability of Directors, then the liability of a Director of the Company
shall be eliminated or limited to the full extent permitted by the Illinois
Business Corporation Act of 1983, as so amended. Any repeal or modification of
this Section 1(a) by the shareholders of the Company shall not adversely affect
any right or protection of a Director of the Company existing at the time of
such repeal or modification.
(b) Each person who is or was or had agreed to become a Director or officer
of the Company, and each person who is or was serving or who had agreed to serve
at the request of the Board of Directors or an officer of the Company as an
employe or agent of the Company or as a director, officer, employe, or agent,
trustee or fiduciary of another corporation, partnership, joint venture, trust
or other enterprise (including the heirs, executors, administrators or estate of
such person), shall be indemnified by the Company to the full extent permitted
by the Illinois Business Corporation Act of 1983 or any other applicable laws as
presently or hereafter in effect. Without limiting the generality of the
foregoing, the Company may enter into one or more agreements with
-13-
<PAGE>
any person which provide for indemnification greater or different than that
provided in this Section 1(b). Any repeal or modification of this Section 1(b)
shall not adversely affect any right or protection existing hereunder
immediately prior to such repeal or modification.
SECTION 2. The provisions of this Article shall be deemed to be a contract
between the Company and each Director or officer who serves in any such capacity
at any time while this Article is in effect, and any repeal or modification of
this Article shall not affect any rights or obligations hereunder with respect
to any state of facts then or theretofore existing or any action, suit or
proceeding theretofore or thereafter brought or threatened based in whole or in
part upon any such state of facts.
SECTION 3. The indemnification provided or permitted by this Article shall
not be deemed exclusive of any other rights to which those indemnified may be
entitled by law or otherwise, and shall continue as to a person who has ceased
to be a Director, officer, employee or agent and shall inure to the benefit of
the heirs, executors and administrators of such person.
SECTION 4. The Company may purchase and maintain insurance on behalf of
any person who is or was a Director, officer, employee or agent of the Company,
or who is or was serving at the request of the Company as a director, officer,
employee or agent of another corporation or of a partnership, joint venture,
trust or other enterprise, against any liability asserted against such person
and incurred by such person in any such capacity, or arising out of his or her
status as such, whether or not the Company would have the power to indemnify
such person against such liability under the laws of the State of Illinois.
ARTICLE VII.
MISCELLANEOUS.
SECTION 1. No bills shall be paid by the Treasurer unless reviewed and
approved by the Comptroller or by some other person or committee expressly
authorized by the Board of Directors, the Executive Committee, the Chairman or
the Comptroller to review and approve bills for payment.
SECTION 2. All checks, drafts or other orders for payment of money issued
in the name of the Company shall be signed by such officers, employees or agents
of the Company as shall from time to time be designated by the Board of
Directors, the Chairman, the chief financial officer of the Company or the
Treasurer.
SECTION 3. Any and all shares of stock of any corporation owned by the
Company and any and all voting trust certificates
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<PAGE>
owned by the Company calling for or representing shares of stock of any
corporation may be voted at any meeting of the shareholders of such corporation
or at any meeting of the holders of such certificates, as the case may be, by
any one of the principal officers of the Company upon any question which may be
presented at such meeting, and any such officer may, on behalf of the Company,
waive any notice required to be given of the calling of such meeting and consent
to the holding of any such meeting without notice. Any such principal officer
other than the Secretary, acting together with the Secretary or an Assistant
Secretary, shall have authority to give to any person a written proxy, in the
name of the Company and under its corporate seal, to vote any or all shares of
stock or any or all voting trust certificates owned by the Company upon any
question that may be presented at any such meeting of shareholders or
certificate holders, with full power to waive any notice of the calling of such
meeting and consent to the holding of such meeting without notice.
SECTION 4. The fiscal year of the Company shall begin on the first day of
January and end on the last day of December in each year.
ARTICLE VIII.
ALTERATION, AMENDMENT OR REPEAL OF BY-LAWS.
These by-laws may be altered, amended or repealed by the shareholders or
the Board of Directors.
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<PAGE>
Exhibit 5
CECo Holding Company
Form S-4
File No. 33-
SIDLEY & AUSTIN
A PARTNERSHIP INCLUDING PROFESSIONAL CORPORATIONS
Los Angeles One First National Plaza London
---- Chicago, Illinois 60603 ----
New York Telephone 312: 853-7000 Singapore
---- Telex 25-4364 ----
Washington, D.C. Facsimile 312: 853-7036 Tokyo
Founded 1866
(312) 853-2227
January 31, 1994
CECo Holding Company
10 South Dearborn Street
P.O. Box 767
Chicago, Illinois 60690-0767
Re: 215,770,000 Shares of Common Stock,
without par value
-----------------------------------
Ladies and Gentlemen:
We refer to the Registration Statement on Form S-4 (the "Registration
Statement") being filed by CECo Holding Company, an Illinois corporation (the
"Company"), with the Securities and Exchange Commission (the "Commission") under
the Securities Act of 1933, as amended (the "Securities Act"), relating to the
registration of 215,770,000 shares of Common Stock, without par value (the "New
Shares"), of the Company.
We are familiar with the proceedings to date with respect to the
proposed issuance, sale and delivery of the New Shares and have examined such
records, documents and questions of law, and satisfied ourselves as to such
matters of fact, as we have considered relevant and necessary as a basis for the
opinions expressed herein.
Based on the foregoing, we are of the opinion that:
1. The Company is duly incorporated and validly existing under the
laws of the State of Illinois.
2. The New Shares will be legally issued, fully paid and non-
assessable when (i) the Registration Statement, as finally amended, shall have
become effective under the Securities Act; (ii) the Company's Board of Directors
shall have duly adopted final resolutions authorizing the issuance, sale and
delivery of the New Shares as contemplated by the Registration Statement; (iii)
in the case of the New Shares issuable pursuant to the sale of such shares under
the Employe Savings and Investment Plan and Employe Stock Purchase Plan (the
"Stock Purchase Plan") of Commonwealth Edison Company, an Illinois corporation
("Edison"), post-effective amendments to the Registration Statement on Form S-8
shall have been filed with the Commission and become effective under the
Securities Act and all other conditions and requirements applicable to the
delivery of such New Shares upon such sale in accordance with the governing
instruments shall have been duly satisfied; (iv) in the case of
<PAGE>
CECo Holding Company
January 31, 1994
Page 2
the New Shares issuable pursuant to the sale of such shares under the Stock
Purchase Plan, certificates representing the New Shares shall have been duly
executed, countersigned and registered and duly delivered to the persons
entitled thereto against receipt of the agreed consideration therefor; and (v)
the merger of CECo Merging Corporation, an Illinois corporation, with and into
Edison described in the Registration Statement shall have become effective as
described therein.
We do not find it necessary for the purposes of this opinion to cover,
and accordingly we express no opinion as to, the application of the securities
or blue sky laws of the various states to the sale of the New Shares.
We hereby consent to the filing of this opinion letter as an Exhibit
to the Registration Statement and to all references to our firm included in or
made a part of the Registration Statement.
Very truly yours,
SIDLEY & AUSTIN
<PAGE>
Exhibit 8
CECo Holding Company
Form S-4
File No. 33-
SIDLEY & AUSTIN
A PARTNERSHIP INCLUDING PROFESSIONAL CORPORATIONS
Los Angeles One First National Plaza London
---- Chicago, Illinois 60603 ----
New York Telephone 312: 853-7000 Singapore
---- Telex 25-4364 ----
Washington, D.C. Facsimile 312: 853-7036 Tokyo
Founded 1866
(312) 853-2227
January 28, 1994
Commonwealth Edison Company
10 South Dearborn Street
Post Office Box 767
Chicago, Illinois 60690-0767
Gentlemen:
We are counsel to Commonwealth Edison Company, an Illinois corporation
("Edison"). We have been requested by Edison to render this opinion in
connection with a proposed corporate restructuring (the "Merger") in which
Edison will become a subsidiary of a new holding company currently named CECo
Holding Company ("Holding Company"), with the current holders of the outstanding
shares of Edison Common Stock becoming the holders of all the outstanding shares
of common stock of Holding Company.
Edison has entered into an Agreement and Plan of Merger (the "Merger
Agreement"), dated as of January 28, 1994, and a Supplemental Agreement, dated
as of January 28, 1994, pursuant to which CECo Merging Corporation ("Merging
Corp."), a newly organized Illinois corporation which is a wholly-owned
subsidiary of Holding Company, will be merged into Edison. As a result of the
Merger, each share of Edison Common Stock will be converted into one share of
Holding Company Common Stock and Edison will become a subsidiary of Holding
Company. The proposed transaction, the Merger Agreement and the Supplemental
Agreement are more fully described in the Registration Statement on Form S-4 to
be filed by Holding Company with the Securities and Exchange Commission on
January 31, 1994, pursuant to the Securities Act of 1933, as amended (the
"Registration Statement"). Defined terms not otherwise defined herein have the
meanings ascribed to them in the Registration Statement.
Based upon our review of the Registration Statement, the Merger
Agreement, the Supplemental Agreement and such other documents as we have deemed
necessary and upon certain representations made by Edison, we are of the opinion
that, assuming the Merger and all other events occur as contemplated in the
Registration Statement, under the Federal income tax law in effect on the date
hereof:
<PAGE>
Commonwealth Edison Company
January 28, 1994
Page 2
1) no gain or loss will be recognized by non-dissenting holders of
Edison Common Stock upon the conversion of Edison Common Stock into Holding
Company Common Stock in the Merger;
2) no gain or loss will be recognized by non-dissenting holders
of Edison Preferred Stock or Edison Preference Stock as a result of the
Merger;
3) the basis of the Holding Company Common Stock deemed received
in the Merger by non-dissenting holders of Edison Common Stock will be the
same as the basis of the Edison Common Stock converted into such Holding
Company Common Stock in the Merger;
4) the holding period of Holding Company Common Stock deemed
received in the Merger by non-dissenting holders of Edison Common Stock
will include the period during which they held the Edison Common Stock
converted into such Holding Company Common Stock in the Merger, provided
such Edison Common Stock is held as a capital asset by such holders at the
effective time of the Merger; and
5) no gain or loss will be recognized by Holding Company or
Edison as a result of the Merger.
Very truly yours,
SIDLEY & AUSTIN
<PAGE>
Exhibit 23(b)
CECo Holding Company
Form S-4
File No. 33-
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
by reference in this Form S-4 Registration Statement of our reports dated
January 28, 1993, included or incorporated by reference in Commonwealth Edison
Company's Annual Report on Form 10-K for the year ended December 31, 1992 and
our reports dated May 13, 1993, August 11, 1993 and November 10, 1993, included
in Commonwealth Edison Company's Quarterly Reports on Form 10-Q for the
quarterly periods ended March 31, 1993, June 30, 1993 and September 30, 1993.
We also hereby consent to all references to our Firm included in this Form S-4
Registration Statement.
ARTHUR ANDERSEN & CO.
Chicago, Illinois
January 31, 1994
<PAGE>
[X] PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE. Exhibit 99(a)
CECo Holding Company
Form S-4
File No. 33-
THIS PROXY/DIRECTION WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN. IF NO DIRECTION IS MADE, IT WILL BE VOTED FOR ELECTION OF DIRECTORS AND
FOR ITEMS B, C AND D.
- --------------------------------------------------------------------------------
FOR WITHHELD
A. Election of Directors [_] [_]
FOR except vote withheld from the following nominee(s):
------------------------
Director Nominees:
Jean Allard Byron Lee, Jr.
James W. Compton Edward A. Mason
Sue L. Gin James J. O'Connor
Donald P. Jacobs Frank A. Olson
George E. Johnson Samuel K. Skinner
Harvey Kapnick
- -------------------------------------------------------
FOR AGAINST ABSTAIN
B. AGREEMENT AND PLAN OF MERGER [_] [_] [_]
FOR AGAINST ABSTAIN
C. AMENDMENT TO EDISON'S RESTATED ARTICLES [_] [_] [_]
FOR AGAINST ABSTAIN
D. APPOINTMENT OF AUDITORS [_] [_] [_]
- --------------------------------------------------------------------------------
If you have noted comments on the other side of the card, please mark box at
right. [_]
SIGNATURE(S)______________________________DATE_________
The signer hereby revokes all proxies heretofore given by the signer to vote at
said meeting or any adjournments thereof.
NOTE: Please sign exactly as name appears hereon. Joint owners should each sign.
When signing as attorney, executor, administrator, trustee or guardian, please
give full title as such.
- --------------------------------------------------------------------------------
. FOLD AND DETACH HERE .
(COMMONWEALTH EDISON LOGO APPEARS HERE)
TO OUR SHAREHOLDERS
The regular annual meeting of shareholders of Commonwealth Edison Company will
be held on Tuesday, May 10, 1994 in the Grand Ballroom of the Chicago Hilton and
Towers, 720 South Michigan Avenue, Chicago, Illinois. You are invited to attend.
The enclosed Proxy Statement describes several items of business to be
conducted at that meeting. Along with the usual election of Directors and
appointment of auditors, you are asked to vote on a proposed corporate
restructuring and an amendment to the Commonwealth Edison Restated Articles of
Incorporation.
As always, your vote is very important. This year it will help to determine
the future course of our Company. Therefore, I urge you to exercise your proxy
and return it as early as possible. This action will expedite the tabulation
process and minimize costs associated with possible follow-up mailings or
reminder contacts.
Even if you now expect to attend the annual meeting, please sign, date and
return the accompanying proxy in the enclosed addressed, postage-paid envelope.
(You may revoke your proxy at any time before it is voted by delivering written
notice of such revocation to Commonwealth Edison, executing a subsequent proxy
or attending the annual meeting and voting in person.)
Sincerely,
James J. O'Connor
Chairman
<PAGE>
COMMONWEALTH EDISON
10 South Dearborn Street
(COMMONWEALTH EDISON LOGO) Post Office Box 767 PROXY/DIRECTION
Chicago, Illinois 60690-0767
- --------------------------------------------------------------------------------
THIS PROXY/DIRECTION IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
COMMONWEALTH EDISON COMPANY (THE "COMPANY") FOR THE
ANNUAL MEETING OF STOCKHOLDERS ON MAY 10, 1994.
The undersigned appoints James J. O'Connor, Samuel K. Skinner and David A.
Scholz, or any of them, as Proxies each with the power to appoint his
substitute, and hereby authorizes them to represent and to vote, as designated
on the reverse side, all shares of the Company's stock held in the undersigned's
name and shares held by agents in Plans, hereafter described, subject to the
voting direction of the undersigned at the Annual Meeting of Stockholders to be
held on May 10, 1994, or any adjournment thereof and, in the Proxies'
discretion, to vote upon such other business as may properly come before the
meeting, all as more fully set forth in the Proxy Statement related to such
meeting, receipt of which is hereby acknowledged.
ALL SHARES VOTABLE HEREBY BY THE UNDERSIGNED INCLUDE SHARES, IF ANY, HELD IN
THE NAME OF AGENTS, FOR THE BENEFIT OF THE UNDERSIGNED, IN THE COMPANY'S
DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN AND THE COMPANY'S EMPLOYE SAVINGS
AND INVESTMENT PLAN TRUST.
Comment/Change of address: -----------------
PLEASE SEE
- ---------------------------------------------------------- REVERSE SIDE
-----------------
- ----------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
Exhibit 99(b)
CECo Holding Company
Form S-4
File No. 33-
CONSENT OF PROSPECTIVE DIRECTOR
The undersigned, being a director of Commonwealth Edison Company, an
Illinois corporation, acting in accordance with Rule 438 promulgated under the
Securities Act of 1933, as amended, hereby consents to being named as a
prospective director of CECo Holding Company, an Illinois corporation, in the
Registration Statement on Form S-4 of CECo Holding Company.
Dated January 31, 1994
/s/ Jean Allard
------------------------
Jean Allard
<PAGE>
CONSENT OF PROSPECTIVE DIRECTOR
The undersigned, being a director of Commonwealth Edison Company, an
Illinois corporation, acting in accordance with Rule 438 promulgated under the
Securities Act of 1933, as amended, hereby consents to being named as a
prospective director of CECo Holding Company, an Illinois corporation, in the
Registration Statement on Form S-4 of CECo Holding Company.
Dated January 31, 1994
/s/ James W. Compton
--------------------------
James W. Compton
<PAGE>
CONSENT OF PROSPECTIVE DIRECTOR
The undersigned, being a director of Commonwealth Edison Company, an
Illinois corporation, acting in accordance with Rule 438 promulgated under the
Securities Act of 1933, as amended, hereby consents to being named as a
prospective director of CECo Holding Company, an Illinois corporation, in the
Registration Statement on Form S-4 of CECo Holding Company.
Dated January 31, 1994
/s/ Sue L. Gin
-----------------------
Sue L. Gin
<PAGE>
CONSENT OF PROSPECTIVE DIRECTOR
The undersigned, being a director of Commonwealth Edison Company, an
Illinois corporation, acting in accordance with Rule 438 promulgated under the
Securities Act of 1933, as amended, hereby consents to being named as a
prospective director of CECo Holding Company, an Illinois corporation, in the
Registration Statement on Form S-4 of CECo Holding Company.
Dated January 31, 1994
/s/ Donald P. Jacobs
--------------------------
Donald P. Jacobs
<PAGE>
CONSENT OF PROSPECTIVE DIRECTOR
The undersigned, being a director of Commonwealth Edison Company, an
Illinois corporation, acting in accordance with Rule 438 promulgated under the
Securities Act of 1933, as amended, hereby consents to being named as a
prospective director of CECo Holding Company, an Illinois corporation, in the
Registration Statement on Form S-4 of CECo Holding Company.
Dated January 31, 1994
/s/ George E. Johnson
---------------------------
George E. Johnson
<PAGE>
CONSENT OF PROSPECTIVE DIRECTOR
The undersigned, being a director of Commonwealth Edison Company, an
Illinois corporation, acting in accordance with Rule 438 promulgated under the
Securities Act of 1933, as amended, hereby consents to being named as a
prospective director of CECo Holding Company, an Illinois corporation, in the
Registration Statement on Form S-4 of CECo Holding Company.
Dated January 31, 1994
/s/ Harvey Kapnick
-------------------------
Harvey Kapnick
<PAGE>
CONSENT OF PROSPECTIVE DIRECTOR
The undersigned, being a director of Commonwealth Edison Company, an
Illinois corporation, acting in accordance with Rule 438 promulgated under the
Securities Act of 1933, as amended, hereby consents to being named as a
prospective director of CECo Holding Company, an Illinois corporation, in the
Registration Statement on Form S-4 of CECo Holding Company.
Dated January 31, 1994
/s/ Byron Lee, Jr.
-------------------------
Byron Lee, Jr.
<PAGE>
CONSENT OF PROSPECTIVE DIRECTOR
The undersigned, being a director of Commonwealth Edison Company, an
Illinois corporation, acting in accordance with Rule 438 promulgated under the
Securities Act of 1933, as amended, hereby consents to being named as a
prospective director of CECo Holding Company, an Illinois corporation, in the
Registration Statement on Form S-4 of CECo Holding Company.
