SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[x] Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended June 30, 1994
or
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from __________ to __________
Commission file number 1-2301
BOSTON EDISON COMPANY
(Exact name of registrant as specified in its charter)
Massachusetts 04-1278810
- ------------------------------- -----------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
800 Boylston Street, Boston, Massachusetts 02199
- ------------------------------------------ ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 617-424-2000
------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days.
Yes x No
----- ----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at June 30, 1994
- ----- ----------------------------
Common Stock, $1 par value 45,320,740 shares
1
Part I - Financial Information
Item 1. Financial Statements
- ------------------------------
<TABLE>
Boston Edison Company
Consolidated Balance Sheets
(Unaudited)
(in thousands)
June 30, December 31,
1994 1993
---------- ----------
<S> <C> <C>
Assets
Utility plant in service $3,959,432 $3,904,776
Less: accumulated depreciation 1,316,575 1,258,359
---------- ----------
Utility plant, net 2,642,857 2,646,417
Nuclear fuel, net 43,822 53,390
Construction work in progress 168,602 144,835
---------- ----------
Total property, plant and equipment 2,855,281 2,844,642
Investments in electric companies 24,614 24,292
Nuclear decommissioning fund 73,795 66,060
Current assets:
Cash and cash equivalents 6,278 8,768
Accounts receivable 187,076 171,098
Accrued unbilled revenues 39,145 29,823
Fuel, materials and supplies 76,473 79,381
Prepaid expenses and other 13,958 9,738
---------- ----------
Total current assets 322,930 298,808
Deferred debits:
Power contracts 32,743 36,275
Cancelled nuclear unit 9,534 19,067
Nuclear outage costs 21,664 25,524
Pension and postretirement costs 27,971 24,416
Redemption premiums 56,481 59,116
Regulatory asset - income taxes, net 27,598 26,916
Other 39,871 52,183
---------- ----------
Total assets $3,492,482 $3,477,299
========== ==========
Capitalization and Liabilities
Common stock equity:
Common stock $ 663,097 $ 657,782
Retained earnings 214,738 218,697
---------- ----------
Total common stock equity 877,835 876,479
Cumulative preferred stock:
Non-mandatory redeemable series 123,000 123,000
Mandatory redeemable series 94,000 96,000
First mortgage bonds 21,400 40,000
Sewage facility revenue bonds, net 31,936 32,497
Debentures 1,205,000 1,200,000
Current liabilities:
Long-term debt/preferred stock
due within one year 2,550 2,000
Notes payable 241,827 204,151
Accounts payable 119,095 144,760
Interest accrued 24,945 25,467
Dividends payable 22,756 22,696
Other 32,802 27,336
---------- ----------
Total current liabilities 443,975 426,410
Deferred credits:
Power contracts 32,743 36,275
Accumulated deferred income taxes 492,280 484,796
Accumulated deferred investment
tax credits 69,103 71,140
Nuclear decommissioning reserve 82,735 73,744
Other 18,475 16,958
Commitments and contingencies - -
---------- ----------
Total capitalization and liabilities $3,492,482 $3,477,299
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
Boston Edison Company
Consolidated Statements of Income
(Unaudited)
(in thousands, except per share amounts)
<TABLE>
Three Months Ended June 30, Six Months Ended June 30,
-------------------------- -------------------------
1994 1993 1994 1993
---- ---- ---- ----
<CAPTION>
<S> <C> <C> <C> <C>
Operating revenues $368,655 $346,074 $746,104 $700,826
-------- -------- -------- --------
Operating expenses:
Fuel 39,057 34,275 83,619 79,704
Purchased power 84,578 94,404 173,662 191,241
Other operations and
maintenance 102,652 93,923 210,816 194,397
Depreciation and
amortization 39,308 34,232 78,424 68,494
Amortization of deferred
cost of cancelled
nuclear unit 4,948 - 9,896 -
Demand side management
programs 10,106 9,746 18,045 18,342
Taxes - property and other 25,012 23,561 51,333 46,967
Income taxes 12,599 6,651 24,119 10,678
------- ------- ------- -------
Total operating expenses 318,260 296,792 649,914 609,823
------- ------- ------- -------
Operating income 50,395 49,282 96,190 91,003
Other income (expense), net 863 (1,444) 1,658 (1,156)
------- ------- ------- -------
Operating and other income 51,258 47,838 97,848 89,847
------- ------- ------- -------
Interest charges:
Long-term debt 25,744 24,892 51,786 50,965
Other 2,990 2,030 5,248 4,697
Allowance for borrowed funds
used during construction (1,458) (1,913) (2,980) (4,096)
------- ------- ------- -------
Total interest charges 27,276 25,009 54,054 51,566
------- ------- ------- -------
Net income 23,982 22,829 43,794 38,281
Preferred dividends provided 3,951 3,704 7,913 7,779
-------- -------- -------- --------
Balance available for common
stock $ 20,031 $ 19,125 $ 35,881 $30,502
======== ======== ======== ========
Average common shares
outstanding 45,284 44,913 45,237 44,867
======== ======== ======== ========
Earnings per share of common
stock $0.44 $0.43 $0.79 $0.68
======== ======== ======== ========
Dividends declared per common
share $0.440 $0.425 $0.88 $0.85
======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<TABLE>
Boston Edison Company
Consolidated Statements of Cash Flows
(Unaudited)
(in thousands)
<CAPTION>
Six Months Ended June 30,
------------------------
1994 1993
---- ----
<S> <C> <C>
Operating activities:
Net income $ 43,794 $ 38,281
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation 71,195 62,293
Amortization of nuclear fuel 12,222 9,498
Amortization of deferred cost of
cancelled nuclear unit, net 9,534 -
Other amortization 6,962 2,788
Allowance for borrowed funds used
during construction (2,980) (4,096)
Deferred income taxes 5,310 1,200
Investment tax credits (2,037) (2,150)
Amortization (deferral) of nuclear
outage costs, net 3,860 (14,758)
Net changes in:
Accounts receivable and accrued
unbilled revenues (25,300) 2,669
Fuel, materials and supplies 544 2,794
Accounts payable (25,665) (14,324)
Other current assets and liabilities 784 8,114
Other, net 18,804 (13,176)
-------- --------
Net cash provided by operating activities 117,027 79,133
-------- --------
Investing activities:
Plant and nuclear fuel expenditures (80,940) (110,439)
Capitalized demand side management
expenditures (10,232) (11,489)
Decommissioning fund (7,735) (7,170)
Investments in electric companies (322) 239
-------- --------
Net cash used by investing activities (99,229) (128,859)
-------- --------
Financing activities:
Issuance of long-term debt 15,000 715,000
Issuance of common stock 5,318 5,403
Issuance of preferred stock - 40,000
Retirement of long-term debt (28,600) (598,625)
Redemption of preferred stock (2,000) (40,000)
Change in notes payable 37,676 (26,340)
Dividends paid (47,682) (46,239)
-------- --------
Net cash provided (used) by financing
activities (20,288) 49,199
-------- --------
Decrease in cash and cash equivalents (2,490) (527)
Cash and cash equivalents at beginning
of year 8,768 3,947
-------- --------
Cash and cash equivalents at end
of period $ 6,278 $ 3,420
======== ========
Cash paid during the period for:
Interest $ 57,556 $ 52,395
Less: amounts capitalized 2,980 4,096
-------- --------
$ 54,576 $ 48,299
======== ========
Income taxes $ 24,618 $ 16,295
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
Notes to Consolidated Financial Statements
- ------------------------------------------
A) Basis of Presentation
---------------------
The accompanying unaudited consolidated financial statements should be read
in conjunction with the Boston Edison Company (the Company) 1993 Form 10-K
Annual Report and Form 10-Q for the period ended March 31, 1994. In the
opinion of the Company, the accompanying unaudited consolidated financial
statements reflect all adjustments (which are all of a normal recurring
nature) necessary to present fairly the financial position as of June 30,
1994 and the results of operations for the three and six months ended June
30, 1994 and 1993 and the cash flows for the six months ended June 30, 1994
and 1993. Certain prior year balances have been reclassified to reflect
current classifications.
The results of operations for the three and six months ended June 30, 1994
are not indicative of the results which may be expected for the full year.
The Company's kWh sales and revenues are seasonal in nature, with both
being lower in the spring and fall seasons. In addition, pursuant to
retail rate orders of the Massachusetts Department of Public Utilities
(DPU), base retail rates billed to customers are higher in the billing
months of June through September. Accordingly, a significant portion of
the Company's annual earnings occurs in the third quarter.
B) Commitments and Contingencies
-----------------------------
In March 1991 the Company was named in a lawsuit alleging discriminatory
employment practices under the Age Discrimination in Employment Act of 1967
concerning 46 employees affected by the Company's 1988 reduction in force.
Legal counsel is vigorously defending this case. Based on the information
presently available, the Company does not expect that this litigation or
certain other legal matters in which the Company is currently involved will
have a material impact on financial condition. However, an unfavorable
decision ordered against the Company could have a material impact on
quarterly earnings.
State regulations revised in 1993 require that properties where releases of
hazardous materials occurred in the past be further cleaned up according to
a timetable developed by the Massachusetts Department of Environmental
Protection. The Company continues to evaluate the potential costs
associated with the cleanup of sites where it has been identified as the
owner or operator. There are uncertainties associated with these potential
costs due to the complexities of cleanup technology, regulatory
requirements and the particular characteristics of the different sites.
The Company also continues to face possible liability as a potentially
responsible party in the cleanup of certain other multi-party hazardous
waste sites in Massachusetts and other states. At the majority of these
other sites the Company is one of many potentially responsible parties and
its alleged share of the responsibility is a small percentage. The Company
does not expect any of its potential cleanup liabilities to have a material
impact on its financial condition or annual results of operations, although
provisions for cleanup costs could have a material impact on quarterly
earnings.
C) Income Taxes
------------
The annual estimated effective income tax rate for 1994 and the actual
effective income tax rate for 1993 and the reasons for their differences
from the statutory federal income tax rate are explained below:
<TABLE>
<CAPTION>
1994 1993
---- ----
<S> <C> <C>
Statutory tax rate 35.0% 35.0%
State income tax, net of federal income
tax benefit 4.3 4.2
Investment tax credits (2.2) (2.6)
Reversal of deferred taxes - settlement
agreement (1.1) (13.0)
Other (0.1) (0.2)
----- -----
Effective tax rate 35.9% 23.4%
===== =====
</TABLE>
5
D) Long-Term Securities
--------------------
In March 1994 the Massachusetts Industrial Finance Agency, on behalf of the
Company, issued $15 million of 5.75% tax-exempt debentures due in 2014.
The proceeds from this issue were used to redeem $15 million of 10.25%
Series U first mortgage bonds on April 1, 1994. The Company also redeemed
$3.6 million of variable rate Series S first mortgage bonds in May 1994 and
$10 million of 9 3/8% debentures in June 1994.
In May 1994 the Company redeemed $2 million of 7.27% cumulative mandatory
redeemable preferred stock. This redemption satisfied the Company's
sinking fund requirement for May 1, 1994.
E) New Accounting Pronouncements
-----------------------------
In the first quarter of 1994 the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 112, Employers' Accounting for
Postemployment Benefits. The statement required the Company to record a
liability computed on an actuarial basis for the estimated cost of
providing postemployment benefits. Postemployment benefits provided by the
Company to former or inactive employees, their beneficiaries and covered
dependents consist primarily of disability-related benefits, including
workers compensation. The Company previously recognized the cost of these
benefits primarily as claims were paid. The adoption of SFAS No. 112 was
not material to the Company.
