FORM 10-Q Page 1 of 17
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1999
---------------------------------------------
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 1-3437-2
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AMERICAN WATER WORKS COMPANY, INC.
- ---------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 51-0063696
- ------------------------------- -----------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
1025 Laurel Oak Road, Voorhees, New Jersey 08043
- ---------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(609) 346-8200
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(Registrant's telephone number, including area code)
Not Applicable
- ---------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since
last report)
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, and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
----- -----
At May 1, 1999, the number of shares of common stock, $1.25 par value,
outstanding was 81,339,945 shares.
<PAGE> Page 2 FORM 10-Q
PART I FINANCIAL INFORMATION
----------------------------
Item 1. Financial Statements
-----------------------------
AMERICAN WATER WORKS COMPANY, INC. AND SUBSIDIARY COMPANIES
-----------------------------------------------------------
Consolidated Statements of Income and Retained Earnings (Unaudited)
(In thousands, except per share amounts)
<TABLE>
Three Months Ended
March 31,
1999 1998
-------- --------
<S> <C> <C>
CONSOLIDATED INCOME
Operating revenues $237,002 $226,000
-------- --------
Operating expenses
Operation and maintenance 111,039 102,032
Depreciation and amortization 31,304 28,509
General taxes 25,317 23,543
-------- --------
167,660 154,084
-------- --------
Operating income 69,342 71,916
Allowance for other funds used during
construction 3,185 1,577
Other income (257) (169)
-------- --------
72,270 73,324
-------- --------
Income deductions
Interest 40,053 36,546
Allowance for borrowed funds used
during construction (2,380) (783)
Amortization of debt expense 465 426
Preferred dividends of subsidiaries 821 866
Other deductions 753 807
-------- --------
39,712 37,862
-------- --------
Income before income taxes 32,558 35,462
Provision for income taxes 12,873 13,874
-------- --------
Net income 19,685 21,588
Dividends on preferred stocks 996 996
-------- --------
Net income to common stock $ 18,689 $ 20,592
======== ========
Average shares of basic common stock outstanding 80,970 79,815
Basic and diluted earnings per common share on
average shares outstanding $ 0.23 $ 0.26
======== ========
<PAGE> Page 3 FORM 10-Q
Three Months Ended
March 31,
1999 1998
-------- --------
<S> <C> <C>
CONSOLIDATED RETAINED EARNINGS
Balance at beginning of period $778,526 $717,243
Add - net income 19,685 21,588
-------- --------
798,211 738,831
-------- --------
Deduct - dividends paid
Preferred stock 882 882
Preference stock 114 114
Common stock - $.215 per share in 1999;
$.205 per share in 1998 17,386 16,346
-------- --------
18,382 17,342
-------- --------
Balance at end of period $779,829 $721,489
======== ========
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE> Page 4 FORM 10-Q
AMERICAN WATER WORKS COMPANY, INC. AND SUBSIDIARY COMPANIES
-----------------------------------------------------------
Consolidated Balance Sheet (Unaudited)
(In thousands)
<TABLE>
March 31 December 31
1999 1998
----------- -----------
<S> <C> <C>
ASSETS
Property, plant and equipment
Utility plant - at original cost less
accumulated depreciation $ 4,077,913 $ 4,041,819
Utility plant acquisition adjustments, net 54,313 54,739
Non-utility property, net of accumulated
depreciation 31,823 32,217
Excess of cost of investments in
subsidiaries over book equity at
acquisition, net 24,416 24,431
----------- -----------
4,188,465 4,153,206
----------- -----------
Current assets
Cash and cash equivalents 45,609 39,059
Customer accounts receivable 69,547 73,774
Allowance for uncollectible accounts (1,401) (1,583)
Unbilled revenues 56,946 58,778
Miscellaneous receivables 8,250 8,786
Materials and supplies 12,130 11,943
Deferred vacation pay 13,494 10,127
Other 8,739 10,888
----------- -----------
213,314 211,772
----------- -----------