Dated January 31, 1994
/s/ Edward A. Mason
--------------------------
Edward A. Mason
<PAGE>
CONSENT OF PROSPECTIVE DIRECTOR
The undersigned, being a director of Commonwealth Edison Company, an
Illinois corporation, acting in accordance with Rule 438 promulgated under the
Securities Act of 1933, as amended, hereby consents to being named as a
prospective director of CECo Holding Company, an Illinois corporation, in the
Registration Statement on Form S-4 of CECo Holding Company.
Dated January 31, 1994
/s/ Frank A. Olson
-------------------------
Frank A. Olson
<PAGE>
EXHIBIT D-1
UNITED STATES OF AMERICA
BEFORE THE
FEDERAL ENERGY REGULATORY COMMISSION
COMMONWEALTH EDISON COMPANY ) DOCKET NO. EC94-___-000
APPLICATION OF COMMONWEALTH EDISON
COMPANY FOR AUTHORITY TO IMPLEMENT
PROPOSED CORPORATE RESTRUCTURING
----------------------------------
FREDERIC G. BERNER, JR.
NANCY Y. GORMAN
SIDLEY & AUSTIN
1722 EYE STREET, N.W.
WASHINGTON, D.C. 20006
ATTORNEYS FOR
COMMONWEALTH EDISON COMPANY
---------------------------
FEBRUARY 4, 1994
<PAGE>
UNITED STATES OF AMERICA
BEFORE THE
FEDERAL ENERGY REGULATORY COMMISSION
COMMONWEALTH EDISON COMPANY ) DOCKET NO. EC94-___-000
APPLICATION OF COMMONWEALTH EDISON
COMPANY FOR AUTHORITY TO IMPLEMENT
PROPOSED CORPORATE RESTRUCTURING
----------------------------------
Pursuant to Section 203 of the Federal Power Act (16 U.S.C. (S)824b) and Part
33 of the Commission's Regulations (18 C.F.R. (S)33), Commonwealth Edison
Company ("Edison") requests the Commission to authorize a "disposition of
facilities" that would be deemed to occur as a result of a proposed corporate
restructuring. As explained herein, the proposed restructuring would have no
effect on Edison's jurisdictional facilities, rates, or services and would be
compatible with the public interest.
Edison requests the Commission to evaluate this application pursuant to the
shortened procedures provided for in Rules 801 and 802 of the Commission's Rules
of Practice and Procedure and to grant the requested authority by April 30,
1994.
<PAGE>
I.
INTRODUCTION AND BACKGROUND
---------------------------
Edison is engaged principally in the production, purchase, transmission,
distribution, and retail sale of electricity. Edison also sells electricity at
wholesale, however, and thus is a public utility within the meaning of the
Federal Power Act.
Edison's operations, other than the operations of certain of its subsidiaries,
are conducted wholly within the State of Illinois. Edison provides electric
service to approximately 3.3 million residential, commercial, and industrial
customers, and owns more than 22,500 MW of generating capacity and more than
5,200 circuit miles of high voltage (138 kV or higher) transmission lines. Its
highest peak load, experienced on August 27, 1993, was 17,771 MW. Edison has
interconnections for the transmission and sale of electricity with its wholly-
owned subsidiary, Commonwealth Edison Company of Indiana, Inc. (the "Indiana
Company"), and with Central Illinois Light Company, Central Illinois Public
Service Company, Illinois Power Company, Indiana Michigan Power Company,
Interstate Power Company, Iowa-Illinois Gas and Electric Company, Northern
Indiana Public Service Company, Wisconsin Electric Power Company, and Wisconsin
Power and Light Company.
Edison's utility operations are subject to the regulation of the Illinois
Commerce Commission (the "Illinois Commission") under the Illinois Public
Utilities Act (the "Illinois Act"). The Illinois Commission regulates, inter
alia,
2
<PAGE>
Edison's retail rates and charges, securities issuances (other than short-term
debt securities), services, facilities, classification of accounts, transactions
with affiliated interests, and other matters.
Edison presently has seven wholly-owned subsidiaries. The Indiana Company
owns a generating station with a net generating capability of 490 MW in Hammond,
Indiana and sells the plant's output to Edison. CECo Enterprises Inc. ("CECo
Enterprises"), an Illinois corporation, was recently established by Edison to
provide, through subsidiaries, unregulated energy-related services for Edison's
customers and others./1/ Edison Development Company, a Delaware corporation,
owns coal land, land rights, and mineral rights to low-sulfur coal, has an
interest in uranium ore deposits, and has other real estate investments. Edison
Development Canada Inc., a Canadian company, has an interest in uranium ore
deposits in Canada. Cotter Corporation, incorporated in New Mexico, owns
uranium mining properties in certain Western states and a mineral processing
plant. Commonwealth Research Corporation, an Illinois corporation, is engaged
in power supply research, development, and testing activities. Concomber, Ltd.,
a Bermuda company, insures liability risks of Edison's contractors arising from
construction or other work relating to Edison's utility business.
- -------
/1/ A present subsidiary of CECo Enterprises, Northwind Inc., is establishing a
district cooling business in Chicago.
3
<PAGE>
II.
THE PROPOSED RESTRUCTURING
--------------------------
Edison proposes to reorganize its corporate operations through the creation of
a holding company structure that will permit Edison affiliates to engage in non-
utility businesses while protecting Edison and its ratepayers from the risks and
costs of such non-utility investments. The restructuring will be accomplished
in the following manner:
1. Edison has formed a subsidiary, CECo Holding Company ("Holding Company"),
under Illinois law. Certain of Edison's incumbent directors have been elected
the directors of Holding Company, and certain of Edison's executive officers
have been elected officers of Holding Company.
2. Holding Company has formed a second-tier subsidiary, CECo Merging
Corporation ("Merging Corp."), also an Illinois corporation.
3. Following Commission approval of Edison's Application and the issuance of
all other necessary approvals, Merging Corp. will merge with and into Edison,
and Edison would be the surviving corporation./2/ In the merger, each
outstanding share of Edison's common stock will be converted into one share of
Holding Company common stock by operation of law, and Holding
Company will become the owner of all of the shares of Edison
- -------
/2/ The proposed merger will be submitted for Edison shareholder approval at
the regular annual meeting of Edison shareholders scheduled for May 10, 1994.
Approval of the merger would require the affirmative vote of the holders of at
least two-thirds of the shares of Edison common stock, preferred stock, and
preference stock, voting together as a single class.
4
<PAGE>
common stock which will be outstanding immediately after the Merger. The common
shares of Edison will thereafter cease to be listed and traded on the New York
Stock Exchange, the Chicago Stock Exchange, and the Pacific Stock Exchange and
the common shares of Holding Company will be listed and traded on those
exchanges instead.
Except for the common shares of Holding Company that will be issued to
facilitate the reorganization, no securities will be issued. Similarly, there
will be no change in the capital structure of Edison or any of its subsidiaries
existing prior to the reorganization. Edison's preferred and preference stock
and debt will not be affected by the restructuring and will remain the
securities and obligations, respectively, of Edison. Following the
restructuring Edison's preferred stock will continue to be convertible only into
Edison common stock.
It is contemplated that Holding Company will have one or more separate
subsidiaries engaged in unregulated businesses after the merger is completed.
As required by recent amendments to the Illinois Act (the "1993 Amendments"),
Edison will transfer to Holding Company all of the stock of CECo Enterprises
after the merger has been consummated. This segregation of Edison's regulated
and unregulated businesses will shelter utility ratepayers from the costs and
risks of diversification, permit greater financial flexibility, and provide a
better organizational and managerial structure.
5
<PAGE>
III.
THE PROPOSED RESTRUCTURING IS
CONSISTENT WITH THE PUBLIC INTEREST
-----------------------------------
The Commission has held that the transfer of a public utility's common stock
from its existing shareholders to a holding company constitutes a transfer of
the "ownership and control" of the utility's jurisdictional facilities and is
thus a "disposition of facilities" subject to Commission review and approval
under Section 203 of the Federal Power Act. See, e.g., Kentucky Utilities Co.
and Old Dominion Power Co., 47 FERC par. 61,271 at 61,947-48 (1989); Central
Vermont Public Service Corp., 39 FERC par. 61,295 (1987). Because Edison's
proposed restructuring will entail the transfer of the ownership of its common
stock from existing shareholders to Holding Company, the restructuring is
subject to the requirements of Section 203 under existing Commission
precedent./3/
The Commission is obligated to approve a proposed "disposition of facilities"
under Section 203 of the Federal Power Act if it would be "consistent with the
public interest." A positive public benefit need not be shown: "Only a showing
of compatibility [with the public interest] is required." Wisconsin Power and
Light Co., 41 FERC par. 62,314 at 63,800 (1987). To determine whether a
proposal is "compatible" with the public interest, the Commission considers,
inter alia, (1) the effect on
- -------
/3/ Consistent with the Commission's authority under Section 203(b) to issue
supplemental orders if necessary or appropriate, Fitchburg Gas and Electric
Light Co., 58 FERC par. 61,201 at 61,624 (1992), Edison reserves the right to
contest the Commission's jurisdiction over the proposed restructuring if future
events should so warrant.
6
<PAGE>
utility operating costs and rate levels; (2) the contemplated accounting
treatment; (3) the reasonableness of the purchase price; (4) the possibility of
coercion; (5) the effect on competition; and (6) the impact on the effectiveness
of state and federal regulation. Commonwealth Edison Co., 36 FPC 927, 936-42
(1966), aff'd sub nom. Utility Users League v. FPC, 394 F.2d 16 (7th Cir. 1968),
cert. denied, 393 U.S. 953 (1968).
As explained below, Edison's proposed restructuring will be compatible with
each of the relevant public interest factors. The restructuring will permit the
timely establishment of non-utility business ventures to compete in unregulated
energy-related services, will establish a more efficient organizational
structure, and will have no effect on Edison's jurisdictional facilities, rates,
or services.
A. THE PROPOSED RESTRUCTURING WILL NOT
AFFECT OPERATING COSTS OR RATE LEVELS
-------------------------------------
The proposed restructuring will have no effect on either Edison's operating
costs or its rate levels. Under the 1993 Amendments, the costs of the proposed
restructuring may not be included in Edison's rate base or treated as allowable
expenses for purposes of determining its retail rates. Any future changes in
Edison's wholesale rates will of course be subject to Commission review and
approval under Section 205 of the Federal Power Act.
B. THE CONTEMPLATED ACCOUNTING
TREATMENT WILL BE APPROPRIATE
-----------------------------
The merger of Edison and Merging Corp. will be accounted for in a manner
similar to that in "pooling of
7
<PAGE>
interests" accounting under generally accepted accounting principles. Under the
accounting treatment proposed, the financial statements of Edison and Merging
Corp. will be combined as though they had always been together. Edison's books
and records will continue to be maintained in accordance with the Commission's
Uniform System of Accounts.
C. THE PURCHASE PRICE WILL NOT ADVERSELY
AFFECT RATEPAYERS OR THE PUBLIC INTEREST
----------------------------------------
The proposed restructuring entails no "purchase price" because there will be
no sale or lease of facilities or other assets. Because the proposed
restructuring involves the conversion of each share of Edison common stock into
a share of Holding Company common stock, the proportion of each shareholder's
ownership will be unchanged. As a result, the restructuring will have no effect
on Edison's capital structure or capital costs and will not result in any change
in Edison's wholesale or retail rates.
D. THE PROPOSED RESTRUCTURING
WILL ENTAIL NO COERCION
--------------------------
Because the proposed reorganization only involves Edison and its affiliates,
there is no possibility of coercion.
E. THE PROPOSED RESTRUCTURING WILL NOT
HAVE AN ADVERSE EFFECT ON COMPETITION
-------------------------------------
Market power in wholesale electric markets arises from the ownership or
control of generation assets, transmission assets, or other inputs that could be
used as barriers to entry. See, e.g., Kansas Power and Light Co. and Kansas Gas
and Electric Co., 54 FERC par. 61,077 at 61,253 (1991); UtiliCorp United Inc.
and Central Corp., 56 FERC par. 61,031, reh'g denied, 56 FERC par. 61,427
8
<PAGE>
(1991). In this case, the proposed restructuring will have no effect on the
ownership or control of such assets or inputs. Thus, there will be no effect on
competition in wholesale electric markets.
A fundamental purpose of the organizational restructuring is to permit the
prompt establishment of non-utility businesses in response to competitive
initiatives of Edison's unregulated competitors. Until recently, the
establishment of such ventures required the prior approval of the Illinois
Commission and entailed ongoing regulation of certain activities of such
ventures by the Illinois Commission. As a result, timely responses to
competitive actions were difficult to undertake, and regulation threatened to
create significant uncertainties and competitive disadvantages. The 1993
Amendments resolved these problems by allowing Edison to create a holding
company structure that permits the development of new competitive enterprises
while protecting ratepayer interests. In this respect, the proposed
reorganization can only have a positive effect on competition.
F. THE PROPOSED RESTRUCTURING WILL NOT IMPAIR
THE EFFECTIVENESS OF STATE OR FEDERAL REGULATION
------------------------------------------------
Edison's proposed restructuring will not impair effective regulation of its
utility operations by either state or federal agencies. Edison's utility
services, rates, and facilities will be unaffected by the restructuring and will
continue to be regulated by the Illinois Commission and the FERC, while its
nuclear generating stations will remain subject to the
9
<PAGE>
jurisdiction of the Nuclear Regulatory Commission ("NRC") under the Atomic
Energy Act.
IV.
THE REQUIREMENTS OF SECTION 33.2 ARE SATISFIED
----------------------------------------------
In further support of its Application, Edison provides the following
information, as required by Section 33.2 of the FERC's regulations.
(a) Name and Address of Applicant. The exact name of Applicant is
Commonwealth Edison Company, and the address of its principal business office is
10 South Dearborn Street
Post Office Box 767
Chicago, Illinois 60690-0767
(b) Incorporation. Edison was organized on October 17, 1913 as a result of
the merger of Cosmopolitan Electric Company into the original corporation named
Commonwealth Edison Company, which had been incorporated under the laws of the
State of Illinois on September 17, 1907. Edison is domesticated in the State of
Illinois.
(c) Authorized Representatives. The names and addresses of the persons
authorized by Edison to receive notices and communications in respect to its
Application are as follows:
10
<PAGE>
Pamela B. Strobel Frederic G. Berner, Jr.
Vice President and General Counsel Nancy Y. Gorman
Commonwealth Edison Company Sidley & Austin
10 South Dearborn Street 1722 Eye Street, N.W.
Post Office Box 767 Washington, D.C. 20006
Chicago, Illinois 60690-0767
(d) Officers. The names and titles of Edison's principal officers are as
follows:
Chairman James J. O'Connor
President Samuel K. Skinner
Senior Vice President Thomas J. Maiman
Senior Vice President Robert J. Manning
Senior Vice President Donald A. Petkus
Senior Vice President Cordell Reed
Senior Vice President Michael J. Wallace
Vice President John C. Bukovski
Vice President Louis O. DelGeorge
Vice President Harlan M. Dellsy
Vice President William H. Downey
Vice President J. Stanley Graves
Vice President Emerson W. Lacey
Vice President Paul D. McCoy
Vice President Robert A. Paul
Vice President James A. Small
Vice President and
General Counsel Pamela B. Strobel
Vice President John J. Viera
Comptroller Roger F. Kovack
Treasurer Dennis F. O'Brien
Secretary David A. Scholz
The address for all such officers is:
10 South Dearborn Street
Post Office Box 767
Chicago, Illinois 60690-0767
(e) Business/Service Area. Edison is a public utility principally engaged in
the production, purchase, transmission, distribution, and sale of electricity in
Illinois. Edison's electric service territory spans an area of approximately
11,540 square miles with an estimated population of 8.1 million people.
Included within that territory is the City of Chicago, an area of
11
<PAGE>
about 225 square miles with an estimated population of three million, from which
Edison derives approximately one-third of its retail revenues. Edison serves
approximately 3.3 million residential, commercial, and industrial customers in
the Illinois counties of Boone, Bureau, Carroll, Cook, DeKalb, DuPage, Ford,
Grundy, Henry, Jo Daviess, Kane, Kankakee, Kendall, La Salle, Lake, Lee,
Livingston, Marshall, McHenry, Ogle, Stephenson, Whiteside, Will, Winnebago, and
Woodford.
There will be no change in the character of Edison's business or territories
served as a result of the reorganization proposed in this Application.
(f) Facilities. Edison owns or connects with electric transmission lines
which deliver or receive electric energy in interstate commerce at nine points
on Illinois' borders with Wisconsin, Indiana, and Iowa. These facilities
provide interconnections with Wisconsin Electric Power Company, Wisconsin Power
and Light Company, the Indiana Company, Northern Indiana Public Service Company,
Indiana Michigan Power Company, Iowa-Illinois Gas and Electric Company, and
Interstate Power Company.
The major transmission lines (138 kV or higher) owned by Edison and in service
as of December 31, 1992 included 90 miles of 765 kV lines, 2,513 miles of 345 kV
lines, and 2,672 miles of 138 kV lines. Relevant transmission line statistics
are included in Edison's FERC Form No. 1 for the year ended December 31, 1992
(at pages 422-423), which is incorporated herein by reference.
12
<PAGE>
(g) Hydro Licenses. Edison currently holds a renewable license under the
Federal Power Act for Hydroelectric Project No. 2446 (the "Dixon" project).
(h) and (i) Capital Stock and Funded Debt. Information regarding Edison's
capital stock and funded debt is set forth in Edison's FERC Form No. 1 for the
year ended December 31, 1992 (at pages 250-257), which is incorporated herein by
reference./4/ In addition, a description of Edison's capital stock is provided
in its 1992 Annual Report to shareholders, which also is incorporated herein by
reference.
None of Edison's capital stock is held as reacquired securities, pledged,
owned by affiliates, or held in any fund. (Reference is made to Edison's FERC
Form No. 1 for the year ended December 31, 1992, at page 251.) None of Edison's
first mortgage bonds or debentures are owned by affiliates. The aggregate
principal amount of first mortgage bonds or debentures which currently is
pledged, held as reacquired securities, or held in a sinking fund is set forth
in Edison's FERC Form No. 1 for the year ended December 31, 1992 (at pages 256C-
257C), which is incorporated herein by reference.
(j) Nature of Transaction and Consideration. Edison's proposed corporate
restructuring will entail the transfer of the ownership of its common stock to
Holding Company by operation of
- -------
/4/ The Commission has proposed to eliminate the requirements of Sections
33.2(h) and (i) because such information is already publicly available from
other documents. See Notice of Proposed Rulemaking, Streamlining Electric Power
Regulation, Docket No. RM92-10-000, FERC Stats. & Regs., Proposed Regulations,
par. 32,484 (May 27, 1992).
13
<PAGE>
law. The Commission has held that such a transfer constitutes a "disposition of
facilities" within the meaning of Section 203 of the Federal Power Act.
As previously explained, the proposed restructuring involves the conversion of
each share of Edison common stock into a share of Holding Company common stock.
Because the proportion of each shareholder's ownership will be unchanged, the
consideration will be fair and reasonable.