SFAS No. 115, Accounting for Certain Investments in Debt and Equity
Securities, was also effective in the first quarter of 1994. This
statement had no material effect on the Company.
Item 2. Management's Discussion and Analysis
- ---------------------------------------------
Results of Operations - Three Months ended June 30, 1994 vs. Three Months ended
- -------------------------------------------------------------------------------
June 30, 1993
- -------------
Earnings per common share for the three months ended June 30, 1994 amounted to
$0.44 as compared to $0.43 per common share for the three months ended
June 30, 1993. The increase in earnings is primarily the result of the
elimination of certain purchased power expenses due to the October 1993
expiration of a long-term contract, a $29 million annual rate increase
effective November 1993 and a 2.5% increase in retail kWh sales.
These were offset by higher depreciation and amortization, operations
and maintenance and income tax expenses.
The results of operations for the quarter are not indicative of the results
which may be expected for the full year due to the seasonality of the Company's
kWh sales and revenues. See Note A to the consolidated financial statements.
Operating revenues
- ------------------
Operating revenues increased 6.5% as follows:
<TABLE>
<CAPTION>
(in thousands)
--------------------------------------------------------
<S> <C>
Retail electric revenues $16,325
Demand side management revenues 2,941
Wholesale and other revenues (11)
Short-term sales revenues 3,326
-----------------------------------------------------
Increase in operating revenues $22,581
=====================================================
</TABLE>
Retail electric revenues increased $16 million. The November 1993 retail rate
increase resulted in $4.2 million of the increased revenues and $1.2 million
was due to the 2.5% increase in retail kWh sales. Performance revenues, which
vary annually based on the operating performance of Pilgrim Nuclear Power
Station, increased $1.7 million as a result of a higher expected annual
capacity factor for the station in 1994 than in 1993. Fuel and purchased power
revenues increased $9.2 million primarily due to the recovery of certain new
purchased power expenses.
A $51 million annual conservation charge for recovery of demand side management
program costs was implemented in February 1994. The charge will recover
$20 million of 1994 program costs and $14 million of amortization of
capitalized program costs plus lost base revenues, incentives and a return.
The previous $53 million annual charge effective through January 1994 recovered
1992 and 1993 program costs plus lost base revenues and a return.
6
Increased short-term sales revenues are the result of higher Company generating
availability and short-term power purchaser requirements. Revenues from short-
term sales serve to reduce fuel and purchased power billings to retail
customers and therefore have no effect on earnings.
Operating expenses
- ------------------
Total fuel and purchased power expenses decreased $5 million. Purchased power
costs decreased due to lower kWh purchases resulting from the expiration of a
long-term contract in October 1993 and a 50% increase in Company generation.
This was partially offset by the timing effect of fuel and purchased power
cost collection and higher Company fuel costs resulting from the higher
generation.
Other operations and maintenance expense increased primarily due to a $3.2
million increase in pension expense and increases in other employee benefit
expenses. In accordance with the 1992 settlement agreement the Company
records pension expense based upon the estimated funding of the pension plan
for the year.
Depreciation and amortization expense increased primarily due to a higher
depreciable plant balance. In 1994 the Company resumed amortization of the
deferred costs of the cancelled Pilgrim 2 nuclear unit. In accordance with
the 1992 settlement agreement the Company did not expense any of these costs
in 1993.
The Company's effective annual income tax rate for 1994 is currently estimated
to be 35.9% vs. an actual rate of 23.4% for 1993. The higher rate is a result
of an $18 million decrease in annual adjustments to deferred income taxes in
accordance with the 1992 settlement agreement.
Results of Operations - Six Months ended June 30, 1994 vs. Six Months ended
- ---------------------------------------------------------------------------
June 30, 1993
- -------------
Earnings per common share for the six months ended June 30, 1994 amounted to
$0.79 as compared to $0.68 per common share for the six months ended June 30,
1993. The increase in earnings is primarily the result of the elimination of
certain purchased power expenses due to the expiration of a long-term contract,
a $29 million annual rate increase effective November 1993 and a 2.8% increase
in retail kWh sales. These were partially offset by higher depreciation and
amortization, operations and maintenance and income tax expenses.
The results of operations for the six months ended June 30, 1994 are not
indicative of the results which may be expected for the full year due to the
seasonality of the Company's kWh sales and revenues. See Note A to the
consolidated financial statements.
<TABLE>
Operating revenues
- ------------------
Operating revenues increased 6.5% as follows:
<CAPTION>
(in thousands)
--------------------------------------------------------
<S> <C>
Retail electric revenues $29,292
Demand side management revenues 4,072
Wholesale and other revenues 5,025
Short-term sales revenues 6,889
--------------------------------------------------------
Increase in operating revenues $45,278
========================================================
</TABLE>
Retail electric revenues increased $29 million. The November 1993 retail rate
increase resulted in $9.8 million of the increased revenues and $4.8 million
was due to the 2.8% increase in retail kWh sales. Performance revenues
increased $3.8 million as a result of a higher expected annual capacity
factor for Pilgrim Station in 1994 than in 1993. Fuel and purchased power
revenues increased $10.9 million primarily due to the recovery of certain
new purchased power expenses.
A $51 million annual conservation charge for recovery of demand side management
costs was implemented in February 1994 as discussed in the results of
operations for the second quarter.
7
The increase in wholesale and other revenues is due primarily to a decrease in
revenue reserves. In 1994 $6 million of reserves were recorded related to
certain wholesale and contract customers. In 1993 the Company recorded $8.7
million of reserves, of which $6.5 million was estimated as a result of a DPU
order on the Company's generating unit performance program.
Increased short-term sales revenues are the result of higher Company
generating availability and short-term power purchaser requirements.
Revenues from short-term sales serve to reduce fuel and purchased power
billings to retail customers and therefore have no effect on earnings.
Operating expenses
- ------------------
Total fuel and purchased power expenses decreased $13.7 million. Purchased
power costs decreased due to lower kWh purchases resulting from the expiration
of a long-term contract in October 1993 and a 21% increase in Company
generation. The timing effect of fuel and purchased power cost collection
also resulted in lower fuel and purchased power expenses, which were partially
offset by higher Company fuel costs resulting from the higher generation.
Other operations and maintenance expense increased primarily due to a $8.1
million increase in pension expense and increases in other employee benefit
expenses.
Depreciation and amortization expense increased primarily due to a higher
depreciable plant balance. In 1994 the Company resumed amortization of the
deferred costs of the cancelled Pilgrim 2 nuclear unit. In accordance with
the 1992 settlement agreement the Company did not expense any of these costs
in 1993.
The Company's effective annual income tax rate for 1994 is currently estimated
to be 35.9% vs. an actual rate of 23.4% for 1993 as discussed in the results
of operations for the second quarter.
Financial Condition
- -------------------
The Company's 1992 settlement agreement with the DPU provides increased
revenues from retail customers over the three-year period ending October 1995.
Additionally, a long-term purchased power contract with annual charges of
approximately $60 million expired in October 1993 with no related change in
revenues. The settlement agreement also limits the annual rate of return on
equity during the three-year period to 11.75%, excluding any penalties or
rewards from performance incentives.
The most significant impact that performance incentives can have on the
Company's financial results is based on Pilgrim Station's annual capacity
factor. Effective November 1993 an annual capacity factor between 60% and
68% will provide approximately $45 million of revenues through the
performance adjustment charge. For each percentage point increase in
capacity factor above 68%, annual revenues will increase by approximately
$650,000. For each percentage point decrease in capacity factor below 60%
(to a minimum of 35%), annual revenues will decrease by approximately
$750,000. The capacity factor for the current performance year to date
(November 1993 through July 1994) is 86.7%.
Liquidity
- ---------
The Company supplements internally generated funds with external financings,
primarily the issuance of short-term commercial paper and bank borrowings.
The Company has authority from the Federal Energy Regulatory Commission to
issue up to $350 million of short-term debt. The Company has a $200 million
revolving credit agreement and arrangements with several banks to provide
additional short-term credit on a committed as well as on an uncommitted and
as available basis. At June 30, 1994 the Company had $242 million of
short-term debt outstanding, none of which was incurred under the revolving
credit agreement.
Outlook for the Future
- ----------------------
A significant portion of the Company's electricity sales is made to commercial
customers rather than industrial customers. As a result the Company's sales
have been only moderately impacted by the decline in the local economy.
Retail electricity sales increased 2.8% in the first six months of 1994 due in
part to extreme weather conditions in Massachusetts. However, this growth
rate is not expected to continue throughout the year.
8
In July 1994 the Company submitted its integrated resource management plan to
the DPU. In this filing the Company concluded that adequate resources exist
to meet customer needs for continued reliable, low cost power through 2004
without procurement of any new generation resources. Hearings will be held
before the DPU to address the issues of intervenors.
Other Matters
- -------------
As of July 1, 1994 the Company no longer has access to low-level radioactive
waste (LLW) disposal facilities located in Barnwell, South Carolina. Following
that date and until access is attained to other disposal facilities,
the Company plans to manage LLW generated at Pilgrim Station through on-site
storage. Although legislation has been enacted in Massachusetts establishing a
regulatory process for managing the state's LLW including the possible siting,
licensing and construction of a disposal facility within the state, or,
alternatively, an agreement with one or more other states, it appears unlikely
that either option will be available in the near future. Pending the
construction of a disposal facility within the state or the adoption by the
state of some other LLW management procedure, the Company continues to monitor
the situation and is investigating all other available options.
The Company's existing fuel storage facility at Pilgrim Station includes
sufficient room for spent nuclear fuel generated through early 1995. In June
1994 the Company received a license amendment from the NRC to allow
modification of the storage facility to provide sufficient room for spent
nuclear fuel generated through the end of Pilgrim's operating license in
2012. The Company plans to initially modify the facility to provide spent fuel
storage capacity through approximately 2003. In addition, the Company, along
with other interested parties, has also been actively exploring the
feasibility of private spent fuel storage facilities.
The United States Department of Energy (DOE), which is ultimately responsible
for the disposal of spent nuclear fuel as required by the Nuclear Waste Policy
Act of 1982, is currently conducting scientific studies evaluating a potential
spent nuclear fuel repository site at Yucca Mountain, Nevada. The potential
site, however, has encountered substantial public and political opposition and
litigation and the DOE has publicly stated that it may be unable to construct
such a repository in a timely manner. On June 20, 1994 the Company and owners
or operators of a number of other nuclear power facilities filed a petition
in the U.S. Court of Appeals for the D.C. Circuit seeking a declaratory ruling
that the DOE is obligated to commence taking spent nuclear fuel for disposal in
1998. A similar petition seeking substantially the same relief was filed on
the same date by representatives of a number of states and state agencies,
including the Massachusetts Attorney General. Notwithstanding such litigation,
the Company is unable to predict whether and on what schedule the DOE will
eventually construct a repository and what the effect will be on the
Company.
Part II - Other Information
- ---------------------------
Item 4. Submission of Matters to a Vote of Security Holders
- ------------------------------------------------------------
The Company's Annual Meeting of Stockholders was reconvened on May 26, 1994.
The following five Class III directors were reelected to serve until the 1997
Annual Meeting:
Total vote Total vote
for each withheld from
director each director
---------- -------------
Gary L. Countryman 39,925,627 688,636
George W. Davis 39,931,120 683,143
Thomas G. Dignan, Jr. 39,945,897 668,366
Herbert Roth, Jr. 39,934,702 679,561
Stephen J. Sweeney 39,898,650 715,613
The proposals relating to the authority to issue an additional 500,000 shares
of preferred stock, the authority to re-issue reacquired shares of preferred
stock and the restatement of the Articles of Organization were adopted. The
shareholder proposal recommending the shutdown of Pilgrim Station was defeated
for the third consecutive year and did not receive sufficient votes to allow it
to be reintroduced at next year's meeting. Voting was as follows:
9
Proposal I (Election of Directors)
Withheld from
For all nominees Instructed all nominees
---------------- ---------- -------------
39,898,650 47,247 668,366
(See above schedule for breakdown of votes by nominee.)