Regulatory and other long-term assets
Regulatory asset - income taxes
recoverable through rates 187,963 186,748
Debt and preferred stock expense 33,203 33,617
Deferred pension expense 27,441 26,345
Deferred postretirement benefit expense 10,936 11,181
Deferred treatment plant costs 6,607 6,873
Deferred water utility billings 1,560 1,862
Tank painting costs 12,124 12,599
Funds restricted for construction 11,778 10,935
Other 56,719 53,169
----------- -----------
348,331 343,329
----------- -----------
$ 4,750,110 $ 4,708,307
=========== ===========
<PAGE> Page 5 FORM 10-Q
March 31 December 31
1999 1998
----------- -----------
<S> <C> <C>
CAPITALIZATION AND LIABILITIES
Capitalization
Common stock $ 101,557 $ 101,118
Paid-in capital 370,455 360,510
Retained earnings 779,829 778,526
Unearned compensation (1,613) (980)
Treasury stock (3,675) --
----------- -----------
Common stockholders' equity 1,246,553 1,239,174
Preferred stocks with mandatory redemption
requirements 40,000 40,000
Preferred stocks without mandatory
redemption requirements 11,673 11,673
Preferred stocks of subsidiaries with
mandatory redemption requirements 36,727 39,161
Preferred stocks of subsidiaries without
mandatory redemption requirements 6,255 6,255
Long-term debt
American Water Works Company, Inc. 201,000 201,000
Subsidiaries 1,904,129 1,905,011
----------- -----------
3,446,337 3,442,274
----------- -----------
Current liabilities
Bank debt 114,057 88,590
Current portion of long-term debt 43,301 53,321
Accounts payable 33,752 56,728
Taxes accrued, including federal income 33,213 18,867
Interest accrued 44,386 38,313
Accrued vacation pay 13,728 10,243
Other 43,443 35,269
----------- -----------
325,880 301,331
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<PAGE> Page 6 FORM 10-Q
March 31 December 31
1999 1998
----------- -----------
<S> <C> <C>
Regulatory and other long-term liabilities
Advances for construction $ 138,565 $ 138,204
Deferred income taxes 456,628 451,118
Deferred investment tax credits 34,801 35,083
Accrued pension expense 50,835 48,755
Accrued postretirement benefit expense 14,066 10,034
Other 9,743 9,602
----------- -----------
704,638 692,796
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Contributions in aid of construction 273,255 271,906
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Commitments and contingencies -- --
----------- -----------
$ 4,750,110 $ 4,708,307
=========== ===========
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE> Page 7 FORM 10-Q
AMERICAN WATER WORKS COMPANY, INC. AND SUBSIDIARY COMPANIES
-----------------------------------------------------------
Consolidated Statement of Cash Flows (Unaudited)
(In thousands)
<TABLE>
Three Months Ended
March 31,
1999 1998
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 19,685 $ 21,588
Adjustments
Depreciation and amortization 31,304 28,509
Provision for deferred income taxes 5,228 4,849
Provision for losses on accounts receivable 1,047 1,299
Allowance for other funds used during
construction (3,185) (1,577)
Employee benefit expenses greater than
funding 5,100 442
Employee stock plan expenses 698 998
Deferred tank painting costs (65) (138)
Deferred rate case expense (900) (265)
Deferred treatment plant costs (1,339) (726)
Amortization of deferred charges 3,392 2,334
Other, net (5,302) (2,580)
Changes in assets and liabilities
Accounts receivable 3,534 3,361
Unbilled revenues 1,832 1,015
Other current assets 1,962 (330)
Accounts payable (22,976) (15,889)
Taxes accrued, including federal income 14,346 17,951
Interest accrued 6,073 7,086
Other current liabilities 8,174 (8,894)
-------- --------
Net cash from operating activities 68,608 59,033
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Construction expenditures (67,983) (52,963)
Allowance for other funds used during
construction 3,185 1,577
Utility system acquisitions (826) (21,384)
Proceeds from the disposition of property,
plant and equipment 84 228
Removal costs from property, plant and
equipment retirements (495) (227)
Funds restricted for construction activity (843) (840)
-------- --------
Net cash used in investing activities (66,878) (73,609)
-------- --------
<PAGE> Page 8 FORM 10-Q
Three Months Ended
March 31,