(k) Affected Facilities. The facilities to be "disposed of" -- i.e., the
facilities with respect to which "ownership and control" will be deemed to be
transferred from Edison's existing shareholders to Holding Company under
existing Commission precedent -- will be all of Edison's facilities, including
all of its operating facilities. There will be no change in the use of such
facilities as a result of the proposed restructuring.
(l) Cost of Affected Facilities. The cost of Edison's net utility plant (and
the calculation thereof) is set forth in the form prescribed by the Commission's
Uniform System of Accounts in Edison's 1992 FERC Form No. 1 for the year ended
December 31, 1992 (at pages 200, 204-207), which is incorporated herein by
reference.
(m) Effect on Contracts. The proposed restructuring will have no effect on
any of Edison's contracts for the purchase, sale, or interchange of electric
energy.
(n) Counsel. The name and address of counsel who have passed upon the
legality of the proposed disposition of facilities is:
14
<PAGE>
Sidley & Austin
One First National Plaza
Chicago, Illinois 60603
(o) Related Applications. The NRC has asserted jurisdiction over
transactions like the proposed restructuring pursuant to Section 184 of the
Atomic Energy Act and 10 C.F.R. Sec. 50.80. Accordingly, Edison has requested
the NRC to approve the transfer of NRC licenses that will be deemed to occur as
a result of the proposed restructuring. In addition, Holding Company's
acquisition of Edison's common stock must be approved by the Securities and
Exchange Commission ("SEC") pursuant to Sections 9(a)(2) and 10 of the Public
Utility Holding Company Act of 1935 ("PUHCA"). Holding Company and Edison have
filed, and will file, with the Illinois Commission certain information relating
to the restructuring, as required by the 1993 Amendments, but no Illinois
Commission approval of the restructuring will be necessary.
(p) Supporting Facts. The facts relied upon by Edison to show that the
proposed restructuring will be consistent with the public interest are set forth
in the Application and can be summarized as follows:
The proposed restructuring will have no effect on Edison's rates, facilities,
or operations. The restructuring will simply implement a new organizational
structure that will permit the timely establishment of unregulated affiliates of
Edison to provide energy-related services and to respond to competitive
initiatives in the energy industry. The new holding-company structure will also
increase financial flexibility,
15
<PAGE>
protect utility ratepayers from the risks and costs of diversification, and
encourage economic development in Edison's service area.
(q) Franchises. In the City of Chicago, Edison operates under a nonexclusive
electric franchise ordinance effective from January 1, 1992 until December 31,
2020. Utility operations outside of the City of Chicago are conducted in
municipalities under nonexclusive franchises and, where required, under
certificates of convenience and necessity granted by the Illinois Commission.
The following tabulation summarizes as of December 31, 1992 the expiration dates
of the electric franchises held in 393 of the 395 municipalities outside of the
City of Chicago which are capable of granting franchises and in which Edison
currently provides electric service.
<TABLE>
<CAPTION>
Franchise Expiration Number of Estimated Aggregate
Periods Municipalities Population
- --------------------------- -------------- -------------------
<S> <C> <C>
1996-2006 7 76,000
2007-2017 32 324,000
2018-2028 17 58,000
2029-2039 7 44,000
2040 and subsequent years 326 3,645,000
No stated time limit 4 71,000
</TABLE>
(r) Public Notice. A form of notice of the Application, suitable for
publication in the Federal Register is attached.
------- --------
16
<PAGE>
V.
REQUIRED EXHIBITS
-----------------
The following exhibits required by Section 33.3 of the Commission's
regulations are filed herewith, except as noted:
Exhibit A -- Resolutions of Directors authorizing the proposed restructuring.
Exhibit B -- Statement of Intercorporate Relations.
Exhibit C -- Edison's balance sheets and supporting plant schedules are set
forth in its FERC Form No. 1 for the year ended December 31, 1992
(at pages 110- 13), which is incorporated by reference.
Exhibit D -- Statement of Contingent Liabilities.
Exhibit E -- Edison's income statement for the year ended December 31, 1992 is
set forth in its FERC Form No. 1 for the year ended December 31,
1992 (at pages 114-17), which is incorporated by reference.
Exhibit F -- A statement of Edison's retained earnings for the period covered
by the income statements referred to in Exhibit E is set forth in
Edison's FERC Form No. 1 for the year ended December 31, 1992 (at
pages 118-19), which is incorporated by reference.
Exhibit G -- Copies of the applications filed with the SEC and the NRC and a
copy of the information filed to date with the Illinois Commission
in accordance with the 1993 Amendments. Copies of the SEC and NRC
orders will be filed with the Commission after they have been
issued.
Exhibit H -- Copies of (1) the Agreement and Plan of Merger between Edison and
Merging Corp., dated as of January 28, 1994, and (2) the
Supplemental Agreement between Edison, Holding Company, and
Merging Corp., dated as of January 28, 1994.
Exhibit I -- A map showing Edison's properties, interconnections, and the
principal cities of the area served.
17
<PAGE>
VI.
REQUEST FOR EXPEDITED ACTION
----------------------------
Commission consideration and approval of this application is requested by
April 30, 1994, prior to the meeting of Edison shareholders on May 10, 1994, at
which the proposed restructuring will be voted upon. Edison will be pleased to
cooperate with the Commission's Staff in any way necessary to facilitate prompt
consideration of this Application. In accordance with Rules 801 and 802 of the
Commission's Rules of Practice and Procedure, Edison requests that the
intermediate decision procedure be omitted and waives oral hearing and
opportunity for filing exceptions to the decision of the Commission.
18
<PAGE>
VII.
CONCLUSION
----------
WHEREFORE, in consideration of the foregoing, Edison requests (1) that the
Commission authorize Edison to proceed with its proposed corporate restructuring
under Section 203 of the Federal Power Act; (2) that this Application be
disposed of in accordance with the shortened procedures set forth in Rules 801
and 802 of the Commission's Rules of Practice and Procedure; and (3) that the
Commission grant such other and further relief as is requested in this
Application or as may be necessary or appropriate in the premises.
Respectfully submitted,
COMMONWEALTH EDISON COMPANY
By /s/ John C. Bukovski
-----------------------------
John C. Bukovski
Vice President
COMMONWEALTH EDISON COMPANY
10 South Dearborn Street
Post Office Box 767
Chicago, Illinois 60690
Counsel:
Frederic G. Berner, Jr.
Nancy Y. Gorman
SIDLEY & AUSTIN
1722 Eye Street, N.W.
Washington, D.C. 20006
(202) 736-8000
Dated: February 4, 1994
19
<PAGE>
State of Illinois )
) ss:
County of Cook )
VERIFICATION
------------
John C. Bukovski, being first duly sworn, deposes and says that he is Vice
President of Commonwealth Edison Company and has been authorized to sign the
foregoing "Application of Commonwealth Edison Company for Authority to Implement
Proposed Corporate Restructuring" for and on behalf of said party; that he is
authorized to do so; that he has read said Application and is familiar with the
contents thereof; and that the facts set forth therein are true and correct to
the best of his knowledge, information, and belief.
/s/ John C. Bukovski
--------------------------
John C. Bukovski
Subscribed and sworn to before me this 2nd day of February, 1994.
/s/ Gail L. Flagg
---------------------------
Notary Public
My Commission expires:
10-9-94
- ---------------------
County of Residence:
Cook
- ---------------------
20
<PAGE>
ATTACHMENT
<PAGE>
UNITED STATES OF AMERICA
BEFORE THE
FEDERAL ENERGY REGULATORY COMMISSION
Commonwealth Edison Company ) Docket No. EC94-___-000
NOTICE OF FILING
(February ___, 1994)
Take notice that on February 4, 1994, Commonwealth Edison Company ("Edison"),
10 South Dearborn Street, Post Office Box 767, Chicago, Illinois 60690,
submitted an application pursuant to Section 203 of the Federal Power Act for
authority to carry out a "disposition of facilities" that would assertedly be
deemed to occur as a result of a proposed corporate restructuring, all as more
fully set forth in the Application, which is on file with the Commission and
open to public inspection.
The Application states that the proposed restructuring would be accomplished
through transactions in which Edison would become a subsidiary of CECo Holding
Company ("Holding Company") through the conversion of Edison's common stock into
common stock of Holding Company. It is stated that the proposed restructuring
will permit Edison affiliates to engage in non-utility businesses and will not
affect Edison's jurisdictional facilities, rates, or services.
Any person desiring to be heard or any person desiring to make any protest
with reference to the Application should, on or before ____________, 1994, file
with the Federal Energy Regulatory Commission, 825 N. Capitol Street, N.E.,
Washington, D.C. 20426, a motion to intervene or a protest in accordance with
the requirements of the Commission's Rules of Practice and Procedure. All
protests filed with the Commission will be considered by it in determining the
appropriate action to be taken, but will not serve to make the protestants
parties to the proceeding. Any person wishing to become a party to the
proceeding or to participate as a party in any hearing therein must file a
motion to intervene in accordance with the Commission's Rules.
Take further notice that, pursuant to the authority contained in, and subject
to the jurisdiction conferred upon the Commission by Sections 203 and 308 of the
Federal Power Act and Sections 801 and 802 of the Commission's Rules of Practice
and Procedure, a hearing will be held without further notice before the
Commission or its designee on this Application if no motion to intervene is
filed within the time required herein, if the Commission on its own review of
the matter finds that approval of the Application is appropriate. If a motion
for leave to intervene is timely filed, or if the Commission on its own motion
believes that a formal hearing is required, further notice of such hearing will
be duly given.
<PAGE>
Under the procedure herein provided for, unless otherwise advised, it will be
unnecessary for the Applicant to appear or to be represented at the hearing.
Lois Cashell
Secretary
2
<PAGE>
EXHIBITS
<PAGE>
EXHIBIT A
<PAGE>
Commonwealth Edison Company
---------------------------
Board of Directors
------------------
October 27, 1993
----------------
RESOLVED: That (i) the Supplemental Agreement (the "Supplemental Agreement")
among the Company, CECo Merging Corporation ("Merging Corp."), and Commonwealth
Edison Holding Company (the "Holding Company") and (ii) the Agreement and Plan
of Merger (the "Merger Agreement") between the Company and Merging Corp., which
agreements contemplate the merger of Merging Corp. with and into the Company
(the "Merger") with the outstanding common stock of the Company being converted
into common stock of the Holding Company, in the forms presented to the Board at
this meeting, be and they hereby are approved.
FURTHER RESOLVED: That the Chairman, President or any Vice President of the
Company be and hereby is authorized and directed to execute and deliver, in the
name and on behalf of the Company, the Supplemental Agreement and the Merger
Agreement in the forms presented to the Board at this meeting, but with such
changes therein as the officer executing such agreement shall approve (such
approval to be conclusively evidenced by such officer's execution thereof).
FURTHER RESOLVED: That the Merger Agreement be submitted to a vote of the
Shareholders of the Company in accordance with the Illinois Business Corporation
Act at the next Annual Meeting of such Shareholders.
FURTHER RESOLVED: That the proper officers of the Company are hereby
authorized and directed, for and on behalf of the Company, to take all further
actions, and incur such expenses, as are in their judgment necessary or
advisable to carry out the intent and purposes of the foregoing resolutions.
<PAGE>
CECO HOLDING COMPANY
AN ILLINOIS CORPORATION
DIRECTORS' CONSENT TO ACTION
IN LIEU OF A SPECIAL MEETING
The undersigned, being all the directors of CECo Holding Company, an Illinois
corporation (the "Company"), hereby waive all notice of the time, place or
purpose of a meeting and consent to, approve and adopt the following resolutions
without a meeting pursuant to Section 8.45 of the Illinois Business Corporation
Act:
RESOLVED, that the Supplemental Agreement (the "Supplemental Agreement") among
the Company, Commonwealth Edison Company ("Edison") and CECo Merging Corporation
("Merging Corp."), which agreement contemplates the merger of Merging Corp. with
and into Edison (the "Merger") with the outstanding common stock of Edison being
converted into common stock of the Company, in the form presented to the
directors of the Company, be and it hereby is approved.
FURTHER RESOLVED, that the Chairman, President or any Vice President of the
Company, be and hereby is authorized and directed to execute and deliver, in the
name and on behalf of the Company, the Supplemental Agreement in the form
presented to the directors of the Company, but with such changes therein as the
officer executing such agreement shall approve (such approval to be conclusively
evidenced by such officer's execution thereof).
FURTHER RESOLVED, that the Supplemental Agreement be submitted to the sole
Shareholder of the Company for approval.
FURTHER RESOLVED, that the proper officers of the Company are hereby
authorized and directed, for and on behalf of the Company, to take all further
actions, and incur such expenses, as are in their judgment necessary or
advisable to carry out the intent and purposes of the foregoing resolutions.
2
<PAGE>
This consent may be executed in counterparts and shall be filed with the
minutes of the Company.
Dated January 28, 1994.
/s/ James J. O'Connor
------------------------------
James J. O'Connor
/s/ Samuel K. Skinner
------------------------------
Samuel K. Skinner
3
<PAGE>
CECO HOLDING COMPANY
AN ILLINOIS CORPORATION
SOLE SHAREHOLDER'S CONSENT TO ACTION
IN LIEU OF A SPECIAL MEETING
The undersigned, being the sole shareholder of CECo Holding Company, an
Illinois corporation (the "Company"), hereby waives all notice of the time,
place and purpose of a meeting and consents to, approves, and adopts the
following resolutions without a meeting pursuant to Section 7.10 of the Illinois
Business Corporation Act:
RESOLVED, that the Supplemental Agreement (the "Supplemental Agreement") among
the Company, Commonwealth Edison Company ("Edison") and CECo Merging Corporation
("Merging Corp."), which agreement contemplates the merger of Merging Corp. with
and into Edison (the "Merger") with the outstanding common stock of Edison being
converted into common stock of the Company, in the form presented to the sole
shareholder of the Company, be and it hereby is approved.
This Consent has been executed by the sole shareholder of the Company and
shall be filed with the minutes of the Company.
Dated January 28, 1994.
COMMONWEALTH EDISON COMPANY,
as sole shareholder
By: James J. O'Connor
--------------------------
James J. O'Connor
Chairman
4
<PAGE>
CECO MERGING CORPORATION
AN ILLINOIS CORPORATION
DIRECTORS' CONSENT TO ACTION
IN LIEU OF A SPECIAL MEETING
The undersigned, being all the directors of CECo Merging Corporation, an
Illinois corporation (the "Company"), hereby waive all notice of the time, place
or purpose of a meeting and consent to, approve and adopt the following
resolutions without a meeting pursuant to Section 8.45 of the Illinois Business
Corporation Act:
RESOLVED, that (i) the Supplemental Agreement (the "Supplemental Agreement")
among the Company, Commonwealth Edison Company ("Edison") and CECo Holding
Company (the "Holding Company") and (ii) the Agreement and Plan of Merger (the
"Merger Agreement") between the Company and Edison, which agreements contemplate
the merger of the Company with and into Edison (the "Merger") with the
outstanding common stock of Edison being converted into common stock of the
Holding Company, in the forms presented to the directors of the Company, be and
they hereby are approved.
FURTHER RESOLVED, that the Chairman, President or any Vice President of the
Company be and hereby is authorized and directed to execute and deliver, in the
name and on behalf of the Company, the Supplemental Agreement and the Merger
Agreement in the forms presented to the directors of the Company, but with such
changes therein as the officer executing such agreement shall approve (such
approval to be conclusively evidenced by such officer's execution thereof).
FURTHER RESOLVED, that the Merger Agreement be submitted to the sole
Shareholder of the Company for approval in accordance with the provisions of the
Illinois Business Corporation Act.
FURTHER RESOLVED, that the proper officers of the Company are hereby
authorized and directed, for and on behalf of the Company, to take all further
actions, and incur such expenses, as are in their judgment necessary or
advisable to carry out the intent and purposes of the foregoing resolutions.
5
<PAGE>
This consent may be executed in counterparts and shall be filed with the
minutes of the Company.
Dated January 28, 1994.
/s/ James J. O'Connor
------------------------------
James J. O'Connor
/s/ Samuel K. Skinner
------------------------------
Samuel K. Skinner
6
<PAGE>
CECO MERGING CORPORATION
AN ILLINOIS CORPORATION
SOLE SHAREHOLDER'S CONSENT TO ACTION
IN LIEU OF A SPECIAL MEETING
The undersigned, being the sole shareholder of CECo Merging Corporation, an
Illinois corporation (the "Company"), hereby waives all notice of the time,
place and purpose of a meeting and consents to, approves, and adopts the
following resolutions without a meeting pursuant to Section 7.10 of the Illinois
Business Corporation Act:
RESOLVED, that the Agreement and Plan of Merger (the "Merger Agreement")
between the Company and Commonwealth Edison Company ("Edison"), which agreement
contemplates the merger of the Company with and into Edison (the "Merger") with
the outstanding common stock of Edison being converted into common stock of CECo
Holding Company, in the form presented to the sole shareholder of the Company,
be and it hereby is approved.
This Consent has been executed by the sole shareholder of the Company and
shall be filed with the minutes of the Company.
Dated January 28, 1994.
CECo HOLDING COMPANY, as
sole shareholder
By: James J. O'Connor
--------------------------
James J. O'Connor
Chairman
7
<PAGE>
EXHIBIT B
<PAGE>
STATEMENT OF INTERCORPORATE RELATIONSHIPS
-----------------------------------------
Edison owns 100 percent of the outstanding common stock of the Indiana
Company, an electric utility that owns a generating station in Hammond, Indiana
with a net generating capability of 490 MW. Edison and Indiana Company have
certain officers and directors in common.
Edison also owns 100 percent of the common stock of six non-utility companies:
(1) CECo Enterprises (an Illinois corporation engaged in the provision, through
subsidiaries, of unregulated energy-related services); (2) Edison Development
Company (a Delaware corporation engaged in the business of acquiring, developing
and managing fuel reserves and acquiring real estate interests); (3) Cotter
Corporation (a New Mexico corporation engaged in the business of uranium mining
and milling); (4) Commonwealth Research Corporation (an Illinois corporation
engaged in power supply research, development, and testing activities); (5)
Concomber, Inc. (a Bermuda company which insures liability risks of Edison's
contractors arising from construction or other work relating to Edison's
business); and (6) Edison Development Canada, Inc. (a Canadian company with an
interest in uranium ore deposits in Canada and which, like Edison Development
Company, acquires, develops and manages fuel reserves). Edison and each of
these companies have certain officers and directors in common.
<PAGE>
No control or ownership is exercised by or over Edison as to any other public
utility or as to any bank, trust company, banking association or firm authorized
by law to underwrite or participate in the marketing of securities of a public
utility or any company supplying electric equipment to Edison.
2
<PAGE>
EXHIBIT C
<PAGE>
Edison's balance sheets and supporting plant schedules are set forth in its FERC
Form No. 1 for the year ended December 31, 1992 (at pages 110-13), which is
incorporated by reference.