Proposal II (Amendment to Articles of Incorporation - Increase in Authorized
Preferred Stock)
For Against Abstain No vote
---------- --------- --------- ---------
29,912,414 3,481,166 1,042,446 6,178,237
Proposal III (Amendment to Articles of Incorporation - Issuance of Reacquired
Preferred Stock)
For Against Abstain No vote
---------- --------- --------- ---------
30,736,625 2,788,610 1,022,297 6,066,731
Proposal IV (Restatement of Articles of Incorporation)
For Against Abstain No vote
---------- --------- --------- ---------
31,495,529 1,753,920 1,186,277 6,178,537
Proposal V (Shareholder Proposal)
For Against Abstain No vote
---------- --------- --------- ---------
2,026,221 31,139,845 1,301,161 6,147,036
Item 5. Other Information
- --------------------------
The following additional information is furnished in connection with the
Registration Statement on Form S-3 of the Registrant (File No. 33-57840),
filed with the Securities and Exchange Commission on February 3, 1993.
Price and dividend information per share of common stock:
Price
------------- Dividend
High Low Paid
---- ---- --------
First quarter 1994 $29 7/8 $26 $0.44
Second quarter 1994 29 1/8 25 1/4 0.44
The last sales price of the Company's common stock on the New York Stock
Exchange as reported in the Wall Street Journal for August 8, 1994 was
$27 1/8 per share.
Ratio of earnings to fixed charges and ratio of earnings to fixed charges and
preferred stock dividend requirements:
Twelve months ended June 30, 1994:
---------------------------------
Ratio of earnings to fixed charges 2.41X
Ratio of earnings to fixed charges and preferred
stock dividend requirements 2.04X
10
Item 6. Exhibits and Reports on Form 8-K
- -----------------------------------------
a) Exhibits filed herewith:
Exhibit 3 - Articles of Incorporation and By-laws
3.1 Restated Articles of Organization
Exhibit 12 - Computation of ratio of earnings to fixed
charges
12.1 Computation of ratio of earnings to fixed
charges for the twelve months
ended June 30, 1994
12.2 Computation of ratio of earnings to fixed
charges and preferred stock dividend
requirements for the twelve months ended
June 30, 1994
Exhibit 15 - Letter re unaudited interim financial
information
15.1 Report of Independent Accountants
Exhibit 99 - Additional Exhibits
99.1 Letter of Independent Accountants
Re Form S-3 Registration Statements filed by
the Company on September 14, 1990 (File No.
33-36824), February 3, 1993 (File No.
33-57840); Form S-8 Registration Statements
filed by the Company on October 10, 1985
(File No. 33-00810), July 28, 1986 (File No.
33-7558), December 31, 1990 (File No.
33-38434), June 5, 1992 (33-48424 and 33-48425)
and March 17, 1993 (33-59662 and 33-59682)
b) A Form 8-K dated April 28, 1994 was filed with the Securities
and Exchange Commission by the Company. This report contained
two press releases: one announcing first quarter earnings and
a second announcing management changes.
11
Signature
---------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BOSTON EDISON COMPANY
--------------------------
(Registrant)
Date: August 10, 1994 /s/ Robert J. Weafer, Jr.
---------------------------
Robert J. Weafer, Jr.
Vice President, Controller
and Chief Accounting
Officer
12
<TABLE>
Exhibit 12.1
Boston Edison Company
Computation of Ratio of Earnings to Fixed Charges
Twelve Months Ended June 30, 1994
(in thousands)
<S> <C>
Net income from continuing operations $123,731
Income taxes 49,950
Fixed charges 122,751
--------
Total $296,432
========
Interest expense $115,525
Interest component of rentals 7,226
--------
Total $122,751
========
Ratio of earnings to fixed charges 2.41
========
</TABLE>
13
<TABLE>
Exhibit 12.2
Boston Edison Company
Computation of Ratio of Earnings to Fixed
Charges and Preferred Stock Dividend Requirements
Twelve Months Ended June 30, 1994
(in thousands)
<S> <C>
Net income from continuing operations $123,731
Income taxes 49,950
Fixed charges 122,751
--------
Total $296,432
========
Interest expense $115,525
Interest component of rentals 7,226
--------
Subtotal $122,751
--------
Preferred stock dividend requirements 22,692
--------
Total $145,443
========
Ratio of earnings to fixed charges and preferred
stock dividend requirements 2.04
====
</TABLE>
14
Exhibit 15.1
Report of Independent Accountants
To the Stockholders and Directors
of Boston Edison Company
We have reviewed the accompanying consolidated balance sheet of Boston Edison
Company (the Company) and subsidiaries as of June 30, 1994 and the related
statements of income and cash flows for the three and six-month periods ended
June 30, 1994 and 1993. These financial statements are the responsibility of
the Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures
to financial data and making inquiries of persons responsible for financial
and accounting matters. It is substantially less in scope than an audit
conducted in accordance with generally accepted auditing standards, the
objective of which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the accompanying financial statements in order for them to be in
conformity with generally accepted accounting principles.
Boston, Massachusetts COOPERS & LYBRAND L.L.P.
July 28, 1994
15
Exhibit 99.1
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Boston Edison Company
Registration on Form
S-3 and Form S-8
We are aware that our report dated July 28, 1994 on our review of the interim
financial information of Boston Edison Company for the period ended June 30,
1994 and included in this Form 10-Q is incorporated by reference in the
Company's registration statements on Form S-3 (File Nos. 33-36824 and
33-57840) and on Form S-8 (File Nos.33-00810, 33-7558, 33-38434, 33-48424,
33-48425, 33-59662 and 33-59682). Pursuant to Rule 436(c) under the
Securities Act of 1933, this report should not be considered a part of the
registration statements prepared or certified by us within the meaning of
Sections 7 and 11 of that Act.
Boston, Massachusetts COOPERS & LYBRAND L.L.P.
July 28, 1994
16
THE COMMONWEALTH OF MASSACHUSETTS
MICHAEL JOSEPH CONNOLLY
Secretary of State
One Ashburton Place, Boston, Mass 02108
RESTATED ARTICLES OF ORGANIZATION
----------------------------------
General Laws, Chapter 164, Section 8C
This certificate must be submitted to the Secretary of the Commonwealth
within sixty days after the date of the vote of stockholders adopting the
restated articles of organization. The fee for filing this certificate is
prescribed by General Laws, Chapter 164, Section 33. Make check payable to the
Commonwealth of Massachusetts.
We, Charles E. Peters, Jr., Senior Vice President, and Theodora S.
Convisser, Clerk of Boston Edison Company located at 800 Boylston Street,
Boston, Massachusetts, do hereby certify that the following restatement of the
articles of organization of the corporation was duly adopted at a meeting held
on May 26, 1994, by vote of 31,495,529 shares of Common Stock out of 45,212,562
shares outstanding, being at least two-thirds of each class of stock
outstanding and entitled to vote and of each class or series of stock adversely
affected thereby: -
1. The name by which the corporation shall be known is:
Boston Edison Company
2. The purposes for which the corporation is formed are as follows:
(1) To engage in the prosecution of a general business of producing,
using, applying and selling light, heat and power generated by means of
electricity and the business of producing, applying and selling electricity,
magnetism, steam and other forces and energies for practical service for light,
heat, power and other uses.
(2) To exercise any and all rights, powers, licenses, permits,
privileges, authorizations and franchises at any time possessed by the
corporation or by any predecessor or constituent corporation.
(3) To engage in any activity in any way connected with, incident to or
in furtherance of the foregoing activities.
(4) To engage in any other activity lawful for a corporation organized
under Chapter 164 of the Massachusetts General Laws.
(5) To engage in any business, operation or activity through a wholly or
partly owned subsidiary.
(6) To engage in any business, operation or activity referred to in the
foregoing paragraphs to the same extent as might an individual, whether as
PAGE 1
principal, agent, contractor or otherwise, and either alone or in conjunction
or a joint venture or other arrangement with any corporation, association,
trust, firm or individual.
(7) To be a partner in any business enterprise which the corporation
would have power to conduct by itself.
3. The total number of shares and the par value, if any, of each class
of stock which the corporation is authorized to issue is as follows:
CLASS OF STOCK NUMBER OF SHARES PAR VALUE
Common 100,000,000 $ 1.00
Preference 8,000,000 $ 1.00
Preferred Stock: 2,890,000 authorized<F1> $100.00
Designated<F2>:180,000 shares Cumulative Preferred Stock, 4.25% Series
250,000 shares Cumulative Preferred Stock, 4.78% Series
460,000 shares Cumulative Preferred Stock, 7.27%
Series<F3>
500,000 shares Cumulative Preferred Stock, 8% Series
400,000 shares Cumulative Preferred Stock, 8 1/4%
Series
400,000 shares Cumulative Preferred Stock, 7.75% Series
[FN] <F1> The 2,830,000 aggregate number of shares of previously authorized
Preferred Stock was reduced to 2,390,000 shares by the redemption and
cancellation by the corporation of 440,000 shares of its designated Preferred
Stock, as described in footnotes 2 and 3 below. The 2,390,000 shares of
preferred Stock were then increased by 500,000 shares to a total of 2,890,000
pursuant to these Restated Articles of Organization.
<F2> All 4 00,000 authorized shares of Cumulative Preferred Stock, 8.88%
Series, were redeemed by the corporation in 1993, and pursuant to the
corporation's articles of organization as in effect on such date, such redeemed
shares were cancelled by the corporation.
<F3> Of the original 500,000 authorized shares of Cumulative Preferred
Stock, 7.27% Series, 20,000 shares were redeemed by the corporation in 1992 and
an additional 20,000 shares were redeemed in 1994, and pursuant to the
corporation's articles of organization as in effect on such date, all of such
redeemed shares were cancelled by the corporation.
4. If more than one class is authorized, a description of each of the
different classes of stock with, if any, the preferences, voting powers,
qualifications special or relative rights or privileges as to each class
thereof and any series now established:
PAGE 2
PROVISIONS RELATING TO CAPITAL STOCK
The capital stock of the corporation shall consist of Cumulative Preferred
Stock having a par value of $100 per share, Preference Stock having a par value
of $1 per share and Common Stock having a par value of $1 per share.
CUMULATIVE PREFERRED STOCK
The preferences and voting powers or restrictions or qualifications of the
Cumulative Preferred Stock are as follows:
A. The shares of Cumulative Preferred Stock shall be of the par value of
$100 each and may be issued, as the board of directors may determine, in one or
more series designated Cumulative Preferred Stock, ...... % Series" (inserting
in each case the dividend rate for the particular series). All shares of
Cumulative Preferred Stock, irrespective of series, shall constitute one and
the same class of stock, shall be of equal rank and shall be identical in all
respects except that the shares of different series may vary, as determined by
the board of directors and, if required by law, by the stockholders, in the
following respects:
(1) the number of shares of the particular series which may be issued;
(2) the annual dividend rate for the particular series;
(3) the date from which dividends on shares of the particular series
shall be cumulative;
(4) the date for the payment of the first dividend on the particular
series;
(5) the redemption price or prices for the particular series;
(6) the amount payable on the particular series upon any liquidation,
dissolution or winding up of the affairs of the corporation or distribution of
capital, when the same is voluntary and when the same is involuntary;
(7) the terms and amount of any sinking fund or purchase fund which may
be provided for the redemption or purchase of shares of the particular series;
and
(8) the terms of any conversion, participation or other special rights
which may lawfully be provided for the particular series.