1999 1998
-------- --------
<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from long-term debt $ 452 $ 17,200
Proceeds from common stock 9,032 5,381
Purchase of common stock for treasury (1,190) --
Net borrowings under
line-of-credit agreements 25,467 25,430
Advances and contributions for construction,
net of refunds 3,390 2,964
Debt issuance costs (161) (1,488)
Repayment of long-term debt (11,354) (4,567)
Redemption of preferred stocks (2,434) (406)
Dividends paid (18,382) (17,342)
-------- --------
Net cash from financing activities 4,820 27,172
-------- --------
Net increase in cash and
cash equivalents 6,550 12,596
Cash and cash equivalents at beginning
of period 39,059 12,661
-------- --------
Cash and cash equivalents at end of period $ 45,609 $ 25,257
======== ========
Cash paid during the period for:
Interest, net of capitalized amount $ 34,648 $ 29,947
======== ========
Income taxes $ 8,413 $ 8,917
======== ========
Common stock issued in lieu of cash in connection with the Employees' Stock
Ownership Plan, the Savings Plan for Employees and the Long-Term
Performance-Based Incentive Plan totaled $1,565 in 1999 and $3,172 in 1998.
Common stock placed into treasury in connection with the Long-Term
Performance-Based Incentive Plan totaled $3,675 in 1999.
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE> Page 9 FORM 10-Q
AMERICAN WATER WORKS COMPANY, INC. AND SUBSIDIARY COMPANIES
-----------------------------------------------------------
Information Accompanying Financial Statements (Unaudited)
(In thousands, except share and per share amounts)
March 31 December 31
1999 1998
---------- -----------
Preferred stocks with mandatory redemption requirements
Cumulative preferred stock - $25 par value
Authorized - 1,770,000 shares
8.50% series (non-voting) - 1,600,000 shares
outstanding $ 40,000 $ 40,000
---------- -----------
Preferred stocks without mandatory redemption requirements
Cumulative preferred stock - $25 par value
5% series (one-tenth of a vote per share)
- 101,777 shares outstanding $ 2,544 $ 2,544
Cumulative preference stock - $25 par value
Authorized - 750,000 shares
5% series (non-voting) - 365,158 shares
outstanding 9,129 9,129
Cumulative preferential stock - $35 par value
Authorized - 3,000,000 shares -- --
---------- -----------
$ 11,673 $ 11,673
========== ===========
The terms of the 8.50% preferred stock provide that all shares of the
series shall be redeemed on December 1, 2000.
Common stockholders' equity
Common stock - $1.25 par value
Authorized - 300,000,000 shares
Outstanding - 81,245,744 shares at March 31, 1999;
80,894,790 at December 31, 1998 $ 101,557 $ 101,118
Paid-in capital 370,455 360,510
Retained earnings 779,829 778,526
Unearned compensation (1,613) (980)
Treasury stock - 108,875 shares at March 31, 1999 (3,675) --
---------- -----------
$1,246,553 $ 1,239,174
========== ===========
During the first three months of 1999, 268,104 shares were issued in
connection with the Dividend Reinvestment and Stock Purchase Plan, 52,063
shares were issued in connection with the Savings Plan for Employees and
30,788 shares were issued in connection with the Long-Term
Performance-Based Incentive Plan. At March 31, 1999, common shares
reserved for issuance in connection with the Company's stock plans were
80,865,863 shares for the Stockholder Rights Plan, 5,077,496 shares for the
Dividend Reinvestment and Stock Purchase Plan, 707,559 shares for the
Employees' Stock Ownership Plan, 746,015 shares for the Savings Plan for
Employees and 296,347 shares for the Long-Term Performance-Based Incentive
Plan.
<PAGE> Page 10 FORM 10-Q
AMERICAN WATER WORKS COMPANY, INC. AND SUBSIDIARY COMPANIES
-----------------------------------------------------------
Notes to Consolidated Financial Statements (Unaudited)
NOTE 1 -- Financial Statement Presentation
The information presented in this Form 10-Q is unaudited. In the opinion
of management the information reported reflects all adjustments, consisting
of normal recurring adjustments, which were necessary to a fair statement
of the results for the periods reported. Certain reclassifications have
been made to conform previously reported data to the current presentation.