<PAGE>
EXHIBIT D
<PAGE>
CONTINGENT LIABILITIES
----------------------
Excluding minor items such as damage claims and similar items involving
relatively small amounts, Edison has the following known contingent liabilities,
as described in the Notes to its Financial Statements as of December 31, 1993:
The Company is a member of Nuclear Mutual Limited (NML), established to
provide insurance coverage against property damage to members' nuclear
generating facilities. The members are subject to a retrospective premium
adjustment in the event losses exceed accumulated reserve funds. Capital has
been accumulated in the reserve funds of NML to the extent that the Company
would have no exposure in the event of a single incident. However, the
Company could be subject to a maximum assessment of approximately $70 million
in any policy year, in the event losses exceed accumulated reserve funds.
The Company also is a member of Nuclear Electric Insurance Limited (NEIL),
which provides insurance coverage against the cost of replacement power
obtained during certain prolonged accidental outages of nuclear generating
units and coverage for property losses in excess of $500 million occurring at
nuclear stations. All companies insured with NEIL are subject to
retrospective premium adjustments if losses exceed accumulated reserve funds.
Capital has been accumulated in the reserve funds of NEIL to the extent that
the Company would have no exposure in the event of a single incident under the
replacement power coverage and the property damage coverage. However, the
Company could be subject to maximum assessments, in any policy year, of
approximately $27 million and $87 million in the event losses exceed
accumulated reserve funds under the replacement power and property damage
coverages, respectively.
The NRC's indemnity for public liability coverage under the Price-Anderson
Act is supported by a mandatory industry-wide program under which owners of
nuclear generating facilities could be assessed in the event of nuclear
incidents. Based on the number of nuclear reactors with operating licenses,
the Company would currently be subject to a maximum assessment of $991 million
in the event of an incident, limited to a maximum of $125 million in any
calendar year. The current maximum assessment was effective August 20, 1993
and represents an increase of $164 million over the previous maximum
assessment of $827 million. The Act requires that the assessment program be
adjusted for inflation every five years, and 1993 was an adjustment year.
In addition, the Company participates in the American Nuclear Insurers and
Mutual Atomic Energy Liability Underwriters Master Worker Program which
provides coverage for worker tort claims filed for bodily injury caused by the
<PAGE>
nuclear energy hazard. The coverage applies to workers whose "nuclear related
employment" began after January 1, 1988. The Company would currently be
subject to a maximum assessment of approximately $37 million in the event
losses exceed accumulated reserve funds.
Shareholder derivative lawsuits were filed on October 1, 1992 and on April
14, 1993 in the Circuit Court against current and former directors of the
Company alleging that they breached their fiduciary duty and duty of care to
the Company in connection with the management of the activities associated
with the construction of the Company's four most recently completed nuclear
generating units. The lawsuits sought restitution to the Company by the
defendants for unquantified and undefined losses and costs alleged to have
been incurred by the Company. Both lawsuits were dismissed by the Circuit
Court; however, appeals are pending before the Illinois Appellate Court.
The Company is involved in administrative and legal proceedings concerning
air quality, water quality, and other matters. The outcome of these
proceedings may require increases in the Company's future construction
expenditures and operating expenses. The Company and its subsidiaries are or
are likely to become parties to proceedings initiated by the United States
Environmental Protection Agency, state agencies and/or other responsible
parties under the Comprehensive Environmental Response, Compensation and
Liability Act of 1980 (CERCLA) with respect to a number of sites, including
manufactured gas plant (MGP) sites, or may voluntarily undertake to
investigate and remediate sites for which they may be liable under CERCLA.
While there is a possibility that in the aggregate the cost of MGP site
investigation and remediation will be substantial over time, the Company is
not able to determine the most probable liability for MGPs. In accordance
with accounting standards, the Company recorded a provision of $25 million in
1991 which reflects the low end of the range of its estimate of the liability
associated with former MGPs. In 1993, the Company recorded a provision of $5
million which reflects the low end of the range of its estimate of the
liability associated with cleanup costs of remediation sites other than former
MGP sites. The Company presently estimates that its costs of investigating
and remediating these other sites pursuant to CERCLA and state environmental
laws will not in the aggregate be material to the business or operations of
the Company. These cost estimates are based on currently available
information regarding the responsible parties likely to share in the costs of
responding to site contamination, the extent of contamination at sites for
which the investigation has not yet been completed and the cleanup levels to
which sites are expected to have to be remediated.
2
<PAGE>
EXHIBIT E
<PAGE>
Edison's income statement for the year ended December 31, 1992 is set forth in
its FERC Form No. 1 for the year ended December 31, 1992 (at pages 114-17),
which is incorporated by reference.
<PAGE>
EXHIBIT F
<PAGE>
A statement of retained earnings for the period covered by the income statements
referred to in Exhibit I is set forth in Edison's FERC Form No. 1 for the year
ended December 31, 1992 (at pages 118-19), which is incorporated by reference.
<PAGE>
EXHIBIT G
<PAGE>
[Omitted as duplicative.]
<PAGE>
EXHIBIT H
<PAGE>
[Omitted as duplicative.]
<PAGE>
EXHIBIT I
<PAGE>
[Omitted as duplicative.]
<PAGE>
EXHIBIT D-3
SIDLEY & AUSTIN
A PARTNERSHIP INCLUDING PROFESSIONAL CORPORATIONS
Los Angeles One First National Plaza London
---- Chicago, Illinois 60603 ----
New York Telephone 312: 853-7000 Singapore
---- Telex 25-4364 ----
Washington, D.C. Facsimile 312: 853-7036 Tokyo
Founded 1866
(312) 853-7323 December 9, 1993
By Federal Express
- ------------------
Ms. Donna M. Caton
Chief Clerk
Illinois Commerce Commission
527 East Capitol Avenue
Springfield, Illinois 62706
Re: Commonwealth Edison Company
---------------------------
Supplement to Information and Statement Concerning
--------------------------------------------------
Reorganization Pursuant to Sections 7-105(d) and
------------------------------------------------
7-106(b) of the Illinois Public Utilities Act.
----------------------------------------------
Dear Ms. Caton:
Pursuant to Section 7-105(d) of the Public Utilities Act, on behalf of
Commonwealth Edison Company, please find the original and four copies of an
informational filing entitled "Supplement to Information and Statement Filed by
Commonwealth Edison Company Concerning its Reorganization Pursuant to Sections
7-105(d) and 7-106(b) of the Illinois Public Utilities Act."
Copies of this letter, together with its enclosure, are being forwarded to
Messrs. Phil Gonet, Eric Artman, Gene Beyer, Steve Hickey, and Tony Visnesky,
and Ms. Donna Martin, all of the Illinois Commerce Commission Staff, Ms. Myra
Karegianes, General Counsel, and Mr. David McGann, Office of the General
Counsel. An extra copy of this letter and the enclosure is included for your
convenience in acknowledging receipt of this filing.
Thank you for your assistance. If you have any questions, please call me.
Very truly yours,
/s/ Anastasia M. Polek
Anastasia M. Polek
AMP:jd
enclosures
cc: service list
<PAGE>
STATE OF ILLINOIS
ILLINOIS COMMERCE COMMISSION
SUPPLEMENT TO
INFORMATION AND STATEMENT FILED BY COMMONWEALTH EDISON COMPANY
CONCERNING ITS REORGANIZATION PURSUANT TO SECTIONS 7-105(d) AND
7-106(b) OF THE ILLINOIS PUBLIC UTILITIES ACT
Commonwealth Edison Company ("Edison") hereby files with the Illinois Commerce
Commission ("Commission"), pursuant to Section 7-105(d) of the Illinois Public
Utilities Act ("Act"), this Supplement to the Information and Statement Filed by
Commonwealth Edison Company Concerning Its Reorganization Pursuant to Sections
7-105(d) and 7-106(b) of the Illinois Public Utilities Act ("Informational
Statement"). This filing is made for the information of the Commission and the
public and Edison does not seek or require the Commission's approval for the
reorganization and other matters described herein or in the Informational
Statement.
1. Subsection 1 of the Informational Statement should be amended by striking
the paragraph beginning "Concurrently" on page 2, and replacing it with the
following:
"g. CECo Enterprises Inc.
"h. Northwind Inc. (Northwind is a wholly-owned
subsidiary of CECo Enterprises Inc.)"
2. Subsection 2 of the Informational Statement should be amended by changing
the first three paragraphs on page 4 as follows:
<PAGE>
"Prior to the anticipated holding company reorganization and
concurrently with this informational filing, Edison has formed is forming
-----------
a subsidiary, CECo Enterprises Inc. ("CECo Enterprises"), pursuant to
-------------------------
Section 7-106 of the Act. As required by Section 7-106(f) of the Act,
CECo Enterprises will ultimately become a direct subsidiary of the
holding company at the same time that Edison becomes a subsidiary of the
holding company.
"Currently, Initially, CECo Enterprises has will have one wholly-owned
----------- ---
subsidiary, Northwind, which will engage in businesses within the scope
of Section 7-106(a) of the Act. In the future, CECo Enterprises may
establish other such subsidiaries.
"CECo Enterprises and Northwind have been are being organized under the
---------
laws of the State of Illinois. Currently, Initially, the directors and
-----------
officers of CECo Enterprises and Northwind are will be:
---
<TABLE>
<CAPTION>
CECo Enterprises Northwind
----------------- ---------------
<S> <C> <C>
Chairman: James J. O'Connor James J. O'Connor
------------------------------------------------------
Director: James J. O'Connor James J. O'Connor
Director: Samuel K. Skinner Samuel K. Skinner
Director: John C. Bukovski John C. Bukovski
------------------------------------------------------
Director: William H. Downey William H. Downey
------------------------------------------------------
Director: Robert J. Manning Robert J. Manning
------------------------------------------------------
President: Samuel K. Skinner Samuel K. Skinner
Vice
----
President: Robert D. Fredrickson
---------- ---------------------
Treasurer: Dennis F. O'Brien Dennis F. O'Brien
Secretary: David A. Scholz David A. Scholz"
</TABLE>
The 5th and 6th lines of page 5 should be amended as follows:
"which were are being filed with the Illinois Secretary of State on July
---- ----
30, 1993 or about the date hereof."
--------
3. Subsection (5) of the Informational Statement should be amended by
changing the second full paragraph on page 6 as follows:
-2-
<PAGE>
"On July 30, 1993, As of the date of this informational filing, Edison
-----------------
entered is entering into an agreement with CECo Enterprises with respect
-------
to the use by CECo Enterprises, directly or through a subsidiary, of
Edison's office facilities and administrative and management services, in
substantially the form attached hereto as EXHIBIT D. Pursuant to Section
7-106(h) of the Act, Edison filed, on July 30, 1993, is today filing a
------------------------
Petition with the Commission seeking approval of this Agreement, which
will remain in effect unless modified by the Commission after a hearing
on such Petition. The proceeding concerning Edison's Petition is
----------------------------------------------
pending."
--------
The last paragraph beginning on page 6, which addresses a License Agreement
between Edison and CECo Enterprises, should be deleted. On July 30, 1993,
Edison filed a Petition with the Commission seeking leave to enter into a
License Agreement with CECo Enterprises. Subsequent to the filing of the
Petition, CECo Enterprises determined that it does not now have a need for the
information that would have been made available to it pursuant to the License
Agreement. On October 21, 1993, Edison filed its Motion to Dismiss Voluntarily
Without Prejudice the Petition. The Motion was granted by the Commission on
November 9, 1993.
4. Subsection (6) of the Informational Statement should be amended by
changing the first complete paragraph on page 7 as follows:
"As of the date of this supplement to the informational filing, Edison
-----------------
plans to transfer to CECo Enterprises, Northwind or any other
subsidiaries of CECo Enterprises, or to permit CECo Enterprises,
Northwind or any other subsidiaries of CECo Enterprises, to use, the
-
public utility assets and information included in the agreements
-3-
<PAGE>
identified in paragraph (5), pursuant to the terms of that agreement."
---------------------------------------
5. Subsection (7) of the Informational Statement should be amended by
deleting the phrase "May 13" from the 4th line of the second complete paragraph
on page 8 and replacing it with "November 10".
6. Exhibit E, the proposed license agreement between Edison and CECo
Enterprises, should be deleted.
7. Exhibit F, the SEC Form 10-Q for the period ended March 31, 1993, should
be deleted and replaced with the SEC Form 10-Q for the period ended September
30, 1993, which is attached hereto.
Respectfully submitted,
COMMONWEALTH EDISON COMPANY
By: /s/ Pamela B. Strobel
---------------------
Pamela B. Strobel
Vice President and
General Counsel
OF COUNSEL:
SIDLEY & AUSTIN
One First National Plaza
Chicago, Illinois 60603
(312) 853-7000
-4-
<PAGE>
[ATTACHMENT OMITTED AS DUPLICATIVE]
-5-
<PAGE>
Note to Exhibit D-3:
The original document reflects the deletion of the following on pages 2 and 3:
Page 2 --
Prior to the anticipated holding company reorganization and concurrently with
this informational filing,; is forming; Initially,; will have; are being;
Initially,; will be; are being; or about the date hereof;
Page 3 --
As of the date of this informational filing,; is entering; substantially; is
today filing; transfer to CECo Enterprises, Northwind or any other subsidiaries
of CECo Enterprises, or to; ,; s;
<PAGE>
SIDLEY & AUSTIN
A PARTNERSHIP INCLUDING PROFESSIONAL CORPORATIONS
Los Angeles One First National Plaza London
---- Chicago, Illinois 60603 ----
New York Telephone 312: 853-7000 Singapore
---- Telex 25-4364 ----
Washington, D.C. Facsimile 312: 853-7036 Tokyo
Founded 1866
(312) 853-7323 July 30, 1993
By Hand
- -------
Ms. Donna M. Caton
Chief Clerk
Illinois Commerce Commission
527 East Capitol Avenue
Springfield, Illinois 62706
Re: Commonwealth Edison Company
---------------------------
Information and Statement Concerning Reorganization Pursuant to
----------------------------------------------------------------
Sections 7-105(d) and 7-106(b) of the Illinois Public Utilities Act.
--------------------------------------------------------------------
Dear Ms. Caton:
Pursuant to Sections 7-105(d) and 7-106(b) of the Public Utilities Act, on
behalf of Commonwealth Edison Company, please find the original and four copies
of an informational filing entitled "Information and Statement Filed by
Commonwealth Edison Company Concerning its Reorganization Pursuant to Sections
7-105(d) and 7-106(b) of the Illinois Public Utilities Act."
Copies of this letter, together with its enclosure, are being forwarded to
Messrs. Phil Gonet, Eric Artman, Gene Beyer, Steve Hickey, and Tony Visnesky,
and Ms. Donna Martin, all of the Illinois Commerce Commission Staff, Ms. Myra
Karegianes, General Counsel, and Mr. David McGann, Office of the General
Counsel. An extra copy of this letter and the enclosure is included for your
convenience in acknowledging receipt of this filing.
Thank you for your assistance. If you have any questions, please call me.
Very truly yours,
/s/ Anastasia M. Polek
Anastasia M. Polek
AMP:jd
enclosures
<PAGE>
STATE OF ILLINOIS
ILLINOIS COMMERCE COMMISSION
INFORMATION AND STATEMENT FILED BY COMMONWEALTH EDISON COMPANY
CONCERNING ITS REORGANIZATION PURSUANT TO SECTIONS 7-105(d) AND
7-106(b) OF THE ILLINOIS PUBLIC UTILITIES ACT.
Commonwealth Edison Company ("Edison") hereby files with the Illinois Commerce
Commission ("the Commission"), pursuant to Section 7-105(d) of the Illinois
Public Utilities Act ("the Act"), the information described in Section 7-204A(a)
of the Act that is now available to Edison, and the statement described in
Section 7-106(b). This filing is made for the information of the Commission and
the public and Edison does not seek or require the Commission's approval for the
reorganization and other matters described herein.
(1) The Names and Corporate Relationships of All Companies which are
Affiliated Interests of Edison on the Date hereof, and the Name of
any Parent or Subsidiary Corporation of Edison.
As of the date of this informational filing, Edison has no parent corporation.
It has the following subsidiaries, which in each case are wholly owned:
a. Commonwealth Edison Company of Indiana, Inc.
<PAGE>
b. Commonwealth Research Corporation
c. Concomber, Ltd.
d. Cotter Corporation
e. Edison Development Canada, Inc.
f. Edison Development Company
Concurrently with this informational filing, Edison is forming a new, wholly-
owned subsidiary, CECo Enterprises Inc., ("CECo Enterprises"), which initially
will have one wholly-owned subsidiary, Northwind Inc. ("Northwind"), as
described in paragraph (2).
In addition, the companies listed in EXHIBIT A are Edison's "affiliated
interests" by virtue of having one or more elected officers or one or more
directors in common with Edison. See 220 ILCS 5/7-101(f). EXHIBIT A is limited
to business and industry organizations and excludes civic, charitable, cultural
and educational institutions.
Except as set forth above, there are no other companies that are Edison's
"affiliated interests" as that term is defined in Section 7-101 of the Act.
-2-
<PAGE>
(2) How Edison Plans to Reorganize.
Edison anticipates that it will become a subsidiary of a holding company
pursuant to a reorganization which will take place within the period specified
in Section 7-106(g) of the Act. As of the date of this informational filing,
the precise structure and timing of this holding company reorganization have not
yet been determined and are therefore not available. Edison will inform the
Commission of its plans in this regard as soon as practicable after they become
available through supplements or amendments to this informational filing as
provided in Section 7-105(d) of the Act.
The anticipated holding company reorganization will be subject to approvals of
Edison's Board of Directors and shareholders and the following federal agencies,
which have, or have asserted, jurisdiction over matters related to such
reorganizations: (i) the Federal Energy Regulatory Commission ("FERC") under the
Federal Power Act; (ii) the Securities and Exchange Commission ("SEC") under the
Public Utility Holding Company Act of 1935; and (iii) the Nuclear Regulatory
Commission ("NRC") under the Atomic Energy Act. Copies of filings with federal
government agencies relating to the holding company reorganization are not yet
available but will be filed with the Commission as soon as practicable.
-3-
<PAGE>
Prior to the anticipated holding company reorganization and concurrently with
this informational filing, Edison is forming a subsidiary, CECo Enterprises,
pursuant to Section 7-106 of the Act. As required by Section 7-106(f) of the
Act, CECo Enterprises will ultimately become a direct subsidiary of the holding
company at the same time that Edison becomes a subsidiary of the holding
company.
Initially, CECo Enterprises will have one wholly-owned subsidiary, Northwind,
which will engage in businesses within the scope of Section 7-106(a) of the Act.
In the future, CECo Enterprises may establish other such subsidiaries.
CECo Enterprises and Northwind are being organized under the laws of the State
of Illinois. Initially, the directors and officers of CECo Enterprises and
Northwind will be:
CECo Enterprises Northwind
----------------- -----------------
Director: James J. O'Connor James J. O'Connor
Director: Samuel K. Skinner Samuel K. Skinner
President: Samuel K. Skinner Samuel K. Skinner
Treasurer: Dennis F. O'Brien Dennis F. O'Brien
Secretary: David A. Scholz David A. Scholz
Attached are copies of the organizational documents associated with CECo
Enterprises and Northwind, consisting of
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<PAGE>
the articles of incorporation of CECo Enterprises (EXHIBIT B), and
the articles of incorporation of Northwind (EXHIBIT C),
which are being filed with the Illinois Secretary of State on or
about the date hereof.