Whenever a vote of the Cumulative Preferred Stock may be required for any
purpose, the shares voting, if of different series, shall be counted
irrespective of series and not by different series, except as otherwise
provided by law or by these articles of organization. All shares of the same
series shall be identical (except as to the date from which dividends on shares
issued at different times will be cumulative) in all respects and each
certificate representing Cumulative Preferred Stock shall state the designation
of the series in which the shares represented by such certificate are issued.
PAGE 3
B. Holders of the Cumulative Preferred Stock shall be entitled to
receive, when and as declared by the board of directors out of funds legally
available for the declaration of dividends, cumulative dividends at the annual
dividend rate per share fixed for the particular series, and no more, payable
in cash quarterly on the first days of February, May, August and November in
each year commencing on the date specified for the first dividend payment as
herein provided to stockholders of record on the respective dates fixed in
advance for the purpose by the board of directors prior to the payment of each
such dividend, which record date for each dividend shall be the same for all
series, before any dividends on, or distribution of assets (by purchase of
shares or otherwise) to holders of, the Common Stock or any other stock ranking
junior to the Cumulative Preferred Stock in respect of the payment of dividends
shall be declared or paid or set apart for payment. Dividends on shares of
Cumulative Preferred Stock shall be cumulative: (1) on shares of any series
issued prior to the first dividend payment date, from the date of issue of such
shares or from such other date as may be fixed at the time of the authorization
of such series; (2) on shares issued on or after such first dividend payment
date, from the quarterly dividend payment date next preceding the date of issue
of such shares or from the date of issue if that be a dividend payment date or
from such other date as may be fixed at the time of the authorization of such
series. No dividend shall be declared on any series of the Cumulative
Preferred Stock or on any other class of preferred stock ranking on a parity
with the Cumulative Preferred Stock in respect of the payment of dividends, for
any quarterly dividend period, unless there shall likewise be declared on all
shares of all series of the Cumulative Preferred Stock and of any other such
parity preferred stock at the time outstanding, like proportionate dividends,
ratably, in proportion to the respective annual dividend rates fixed therefor,
for the same quarterly dividend period, to the extent that such shares are
entitled to receive dividends for such quarterly dividend period. Whenever
dividends accrued on all outstanding shares of Cumulative Preferred Stock to
the last preceding quarterly dividend payment date shall have been paid in full
or declared and set apart for payment, the board of directors may, without
awaiting the expiration of the current dividend period for the Cumulative
Preferred Stock, declare and pay dividends on the Common Stock or any other
stock ranking junior to the Cumulative Preferred Stock in respect of the
payment of dividends.
The expression "dividends accrued", as used in these provisions relating
to the Cumulative Preferred Stock, shall mean the sum of amounts in respect of
shares of Cumulative Preferred Stock then outstanding which, as to each share,
shall be an amount computed at the dividend rate per annum fixed for the
particular share from the date from which dividends on such share became
cumulative to the date with reference to which the expression is used,
irrespective of whether such amount or any part thereof shall have been
declared as dividends or there shall have existed any funds legally available
for the payment thereof, less the aggregate of all dividends paid or declared
and set apart for payment on such share.
C. The corporation shall have the right, at its option and by resolution
of its board of directors, to redeem the Cumulative Preferred Stock or any
series thereof, as a whole at any time, or in part from time to time, upon
PAGE 4
payment in cash of the redemption price fixed for the shares of the particular
series, together with dividends accrued thereon to the redemption date. If
less than all of any series of Cumulative Preferred Stock is to be redeemed at
any time, the shares thereof to be redeemed shall be selected by lot by the
board of directors. If at any time the corporation shall have failed to
declare and pay or set apart for payment dividends in full upon the Cumulative
Preferred Stock of all series for all past quarterly dividend periods,
thereafter and until all such dividends shall have been paid in full or
declared and set apart for payment, the corporation shall not redeem or
purchase, or permit any subsidiary to purchase, for any purpose, any shares of
Cumulative Preferred Stock of any series, unless all shares of Cumulative
Preferred Stock of all series then outstanding shall be redeemed. At its
election, the corporation on or prior to the redemption date, may deposit an
amount equal to the aggregate redemption price of the shares so to be redeemed,
together with dividends accrued thereon to the redemption date, with a bank or
trust company having a capital and surplus of not less than $2,000,000 and its
principal office in Boston, Massachusetts, designated by the board of
directors, in trust for the account of the holders of the shares so to be
redeemed.
Notice of any such redemption, and specifying the redemption date, shall
be mailed, postage prepaid, to each holder of record of the shares of
Cumulative Preferred Stock so to be redeemed, at his address as it appears on
the books of the corporation, not more than sixty (60) nor less than thirty
(30) days prior to such redemption date. Notice of redemption having been so
given, the shares so to be redeemed shall not be entitled to any dividends
which may be declared after the redemption date specified in such notice unless
default be made in the payment or deposit of the redemption price, together
with dividends accrued thereon to the redemption date, and on the redemption
date, or on a date prior thereto on which such deposit shall have been made,
all rights of the respective holders of such shares as stockholders of the
corporation by reason of the ownership of such shares shall cease, except the
right to receive the redemption price, together with dividends accrued thereon
to the redemption date, upon presentation and surrender of the certificates
representing such shares and such shares shall not be deemed to be outstanding
after the redemption date or the earlier date of such deposit. In case less
than all the shares represented by such certificates are to be redeemed, a new
certificate or certificates shall be issued representing the unredeemed shares.
In case the holders of shares of Cumulative Preferred Stock which shall have
been redeemed shall not within four (4) years after the redemption date claim
any amount so deposited in trust for the redemption of such shares, such bank
or trust company shall, upon demand, pay over to the corporation any such
unclaimed amount so deposited with it, and shall thereupon be relieved of all
responsibility in respect thereof, and thereafter the holders of such shares
shall look only to the corporation for payment of the redemption price thereof,
together with dividends accrued thereon to the redemption date, but without
interest. Shares of Cumulative Preferred Stock redeemed, purchased or
otherwise acquired by the corporation may, in the discretion of the board of
directors, be restored to the status of authorized but unissued shares of
Cumulative Preferred Stock by vote of the board of directors, and may be
reissued as shares of a new series of shares of Cumulative Preferred Stock
PAGE 5
having terms determined by the board of directors, subject to the conditions
and restrictions on issuance set forth herein.
D. In the event of any liquidation, dissolution or winding up
(whether voluntary or involuntary) of the affairs of the corporation or any
distribution of its capital, then the holders of each series of the Cumulative
Preferred Stock at the time outstanding shall be entitled to be paid in cash
the distributive amount fixed for the particular series, together in each case
with dividends accrued thereon to the date fixed for payment of such
distributive amounts, and no more, before any distribution shall be made to the
holders of Common Stock or any other stock ranking junior to the Cumulative
Preferred Stock in respect of the distribution of assets. No payment on
account of such distributive amounts shall be made to the holders of any series
of the Cumulative Preferred Stock or any other preferred stock ranking on a
parity with the Cumulative Preferred Stock in respect of the distribution of
assets, unless there shall likewise be paid at the same time to the holders of
each other series of the Cumulative Preferred Stock or such parity stock like
proportionate distributive amounts, ratably, in proportion to the full
distributive amounts to which they are respectively entitled. After such
payment to the holders of Cumulative Preferred Stock or such parity stock, the
remaining assets and funds of the corporation shall be distributed among the
holders of the Common Stock or any other stock ranking junior to the Cumulative
Preferred Stock in respect of the distribution of assets then outstanding
according to their respective rights. Consolidation or merger of the
corporation with or into any other corporation or corporations shall not be
deemed a liquidation, dissolution or winding up of the affairs of the
corporation within the meaning of this section D if it does not effect any
change in the preferences or rights of the Cumulative Preferred Stock as set
forth herein which is substantially prejudicial to the holders thereof.
E. Except as by law or in these articles of organization
provided holders of the Cumulative Preferred Stock shall have no right to be
represented at or to receive notice of meetings of the stockholders and shall
have no right to vote for the election of directors or for any other purpose or
on any other subject.
However, whenever dividends accrued on any shares of any series
of the Cumulative Preferred Stock at the time outstanding shall equal or exceed
an amount equivalent to six (6) full quarterly dividends thereon, holders of
the Cumulative Preferred Stock shall have the right to be represented at and to
receive notice of any meeting of the stockholders of the corporation held for
the purpose of electing directors and the exclusive right, voting separately as
a class, to elect the smallest number of directors which will constitute a
majority of the total number of directors of the corporation constituting the
full board as then last fixed by the stockholders; and the remaining directors
shall be elected by the holders of the Common Stock and any other class of
stock entitled to vote therefor.
If and when all dividends in default on the Cumulative Preferred
Stock shall have been paid in full or declared and set apart for payment, the
holders of the Cumulative Preferred Stock shall again be excluded from the
right to be represented at and to receive notice of meetings of the
PAGE 6
stockholders and from the right to vote, except as by law or in these articles
of organization provided.
Such dividends in default shall be declared and paid as soon as
reasonably practicable unless payment thereof is prevented by law or by the
provisions of any indenture or agreement to which the corporation is a party or
unless a majority of the directors elected otherwise than by holders of the
Cumulative Preferred Stock shall determine that such payment is not in the best
interests of the corporation.
The term of office of all persons who may be directors of the
corporation at the time when the right to vote for directors shall accrue to
holders of the Cumulative Preferred Stock as herein provided shall terminate
upon the election of new directors at a meeting of stockholders which, if not
otherwise called, shall be called by the clerk of the corporation upon request
of, or may be called by, the holders of record of at least 10% of all shares of
Cumulative Preferred Stock then outstanding. The new directors so elected
shall serve until the next annual meeting of stockholders subject to the
following provision and until their successors shall be chosen and qualified.
When all dividends in default on the Cumulative Preferred Stock
shall have been paid in full or declared and set apart for payment, each
director elected by the holders of the Cumulative Preferred Stock shall cease
to hold office upon the election of a successor or of a new board of directors
by the stockholders then entitled to vote for directors at a meeting of
stockholders which, if not otherwise called, shall be called by the clerk of
the corporation upon request of, or may be called by, one or more of the
directors then in office.
If the event calling for any election of directors as provided
for herein shall occur not more than sixty (60) and not less than thirty (30)
days before the date for an annual meeting of the stockholders, the election of
directors shall be held at such annual meeting, otherwise at a special meeting
of the stockholders to be called for the purpose.
Notice of every meeting of the stockholders held for the
election of directors during a period when the holders of the Cumulative
Preferred Stock have the right to vote for the election of directors shall be
given to the holders of record of Cumulative Preferred Stock and of Common
Stock and of any other class of stock entitled to vote therefor and shall state
the purpose of the meeting in respect of the election of directors representing
the different classes of stock.
At each such meeting one-third of the outstanding shares of the
Cumulative Preferred Stock shall be required to constitute a quorum for the
election of directors by the Cumulative Preferred Stock and a majority of the
outstanding shares of the Common Stock or of any other class of stock entitled
to vote therefor shall be required to constitute a quorum for the election of
directors by the Common Stock and such other class of stock.