NOTE 2 -- Acquisitions
On October 13, 1998, the Company announced that an agreement in principle
had been reached to acquire National Enterprises Inc.(NEI)in a transaction
valued at $700 million. Subsidiaries of NEI, a privately owned company,
provide water service to 504,000 customers in Missouri, Illinois, Indiana
and New York.
The transaction, which will be accounted for as a pooling of interests,
will be accomplished through a tax free exchange of 14,937,000 shares of
the Company's stock valued at $475 million, for all of the outstanding
shares of NEI and $225 million of assumed debt. It is anticipated that the
transaction will be completed in the third quarter of 1999, following
regulatory approvals, termination of the waiting period under Federal
anti-trust laws and completion of other requirements.
NEI is the parent company of Continental Water Company, which in turn owns:
St. Louis County Water Company serving suburban St. Louis, Missouri;
Northwest Indiana Water Company serving Gary, Hobart and surrounding areas;
Northern Illinois Water Company serving Champaign, Urbana and surrounding
areas; and Long Island Water Corporation serving the southwest portion of
Nassau County on Long Island, New York. NEI also has passive investments
in the telecommunications industry owning approximately 4 million shares of
ITC Deltacom and .6 million shares of Powertel as well as an interest in
privately held ITC Holdings.
All of the common stock of NEI is currently owned by descendants of the
Charles Stewart Mott family. Upon completion of this transaction, the Mott
family will hold approximately 16% of the outstanding shares of American
Water Works common stock. It is expected that two representatives of the
Mott family will be elected to the Board of the Company.
NOTE 3 -- New Accounting Standards
In 1999, the Company will adopt Statement of Financial Accounting Standards
No. 133 "Accounting for Derivative Instruments and Hedging Activities"
(SFAS 133). This statement establishes accounting and reporting standards
for derivative instruments and hedging activities. SFAS 133 was issued by
the Financial Accounting Standards Board in June of 1998 and requires that
an entity recognize all derivatives as either assets or liabilities in the
statement of financial position and measure those instruments at fair
value. As of March 31, 1999, the Company had no derivative instruments or
hedging activities.
<PAGE> Page 11 FORM 10-Q
PART I - FINANCIAL INFORMATION
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
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Results of Operations
- ---------------------
First quarter revenues increased 5 percent from $226 million in 1998 to
$237 million this year. Revenue growth for the first quarter of 1999 was
driven primarily by a 4 percent increase in water sales over the previous
period due to customer growth and recovery from reduced sales in California
related to El Nino in the first quarter of 1998.
During the first four months of 1999, two utility subsidiaries received
rate orders which are expected to provide $13.9 million in additional
annual revenues. Included in this $13.9 million is $13.1 million awarded
to the Company's New Jersey subsidiary in early April. Six subsidiaries
have rate increase applications on file before regulatory agencies which,
if granted in full, would provide approximately $60.3 million in additional
annual revenues. The largest of these, the Company's Pennsylvania
subsidiary's rate case, has been filed requesting $40 million in additional
annual revenues.
Operating expenses were up 9 percent to $167.7 million in 1999 from $154.1
million in the first quarter of 1998. Adverse winter weather experienced
at several utility subsidiaries contributed to increased maintenance,
purchased water and production costs. Other expense elements of note were
expected increases in depreciation expense and general taxes, both related
to the Company's ongoing program of utility plant construction.
Interest expense rose by 10% to $40.1 million in the first quarter of 1999
compared to the first quarter of 1998, primarily due to an increase in
total debt to fund construction of new water service assets. The total
allowance for funds used (equity and borrowed) during construction
("AFUDC") recorded in the first quarter of 1999 was $5.6 million, compared
to $2.4 million in the first quarter of 1998. The utility subsidiaries
record AFUDC to the extent permitted by the regulatory authorities.
Income taxes decreased in the first three months of 1999 when compared to
the first three months in 1998, as a result of decreased earnings.