(3) The Costs and Fees Attributable to the Reorganization.
As of the date of this informational filing, Edison has not yet estimated the
total amount of costs and fees attributable to the holding company
reorganization referred to in paragraph (2). Edison will provide such an
estimate to the Commission as soon as practicable.
(4) The Methods by which Management, Personnel, Property, Income, Losses,
Costs and Expenses Will Be Allocated between Edison and any
Affiliated Interest.
CECo Enterprises, Northwind and any other subsidiaries of CECo Enterprises
will compensate Edison for all management, personnel, property and other
services and facilities provided to
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<PAGE>
them by Edison based on their shares of Edison's fully allocated costs, as set
forth in the agreements described in paragraph (5).
Income, losses, costs and expenses incurred by CECo Enterprises, Northwind and
any other subsidiaries of CECo Enterprises will not be allocated in any amount
to Edison, except that the financial results of Edison, CECo Enterprises,
Northwind and any other subsidiaries of CECo Enterprises may be consolidated for
financial and tax reporting purposes.
(5) Proposed, Currently Available Agreements between Edison and Any
Person with which it will be an Affiliated Interest.
As of the date of this informational filing, Edison is entering into an
agreement with CECo Enterprises with respect to the use by CECo Enterprises,
directly or through a subsidiary, of Edison's office facilities and
administrative and management services, in substantially the form attached
hereto as EXHIBIT D. Pursuant to Section 7-106(h) of the Act, Edison is today
filing a Petition with the Commission seeking approval of this Agreement, which
will remain in effect unless modified by the Commission after a hearing on such
Petition.
In addition, Edison proposes to enter into a License Agreement with CECo
Enterprises in substantially the form
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<PAGE>
attached as EXHIBIT E under which Edison would permit CECo Enterprises and its
subsidiaries to use certain confidential Edison customer billing information.
Edison is today filing a Petition with the Commission seeking the Commission's
approval of this proposed License Agreement, pursuant to Sections 7-101, 7102
and 7-204A(b) of the Act.
(6) Edison Public Utility Assets and Information In Existence Which
Edison Plans to Transfer to an Affiliated Interest or to Permit an
Affiliated Interest to Use, and the Proposed Terms and Conditions of
Such Transfer or Use.
As of the date of this informational filing, Edison plans to transfer to CECo
Enterprises, Northwind or any other subsidiaries of CECo Enterprises, or to
permit CECo Enterprises, Northwind or any other subsidiaries of CECo Enterprises
to use, the public utility assets and information included in the agreements
identified in paragraph (5).
In addition, as of the date of this informational filing, Edison expects that
it will make investments in, or guarantees of, the contractual obligations of
CECo Enterprises, Northwind and other subsidiaries of CECo Enterprises pursuant
to the authority granted in Section 7-106 of the Act.
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<PAGE>
As of the date of this informational filing, the only public utility
information Edison expects to transfer to the holding company, or to permit the
holding company to use, is the information reasonably necessary for continuing
financial, tax, accounting and management purposes following the anticipated
holding company reorganization.
(7) Edison's Capital Requirements Forecast.
As of the date of this informational filing, Edison does not have a capital
requirements forecast for the five years following 1993. Attached as EXHIBIT F
is Edison's most recent Quarterly Report to the SEC on Form 10-Q, dated May 13,
1993. This includes a discussion of Edison's forecasted capital requirements
for the years 1993-1995, including sources of capital, capital structure and the
assumptions underlying the information included in the forecast. EXHIBIT F does
not reflect the anticipated holding company reorganization, the formation of
CECo Enterprises, Northwind or any other subsidiaries of CECo Enterprises, or
any investment by Edison in CECo Enterprises, Northwind or any other
subsidiaries of CECo Enterprises. Edison is currently revising and updating its
financial projections for 1994 and subsequent years. This revised capital
requirements forecast will be filed with the Commission as soon as practicable.
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<PAGE>
Pursuant to Section 7-105(d) of the Act, Edison will file with the Commission
any corrections, amendments, updates or supplements to the information provided
herein as soon as practicable after they become available, until the day on
which Edison becomes a subsidiary of the holding company.
Respectfully submitted,
COMMONWEALTH EDISON COMPANY
/s/ Pamela B. Strobel
By:___________________________
Pamela B. Strobel
Vice President and
General Counsel
OF COUNSEL:
SIDLEY & AUSTIN
One First National Plaza
Chicago, Illinois 60603
(312) 853-7000
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<PAGE>
STATE OF ILLINOIS
ILLINOIS COMMERCE COMMISSION
INFORMATION FILED BY COMMONWEALTH EDISON COMPANY CONCERNING ITS
REORGANIZATION PURSUANT TO SECTIONS 7-105 AND 7-106 OF THE
ILLINOIS PUBLIC UTILITIES ACT.
List of Exhibits
----------------
Exhibit A: Edison's Affiliated Interests in Business and Industry
Exhibit B: Articles of Incorporation of CECo Enterprises Inc.
Exhibit C: Articles of Incorporation of Northwind Inc.
Exhibit D: Office Facilities and Administrative and Management Services
Agreement between Edison and CECo Enterprises
Exhibit E: License Agreement between Edison and CECo Enterprises
Exhibit F: Commonwealth Edison Company Quarterly Report to the SEC on
Form 10-Q for the period ended March 31, 1993
<PAGE>
ICC INFORMATIONAL FILING
JULY 30, 1993
EXHIBIT A
COMMONWEALTH EDISON COMPANY
AFFILIATED INTERESTS
IN BUSINESS AND INDUSTRY
Advanced Reactor Corporation
American National Can Company
American Nuclear Energy Council
American Nuclear Society
American Power Conference, Organizing Committee
American Society of Corporate Secretaries
American Society of Corporate Secretaries
Chicago Chapter, Advisory Committee
American Society of Mechanical Engineers
American Society of Mechanical Engineers
Industry Advisory Board
Arthur Andersen & Co., Public Review Board
Association of Edison Illuminating Companies,
Committee on Power Distribution
Axel Johnson Inc.
Banc One of Rockford
Becton, Dickinson and Company
Burrell Communications
Canonie Environmental Services Corp.
Cooper Industries
Corning Incorporated
Delaware Risk Management Inc.
Drexel National Bank
Edison Electric Institute
<PAGE>
Edison Electric Institute - Executive Advisory Committee -
Engineering, Operations and Standards
Edison Electirc Institute - Prime Movers Committee
Energy Insurance Mutual
The Financial Executives Institute
The First National Bank of Chicago
First Chicago Corporation
Flying Food Fare, Inc.
General Dynamics Corporation
Hartmarx Corporation
The Hertz Corporation
Human Resources Management Association of Chicago
Illinois State Chamber of Commerce
Illinois Safety Council
lndecorp, Inc.
Independence Bank of Chicago
Industrial Relations Committee - Department of Economics -
University of Notre Dame
Kapnick Investment Company, Inc.
LaSalle National Bank
LaSalle National Corporation
LaSalle National Trust
LTV Corporation
MATRA Transit, Inc.
Maytag Corp.
Michigan National Bank
Mid-America Interconnected Network (MAIN)
Midwest Stock Exchange
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<PAGE>
National Association of Corporate Treasurers
National Coal Council
National Society of Professional Engineers
North American Electric Reliability Council (NERC)
Nuclear Electric Cayman Ltd.
Nuclear Electric Ins. Ltd.
Nuclear Mutual Cayman Ltd.
Nuclear Mutual Ltd.
Nuclear Service Organization Inc.
Pet, Inc.
Scotsman Industries, Inc.
St. Paul Bancorp Inc.
Tribune Company
UAL Corporation
UDC - Homes, Inc.
Unocal Corp.
University of Illinois at Chicago - Industrial Advisory Board
U.S. Committee for Energy Awareness
Utility and Telecommunications Securities Club of Chicago
Whitman Corp.
World Travel & Tourism Council
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<PAGE>
ICC Informational Filing
July 30, 1993
Exhibit B
CECO ENTERPRISES INC.
ARTICLES OF INCORPORATION
ARTICLE ONE The name of the corporation is CECo Enterprises Inc.
ARTICLE TWO The name and address of the registered agent and its registered
office are:
Registered Agent: CT Corporation System
Registered Office: 208 South LaSalle Street,
8th Floor
Chicago, Illinois 60603
Cook County
ARTICLE THREE The purpose or purposes for which the corporation is organized
are to transact any or all lawful businesses for which
corporations may be incorporated under the Business Corporation
Act of 1983, as amended from time to time.
ARTICLE FOUR Paragraph 1. The number of shares which the corporation is
authorized to issue is 100 shares of Common Stock without par
value.
Paragraph 2. The Corporation proposes to issue 100 shares of
Common Stock for the consideration of $1,000.
Paragraph 3. The shares of Common Stock shall entitle the
holders thereof to one vote for each share upon all matters upon
which shareholders have the right to vote and the corporation
elects to eliminate cumulative voting rights in all
circumstances.
ARTICLE FIVE Each person who is or was or had agreed to become a
director or officer of the corporation, and each person who is or
was serving or who had agreed to serve at the request of the
Board of Directors or an officer of the corporation as an
employee or agent of the corporation or as a director, officer,
employee, or agent of another corporation, partnership, joint
venture, trust or other enterprise (including the heirs,
executors, administrators or estate of such person), shall be
indemnified by the corporation to the full extent permitted by
the Business Corporation Act of the State of Illinois or any
other applicable laws as presently or hereafter in effect.
Without limiting the generality of the foregoing, the corporation
may enter into one or more agreements with any person which
provide for indemnification
<PAGE>
greater or different than that provided in this Article Five.
Any repeal or modification of this Article Five shall not
adversely affect any right or protection existing hereunder
immediately prior to such repeal or modification.
ARTICLE SIX The undersigned incorporator hereby declares, under penalties of
perjury, that the statements made in the foregoing Articles of
Incorporation are true.
Dated July 30, 1993
Signature and Name Address
------------------ -------
/s/ Ashok K. Lalwani
____________________ Sidley & Austin
Ashok K. Lalwani Suite 4400
One First National Plaza
Chicago, Illinois 60603
<PAGE>
ICC Informational Filing
July 30, 1993
Exhibit C
NORTHWIND INC.
ARTICLES OF INCORPORATION
ARTICLE ONE The name of the corporation is Northwind Inc.
ARTICLE TWO The name and address of the registered agent and its registered
office are:
Registered Agent: CT Corporation System
Registered Office: 208 South LaSalle Street,
8th Floor
Chicago, Illinois 60603
Cook County
ARTICLE THREE The purpose or purposes for which the corporation is organized
are to transact any or all lawful businesses for which
corporations may be incorporated under the Business Corporation
Act of 1983, as amended from time to time.
ARTICLE FOUR Paragraph 1. The number of shares which the corporation is
authorized to issue is 100 shares of Common Stock without par
value.
Paragraph 2. The Corporation proposes to issue 100 shares of
Common Stock for the consideration of $1,000.
Paragraph 3. The shares of Common Stock shall entitle the
holders thereof to one vote for each share upon all matters upon
which shareholders have the right to vote and the corporation
elects to eliminate cumulative voting rights in all
circumstances.
ARTICLE FIVE Each person who is or was or had agreed to become a
director or officer of the corporation, and each person who is or
was serving or who had agreed to serve at the request of the
Board of Directors or an officer of the corporation as an
employee or agent of the corporation or as a director, officer,
employee, or agent of another corporation, partnership, joint
venture, trust or other enterprise (including the heirs,
executors, administrators or estate of such person), shall be
indemnified by the corporation to the full extent permitted by
the Business Corporation Act of the State of Illinois or any
other applicable laws as presently or hereafter in effect.
Without limiting the generality of the foregoing, the corporation
may enter into one or more agreements with any person which
provide for indemnification greater or different than that
provided in this
<PAGE>
Article Five. Any repeal or modification of this Article Five
shall not adversely affect any right or protection existing
hereunder immediately prior to such repeal or modification.
ARTICLE SIX The undersigned incorporator hereby declares, under penalties of
perjury, that the statements made in the foregoing Articles of
Incorporation are true.
Dated July 30, 1993
Signature and Name Address
------------------ -------
/s/ Ashok K. Lalwani
____________________ Sidley & Austin
Ashok K. Lalwani Suite 4400
One First National Plaza
Chicago, Illinois 60603
<PAGE>
ICC Informational Filing
July 30, 1993
Exhibit D
OFFICE FACILITIES AND ADMINISTRATIVE
AND MANAGEMENT SERVICES AGREEMENT
THIS AGREEMENT is made and entered into as of July 30, 1993 by and between
Commonwealth Edison Company, an Illinois corporation ("Edison") and CECo
Enterprises Inc., an Illinois corporation ("Enterprises").
WHEREAS, Enterprises is a subsidiary of Edison which will engage in businesses
described in Section 7-106(a) of The Illinois Public Utilities Act (the "Act")
and Enterprises may form additional subsidiaries which will engage in such
businesses ("Subsidiaries");
WHEREAS, Edison desires to provide Enterprises and its Subsidiaries the use of
certain office facilities and administrative and management services reasonably
necessary for the management of the businesses of Enterprises and its
Subsidiaries, and Enterprises desires to accept and pay for, and cause its
Subsidiaries to accept and pay for, the use of such facilities and services,
pursuant to the terms and subject to the conditions set forth herein; and
WHEREAS, Edison and Enterprises intend this Agreement to become effective upon
the filing of a petition with the Illinois Commerce Commission (the
"Commission") seeking the approval of this Agreement, pursuant to Section 7-
106(h) of the Act;
NOW, THEREFORE, in consideration of the covenants and agreements hereinafter
set forth, Edison and Enterprises hereby agree as follows:
1. Facilities and Services. Upon the terms and subject to the conditions of
this Agreement, Edison agrees to provide to Enterprises and its Subsidiaries,
upon the request of Enterprises and its Subsidiaries, any or all of the
following services and facilities:
(a) The use of office facilities, including but not limited to, office
space, fixtures, furniture, equipment, machinery, supplies, stand-alone and
mainframe computer hardware, computer software and other personal property;
(b) Administrative and management services, including, but not limited
to, accounting, legal, insurance, information systems, treasury and
finance, payroll processing, employee benefits participation/ processing,
purchase orders bidding/processing, billing, receipt and
<PAGE>
mailing of parcels and letters, tax, negotiation, administration and
management of contracts for services to be provided by third parties
(including contracts for engineering, architectural, design, construction,
marketing and other third party services), administration and management of
financial requirements (including negotiation, administration and management
of underlying documentation) and relationships with regulatory and other
governmental authorities; and
(c) In connection with providing such administrative and management
services, the services of any of the following personnel, as determined by
Edison in its sole discretion: its Chairman, President, Chief Financial
Officer, Senior Vice Presidents, Vice Presidents, Secretary, Treasurer,
General Counsel, Comptroller, Marketing Manager, Technical Services Director,
New Business Ventures Sales Administrator and other administrative and
management personnel;
provided, however, that Edison reserves the right to schedule the use by
Enterprises and its Subsidiaries of all such facilities and the provision to
them of such services so as not to interfere with Edison's operations.
Enterprises and its Subsidiaries may choose not to use any one or more of the
facilities or services made available hereunder or to discontinue use of any one
or more facilities or services provided by Edison hereunder by giving Edison 30
days notice of such discontinuance. Such lack of use or discontinuance of use
shall not affect Edison's obligation to provide the use of any other facilities
or services hereunder.
2. Costs. Enterprises agrees to pay, and to cause each of its
Subsidiaries to pay, to Edison its share of Edison's fully allocated costs in
providing the use of any such facilities and services actually used by
Enterprises or such Subsidiary as follows:
(a) Office Space. A monthly rental based upon the total costs to Edison
of the use of office space, including utilities, in any building occupied by
Enterprises or such Subsidiary multiplied by (i) a percentage amount
approximating (A) the square footage occupied by Enterprises or such
Subsidiary in relation to (B) the total square footage of office space
occupied by Enterprises and its Subsidiaries and Edison in such building and
(ii) a fraction of which the numerator is the hours such office space is used
during such month by Enterprises or such Subsidiary and the denominator is
the total hours such office space is used during such month by Enterprises
and its Subsidiaries and Edison.
(b) Fixtures, furniture, equipment and machinery. A monthly rental to be
determined by a cost and value study to be conducted by Edison.
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<PAGE>
(c) Supplies. The actual costs to Edison, including receipt and handling
costs, for all supplies used by Enterprises or such Subsidiary.
(d) Billing. A charge equal to the average cost per customer (for
similar classes of customers) of operating the Revenue Accounting
Department's related billing system multiplied by the number of customers of
Enterprises or such Subsidiary which Edison bills.
(e) Payment of Invoices. A charge equal to the average cost per invoice
of operating the Accounts Payable function of Edison multiplied by the number
of invoices paid on behalf of Enterprises or such Subsidiary.
(f) Payroll Processing. A charge equal to the cost per employee of
operating the payroll function of Edison multiplied by the number of
employees of Enterprises or such Subsidiary for which this function is
performed.
(g) Employee Benefits Participation and Processing. A charge, determined
by Edison, equal to the direct cost of including any employee of Enterprises
or such Subsidiary in any Edison employee benefit plan in which such employee
participates, including the cost of contributions to such plan, plus a
percentage share of the total cost of administering Edison employee benefit
plans in which employees of Enterprises or such Subsidiary participate, based
on the number of employees of Enterprises or such Subsidiary participating in
each plan in relation to the total number of employees participating in each
plan.
(h) Processing of Purchase Orders. A charge equal to the average cost
per purchase order of operating the Edison purchasing function by type of
purchase order (if applicable) multiplied by the number of purchase orders
processed for Enterprises or such Subsidiary.
(i) Receipt and mailing of Parcels and Letters. A charge based on a
portion of the costs of operating Edison's mail room, as determined by an
Edison study, and a separate postage charge based on actual usage.
(j) Stand-Alone Computer Hardware Usage. A rental charge covering
Edison's cost or rental and maintenance of computer hardware; provided, that
if usage of any computer hardware is shared with Edison, such rental shall be
based on the percentage of time Enterprises or such Subsidiary uses such
hardware in relation to the use by Enterprises, its Subsidiaries and Edison.
(k) Mainframe Computer Usage. A direct charge based on a cost per
computer processing unit, which will be
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<PAGE>
updated periodically by Edison's Information Services department.
(l) Computer Software. A charge based on a portion of the computer
software license fee paid by Edison for software used by Enterprises,
determined as a percentage of time Enterprises or such Subsidiary uses such
software in relation to use of such software by Enterprises, its Subsidiaries
and Edison.
(m) Administrative and General Costs. A charge for such costs,
determined by Edison as a percentage of total expenditures made on behalf of
Enterprises or such Subsidiary, to be applied to the total costs billed to
Enterprises or such Subsidiary.