If for lack of a quorum or for any other reason, at any meeting
at which holders of the Cumulative Preferred Stock have the right to elect
PAGE 7
directors, such holders or the holders of the Common Stock or of any other
class of stock entitled to vote therefor shall not elect the number of
directors they are entitled to elect, the holders of the other class or classes
of stock, provided they have elected the number of directors they are entitled
to elect, may also elect such additional directors as are necessary to
constitute the full board, but no person shall be so elected as an additional
director except a director in office at the time of the meeting who had been
elected by the class of stock failing to exercise its voting rights so long as
any such director in office is available for such election.
In case of any vacancy in the office of a director elected by
holders of the Cumulative Preferred Stock, the remaining directors elected by
holders of the Cumulative Preferred Stock, by vote of a majority thereof, or
the remaining director so elected if there be only one, may fill the vacancy by
the election of a successor to hold office for the unexpired term of such
director. So long as any shares of the Cumulative Preferred Stock of any
series are outstanding, no amendment of these articles of organization or the
by-laws shall authorize the removal of any director elected by holders of the
Cumulative Preferred Stock except by vote of the holders thereof.
Directors elected by, or in place of directors elected by,
holders of the Cumulative Preferred Stock need not be stockholders of the
corporation.
F. (1) So long as any shares of the Cumulative Preferred Stock
of any series are outstanding, the corporation shall not, without the vote at a
meeting called for that purpose of holders of at least two-thirds of the total
number of shares of the Cumulative Preferred Stock of all series then
outstanding:
(a) change any of the provisions of the Cumulative
Preferred Stock, or of any series thereof, which would alter the
preferences or rights of the holders thereof in any manner
substantially prejudicial to the holders thereof, except that if
such change is prejudicial to the holders of one or more, but
not all of such series, only the vote of the holders of two-
thirds of the total number of shares of all series so affected
and then outstanding shall be required; or
(b) create any class of stock ranking prior to or on a
parity with the Cumulative Preferred Stock in respect of either
the payment of dividends or the distribution of assets.
(2) So long as any shares of the Cumulative Preferred Stock of
any series are outstanding, the corporation shall not, without the vote at a
meeting called for that purpose of the holders of at least a majority of the
total number of shares of the Cumulative Preferred Stock of all series then
outstanding:
(a) issue any shares of Cumulative Preferred Stock in
addition to the shares of the first series thereof or of any
class of stock ranking prior to or on a parity with the
PAGE 8
Cumulative Preferred Stock in respect of either the payment of
dividends or the distribution of assets (except for the purpose
of retiring stock ranking prior to the Cumulative Preferred
Stock or for the purpose of retiring Cumulative Preferred Stock
or stock ranking on a parity therewith if the shares issued are
only shares thereof or on a parity therewith, provided the
aggregate par or stated value of the shares issued shall not
exceed the aggregate par or stated value of the shares to be
retired) unless, after giving effect thereto,
(i) net income of the corporation for any period of
twelve months within the next preceding fifteen months
(after adding back interest charges on funded debt of the
corporation deducted in the computation) shall have been
at least equal to one and one-half (1 1/2) times the sum
of the annual interest charges on funded debt of the
corporation to be outstanding at the date of such issue
plus the annual dividend requirements on the Cumulative
Preferred Stock and on any class of stock ranking prior
to or on a parity with the Cumulative Preferred Stock in
respect of either the payment of dividends or the
distribution of assets which is to be outstanding at the
date of such issue, including the shares to be issued but
excluding any funded debt or shares of such prior or
parity stock to be retired in connection with such issue;
and
(ii) the aggregate amount of capital and paid-in
premiums represented by the Common Stock and any other
stock ranking junior to the Cumulative Preferred Stock in
respect of either the payment of dividends or the
distribution of assets plus the earned surplus of the
corporation would be at least equal to the capital and
paid-in premiums represented by the Cumulative Preferred
Stock and all other stock ranking prior to or on a parity
with the Cumulative Preferred Stock in respect of either
the payment of dividends or the distribution of assets to
be outstanding after giving effect to such issue but
excluding any such stock to be retired in connection
therewith;
or
(b) merge into or consolidate with any other corporation
or sell or transfer its assets as, or substantially as, an
entirety, unless such merger, consolidation, sale or transfer
shall have been required by order of the Massachusetts
Department of Public Utilities or other regulatory authority of
said Commonwealth or of the United States having jurisdiction in
the premises, or unless, in the case of such merger or
consolidation, this corporation shall itself by the successor
corporation. The term "sell or transfer", as used herein,
PAGE 9
includes a lease or exchange but does not include a mortgage or
pledge.
The term "funded debt", as used in this section F, shall mean
all indebtedness, other than indebtedness incurred in the ordinary course of
business, maturing more than twelve months from the date on which it was
incurred, except that there shall not be included in funded debt any
indebtedness for the payment or redemption of which at maturity or on a
redemption date sums sufficient for the payment thereof have been deposited in
trust.
The term "net income", as used in this section F, shall mean the
net income of the corporation determined in accordance with generally accepted
principles of accounting, subject to any applicable requirements imposed by the
Massachusetts Department of Public Utilities or other regulatory body having
jurisdiction.
G. Except as otherwise provided by law, no holder of Cumulative
Preferred Stock shall be entitled as such as a matter of right to subscribe for
or purchase any part of any new or additional issue of stock or warrants
carrying rights to stock, or securities convertible into stock, of any class
whatever, whether now or hereafter authorized, and whether issued for cash,
property, services or otherwise. If it is required by law that such new or
additional issue be offered proportionately to the stockholders, then, unless
otherwise provided by law, the holders of all classes of preferred stock only
shall be entitled to subscribe for new or additional preferred stock of any
class and the holders of common stock only shall be entitled to subscribe for
new or additional common stock; and notice of such increase as required by law
need be given and the new shares need be offered proportionately only to the
stockholders who are so entitled to subscribe.
H. Except as otherwise provided by law, shares of Cumulative
Preferred Stock when duly authorized may be issued for such consideration as
may be fixed from time to time by the board of directors and upon receipt by
the corporation of the consideration so fixed such shares shall be deemed to
have been fully paid and shall not be liable to any further call or assessment.
I. Subject to the limitations, if any, contained in these
provisions relating to the Cumulative Preferred Stock, the corporation may from
time to time issue additional capital stock divided into classes with such
preferences as to dividends, voting power and other incidents as may be
determined in accordance with applicable provisions of law and the terms of
outstanding capital stock. Without limiting the generality of the foregoing,
any such additional capital stock may be an additional series of Cumulative
Preferred Stock or additional shares of any series of Cumulative Preferred
Stock (other than the first series) within the limit fixed for such series.
J. No stockholder, director, officer or agent of the
corporation shall be held individually responsible for any action taken in good
faith though subsequently adjudged to be in violation of this Section 1.
PAGE 10
K. Terms applicable to particular series of the Cumulative
Preferred Stock:
(1) The first series of the Cumulative Preferred Stock shall be
designated "Cumulative Preferred Stock, 4.25% Series"; the number of shares of
the first series which may be issued shall be limited to 180,000 shares; the
annual dividend rate per share shall be 4.25% of the par value thereof, such
dividends shall be cumulative from June 21, 1956 and the first dividend payment
date shall be August 1, 1956; the redemption prices shall be as follows:
Redemption
Price per Share
If the redemption date is:
On or before June 30, 1961$105.625
Thereafter but on or before June 30, 1966$104.625
At all times after June 30, 1966$103.625
together in each case with dividends accrued thereon to the redemption date;
the amount payable upon any liquidation, dissolution or winding up of the
affairs of the corporation or distribution of capital, if involuntary, shall be
$100 per share and, if voluntary, shall be equal to the applicable redemption
price per share, plus in each case dividends accrued to the date of
distribution.
(2) The second series of the Cumulative Preferred Stock shall
be designated "Cumulative Preferred Stock, 4.78% Series"; the number of shares
of the second series which may be issued shall be limited to 250,000 shares;
the annual dividend rate per share shall be 4.78% of the par value thereof,
such dividends shall be cumulative from July 17, 1958 and the first dividend
payment date shall be August 1, 1958; the redemption prices shall be as
follows:
Redemption
Price per Share
If the redemption date is:
On or before June 30, 1963$107.80
Thereafter but on or before June 30, 1968$105.80
Thereafter but on or before June 30, 1973$103.80
At all times after June 30, 1973$102.80
together in each case with dividends accrued thereon to the redemption date;
the amount payable upon any liquidation, dissolution or winding up of the
affairs of the corporation or distribution of capital, if involuntary, shall be
$100 per share and, if voluntary, shall be equal to the applicable redemption
price per share, plus in each case dividends accrued to the date of
distribution; provided, however, that the corporation shall not on or before
June 30, 1963 exercise its option to redeem any shares of the Cumulative
Preferred Stock, 4.78% Series, as a part of or in anticipation of any refunding
operation by the application, directly or indirectly, of borrowed funds or the
proceeds of issue of any Cumulative Preferred Stock or any stock ranking prior
PAGE 11
to or on a parity with the Cumulative Preferred Stock in respect of either the
payment of dividends or the distribution of assets if such borrowed funds have
an interest rate or interest cost (calculated in accordance with accepted
financial practice), or such stock has a dividend rate or cost to the
corporation so calculated, less than the dividend rate per annum of the
Cumulative Preferred Stock, 4.78% Series.1
(3) The fourth series of Cumulative Preferred Stock shall be
designated "Cumulative Preferred Stock, 7.27% Series"; the number of shares of
the fourth series which may be issued shall be limited to 500,000 shares; the
annual dividend rate per share shall be 7.27% of the par value thereof, such
dividends shall be cumulative from March 12, 1987 and the first dividend
payment date shall be May 1, 1987; the redemption prices for the Cumulative
Preferred Stock, 7.27% Series shall be as follows:
Redemption Price
per Share
If the redemption date is:
On or before April 30, 1992 $107.27
May 1, 1992 to and including April 30, 1993 104.85
May 1, 1993 to and including April 30, 1994 104.36
May 1, 1994 to and including April 30, 1995 103.88
May 1, 1995 to and including April 30, 1996 103.39
May 1, 1996 to and including April 30, 1997 102.91
May 1, 1997 to and including April 30, 1998 102.42
May 1, 1998 to and including April 30, 1999 101.94
May 1, 1999 to and including April 30, 2000 101.45
May 1, 2000 to and including April 30, 2001 100.97
May 1, 2001 to and including April 30, 2002 100.48
On or after May 1, 2002 100.00
together in each case with dividends accrued thereon to the redemption date;
and the amount payable upon any liquidation, dissolution, or winding up of the
affairs of the corporation or distribution of capital, if involuntary, shall be
$100 per share and, if voluntary, shall be equal to the applicable redemption
price per share, plus in each case dividends accrued to the date of
distribution; provided, however, that the corporation shall not on or before
April 30, 1992 exercise its option to redeem any shares of the Cumulative
Preferred Stock, 7.27% Series, as a part of or in anticipation of any refunding
operation by the application, directly or indirectly, of borrowed funds or the
proceeds of issue of any Cumulative Preferred Stock or any stock ranking prior
to or on a parity with the Cumulative Preferred Stock, 7.27% Series, in respect
of either the payment of dividends or the distribution of assets if such
borrowed funds have an interest rate or interest cost (calculated in accordance
with generally accepted financial practice), or such stock has a dividend rate
or cost to the corporation so calculated less than 7.334%.
1 The third series of Cumulative Preferred Stock, consisting of
400,000 shares of Cumulative Preferred Stock, 8.88% Series, was redeemed
by the corporation in 1993.
PAGE 12
As a sinking fund for the retirement of the Cumulative Preferred Stock,
7.27% Series, the corporation shall, on or before May 1 in each year, beginning
in 1993, set aside sufficient funds for the redemption of 20,000 shares (4% of
the number originally issued) of the Cumulative Preferred Stock, 7.27% Series,
or such lesser number of shares thereof as shall then be outstanding; the
sinking fund requirement shall be cumulative so that, if in any year the full
amount required to be set aside for such year (including any amount carried
over from any preceding year) is not so set aside for any reason, the
deficiency shall be added to the requirement of the sinking fund for the next
year; the corporation may, at its option, on any such May 1 increase the number
of shares to be redeemed pursuant to said sinking fund by an amount not to
exceed 20,000 shares per year (but only upon the contemporaneous satisfaction
of the sinking fund redemption due on such date); the right of optional sinking
fund redemptions shall be noncumulative and may not be used to reduce the
amount of any future sinking fund requirements; the corporation may credit
against the sinking fund obligation shares purchased or optionally redeemed
other than pursuant to the sinking fund; and the sinking fund redemption price
for the Cumulative Preferred Stock, 7.27% Series will be $100 per share, plus
dividends accrued and unpaid thereon to the redemption date and will be paid
out of funds legally available therefor after full cumulative dividends on
shares of all series of Cumulative Preferred Stock or on any other class of
preferred stock ranking on a parity with the Cumulative Preferred Stock in
respect of the payment of dividends shall have been paid or declared and set
aside for payment.
The corporation shall not declare or pay any dividend (other than
dividends payable solely in Common Stock of the corporation) upon, or make any
distribution with respect to, the Common Stock or any other class of stock
ranking junior to the Cumulative Preferred Stock with respect to the payment of
dividends, or purchase, redeem or otherwise acquire for valuable consideration
any shares of Common Stock or such other junior class of stock, unless all
sinking fund installments provided for the Cumulative Preferred Stock, 7.27%
Series, the obligation of which shall have accrued, shall have been paid in
full or set aside for payment.
(4) The fifth series of Cumulative Preferred Stock shall be designated
"Cumulative Preferred Stock, 8% Series"; the number of shares of the fifth
series which may be issued shall be limited to 500,000 shares; the annual
dividend rate per share shall be 8% of the par value thereof, such dividends
shall be cumulative from December 2, 1991 and the first dividend payment date
shall be February 1, 1992; subject to the rights of holders of any other series
of Cumulative Preferred Stock and to the availability of funds which may be
lawfully used for such purpose, the corporation shall, on December 1, 2001,
redeem all of the outstanding shares of Cumulative Preferred Stock, 8% Series,
at a redemption price of $100 per share, plus the dividends accrued and unpaid
thereon to December 1, 2001; the amount payable upon any liquidation,
distribution, dissolution or winding-up of the affairs of the corporation or
distribution of capital, whether voluntary or involuntary, shall be $100 per
share, plus dividends accrued to the date of distribution.
(5) The sixth series of Cumulative Preferred Stock shall be designated
"Cumulative Preferred Stock, 8 1/2% Series"; the number of shares of the sixth
PAGE 13
series which may be issued shall be limited to 400,000 shares; the annual
dividend rate per share shall be 8 1/4% of the par value thereof, such dividends
shall be cumulative from June 11, 1992 and the first dividend payment date
shall be August 1, 1992; the amount payable upon any liquidation, distribution,
dissolution or winding-up of the affairs of the corporation or distribution of
capital, whether voluntary or involuntary, shall be $100 per share, plus
dividends accrued to the date of distribution; said shares shall not be subject
to redemption before June 1, 1997, and thereafter said shares shall be subject
to redemption as a whole at any time or in part from time to time by resolution
of the Board of Directors at the price of $100 per share, plus dividends
accrued to the date of redemption.
(6) The seventh series of the Cumulative Preferred Stock shall be
designated "Cumulative Preferred Stock, 7.75% Series"; the number of shares of
the seventh series which may be issued shall be limited to 400,000 shares; the
annual dividend rate per share shall be 7.75% of the par value thereof, such
dividends shall be cumulative from May 6, 1993 and the first dividend payment
date shall be August 1, 1993; the amount payable upon any liquidation,
distribution, dissolution or winding-up of the affairs of this corporation or
distribution of capital, whether voluntary or involuntary, shall be $100 per
share, plus dividends accrued to the date of distribution; said shares shall
not be subject to redemption before May 1, 1998, and thereafter said shares
shall be subject to redemption as a whole at any time or in part from time to
time by resolution of the Board of Directors at the price of $100 per share,
plus dividends accrued to the date of redemption.
PREFERENCE STOCK
A. The Preference Stock shall consist of 8,000,000 shares having a par
value of $1 per share. The board of directors is authorized to issue the
Preference Stock at any time and from time to time in one or more series, as
hereinafter provided, but only if, immediately after the issuance of any shares
of Preference Stock proposed to be issued by the board of directors, the
maximum aggregate amount to be received by the holders of all shares of
Preference Stock then outstanding upon any liquidation, dissolution or winding
up of the corporation, whether voluntary or involuntary, would not exceed
$100,000,000.
B. The various series of Preference Stock shall be established and
designated and the variations in the relative rights and preferences as between
the different series shall be fixed and determined by the board of directors.
All shares of Preference Stock shall be identical except as to the designation
thereof and except that there may be variations fixed and determined by the
board of directors, to the extent not inconsistent with the provisions of the
Articles of Organization relating to the Preference Stock, between different
series as to right of redemption and the price, terms and manner of redemption,
special and relative rights as to dividends and on liquidation, sinking or
purchase fund provisions and conversion rights.
C. Subject to the prior preferential rights of the Cumulative Preferred
Stock and any other class of stock ranking prior to the Preference Stock with
PAGE 14
respect to the payment of dividends, the holders of shares of each series of
Preference Stock shall be entitled to receive, when, as and if declared by the
board of directors, out of funds legally available for the purpose, cash
dividends determined in the manner fixed by the board of directors for such
series, and no more, payable on such dates and accruing from such dates as
shall be fixed by the board of directors for such series. Each share of each
series of Preference Stock entitled to cumulative dividends shall rank on a
parity with respect to payment of dividends with each share of each other
series of Preference Stock entitled to cumulative dividends. No dividend shall
be declared on Preference Stock of any series entitled to cumulative dividends
unless there shall likewise be declared or have been declared on all shares of
all series of Preference Stock at the time outstanding and entitled to
cumulative dividends, like proportionate dividends, ratably, in proportion to
the dividends accrued to the respective dividend payment dates for such series
falling on or last preceding the date on which the dividend to be declared is
to be paid; and no dividend shall be declared on Preference Stock of any series
entitled to noncumulative dividends unless there shall likewise be declared or
have been declared on all shares of all series of Preference Stock at the time
outstanding and entitled to cumulative dividends, all dividends the payment
dates for which fall on or precede the date on which such dividend on a series
of Preference Stock entitled to noncumulative dividends is to be paid.
D. So long as any shares of Preference Stock are outstanding, the
corporation shall not declare or pay any dividend (other than dividends payable
solely in Common Stock of the corporation) upon, or make any distribution with
respect to, the Common Stock or any other class of stock ranking junior to the
Preference Stock with respect to the payment of dividends, or purchase, redeem
or otherwise acquire for valuable consideration any shares of Common Stock or
such other junior class of stock, unless all dividends accrued to the
respective dividend payment dates falling on or last preceding the date on
which such action is to be taken shall have been paid in full or declared and
set apart for payment on all shares of all series of Preference Stock at the
time outstanding and on any class of stock ranking on a parity with the
Preference Stock with respect to the payment of dividends and unless all
sinking or purchase fund installments, the obligation of which shall have
accrued, applicable to any series of Preference Stock and any class of stock
ranking on a parity with the Preference Stock with respect to the payment of
dividends shall have been paid in full or set apart for payment in accordance
with the requirements relating thereto.
E. Upon any liquidation, dissolution or winding up of the corporation,
whether voluntary or involuntary, the holders of shares of each series of
Preference Stock shall be entitled, before any distribution or payment is made
upon any shares of Common Stock or any other class of stock ranking junior to
the Preference Stock with respect to the distribution of assets in liquidation,
but subject to the prior preferential rights of the Cumulative Preferred Stock
and any other class of stock ranking prior to the Preference Stock with respect
to the distribution of assets in liquidation, to be paid the amount fixed and
determined by the board of directors for such series plus an amount equal to
dividends accrued to the date of payment, and to no further payment. After
such payment to the holders of all shares of Preference Stock and any class of
stock ranking on a parity with the Preference Stock with respect to the
PAGE 15
distribution of assets in liquidation, the remaining assets and funds of the
corporation shall be distributed among the holders of the Common Stock and any
other class of stock ranking junior to the Preference Stock with respect to the
distribution of assets in liquidation then outstanding according to their
respective rights. In the event that the assets of the corporation available
for distribution to holders of Preference Stock shall not be sufficient to pay
in full the amount herein required to be paid, such assets shall be distributed
to the holders of the shares of each series of Preference Stock, ratably, in
proportion to the amounts payable on each share thereof, including dividends
accrued to the date of payment. Neither the consolidation or merger of the
corporation into or with any other corporation or corporations nor the sale or
transfer by the corporation of all or substantially all of its assets nor a
reduction of the capital stock of the corporation shall be deemed a
liquidation, dissolution or winding up of the corporation within the meaning of
this section (E).
F. Except as otherwise by law or in this section (F) provided, holders of
shares of Preference Stock shall have no right to be represented at or to
receive notice of meetings of the stockholders of the corporation and shall
have no right to vote for the election of directors or for any other purpose or
on any other subject.
However, whenever dividends accrued on any shares of any series of
Preference Stock at the time outstanding which is entitled to cumulative
dividends shall equal or exceed an amount equivalent to six full quarterly
dividends thereon, or whenever no dividends shall have been paid on shares of
any series of Preference Stock at the time outstanding which is entitled to
noncumulative dividends for a period of eighteen months or more, holders of the
Preference Stock shall have the right to be represented at and to receive
notice of any meeting of the stockholders of the corporation held for the
purpose of electing directors and the exclusive right, voting separately as a
single class, to elect two directors if the total number of directors of the
corporation constituting the full board as then last fixed by the stockholders
is five or more, or one director if such total number of directors is three or
four; and the remaining directors shall be elected by the holders of the
Cumulative Preferred Stock, the Common Stock or any other class of stock
entitled to vote therefor in accordance with their respective rights.
If and when all dividends accrued on all shares of all series of
Preference Stock entitled to cumulative dividends to the respective last
preceding dividend payment dates for such series shall have been paid in full
or declared and set apart for payment and at least one full quarterly dividend
on all shares of all series of Preference Stock entitled to noncumulative
dividends shall have been paid in full or declared and set apart for payment,
the holders of the Preference Stock shall again be excluded from the right to
be represented at and to receive notice of meetings of the stockholders and
from the right to vote, except as otherwise by law provided.
Subject to the prior preferential rights of the Cumulative Preferred Stock
and any other class of stock ranking prior to the Preference Stock with respect
to the payment of dividends, such dividends accrued on shares of all series of
Preference Stock entitled to cumulative dividends and such full quarterly
PAGE 16
dividend on shares of all series entitled to noncumulative dividends shall be
paid as soon as reasonably practicable unless payment thereof is prevented by
law or by the provisions of any indenture or agreement to which the corporation
is a party or unless a majority of the directors elected otherwise than by
holders of the Preference Stock shall determine that payment thereof is not in
the best interests of the corporation.