(n) Personnel. A charge for administrative and managerial personnel
whose services are provided by Edison to Enterprises or such Subsidiary,
based on the following:
(i) Direct Costs: payroll costs at actual salary or wage rates or at
group rates of Edison employees for hours worked during normal business
hours on behalf of Enterprises or such Subsidiary; and
(ii) Indirect Costs: the following types of indirect costs are to be
charged based on Edison's estimates for each type of cost, subject to
adjustment at the end of each calendar year: pension, payroll taxes,
insurance and other fringe benefits, including compensated personal
absence - allocated as a percentage of total payroll costs, such
percentage to be based on Edison's General Company Order No. 25, Appendix
D, Rates and Percentages Applicable to Actual Cost Billing.
(o) Any Other Costs. A charge for any other cost incurred by Edison on
behalf of Enterprises or such Subsidiary not included above.
3. Payment. Edison shall invoice Enterprises and each Subsidiary for all
facilities and services provided hereunder on a monthly basis. Invoices will be
payable by Enterprises and each Subsidiary within 30 days after receipt of each
invoice.
4. Personal Service Allocation. (a) Executive officers of Edison will
provide to Edison a written monthly estimate of the percentage of business time
spent by such executive officer on behalf of Enterprises and each Subsidiary in
the preceding month.
(b) Each other Edison employee providing labor on behalf of Enterprises
shall maintain and furnish to Edison a
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<PAGE>
written record of all time spent each day during normal business hours in
performing any services for Enterprises and each Subsidiary.
5. Recording of Costs. All transactions between Edison and Enterprises
or its Subsidiaries will be recorded using unique function numbers so that they
can readily be identified and monitored under Edison's General Ledger System.
Special accounts will be established to accumulate all costs incurred by Edison
for Enterprises and each Subsidiary. The amounts in these accounts will provide
the basis for monthly billings.
6. Term. (a) This Agreement will be effective on the date a petition is
filed with the Commission seeking approval of this Agreement and shall continue,
unless terminated by the parties hereto pursuant to Section 6(b) hereof or by
the Commission following a hearing on such petition, until the tenth anniversary
of such date (the "Initial Term") or any renewal term. Unless written notice
that this Agreement shall terminate on the last day of the Initial Term or any
renewal term is provided by either party at least 30 days prior to the
expiration of the then current Initial Term or renewal term, this Agreement
shall continue for an additional renewal term of ten year(s).
(b) Either Edison or Enterprises may terminate this Agreement by providing
30 days prior written notice to the other party hereto of the effective date of
such termination.
7. Confidential Information. Edison and Enterprises each agree to, and
Enterprises agrees to cause each of its Subsidiaries to, treat in confidence all
information which it shall have obtained regarding the other party and its
business during the course of the performance of this Agreement. Such
information shall not be communicated to any person other than Enterprises, its
Subsidiaries and Edison and their respective representatives, except to the
extent disclosure of such information is required by a governmental authority.
If either party is required to disclose confidential information to a
governmental authority, such party shall take reasonable steps to make such
disclosure confidential under the rules of such governmental authority.
Information provided hereunder shall remain the sole property of the party
providing such information. The obligation of each party to treat such
information in confidence shall not apply to any information which (i) is or
becomes available to such party from a source other than the party providing
such information, or (ii) is or becomes available to the public other than as a
result of disclosure by such party or its agents.
8. Entire Agreement; Amendments. This Agreement constitutes the sole and
entire agreement between the parties with respect to the subject matter herein
and supersedes all previous proposals, oral or written, negotiations,
representations, commitments and all other communications between
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<PAGE>
the parties. This Agreement shall not be amended, modified or supplemented
except by a written instrument signed by an authorized representative of each of
the parties hereto.
9. Assignment. This Agreement may not be assigned by either party
without the prior written consent of the other party.
10. Access to Records. During the term of this Agreement and for a period of
seven years after the expiration or termination of this Agreement, Enterprises
shall have reasonable access to and the right to examine any and all books,
documents, papers and records which pertain to services and facilities provided
by Edison hereunder. Edison shall maintain all such records for a period of
seven years after expiration or termination of this Agreement.
11. Partial Invalidity. Wherever possible, each provision hereof shall be
interpreted in such manner as to be effective and valid under applicable law,
but in case any one or more of the provisions contained herein shall, for any
reason, be held to be invalid, illegal or unenforceable in any respect, such
provision shall be ineffective to the extent, but only to the extent, of such
invalidity, illegality or unenforceability without invalidating the remainder of
such invalid, illegal or unenforceable provision or provisions or any other
provisions hereof, unless such a construction would be unreasonable.
12. Waiver. Failure by either party to insist upon strict performance of any
term or condition herein shall not be deemed a waiver of any rights or remedies
that either party may have against the other nor in any way to affect the
validity of this Agreement or any part hereof or the right of any party
thereafter to enforce each and every such provision. No waiver of any breach of
this Agreement shall be held to constitute a waiver of any other or subsequent
breach.
13. Status of Parties. In the performance of services hereunder, Edison
shall be an independent contractor with authority to control and direct the
performance of the work hereunder except as limited herein.
14. Governing Law. This Agreement shall be governed by, construed and
interpreted pursuant to the laws of the State of Illinois.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed the day and year first above written.
COMMONWEALTH EDISON COMPANY CECo ENTERPRISES INC.
/s/ Samuel K. Skinner /s/ David A. Scholz
By:_________________________ By:______________________
Its: Its:
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<PAGE>
ICC Informational Filing
July 30, 1993
Exhibit E
LICENSE AGREEMENT
THIS AGREEMENT is made and entered into as of July 30, 1993 by and between
Commonwealth Edison Company, an Illinois corporation ("Edison") and CECo
Enterprises Inc., an Illinois corporation ("Enterprises").
WHEREAS, Enterprises is a subsidiary of Edison which will engage in businesses
described in Section 7-106(a) of The Illinois Public Utilities Act (the "Act")
and Enterprises may form additional subsidiaries which will engage in such
businesses ("Subsidiaries");
WHEREAS, Edison compiles certain confidential customer billing information,
including the identities of Edison's customers, their addresses and telephone
numbers, their energy usage and requirements, and their electricity bills and
payments ("Edison Information"), which is stored in a computer data base known
as the "Customer Information System";
WHEREAS, Edison desires to share the Edison Information with Enterprises and
its Subsidiaries, and Enterprises and its Subsidiaries desire to use the Edison
Information, pursuant to the terms and subject to the conditions set forth
herein; and
WHEREAS, Edison and Enterprises intend this Agreement to became effective upon
the issuance of an order from the Illinois Commerce Commission (the
"Commission") approving this Agreement, pursuant to Sections 7-101, 7-102 and 7-
204A of the Act;
NOW, THEREFORE, in consideration of the covenants and agreements hereinafter
set forth, Edison and Enterprises hereby agree as follows:
1. Edison License. (a) Edison hereby grants to Enterprises and its
Subsidiaries a nonexclusive, nontransferable right to use the Edison Information
for the duration of this Agreement, subject to the following restrictions: (i)
the Edison Information shall be used only in the businesses of Enterprises and
its Subsidiaries, and (ii) Enterprises and its Subsidiaries shall not sell,
sublicense, convey, assign or otherwise transfer the Edison Information to any
third party.
(b) All right, title and interest in and to the Edison Information, other
than those rights granted herein, shall remain the property of Edison.
2. Access to Information. Edison agrees to provide Enterprises and its
Subsidiaries access to the Customer Information System and Edison's computer
hardware and software to
<PAGE>
allow Enterprises and its Subsidiaries conveniently to use the Edison
Information.
3. Fees. Enterprises agrees to pay, and to cause each of its
Subsidiaries to pay, Edison a charge for the use of any Edison computer hardware
or software by Enterprises or such Subsidiary pursuant to the Office Facilities
and Administration and Management Services Agreement, dated as of July 13, 1993,
between Edison and Enterprises;
4. Term. (a) This Agreement will be effective the date an order is
obtained from the Commission approving this Agreement and shall continue, unless
terminated by the parties hereto pursuant to Section 4(b) hereof until the tenth
anniversary of such date (the "Initial Term") or any renewal term. Unless
written notice that this Agreement shall terminate on the last day of the
Initial Term or any renewal term is provided by either party at least 30 days
prior to the expiration of the then current Initial Term or renewal term, this
Agreement shall continue for an additional renewal term of ten year(s).
(b) Either Edison or Enterprises may terminate this Agreement by providing 30
days prior written notice to the other party hereto of the effective date of
such termination.
(c) In the event this Agreement terminates or expires, Enterprises and its
Subsidiaries shall return the Edison Information, in whatever form held by them,
to Edison.
5. Confidential Information. Enterprises agrees to, and agrees to cause
each of its Subsidiaries to, treat in confidence all Edison Information provided
hereunder. Such information shall not be communicated to any person other than
Enterprises, its Subsidiaries and their respective representatives (provided
such representatives execute confidentiality agreements in form and substance
acceptable to Edison), except to the extent disclosure of such information is
required by a governmental authority. If Enterprises or any Subsidiary is
required to disclose confidential information to a governmental authority, it
shall take reasonable steps to make such disclosure confidential under the rules
of such governmental authority. The obligation of Enterprises and its
Subsidiaries to treat such information in confidence shall survive the
termination or expiration of this Agreement.
6. Entire Agreement; Amendments. This Agreement constitutes the sole and
entire agreement between the parties with respect to the subject matter herein
and supersedes all previous proposals, oral or written, negotiations,
representations, commitments and all other communications between the parties.
This Agreement shall not be amended, modified or supplemented except by a
written instrument signed by an authorized representative of each of the parties
hereto.
-2-
<PAGE>
7. Assignment. This Agreement may not be assigned by either party without
the prior written consent of the other party.
8. Partial Invalidity. Wherever possible, each provision hereof shall be
interpreted in such manner as to be effective and valid under applicable law,
but in case any one or more of the provisions contained herein shall, for any
reason, be hold to be invalid, illegal or unenforceable in any respect, such
provision shall be ineffective to the extent, but only to the extent, of such
invalidity, illegality or unenforceability without invalidating the remainder of
such invalid, illegal or unenforceable provision or provisions or any other
provisions hereof, unless such a construction would be unreasonable.
9. Waiver. Failure by either party to insist upon strict performance of
any term or condition herein shall not be deemed a waiver of any rights or
remedies that either party may have against the other nor in any way to affect
the validity of this Agreement or any part hereof or the right of any party
thereafter to enforce each and every such provision. No waiver of any breach of
this Agreement shall be held to constitute a waiver of any other or subsequent
breach.
10. Governing Law. This Agreement shall be governed by, construed and
interpreted pursuant to the laws of the State of Illinois.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed the day and year first above written.
COMMONWEALTH EDISON COMPANY CECo ENTERPRISES INC.
By:__________________________ By:______________________
Its: Its:
-3-
<PAGE>
ICC Informational Filing
July 30, 1993
Exhibit F
[OMITTED AS DUPLICATIVE]
-4-
<PAGE>
Exhibit D-4
AMENDMENT TO SENATE BILL 770
AMENDMENT NO. 13. Amend Senate Bill 770, AS AMENDED, by
replacing the title with the following:
"AN ACT to amend the Public Utilities Act by adding Section
7-105, 7-106, 7-107, 7-108, and 8-208."; and by replacing
everything after the enacting clause with the following:
"Section 5. The Public Utilities Act is amended by adding
Sections 7-105, 7-106, 7-107, 7-108, and 8-208 as follows:
(220 ILCS 5/7-105 new)
Sec. 7-105. (a) Notwithstanding anything to the contrary
----------------------------------------------------------
in Sections 6-103, 7-101, 7-102, 7-203, 7-204, 7-204A of this Act
- -----------------------------------------------------------------
or any rule or regulation promulgated by the Commission, a public
- -----------------------------------------------------------------
utility providing electric service to more than 500,000 customers
- -----------------------------------------------------------------
in this State may, within 550 days after the effective date of
- --------------------------------------------------------------
this amendatory Act of 1993 or any extension of time pursuant to
- ----------------------------------------------------------------
Section 7-106 of this Act, without the approval or consent of, or
- -----------------------------------------------------------------
prior filing for the approval or consent of, the Commission:
- ------------------------------------------------------------
(i) engage in only those transactions as are
---------------------------------------------
reasonably necessary to create a holding company and make
---------------------------------------------------------
the public utility a subsidiary company of the holding
------------------------------------------------------
company; and
------------
(ii) loan to such holding company prior to the 60th
----------------------------------------------------
day after the day on which such public utility becomes a
--------------------------------------------------------
subsidiary company of the holding company, amounts which, in
------------------------------------------------------------
the aggregate, do not exceed the lesser of $10,000,000 or
---------------------------------------------------------
2.5% of the retained earnings of the public utility as
------------------------------------------------------
reported on its most recent annual report to the Commission.
------------------------------------------------------------
(b) The terms of transactions authorized by Section 7-
-------------------------------------------------------
105(a)(i) shall require that the holding company pay, or
- --------------------------------------------------------
reimburse the public utility for, all expenses incurred, services
- -----------------------------------------------------------------
rendered, or facilities provided by the public utility engaging
- ---------------------------------------------------------------
in such transactions. Such public utility shall incur no
- ---------------------------------------------------------
liabilities in or in connection with such transactions other than
- -----------------------------------------------------------------
<PAGE>
expenses incurred to effect such transactions. The terms of any
- ----------------------------------------------------------------
loan authorized by Section 7-105(a)(ii) shall require that the
- --------------------------------------------------------------
loan (i) be repaid no later than the 240th day after the public
- ---------------------------------------------------------------
utility becomes a subsidiary company of the holding company and
- ---------------------------------------------------------------
(ii) bear interest at the rate of 10% per annum. Contracts or
- --------------------------------------------------------------
arrangements between the public utility and any of its
- ------------------------------------------------------
affiliates, including the holding company, other than as
- --------------------------------------------------------
authorized by Section 7-105(a), shall be subject to the
- -------------------------------------------------------
jurisdiction of the Commission under Sections 7-101, 7-102, 7-
- --------------------------------------------------------------
204A(b), and other applicable provisions, if any, of this Act.
- --------------------------------------------------------------
(c) Costs incurred by a public utility in effecting or
-------------------------------------------------------
attempting to effect any transaction authorized by this Section
- ---------------------------------------------------------------
7-105 shall not be included in rate base or treated as allowable
- ----------------------------------------------------------------
expenses for purposes of determining the rates to be charged by
- ---------------------------------------------------------------
the public utility.
- -------------------
(d) Not later than the earlier of (i) the 30th day after a
-----------------------------------------------------------
public utility or a company which seeks to become a holding
- -----------------------------------------------------------
company of such public utility in accordance with this Section 7-
- -----------------------------------------------------------------
105 files any registration statement or application with any
- ------------------------------------------------------------
federal regulatory agency seeking authority for a transaction in
- ----------------------------------------------------------------
which such public utility would become a subsidiary of such
- -----------------------------------------------------------
holding company or (ii) the 180th day after the effective date of
- -----------------------------------------------------------------
this amendatory Act of 1993, such public utility or holding
- -----------------------------------------------------------
company shall file with the Commission, for the information of
- --------------------------------------------------------------
the Commission and the public, the information, to the extent
- -------------------------------------------------------------
available to such public utility or company on such day,
- --------------------------------------------------------
described in Section 7-204A(a) of this Act, and such public
- -----------------------------------------------------------
utility or company shall, until the day on which such public
- ------------------------------------------------------------
utility becomes a subsidiary of a holding company, file with the
- ----------------------------------------------------------------
Commission all additional such information, and corrections,
- ------------------------------------------------------------
<PAGE>
amendments, or supplements to all previously filed such
- -------------------------------------------------------
information, as soon as practicable after it becomes available to
- -----------------------------------------------------------------
such public utility or company; provided, that nothing in this
- --------------------------------------------------------------
Section 7-105 eliminates or restrict the Commission's authority,
- ----------------------------------------------------------------
on timely motion of any person or corporation, to enter an order
- ----------------------------------------------------------------
to protect confidential, proprietary, or trade secret data or
- -------------------------------------------------------------
information filed with the Commission.
- --------------------------------------
(e) As used in Sections 7-105 and 7-106 of this Act,
-----------------------------------------------------
"subsidiary company" and "holding company" mean a "subsidiary
- -------------------------------------------------------------
company" and a "holding company" as defined in the Public Utility
- -----------------------------------------------------------------
Holding Company Act of 1935, as amended.
- ----------------------------------------
(220 ILCS 5/7-106 new)
Sec. 7-106. (a) Subject to the limitations contained in
---------------------------------------------------------
this Section 7-106, and notwithstanding anything to the contrary
- ----------------------------------------------------------------
in Section 6-103 and subsections (f), (g), and (h) of Section 7-
- ----------------------------------------------------------------
102 of this Act or any rule or regulation promulgated by the
- ------------------------------------------------------------
Commission under this Act, a public utility that has filed,
- -----------------------------------------------------------
pursuant to Section 7-105(d) of this Act, the information
- ---------------------------------------------------------
described in Section 7-204A(a) of this Act, may, without the
- ------------------------------------------------------------
approval or consent of, or other prior filing with, the
- -------------------------------------------------------
Commission, form, invest moneys denominated in United States
- ------------------------------------------------------------
dollars in, and guarantee contractual obligations of a subsidiary
- -----------------------------------------------------------------
which engages in any business that provides to persons,
- -------------------------------------------------------
corporations, municipal corporations, or other entities that are
- ----------------------------------------------------------------
customers or potential customers of the public utility (i)
- ----------------------------------------------------------
heating, cooling, or lighting services; (ii) energy management
- --------------------------------------------------------------
services; or (iii) design, development, construction,
- -----------------------------------------------------
engineering, financial, maintenance, management, or consulting
- --------------------------------------------------------------
services for owners, lessees, managers, or operators of
- -------------------------------------------------------
facilities for the generation, transmission, or distribution of
- ---------------------------------------------------------------
<PAGE>
electricity; each such subsidiary is referred to in this Act as a
- -----------------------------------------------------------------
"Section 7-106 subsidiary".
- ---------------------------
(b) Prior to investing in or guaranteeing any contractual
----------------------------------------------------------
obligations of a Section 7-106 subsidiary, the utility shall file
- -----------------------------------------------------------------
with the Commission a statement identifying all public utility
- --------------------------------------------------------------
assets or information in existence, such as customer lists, which
- -----------------------------------------------------------------
the utility plans to transfer to or permit the Section 7-106
- ------------------------------------------------------------
subsidiary or any associate or affiliate of the subsidiary to
- -------------------------------------------------------------
use, which statement shall include a description of the proposed
- ----------------------------------------------------------------
terms and conditions under which the assets or information will
- ---------------------------------------------------------------
be transferred or used.
- -----------------------
(c) In any proceeding pending before the Commission to
-------------------------------------------------------
determine the rates to be charged for electric service by a
- -----------------------------------------------------------
public utility which has a Section 7-106 subsidiary, or which is
- ----------------------------------------------------------------
a subsidiary of a holding company formed under Section 7-105 of
- ---------------------------------------------------------------
this Act, the Commission shall reduce the public utility's rates
- ----------------------------------------------------------------
to reflect the additional amount of revenue it would have earned
- ----------------------------------------------------------------
during the test year if the Section 7-106 subsidiary, such
- ----------------------------------------------------------
holding company, or any other subsidiary company of such holding
- ----------------------------------------------------------------
company had not provided the customer with the services described
- -----------------------------------------------------------------
in items (i), (ii), and (iii) of subsection (a) of this Section.