The term of office of all persons who may be directors of the corporation
at the time when the right to vote for directors shall accrue to holders of the
Preference Stock as herein provided shall terminate upon the election of new
directors at a meeting of stockholders which, if not otherwise called, shall be
called by the president of the corporation upon request of the holders of
record of at least 10% of all shares of Preference Stock then outstanding. The
new directors so elected shall serve until the next annual meeting of
stockholders subject to the following provision and until their successors
shall be chosen and qualified.
When all dividends accrued on all shares of all series of Preference Stock
entitled to cumulative dividends to the respective last preceding dividend
payment dates for such series shall have been paid in full or declared and set
apart for payment and at least one full quarterly dividend on all shares of all
series of Preference Stock entitled to noncumulative dividends shall have been
paid in full or declared and set apart for payment, each director elected by
the holders of the Preference Stock shall cease to hold office upon the
election of a successor or of a new board of directors by the stockholders then
entitled to vote for directors at a meeting of stockholders, which, if not
otherwise called, shall be called by the president of the corporation upon
request of one or more of the directors then in office.
If the event calling for any election of directors as provided for herein
shall occur not more than sixty and not less than thirty days before the date
for an annual meeting of the stockholders, the election of directors shall be
held at such annual meeting, otherwise at a special meeting of the stockholders
to be called for the purpose.
Notice of every meeting of the stockholders held for the election of
directors during a period when the holders of the Preference Stock have the
right to vote for the election of directors shall be given to the holders of
record of each series of the Preference Stock and of Common Stock and of any
other class or series of stock entitled to vote thereat and shall state the
purpose of the meeting in respect of the election of directors representing the
different classes of stock.
At each such meeting a majority of the aggregate number of outstanding
shares of all series of the Preference Stock shall be required to constitute a
quorum for the election of directors by the Preference Stock.
If, for lack of a quorum or for any other reason, at any meeting at which
holders of the Preference Stock have the right to elect directors, such holders
shall not elect the number of directors they are entitled to elect, the holders
of the other class or classes of stock, provided they have elected the number
of directors they are entitled to elect, may also elect such additional
PAGE 17
directors as are necessary to constitute the full board, but no person shall be
so elected as an additional director except a director in office at the time of
the meeting who had been elected by the class or series of stock failing to
exercise its voting rights so long as any such director in office is available
for such election.
In case of any vacancy in the office of a director elected by holders of
the Preference Stock, the remaining director elected by holders of the
Preference Stock, if any, may fill the vacancy by the election of a successor
to hold office for the unexpired term of such director. So long as any shares
of any series of the Preference Stock are outstanding, no director elected by
holders of the Preference Stock shall be removed except by vote of the holders
thereof.
Directors elected by, or in place of directors elected by, holders of the
Preference Stock need not be stockholders of the corporation.
G. If any series of Preference Stock is redeemable at the option of the
corporation and the corporation elects to redeem shares of such series, notice
of any such redemption, specifying the redemption date, shall be mailed,
postage prepaid, to each holder of record of shares to be redeemed as of the
date of mailing, at his address as it appears on the books of the corporation,
not more than sixty nor less than thirty days prior to the redemption date. At
its election, the corporation, on or prior to the redemption date, may deposit
an amount equal to the aggregate redemption price of the shares to be redeemed,
plus dividends accrued thereon to the redemption date, with the transfer agent
or agents for the shares to be redeemed, in trust for the account of the
holders of the shares so to be redeemed.
Notice of redemption having been given, unless default be made in the
payment or deposit of the redemption price plus dividends accrued thereon to
the redemption date, the shares to be redeemed shall not be entitled to any
dividends which may be declared on or after the redemption date specified in
such notice and, on the redemption date or on the date prior thereto on which
such deposit shall have been made, all rights of the respective holders of such
shares as stockholders of the corporation by reason of the ownership of such
shares shall cease, except the right to receive the redemption price, plus
dividends accrued thereon to the redemption date, upon presentation and
surrender of the certificates representing such shares and such shares shall
not be deemed to be outstanding after the redemption date, or the earlier date
of such deposit. In case the holders of shares which shall been redeemed shall
not within four years after the redemption date claim any amount so deposited
in trust for the redemption of such shares, the transfer agent or agents shall,
upon demand, pay over to the corporation any such unclaimed amount so
deposited, and shall thereupon be relieved of all responsibility in respect
thereof, and thereafter the holders of such shares shall look only to the
corporation for payment of the redemption price thereof plus dividends accrued
thereon to the redemption date, but without interest.
Notwithstanding the foregoing, if at any time the corporation shall have
failed to declare and pay or set apart for payment in full all dividends
accrued to the respective dividend payment dates falling on or last preceding
PAGE 18
such time on all shares of all series of Preference Stock entitled to
cumulative dividends at the time outstanding or shall have failed to pay or set
apart for payment in full all dividends which have been declared on all shares
of all series of Preference Stock entitled to noncumulative dividends at the
time outstanding, thereafter and until all such dividends shall have been paid
or set apart for payment in full, the corporation shall not redeem or purchase,
or permit any subsidiary to purchase, for any purpose, any shares of Preference
Stock of any series, unless all shares of Preference Stock of all series then
outstanding shall be redeemed.
H. Shares of the Preference Stock redeemed, purchased or otherwise
acquired by the corporation upon their acquisition may, in the discretion of
the board of directors, (i) be retired, in which case they shall have the
status of authorized but unissued shares of the Preference Stock but shall not
be reissued as shares of any series shares of which are outstanding at the time
of such reissue; or (ii) be held in the treasury of the corporation, in which
case they may be sold or otherwise disposed of by the board of directors at
such times, in such manner and upon such terms as the board of directors may
determine. Such of Preference Stock held in the treasury of the corporation
shall not be deemed to be outstanding shares of Preference Stock for any
purpose.
I. The term "dividends accrued", as used in sections A through H above,
shall mean (a) as to each share of Preference Stock of a series entitled to
cumulative dividends, an amount computed in the manner fixed for such series
from the date from which dividends on such share became cumulative to (but not
including) the date with reference to which the term is used, irrespective of
whether such amount or any part thereof shall have been declared as dividends
or there shall have existed any funds legally available for the payment
thereof, less the aggregate of all dividends paid or declared and set apart for
payment on such share; and (b) as to each share of Preference Stock of a series
entitled to noncumulative dividends, dividends determined in the manner fixed
for such series which have been declared but not paid on or prior to the date
with reference to which the term is used.
COMMON STOCK
The terms of the Common Stock, in addition and subject to the provisions
of these articles of organization relating to the Cumulative Preferred Stock
and the Preference Stock, are as follows:
Each share of the Common Stock shall be equal to every other share thereof
in all respects.
Except as by law or in these articles of organization provided, holders of
the Common Stock shall have the exclusive right to vote for the election of
directors and for any other purpose or on any other subject and to be
represented at and to receive notice of any meeting of stockholders.
5. The restrictions, if any, imposed by thee articles of organization
upon the transfer of shares of stock of any class are as follows:
PAGE 19
None
6. Other lawful provisions, if any, for the conduct and regulation of
the business and affairs of the corporation, for its voluntary dissolution, or
for limiting, defining, or regulating the powers of the corporation, or of its
directors or stockholders, or of any class of stockholders:
(a) The directors may make, amend or repeal the Bylaws in whole or in
part, except with respect to any provision thereof which by law or the Bylaws
requires action by the stockholders.
(b) The directors may specify the manner in which the accounts of the
corporation shall be kept and may determine what constitutes net earnings,
profits and surplus, what amounts, if any, shall be reserved for any corporate
purpose, and what amounts, if any, shall be declared as dividends. Unless the
board of directors otherwise specifies, the excess of the consideration for any
share of its capital stock with par value issued by it over such par value
shall be paid-in surplus. The board of directors may allocate to capital stock
less than all of the consideration for any share of its capital stock without
par value issued by it, in which case the balance of such consideration shall
be paid-in surplus. All surplus shall be available for any corporate purpose,
including the payment of dividends.
(c) No director of the corporation shall be personally liable to the
corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director notwithstanding any provision of law imposing such
liability; provided, however, that this Article 6(c) shall not eliminate the
liability of a director to the extent that such liability is provided by
applicable law (i) for any breach of the director's duty of loyalty to the
corporation or its stockholders, (ii) for acts or omissions not in good faith
or which involve intentional misconduct or a knowing violation of law, (iii)
under Section 61 or Section 62 (or successor provision) of the Business
Corporation Law of The Commonwealth of Massachusetts, or (iv) for any
transaction from which the director derived an improper personal benefit. The
foregoing provisions of this Article 6(c) shall not eliminate the liability of
a director for any act or omission occurring prior to the date on which this
Article 6(c) becomes effective. No amendment to or repeal of this Article 6(c)
shall apply to or have any effect on the liability or alleged liability of any
director of the corporation for or with respect to any acts or omissions of
such director occurring prior to such amendment or repeal.
(d) The directors shall be divided as nearly equally as possible into
three classes, with each class to consist of approximately one-third of the
number of directors. The term of office of the directors of the first class
shall continue until the annual meeting of the stockholders held in 1989, the
term of office of those of the second class shall continue until the annual
meeting of the stockholders held in 1990, and the term of office of those of
the third class shall continue until the annual meeting of the stockholders
held in 1991, and, in each case, until a successor shall be elected and
qualified (unless otherwise required by law) or until the director sooner dies,
resigns, or is removed. At each annual meeting of the stockholders beginning
in 1989, the directors elected to succeed those whose terms then expire shall
PAGE 20
be of one class and shall be elected for a term which shall continue until the
third succeeding annual meeting, and until a successor shall be elected (unless
otherwise required by law) or until the director sooner dies, resigns or is
removed. Any director elected to fill a vacancy caused by death, resignation
or removal shall be elected for a term which shall coincide with the term of
the class of the vacant directorship. Any director elected to fill an
additional directorship resulting from an increase in the number of directors
shall be of the class whose term continues and shall be elected to serve, until
the annual meeting of the stockholders closest to three years from the date of
the increase, and until a successor shall be elected and qualified (unless
otherwise required by law) or until the director sooner dies, resigns or is
removed. The number of directors shall not be increased or decreased at a time
when, or to the extent that, it would result in the directors not being divided
as nearly equally as possible into three classes each consisting of
approximately one-third of the number of directors. The total number of
directors need not be an exact multiple of three. A director may succeed
himself. Notwithstanding anything in the articles of organization or bylaws of
the corporation to the contrary, whenever the holders of any one or more
classes or series of shares of capital stock of the corporation other than
shares of Common Stock shall have the right, voting separately by class or
series, to elect directors at an annual or special meeting of stockholders, the
election, term of office, filling of vacancies and other features of such
directorship shall be governed by the terms of the articles of organization
applicable thereto, and such directors so elected shall not be divided into
classes pursuant to this Article 6(d) unless expressly provided by such terms.
References in this Article 6(d) to an annual meeting of stockholders shall be
deemed to include a special meeting held in place of an annual meeting. This
Article 6(d) may be altered, amended or repealed only by vote of the holders of
80% of the shares issued and outstanding and entitled to vote generally in the
election of directors unless such alteration, amendment or repeal has been
recommended by 80% of the directors then in office.