- ----------------------------------------------------------------
The Commission shall not reduce the revenues of the public
- ----------------------------------------------------------
utility unless it finds that there was no reasonable probability
- ----------------------------------------------------------------
that the customer would have obtained the services described in
- ---------------------------------------------------------------
items (i), (ii), and (iii) of subsection (a) of this Section from
- -----------------------------------------------------------------
another source (including the customer), if such subsidiary,
- ------------------------------------------------------------
holding company, or other subsidiary company had not entered into
- -----------------------------------------------------------------
a contract or arrangement with the customer. A written statement
- -----------------------------------------------------------------
by an employee or authorized agent of the customer that such
- ------------------------------------------------------------
services are available from other sources (including the
- --------------------------------------------------------
<PAGE>
customer) and that such agent or employee believes that there was
- -----------------------------------------------------------------
a reasonable probability that the customer would have so obtained
- -----------------------------------------------------------------
such services from another source (including the customer) shall
- ----------------------------------------------------------------
constitute prima facie evidence of such reasonable probability.
- ---------------------------------------------------------------
The provisions of this subsection shall not be construed as
- -----------------------------------------------------------
limiting the authority of the Commission with respect to rates
- --------------------------------------------------------------
under any other Section of this Act.
- ------------------------------------
(d) The aggregate amount of a public utility's investments
-----------------------------------------------------------
in, and guarantees of, the contractual obligations of Section 7-
- ----------------------------------------------------------------
106 subsidiaries without the approval or consent of, or prior
- -------------------------------------------------------------
filing with, the Commission, outstanding at the time of and after
- -----------------------------------------------------------------
giving effect to any such investment or guarantee, shall not
- ------------------------------------------------------------
exceed as of the date of such investment or guarantee an amount
- ---------------------------------------------------------------
equal to the lesser of $170,000,000 or 20% of the retained
- ----------------------------------------------------------
earnings of the public utility as reported on its most recent
- -------------------------------------------------------------
annual report to the Commission. The amount of each such
- ---------------------------------------------------------
guarantee shall be limited to a maximum dollar amount which shall
- -----------------------------------------------------------------
be specified in such guarantee. The terms of each such guarantee
- -----------------------------------------------------------------
shall provide that it shall terminate, and it shall terminate, at
- -----------------------------------------------------------------
the time that the public utility liquidates or transfers to any
- ---------------------------------------------------------------
entity or person, the interest and investment of such public
- ------------------------------------------------------------
utility in the Section 7-106 subsidiary whose obligations are
- -------------------------------------------------------------
subject to such guarantee. The authority of a public utility to
- ----------------------------------------------------------------
invest in and guarantee the contractual obligations of a Section
- ----------------------------------------------------------------
7-106 subsidiary without the approval or consent of, or prior
- -------------------------------------------------------------
filing with, the Commission, as permitted by this Section 7-106,
- ----------------------------------------------------------------
shall expire on the date such public utility liquidates or
- ----------------------------------------------------------
transfers its interest and investment in such Section 7-106
- -----------------------------------------------------------
subsidiary.
- -----------
(e) The Commission shall not consider the investment of a
----------------------------------------------------------
<PAGE>
public utility in or its obligation to make an investment in a
- --------------------------------------------------------------
Section 7-106 subsidiary, or the guarantee by a public utility of
- -----------------------------------------------------------------
contractual obligations of its Section 7-106 subsidiaries, in
- -------------------------------------------------------------
considering the amount or terms of any reparations or refunds to
- ----------------------------------------------------------------
be made by such public utility to its customers.
- ------------------------------------------------
(f) On the date that a public utility becomes a subsidiary
-----------------------------------------------------------
company of a holding company pursuant to Section 7-105 of this
- --------------------------------------------------------------
Act, such public utility shall either:
- --------------------------------------
(i) liquidate or transfer its interest and investment
------------------------------------------------------
in its Section 7-106 subsidiaries to such holding company or
------------------------------------------------------------
to any other entity or person in a transaction which does
---------------------------------------------------------
not require the prior approval or consent of the Commission
-----------------------------------------------------------
under Section 7-101 or Section 7-102 of this Act, or
----------------------------------------------------
(ii) file with the Commission for its approval under
-----------------------------------------------------
Section 7-101 or Section 7-102 of this Act, a plan for such
-----------------------------------------------------------
public utility to liquidate or transfer its interest and
--------------------------------------------------------
investment in its Section 7-106 subsidiaries.
---------------------------------------------
(g) If on the 550th day after the effective date of this
---------------------------------------------------------
amendatory Act of 1993 such public utility is not a subsidiary
- --------------------------------------------------------------
company of a holding company, such public utility shall on such
- ---------------------------------------------------------------
550th day either:
- -----------------
(i) liquidate or transfer its interest and investments
-------------------------------------------------------
in its Section 7-106 subsidiaries to any entity or person in
------------------------------------------------------------
a transaction which does not require the prior approval or
----------------------------------------------------------
consent of the Commission under Section 7-101 or Section 7-
-----------------------------------------------------------
102 of this Act, or
-------------------
(ii) file with the Commission for its approval under
-----------------------------------------------------
Section 7-101 or Section 7-102 of this Act, a plan for such
-----------------------------------------------------------
public utility to liquidate or transfer its interest and
--------------------------------------------------------
investment in its Section 7-106 subsidiaries, or
------------------------------------------------
<PAGE>
(iii) file with the Commission a petition for an
-------------------------------------------------
extension of time within which: (A) to become a subsidiary
-----------------------------------------------------------
company of a holding company and to take action pursuant to
-----------------------------------------------------------
subsection (f) of this Section 7-106; or (B) to take action
-----------------------------------------------------------
pursuant to either subparagraph (i) or subparagraph (ii) of
-----------------------------------------------------------
subsection (g) of this Section 7-106. The Commission shall
-----------------------------------------------------------
grant such extension to an appropriate date unless it finds
-----------------------------------------------------------
that the public utility has not taken action in a timely and
------------------------------------------------------------
appropriate manner to seek all regulatory, shareholder, and
-----------------------------------------------------------
other authority for or, after obtaining all such authority,
-----------------------------------------------------------
has not taken action in a timely and appropriate manner to
----------------------------------------------------------
effect a transaction in which such public utility would
-------------------------------------------------------
become a subsidiary company of a holding company. If the
---------------------------------------------------------
Commission finds that the public utility has not taken
------------------------------------------------------
action in a timely and appropriate manner to seek all
-----------------------------------------------------
regulatory, shareholder, and other authority for or, after
----------------------------------------------------------
obtaining all such authority, has not taken action in a
-------------------------------------------------------
timely and appropriate manner to effect a transaction in
--------------------------------------------------------
which such public utility would become a subsidiary company
-----------------------------------------------------------
of a holding company, the Commission shall deny the public
----------------------------------------------------------
utility's petition and shall approve a plan for such public
-----------------------------------------------------------
utility to liquidate or transfer its interests and
--------------------------------------------------
investments in its Section 7-106 subsidiaries. During the
----------------------------------------------------------
pendency of the proceeding before the Commission initiated
----------------------------------------------------------
by the petition filed by the public utility, the utility may
------------------------------------------------------------
continue to engage in activities described in Sections 7-105
------------------------------------------------------------
and 7-106, as provided therein.
-------------------------------
(h) Contracts or arrangements between a public utility and
-----------------------------------------------------------
its Section 7-106 subsidiaries, including contracts or
- ------------------------------------------------------
arrangements for any services described in Section 7-106 (a)(i),
- ----------------------------------------------------------------
<PAGE>
(ii), and (iii), but excluding investments and guarantees
- ---------------------------------------------------------
permitted by this Section 7-106, shall be subject to the
- --------------------------------------------------------
jurisdiction of the Commission under Sections 7-101, 7-102, 7-
- --------------------------------------------------------------
204A(b), and other applicable provisions, if any, of this Act,
- --------------------------------------------------------------
except that such public utility may, pursuant to contracts or
- -------------------------------------------------------------
arrangements filed with the Commission, provide its Section 7-106
- -----------------------------------------------------------------
subsidiaries with office facilities or administrative and
- ---------------------------------------------------------
management services which are reasonably necessary for the
- ----------------------------------------------------------
management of the business of its Section 7-106 subsidiaries,
- -------------------------------------------------------------
which contracts or arrangements shall become effective upon such
- ----------------------------------------------------------------
public utility filing with the Commission a petition seeking
- ------------------------------------------------------------
Commission approval thereof, and such contracts and arrangements
- ----------------------------------------------------------------
shall remain in effect unless modified by the Commission after a
- ----------------------------------------------------------------
hearing on such petition in which such public utility shall have
- ----------------------------------------------------------------
the burden of proving the reasonable necessity of the provision
- ---------------------------------------------------------------
of such facilities and services. Such contracts or arrangements
- ----------------------------------------------------------------
shall require each Section 7-106 subsidiary to pay to the public
- ----------------------------------------------------------------
utility the fair market value for the use of such facilities and
- ----------------------------------------------------------------
services. The public utility shall keep its books of account and
- -----------------------------------------------------------------
other records in a manner that will enable the Commission to
- ------------------------------------------------------------
determine the propriety of any allocation of costs between the
- --------------------------------------------------------------
public utility and its Section 7-106 subsidiaries. The burden of
- -----------------------------------------------------------------
proving the propriety of any such allocation shall be on the
- ------------------------------------------------------------
public utility. The public utility shall also have the burden of
- -----------------------------------------------------------------
proving that it has received or will receive fair market value
- --------------------------------------------------------------
for all facilities or services provided to its Section 7-106
- ------------------------------------------------------------
subsidiaries under this Section 7-106.
- --------------------------------------
(i) The costs of any public utility investment in or
-----------------------------------------------------
guarantee of the contractual obligations of its Section 7-106
- -------------------------------------------------------------
subsidiaries shall not be included in rate base or treated as
- -------------------------------------------------------------
<PAGE>
allowable expenses for purposes of determining the rates to be
- --------------------------------------------------------------
charged by the public utility.
- ------------------------------
(j) No public utility shall have any liability to any of
---------------------------------------------------------
its Section 7-106 subsidiaries, except any obligation it may have
- -----------------------------------------------------------------
to make investments in such Section 7-106 subsidiaries in
- ---------------------------------------------------------
accordance with this Section 7-106. No public utility shall have
- -----------------------------------------------------------------
any liability for any obligation or liability of any of its
- -----------------------------------------------------------
Section 7-106 subsidiaries, except under any guarantee of
- ---------------------------------------------------------
contractual obligations of such Section 7-106 subsidiaries made
- ---------------------------------------------------------------
in accordance with this Section 7-106.
- --------------------------------------
(k) No Section 7-106 subsidiary shall engage in the repair
-----------------------------------------------------------
or servicing of home or other consumer appliances except in
- -----------------------------------------------------------
emergencies posing a threat to life or property.
- ------------------------------------------------
(220 ILCS 5/7-107 new)
Sec. 7-107. Nothing in Section 7-105 or 7-106 of this Act
----------------------------------------------------------
shall be construed as (a) limiting the ability of any public
- ------------------------------------------------------------
utility to engage in, or the authority of the Commission to
- -----------------------------------------------------------
authorize, any transaction subject to Section 7-101, 7-102, 7-
- --------------------------------------------------------------
204, or 7-204A of this Act as in effect prior to the effective
- --------------------------------------------------------------
date of this amendatory Act of 1993 or (b) affecting the validity
- -----------------------------------------------------------------
of any petition or application for authorization under Section 7-
- -----------------------------------------------------------------
101, 7-102, 7-204, or 7-204A of this Act pending before the
- -----------------------------------------------------------
Commission as of the effective date of this amendatory Act of
- -------------------------------------------------------------
1993.
- -----
(220 ILCS 5/7-108 new)
Sec. 7-108. (a) Where an affiliate of an electric public
----------------------------------------------------------
utility has offered an unregulated sale of electricity, and such
- ----------------------------------------------------------------
affiliate would use a portion of the utility's distribution or
- --------------------------------------------------------------
transmission facilities to distribute or transmit the electricity
- -----------------------------------------------------------------
that is to be so sold, the utility shall make such portion of its
- -----------------------------------------------------------------
<PAGE>
facilities available to any other person or entity that offers to
- -----------------------------------------------------------------
make such sale, at the same price and under the same terms and
- --------------------------------------------------------------
conditions as the utility makes such portion of its facilities
- --------------------------------------------------------------
available to its affiliate. Nothing contained in this Section 7-
- -----------------------------------------------------------------
108(a) shall be construed as requiring or authorizing the
- ---------------------------------------------------------
Commission to require an electric public utility to make any
- ------------------------------------------------------------
portion its facilities available to its affiliate.
- --------------------------------------------------
(b) Where an affiliate of a gas public utility has offered
-----------------------------------------------------------
an unregulated sale of gas, and such affiliate would use a
- ----------------------------------------------------------
portion of the utility's distribution or transmission facilities
- ----------------------------------------------------------------
to distribute or transmit the gas that is to be so sold, the
- ------------------------------------------------------------
utility shall make such portion of its facilities available to
- --------------------------------------------------------------
any other person or entity that offers to make such sale, at the
- ----------------------------------------------------------------
same price and under the same terms and conditions as the utility
- -----------------------------------------------------------------
makes such portion of its facilities available to its affiliate.
- ----------------------------------------------------------------
Nothing contained in this Section 7-108(b) shall be construed as
- ----------------------------------------------------------------
requiring or authorizing the Commission to require a gas public
- ---------------------------------------------------------------
utility to make any portion of its facilities available to its
- --------------------------------------------------------------
affiliate.
- ----------
(c) As used in this Section 7-108:
-----------------------------------
(1) The term "affiliate" shall mean (i) every
----------------------------------------------
corporation and person owning or holding, directly or
-----------------------------------------------------
indirectly, 10% or more of the voting capital stock of a
--------------------------------------------------------
public utility; (ii) every corporation and person in any
--------------------------------------------------------
chain of successive ownership of 10% or more of the voting
----------------------------------------------------------
capital stock of such public utility; (iii) every
-------------------------------------------------
corporation, 10% or more of whose voting capital stock is
---------------------------------------------------------
owned by any person or corporation owning 10% or more of the
------------------------------------------------------------
voting capital stock of such public utility, or by any
------------------------------------------------------
person or corporation in any such chain of successive
-----------------------------------------------------
<PAGE>
ownership of 10% or more of the voting capital stock of such
------------------------------------------------------------
public utility; (iv) every entity, 10% or more of whose
-------------------------------------------------------
voting securities is owned, directly or indirectly, by such
-----------------------------------------------------------
public utility or by an entity described in clauses (i),
--------------------------------------------------------
(ii), or (iii) of this paragraph; and (v) every entity in
---------------------------------------------------------
which such public utility or an entity described in clauses
-----------------------------------------------------------
(i), (ii), (iii), or (iv) of this paragraph owns, controls,
-----------------------------------------------------------
or holds, directly or indirectly, a financial interest
------------------------------------------------------
entitling it or a contract right potentially entitling it to
------------------------------------------------------------
10% or more of revenues or profits and losses of any such
---------------------------------------------------------
entity.
-------
(2) the term "voting security" shall mean a "voting
----------------------------------------------------
security" as defined in the Public Utility Holding Company
----------------------------------------------------------
Act of 1935, as amended, and shall also mean any security
---------------------------------------------------------
giving the owner or holder thereof the privilege to convert
-----------------------------------------------------------
such security in whole or in part into a voting security, or
------------------------------------------------------------
any security directly or indirectly secured in whole or in
----------------------------------------------------------
part by the pledge of a voting security.
----------------------------------------
(3) the term "security" shall mean a "security" as
---------------------------------------------------
defined in the Public Utility Holding Company Act of 1935,
----------------------------------------------------------
as amended.
-----------
(4) the term "unregulated sale" shall mean a sale of
-----------------------------------------------------
electricity or gas to an end-user for use in facilities in
----------------------------------------------------------
this State, the price of which sale is not regulated by the
-----------------------------------------------------------
Commission.
-----------
(220 ILCS 5/8-208 new)
Sec. 8-208. (a) The General Assembly finds that the
-----------------------------------------------------
availability of adequate, affordable housing bears a close
- ----------------------------------------------------------
relationship to efficient and reliable delivery of utility
- ----------------------------------------------------------
services and that the lack of affordable housing exacerbates
- ------------------------------------------------------------
<PAGE>
difficulties in the delivery of electric services. It is further
- -----------------------------------------------------------------
found that the meeting of electric public utility service
- ---------------------------------------------------------
obligations imposed under this Act can be attained by allocating
- ----------------------------------------------------------------
certain resources to alleviating housing needs. It is declared
- ---------------------------------------------------------------
to be the public policy of this State that prudent investments in
- -----------------------------------------------------------------
or contributions to projects that foster the availability of
- ------------------------------------------------------------
adequate, affordable housing furthers the goals and objectives of
- -----------------------------------------------------------------
this Act.
- ---------
(b) Beginning in calendar year 1994 and continuing through
-----------------------------------------------------------
calendar year 2014, a public utility providing electric service
- ---------------------------------------------------------------
to more than 1,000,000 customers in this State shall contribute,
- ----------------------------------------------------------------
from retained earnings, each year $500,000 to the Illinois
- ----------------------------------------------------------
Affordable Housing Trust Fund created by the Illinois Affordable
- ----------------------------------------------------------------
Housing Act or invest that amount in projects financed by the
- -------------------------------------------------------------
Fund.
- -----
Section 10. Severability. The provisions of this amendatory
Act of 1993 are severable under Section 1.31 of the Statute on
Statutes.
Section 99. This Act takes effect upon becoming law.".
<PAGE>
EXHIBIT D-5
SIDLEY & AUSTIN
A PARTNERSHIP INCLUDING PROFESSIONAL CORPORATIONS
Los Angeles One First National Plaza London
---- Chicago, Illinois 60603 ----
New York Telephone 312: 853-7000 Singapore
---- Telex 25-4364 ----
Washington, D.C. Facsimile 312: 853-7036 Tokyo
Founded 1866
312: 853-2666
January 31, 1994
10 CFR Sec. 50.80
U.S. Nuclear Regulatory Commission
ATTN: Document Control Desk
Washington, D.C. 20555
RE: DRESDEN NUCLEAR POWER STATION, UNITS 1, 2 AND 3
(DOCKET NOS. 50-010; 50-237; 50-249)
QUAD CITIES NUCLEAR POWER STATION UNITS 1 AND 2
(DOCKET NOS. 50-254; 50-265)
ZION NUCLEAR POWER STATION UNITS 1 AND 2
(DOCKET NOS. 50-295; 50-304)
LASALLE COUNTY NUCLEAR POWER STATION UNITS 1 AND 2
(DOCKET NOS. 50-373; 50-344)
BYRON NUCLEAR POWER STATION UNITS 1 AND 2
(DOCKET NO. 50-454; 50-455)
BRAIDWOOD NUCLEAR POWER STATION UNITS 1 AND 2
(DOCKET NOS. 50-456; 50-457)
Dear Commissioners:
We are counsel to Commonwealth Edison Company ("Edison") in connection with
the proposed corporate restructuring described in this letter. On May 10, 1994,
the shareholders of Edison are scheduled to vote on a proposed restructuring
plan by which Edison will become a wholly owned subsidiary of a new holding
company which currently is named CECo Holding Company ("Holding Company"). If
Edison shareholders approve the plan, and necessary regulatory approvals are
obtained, the proposed restructuring is expected to take place on or about July
1, 1994. The restructuring will have no effect upon the management, operation
and financing of Edison's nuclear facilities. Pursuant to 10 CFR (S) 50.80 and
the Commission's practice with respect to such transactions, Edison asks that
you give consent to its proposed restructuring or disclaim jurisdiction over the
restructuring.