(e) A. Higher Vote for Certain Business Transactions. In addition to
any affirmative vote required by law or these Restated Articles of Organization
or the Bylaws of the corporation, and except as otherwise expressly provided in
Section C of this Article 6(e):
(1) any merger or consolidation of the corporation or any
Subsidiary (as hereinafter defined) with (a) any Interested
Stockholder (as hereinafter defined) or (b) any other company
(whether or not itself an Interested Stockholder) which is or after
such merger or consolidation would be an Affiliate (as hereinafter
defined) or Associate (as hereinafter defined) of an Interested
Stockholder; or
(2) any sale, lease, exchange, mortgage, pledge, transfer or
other disposition (in one transaction or a series of transactions) to
or with any Interested Stockholder or any Affiliate or Associate of
any Interested Stockholder involving any assets or securities of the
corporation, any Subsidiary or any Interested Stockholder or any
Affiliate or Associate of any Interested Stockholder having an
aggregate Fair Market Value (as hereinafter defined) in excess of 5%
PAGE 21
of the total consolidated book value of the total assets of the
corporation and its Subsidiaries as of the end of the corporation's
most recent fiscal year prior to the time the determination is made;
or
(3) the adoption of any plan or proposal for the termination,
liquidation or dissolution of the corporation proposed by or on
behalf of an Interested Stockholder or any Affiliate or Associate of
any Interested Stockholder; or
(4) any reclassification of securities (including any reverse
stock split) or recapitalization of the corporation or any merger or
consolidation of the corporation with any of its Subsidiaries or any
other transaction (whether or not with or otherwise involving an
Interested Stockholder) that has the effect, directly or indirectly,
of increasing the proportionate share of any class or series of
Capital Stock (as hereinafter defined), or any securities convertible
into Capital Stock or into equity securities of any Subsidiary, that
is beneficially owned by any Interested Stockholder or any Affiliate
or Associate of any Interested Stockholder; or
(5) any tender offer or exchange offer made by the corporation
for shares of Capital Stock which may have the effect of increasing
an Interested Stockholder's percentage beneficial ownership (as
hereinafter defined) so that following the completion of the tender
offer or exchange offer the Interested Stockholder's percentage
beneficial ownership of the outstanding Capital Stock may exceed 110%
of the Interested Stockholder's percentage beneficial ownership
immediately prior to the commencement of such tender offer or
exchange offer; or
(6) any agreement, contract or other arrangement providing for
any one or more of the actions specified in the foregoing clauses (1)
to (5);
shall require the affirmative vote of the holders of Voting Stock (as
hereinafter defined) representing shares equal to the sum of (i) a
majority of the then outstanding Voting Stock, excluding Voting Stock of
which such Interested Stockholder is the beneficial owner, plus (ii) the
number of shares of Voting Stock of which such Interested Stockholder is
the beneficial owner, voting together as a single class. Such affirmative
vote shall be required notwithstanding the fact that no vote may be
required, or that a lesser percentage may be specified, by law or any
agreement with any national securities exchange or otherwise.
B. Definition of "Business Transaction". For the purposes of this
Article 6(e) the term "Business Transaction" shall mean any transaction
that is referred to in any one or more of clauses (1) through (6) of this
Section A of this Article 6(e).
C. When Higher Vote is Not Required. The provisions of Section A
of this Article 6(e) shall not be applicable to any direct or indirect
PAGE 22
purchase or other acquisition by the corporation or any Subsidiary of any
shares of Capital Stock from an Interested Stockholder. The provisions of
Section A of this Article 6(e) shall also not be applicable to any
particular Business Transaction involving an Interested Stockholder, and
such Business Transaction shall require only such affirmative vote, if
any, as is required by law or by any other provision of these Restated
Articles of Organization or the Bylaws of the corporation if the Business
Transaction shall have been approved by a majority of the Disinterested
Directors (whether such approval is made prior to or subsequent to the
acquisition of beneficial ownership of the Voting Stock that caused the
Interested Stockholder to become an Interested Stockholder).
D. Certain Definitions. For purposes of this Article 6(e):
1. The term "Capital Stock" shall mean all capital stock of
the corporation authorized to be issued from time to time under
Article 4A of the Restated Articles of Organization.
2. The term "person" shall mean any individual, firm,
corporation or other entity and shall include any group comprised of
any person and any other person with whom such person or any
Affiliate or Associate of such person has any agreement, arrangement
or understanding, directly or indirectly, for the purpose of
acquiring, holding, voting or disposing of Capital Stock.
3. The term "Interested Stockholder" shall mean any person
(other than the corporation or any Subsidiary and other than any
profit-sharing, employee stock ownership or other employee benefit
plan of the corporation or any Subsidiary or any trustee of or
fiduciary with respect to any such plan when acting in such capacity)
who or which (a) is the beneficial owner of Voting Stock representing
5% or more of the votes entitled to be cast by the holders of all
then outstanding shares of Voting Stock; or (b) is an Affiliate of
the corporation and at any time within the two-year period
immediately prior to the date in question was the beneficial owner of
Voting Stock representing 5% or more of the votes entitled to be cast
by the holders of all the outstanding shares of the Voting Stock.
4. A person shall be a "beneficial owner" of any Capital Stock
(a) which such person or any of its Affiliates or Associates
beneficially owns, directly or indirectly; (b) which such person or
any of its Affiliates or Associates has, directly or indirectly, (i)
the right to acquire (whether such right is exercisable immediately
or subject only to the passage of time), pursuant to any agreement,
arrangement or understanding or upon the exercise of conversion
rights, exchange rights, warrants or options, or otherwise, or (ii)
the right to vote pursuant to any agreement, arrangement or
understanding; or (c) which is beneficially owned, directly or
indirectly, by any other person with which such person or any of its
Affiliates or Associates has any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or
disposing of any shares of Capital Stock. For the purposes of
PAGE 23
determining whether a person is an Interested Stockholder pursuant to
paragraph 3 above, the number of shares of Capital Stock deemed to be
outstanding shall include shares deemed beneficially owned by such
person through application of this paragraph 4, but shall not include
any other shares of Capital Stock that may be issuable pursuant to
any agreement, arrangement or understanding, or upon exercise of
conversion rights, warrants or options, or otherwise.
5. An "Affiliate" of a specified person is a person that
directly, or indirectly through one or more intermediaries, controls,
or is controlled by, or is under common control with, the person
specified.
6. The term "Associate" used to indicate a relationship with
any person means (a) any company (other than the corporation or any
Subsidiary) of which such person is an officer or partner or is,
directly or indirectly, the beneficial owner of 10% or more of any
class of equity securities, (b) any trust or other estate in which
such person has a substantial beneficial interest or as to which such
person serves as trustee or in a similar fiduciary capacity, and (c)
any relative or spouse of such person, or any relative of such
spouse, who has the same home as such person or who is a director or
officer of the corporation or any of its parents or Subsidiaries.
7. The term "Subsidiary" means any company of which a majority
of any class of equity security is beneficially owned by the
corporation, provided, however, that for the purposes of the
definition of Interested Stockholder set forth in paragraph 3 above
and the definition of Associate set forth in paragraph 6 above, the
term "Subsidiary" shall mean only a company of which a majority of
each class of equity security is beneficially owned by the
corporation.
8. The term "Disinterested Director" means any director who is
not an Affiliate or Associate or representative of the Interested
Stockholder and was a director prior to the time that the Interested
Stockholder became an Interested Stockholder, and any director who is
a successor of a Disinterested Director, is not an Affiliate or
Associate or representative of the Interested Stockholder and is
recommended or elected to succeed the Disinterested Director by a
majority of the Disinterested Directors.
9. The term "Fair Market Value" means (a) in the case of cash,
the amount of such cash, (b) in the case of stock, the highest
closing sale price during the 30-day period immediately preceding the
date in question of a share of such stock on the Composite Tape for
New York Stock Exchange Listed Stocks, or, if such stock is not
quoted on the Composite Tape, on the New York Stock Exchange, or, if
such stock is not listed on such Exchange, on the principal United
States securities exchange registered under the Securities Exchange
Act of 1934 on which such stock is listed, or, if such stock is not
listed on any such exchange, the highest closing bid quotation with
PAGE 24
respect to a share of such stock during the 30-day period immediately
preceding the date in question on the National Association of
Securities Dealers, Inc. Automated Quotations System or any similar
system then in use, or if no such quotation is available, the fair
market value on the date in question of a share of such stock as
determined by a majority of the Disinterested Directors in good
faith; and (c) in the case of property other than cash or stock, the
fair market value of such property on the date in question as
determined in good faith by a majority of the Disinterested
Directors.
10. The term "Voting Stock" means all Capital Stock which by
its terms may be voted generally in the election of directors of the
corporation.
E. Powers of the Disinterested Directors. A majority of the
Disinterested Directors shall have the power and duty to determine for
purposes of this Article 6(e), on the basis of information known to them
after reasonable inquiry, (1) whether a person is an Interested
Stockholder, (2) the number of shares of Capital Stock or other securities
beneficially owned by any person, (3) whether a person is an Affiliate or
Associate of another, and (4) whether the assets that are the subject of
any Business Transaction have, or the consideration to be received for the
issuance or transfer of securities by the corporation or any Subsidiary in
any Business Transaction has, an aggregate Fair Market Value in excess of
the amount set forth in clause (2) of Section A of this Article 6(e). Any
such determination made in good faith shall be binding and conclusive for
all the purposes of this Article 6(e).
F. No Effect on Fiduciary Obligations of Interested Stockholders.
Nothing contained in this Article 6(e) shall be construed to relieve any
Interested Stockholder from any fiduciary obligation imposed by law.
G. Alteration, Amendment, Repeal. Notwithstanding any other
provisions of these Restated Articles of Organization (and notwithstanding
the fact that a lesser percentage or separate class vote may be specified
by law or these Restated Articles of Organization), the affirmative vote
of the holders of 80% of the then outstanding shares of Voting Stock shall
be required to alter, amend or repeal this Article 6(e); provided,
however, that this Section G shall not apply to, and such 80% vote shall
not be required for, any alteration, amendment or repeal recommended by a
majority of the Disinterested Directors.
We further certify that the foregoing restated articles of organization
effect no amendments to the articles of organization of the corporation as
heretofore amended, except amendments to the following articles: 3 and 4.
Briefly describe amendments in space below:
The language in Article 4 establishing all series of Preference Stock and
all rights and privileges thereof has been deleted to reflect the restoration
PAGE 25
of previously designated shares to the status of authorized but unissued
shares.
The number of authorized shares of Preferred Stock has been increased by
500,000 shares to 2,890,000. <F1>
Article 4, paragraph C has been amended to authorize the rest oration of
redeemed, repurchased or otherwise acquired shares of Cumulative Preferred
Stock to the status of authorized but unissued shares by vote of the board of
directors.
[FN] <F1> The 2,830,000 aggregate number of shares of the corporation's
previously authorized preferred Stock was reduced to 2,390,000 shares by the
redemption and cancellation of 440,000 authorized and issued shares of
Preferred Stock in 1992, 1993 and 1994. The 2,390,000 shares of authorized
Preferred Stock were then increased by 500,000 shares to a total of 2,890,000
authorized shares of Preferred Stock pursuant to these Restated Articles of
Organization.
IN WITNESS WHEREOF AND UNDER THE PENALTIES OF PERJURY, we have hereunto
signed our names this 10th day of June in the year 1994.
/s/ Charles E. Peters, Jr., Senior Vice President
/s/ Theodora S. Convisser, Clerk
THE COMMONWEALTH OF MASSACHUSETTS
RESTATED ARTICLES OF ORGANIZATION
(General Laws, Chapter 156B, Section 74)
I hereby approve the within restated articles of organization and, the
filing fee in the amount of $ having been paid, said articles are
deemed to have been filed with me this 20th day of June, 1994.
MICHAEL JOSEPH CONNOLLY
Secretary of State
TO BE FILLED IN BY THE CORPORATION
Photo copy of Restates Articles of Organization to be sent
To: Theodora Convisser
Boston Edison Company
800 Boylston Street
Boston, MA 02199
Telephone: 617-424-2530
PAGE 26