<PAGE>
U.S. Nuclear Regulatory Commission
January 31, 1994
Page 2
In 1987, your staff consented to a corporate restructuring proposed by
Consumers Power Company which was nearly identical to Edison's proposed
restructuring. Other restructurings to which the staff has consented include
those for Entergy, Inc. and WEPCo. An application for consent to a similar
restructuring for IP Holding Company is currently pending.
1. DESCRIPTION OF THE RESTRUCTURING
If Edison's shareholders approve of the proposed restructuring, Edison common
stock will be converted in a merger, on a share-for-share basis, into common
stock of Holding Company. Holding Company will be the only Edison common
shareholder. All Edison bonds and preferred stock will be unaffected, and will
continue to be outstanding securities of Edison. The only outstanding securities
of Holding Company will be its common stock.
The proposed restructuring is more fully described in the enclosed draft
Preliminary Prospectus for CECo Holding Company and Proxy Statement for
Commonwealth Edison Company, dated January 31, 1994 (hereinafter referred to as
"Attachment A").
2. EFFECT ON EDISON'S FINANCIAL RESOURCES
The proposed restructuring will not reduce the funds available to Edison to
carry out activities under its operating licenses for the above-referenced
nuclear plants. Under legislation enacted in Illinois in July 1993, Edison is
authorized to loan the lesser amount of $10 million or to up to 2.5% of its
retained earnings to the Holding Company, and any such loan must be repaid
within 240 days after the day on which the restructuring occurs with interest at
10% annually. See Attachment A, p. 24. After the restructuring Holding Company
will also become the owner of 100% of the shares of CECo Enterprises, Inc.
("Enterprises") which is currently a wholly owned subsidiary of Edison. Ibid.
Enterprises was formed as an Edison subsidiary in 1993 and is itself a holding
company. Enterprise's sole subsidiary is Northwind Inc., which was formed to
provide district cooling services to office and other commercial and industrial
buildings in Chicago. The 1993 Illinois legislation referred to above requires
that Edison transfer or liquidate its interest in Enterprises on the date that
Edison becomes a subsidiary of Holding Company;
<PAGE>
U.S. Nuclear Regulatory Commission
January 31, 1994
Page 3
consequently, Edison intends to transfer to Holding Company on such date, the
stock of Enterprises as a dividend on the Edison Common Stock held by Holding
Company.
Edison's utility operations will continue to be the primary source of revenue
and income for Edison, and will also constitute the majority of the Holding
Company's earning power for the foreseeable future. The Federal Energy
Regulatory Commission will continue to regulate Edison's wholesale electric
rates. The Illinois Commerce Commission will retain jurisdiction over Edison's
retail electric rates. See Attachment A, p. 22.
The proposed restructuring, including any Holding Company investments in non-
utility affiliates, will not affect Edison's ability to meet future financial
requirements related to its nuclear units through the revenues produced by its
utility business and by the issuance of debt and other securities. Thus, no
change in the amount of revenues, the source of funds, or the ability to obtain
the funds necessary to operate Edison's nuclear plants will result from the
restructuring.
To assist you in reviewing the financial aspects of the restructuring, there
is enclosed, as Attachment B, a copy of Edison's Annual Report for the year
ended December 31, 1992.
3. EFFECT ON EDISON MANAGEMENT
The restructuring will have no effect on the management of Edison's utility
operations. Officer responsibilities at the Holding Company level will have no
direct effect on Nuclear Operations. See Attachment A, p. 22.
4. CITIZENSHIP OF LICENSEE
The proposed restructuring will not result in Edison becoming owned,
controlled or dominated by an alien, a foreign corporation, or a foreign
government. Under the restructuring proposal, the present common shareholders
of Edison will become the common shareholders of Holding Company in the same
proportion in which they currently hold Edison common stock. Holding Company
will become the sole holder of the common stock of Edison. Edison is and will
remain an Illinois corporation. Holding Company, incorporated on January 28,
1994, is also an Illinois corporation. At the time the restructuring becomes
effective, the Board of Directors of Holding Company will be comprised of the
same persons who are members of Edison's Board of Directors at such time. See
Attachment A, p. 29.
<PAGE>
U.S. Nuclear Regulatory Commission
January 31, 1994
Page 4
5. CONCLUSION
Based on the above factors, we conclude that the proposed restructuring will
not affect Edison's qualifications as a holder of the operating licenses for the
above-named nuclear plants. The proposed restructuring is also consistent with
applicable provisions of law and the Commission's regulations and orders.
Accordingly, we respectfully request that you consent to the proposed
restructuring, or, in the alternative, disclaim jurisdiction, as soon as
practicable prior to April 1, 1994. Please advise the undersigned if there is
anything Edison can do to assist you in accommodating this request. We will
promptly notify you of the results of the shareholder vote on May 10, 1994.
Yours truly,
SIDLEY & AUSTIN
/s/ Michael I. Miller
Michael I. Miller
Enclosures
CC: J. Zwolinski, Office of Nuclear Reactor Regulation
J.E. Dyer, Office of Nuclear Reactor Regulation
J.B. Martin, Regional Administrator, Region 3
Joseph Rutberg, Esq.
<PAGE>
U.S. Nuclear Regulatory Commission
January 31, 1994
Page 5
STATE OF ILLINOIS)
)
COOK COUNTY )
The undersigned hereby affirms to the best of his knowledge and belief that
the information contained in the foregoing application is truthful and accurate
as of the date hereof.
/s/ Michael I. Miller
__________________________________
Subscribed and sworn before me this 31st day of January, 1994.
/s/ Sue Edwards
___________________
Notary Public
[SEAL]
<PAGE>
[ATTACHMENTS OMITTED AS DUPLICATIVE]
<PAGE>
Exhibit E-1
[ Map of Edison Service Territory
filed under cover of Form SE]
<PAGE>
Exhibit F-1
SIDLEY & AUSTIN
A PARTNERSHIP INCLUDING PROFESSIONAL CORPORATIONS
Los Angeles One First National Plaza London
---- Chicago, Illinois 60603 ----
New York Telephone 312: 853-7000 Singapore
---- Telex 25-4364 ----
Washington, D.C. Facsimile 312: 853-7036 Tokyo
Founded 1866
February 4, 1994
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: CECo Holding Company Application on Form U-1 under
the Public Utility Holding Company Act of 1935
--------------------------------------------------
Ladies and Gentlemen:
We refer to the Application on Form U-1 ("Application") under the
Public Utility Holding Company Act of 1935, as amended ("1935 Act"), filed with
the Securities and Exchange Commission ("Commission") by CECo Holding Company,
an Illinois corporation ("CECo"), in which CECo requests that the Commission
authorize the acquisition of all of the issued and outstanding common stock, par
value $12.50 per share ("Common Stock"), of Commonwealth Edison Company, an
Illinois corporation ("Edison"), in the merger ("Merger") of CECo Merging
Corporation, an Illinois corporation ("Merging Co.") and wholly-owned subsidiary
of CECo, with and into Edison. As a result of the Merger, CECo will issue up to
215,770,000 shares of its common stock, without par value ("CECo Common Stock"),
which shares are covered by the Registration Statement on Form S-4 (Registration
No. 33-52109) ("Registration Statement") filed by CECo with the Commission
pursuant to the Securities Act of 1933, as amended ("Securities Act"), on
January 31, 1994.
We are familiar with the proceedings to date with respect to (a) the
proposed Merger and (b) the proposed issuance as a result of the Merger of the
shares of CECo Common Stock, and we have examined such records, documents and
questions of law and satisfied ourselves as to such matters of procedure, law
and fact as we have considered relevant and necessary as a basis for the
opinions expressed in this letter.
<PAGE>
Securities and Exchange Commission
February 4, 1994
Page 2
Based upon the foregoing, we are of the opinion that:
1. All laws of the State of Illinois applicable to the transactions
contemplated by the Merger and described in the Application and the Registration
Statement will have been complied with when: (a) CECo has made the
informational filing with the Illinois Commerce Commission in accordance with
the Illinois Public Utilities Act ("ICC Filing"); (b) the Merger has been
approved by the shareholders of Edison; (c) duly authorized and executed
Articles of Merger have been filed with Office of the Secretary of State of
Illinois as provided in Sections 11.25(a) and 1.10 of the Illinois Business
Corporation Act of 1983, as amended ("IBC"); and (d) the Secretary of State of
Illinois has issued a Certificate of Merger as provided in Section 11.40 of the
IBC.
2. CECo is a corporation validly organized and duly existing under
the laws of the State of Illinois.
3. The shares of CECo Common Stock to be issued as a result of the
Merger will be validly issued, fully paid and nonassessable and the holders of
such shares will be entitled to the rights and privileges appertaining thereto
set forth in the Articles of Incorporation and By-Laws of CECo when: (a) the
Registration Statement, as finally amended, has been declared effective under
the Securities Act by the Commission; (b) CECo's Board of Directors has duly
adopted final resolutions authorizing the issuance, sale and delivery of the
shares of CECo Common Stock as contemplated by the Registration Statement; (c)
in the case of the shares of CECo Common Stock issuable pursuant to the sale of
such shares under the Employe Savings and Investment Plan and Employe Stock
Purchase Plan ("Stock Purchase Plan") of Edison, post-effective amendments to
the Registration Statement on Form S-8 have been filed with the Commission and
become effective under the Securities Act and all other conditions and
requirements applicable to the delivery of such shares of CECo Common Stock upon
such sale in accordance with the governing instruments have been duly satisfied;
(d) in the case of the shares of CECo Common Stock issuable pursuant to the sale
of such shares under the Stock Purchase Plan, certificates representing the
shares of CECo Common Stock have been duly executed, countersigned and
registered and duly delivered to the persons entitled thereto against receipt of
the agreed consideration therefor; and (e) the Merger has been duly consummated
in accordance with the IBC.
4. Edison is a corporation validly organized and duly existing under
the laws of the State of Illinois.
<PAGE>
Securities and Exchange Commission
February 4, 1994
Page 3
5. The shares of Common Stock to be acquired by CECo as a result of
the Merger will have been legally acquired by CECo when: (a) CECo has received
the approval of the Commission pursuant to Section 9(a)(2) of the 1935 Act; (b)
the Federal Energy Regulatory Commission has duly entered its order under
Section 203 of the Federal Power Act; (c) the Nuclear Regulatory Commission
("NRC") has duly approved the transfer of NRC licenses deemed to have occurred
as a result of the Merger; (d) the ICC Filing has been made; and (e) the Merger
has been duly consummated in accordance with the IBC.
6. The consummation of the Merger (as described in the Application
and the Registration Statement) will not violate the legal rights of any of the
holders of common stock of (a) CECo, (b) Edison, (c) Merging Co. or (d) any of
their associates, as set forth in their respective Articles of Incorporation.
We hereby consent to the use of this opinion letter as an exhibit to
the Application.
Very truly yours,
SIDLEY & AUSTIN
<PAGE>
EXHIBIT H-1
UNITED STATES OF AMERICA
BEFORE THE
SECURITIES AND EXCHANGE COMMISSION
CECo Holding Company ) File No. __________
NOTICE OF PROPOSED ACQUISITION
Take notice that on February 4, 1994, CECo Holding Company ("Holding
Company"), 10 South Dearborn Street, Chicago, Illinois, 60690-0767, filed an
application pursuant to Sections 9(a)(2) and 10 of the Public Utility Holding
Company Act of 1935 (the "1935 Act") for authority to acquire all of the
outstanding common stock of Commonwealth Edison Company ("Edison") and, through
such acquisition, Holding Company's acquisition of Edison's holdings of all of
the outstanding common stock of Commonwealth Edison Company of Indiana, Inc.
("Indiana Company"). In its application, Holding Company has also requested the
Commission to grant it an exemption under Section 3(a)(1) of the Act, except
Section 9(a)(2) thereof, following the proposed acquisition of securities.
CECo Holding Company's proposed acquisition of the common stock of Edison and
the Indiana Company (the "Acquisition") is part of a planned corporate
restructuring in which Holding Company will become a holding company over
Edison, which is an Illinois electric utility and a holding company that is
currently exempt from registration under Section 3(a)(1) of the Act. CECo
Holding Company was incorporated under Illinois law on January 28, 1994 for the
purpose of carrying out the proposed restructuring. Holding Company owns all of
the outstanding common stock of CECo Merging Corporation ("Merging Corp."), an
Illinois corporation that has also been incorporated to accomplish the
restructuring. Neither Holding Company nor Merging Corp. owns any utility
assets. Edison and the Indiana Company are "electric utilities" as defined in
Section 2(a)(3) of the Act and "public utilities" as defined in Section 2(a)(5)
of the Act.
Holding Company is not currently a "holding company" under the Act because it
does not own, control, or hold with power to vote ten percent or more of the
voting securities of a public-utility company. Holding Company believes that,
following the consummation of the Merger, it will be a public-utility company
entitled to an exemption under Section 3(a)(1) of the Act from all of the
provisions of the Act (except for Section 9(a)(2) thereof) because it and each
of its public utility subsidiaries from which it will derive a material part of
its income will be predominantly intrastate in character and will carry on their
businesses substantially within the State of Illinois.
Edison was organized on October 17, 1913 as a result of the merger of
Cosmopolitan Electric Company into the original
<PAGE>
corporation named Commonwealth Edison Company, which had been incorporated under
the laws of the State of Illinois on September 17, 1907. It is a public utility
company which is exempt from regulation by the Commission under the Act (except
for Section 9(a)(2) thereof) by order of the Commission under Section 3(a)(1) of
the Act, Commonwealth Edison Co., Holding Co. Act Release No. 8331, 28 S.E.C.
----------------------
172 (1948), and by reason of annual exemption statements filed under Rule 2.
Edison owns all of the outstanding common stock of the Indiana Company, an
Indiana corporation that was organized on March 22, 1926. Indiana Company is a
public utility that is engaged in the production of electricity which is sold to
Edison. For the year ended December 31, 1992, the Indiana Company represented
approximately 1.2% of Edison's consolidated operating revenues, 1.0% of
consolidated net income, 0.4% of consolidated net utility plant, and 0.6% of
consolidated total assets.
Edison is engaged in the production, purchase, transmission, distribution, and
sale of electricity in Illinois. It serves approximately 3.3 million
residential, commercial, and industrial customers in an area of approximately
11,540 square miles. The Indiana Company owns generation and transmission
facilities in Indiana. It is engaged in the sale of electricity at wholesale to
Edison.
Edison and Merging Corp. entered into an Agreement and Plan of Merger dated as
of January 28, 1994 (the "Merger Agreement"). In addition, Holding Company,
Edison, and Merging Corp. have entered into a Supplemental Agreement dated as of
January 28, 1994 ("Supplemental Agreement"). Consummation of the transactions
contemplated by the Merger Agreement and the Supplemental Agreement is subject
to various conditions, including the approval of the Commission under Sections
9(a)(2) of the 1935 Act.
The Merger Agreement, which was unanimously approved by Edison's Board of
Directors on October 27, 1993, contemplates a corporate restructuring that would
be accomplished through a merger of Merging Corp. into Edison, with Edison as
the surviving corporation. The common stock of Merging Corp. owned by Holding
Company would be converted into common stock of Edison, and the outstanding
common stock of Edison would be converted, on a share-for-share basis, into
common stock of Holding Company. Edison would thus become a subsidiary of
Holding Company, while Edison's present subsidiaries, except for Holding Company
and CECo Enterprises Inc. (a company established to provide unregulated energy-
related services to Edison's customers and others), would remain subsidiaries of
Edison.
The Merger Agreement also provides that the present holders of Edison common
stock will cease to have any rights as Edison shareholders after the
restructuring, except that holders of shares who have perfected their
dissenters' rights in accordance with Illinois law will have the right to be
paid the
2
<PAGE>
fair value of such shares under Illinois law. After the Articles of Merger are
filed with the Secretary of State of Illinois, certificates representing shares
of Edison common stock will represent, and be exchangeable for certificates
representing shares of Holding Company common stock. There will be no exchange
of, or any changes to, the outstanding preferred and preference stock and debt
of Edison in connection with the restructuring. Following the restructuring,
Edison preferred stock will continue to be convertible at the option of its
holders only into Edison common stock. Immediately following the restructuring,
Holding Company will have no outstanding or authorized securities other than
common stock. Holders of Edison preferred and preference stock and debt
securities will continue as security holders of Edison, except for those holders
of Edison preferred and preference stock who properly exercise statutory
appraisal rights.
Holding Company states that the principal purpose of the proposed
restructuring is to permit Edison affiliates to engage in non-utility businesses
and to compete with other unregulated companies in providing energy-related
services. In addition, the restructuring will (1) increase financial
flexibility, (2) separate regulated and unregulated businesses in a manner that
will protect the interests of utility ratepayers and security holders, and (3)
promote economic development in Edison's service area.
The fees, commissions, and expenses to be paid or incurred by Holding Company
in connection with the proposed restructuring are estimated to be $3.1 million.
Holding Company states that the Federal Energy Regulatory Commission must
approve the proposed restructuring under Section 203 of the Federal Power Act
and that the Nuclear Regulatory Commission ("NRC") must approve the de jure
-------
transfer of NRC licenses pursuant to Section 184 of the Atomic Energy Act.
Holding Company has requested that the Commission enter an order granting and
permitting its application to become effective by April 30, 1994. Holding
Company has requested that there be no 30-day waiting period between the
issuance of the Commission's order and the date on which it is to become
effective. Holding Company submits that a recommended decision is not needed
with respect to the proposed transaction and that the Division of Investment
Management may assist with the preparation of the Commission's decision and/or
order in this matter unless such Division opposes the application.
Holding Company's application and any amendments thereto are available for
public inspection through the Commission's Office of Public Reference.
Interested persons wishing to comment or request a hearing should submit their
views in writing by _______________, 1994, to the Secretary, Securities and
Exchange Commission, Washington, D.C. 20549, and serve a copy on Holding Company
at the address specified above. Proof of
3
<PAGE>
service (by affidavit or, in case of attorney at law, by certificate), should be
filed with the request. Any request for a hearing must identify specifically
the issues of fact or law that are disputed. A person who so requests will be
notified of any hearing, if ordered, and will receive a copy of any notice or
order issued in this matter. After said date, the application, as filed or as
it may be amended, may be authorized.
4