Net income to common stock was $18.7 million for the first quarter of 1999
compared with $20.6 million for the same period in 1998.
Capital Resources and Liquidity
- -------------------------------
All shares of common stock issued during 1999 have been the result of stock
issued in conjunction with the Dividend Reinvestment and Stock Purchase
Plan, the Employees' Stock Ownership Plan, the Savings Plan for Employees,
and the Long-Term Performance-Based Incentive Plan.
<PAGE> Page 12 FORM 10-Q
During the balance of 1999, in addition to the NEI acquisition (see Note
2), the Company plans to issue shares of common stock through its Dividend
Reinvestment and Stock Purchase Plan, the Employees' Stock Ownership Plan
and the Savings Plan for Employees. Proceeds from the issuance of common
stock will fund additional equity investments in subsidiaries.
The Company placed 108,875 shares of common stock into treasury in
connection with the Long-Term Performance-Based Incentive Plan in the first
quarter of 1999.
In the first four months of 1999, the Company invested $2.1 million in the
common stock of a subsidiary. It is anticipated that some subsidiaries
will sell long-term debt to institutional investors and common stock to the
Company during the remainder of 1999, with the proceeds used to fund
construction programs, continue acquisitions and repay bank loans.
Year 2000 Issues
- ----------------
Many computer systems in use today were designed and developed without
regard to the impact of the upcoming century change. Computer programs and
devices often use only two digits for the year to identify dates. As a
result, computer systems may fail completely or create erroneous results
unless corrective measures are taken.
The Company utilizes numerous computerized systems and date sensitive
devices in its operations. If some of these key systems and devices are
not ready for the Year 2000 there will likely be adverse effects on the
Company's business, results of operations, and financial condition. The
Company is also dependent on third parties that supply important materials
and services such as water treatment chemicals, electric power for pumps
and the processing of customer payments. The failure of some of these
third parties to be Year 2000 compliant on a timely basis would also have
an adverse effect on the Company. The Company has assigned a very high
priority to its Year 2000 compliance efforts, and as discussed below,
considerable progress has been made. These efforts are expected to be
substantially completed in the second quarter of 1999.
An inventory of all important computer programs and devices with embedded
technology has been prepared for each utility subsidiary. Those
inventories are being used to track the status of any necessary upgrades or
replacements, and to log the results of testing by Company personnel to
ensure that all important systems are in fact Year 2000 compliant. In some
instances work on other information technology projects has been delayed
because of Year 2000 remediation projects, but these delays are not
expected to have a significant impact on the Company's operations.
Because the Company is particularly dependent on its computerized
financial, customer service and treatment plant automation systems, those
systems are the primary areas in which Year 2000 efforts are focused.
The Company is currently implementing two new software packages for
financial and customer service applications that are Year 2000 compliant.
Although the decision to purchase and implement this software was based on
an analysis of all of the Company's current and future systems
<PAGE> Page 13 FORM 10-Q
requirements, once the decision was made these projects became a key part
of the Company's Year 2000 compliance plan. New enterprise software for
financial applications is now in use by all of the utility subsidiaries.
The new customer service software is currently being used by two of the
Company's subsidiaries, and another subsidiary is expected to begin using
the new software in July. Implementation of the new customer service
software will continue beyond 1999, so the customer service software
currently used by many of the subsidiaries is also being made Year 2000
compliant. Several of the utility subsidiaries are now using the
remediated Year 2000 compliant customer service software, and this project
is expected to be completed in July. In conjunction with these projects,
midrange and personal computers have been upgraded with hardware and
operating systems that are Year 2000 compliant.
Many of the Company's water treatment plants utilize automation systems
that are controlled by personal computers. These systems are being tested
and upgraded if necessary, and that work has been completed at most
facilities. The Company's production and distribution facilities also
utilize many pieces of equipment with embedded microcontroller chips.
These chips, which may be time/date sensitive, are an integral part of
critical operating equipment. Much of this equipment cannot be field
tested to evaluate Year 2000 compliance, so the Company used a systematic
approach to identify and resolve this issue that was completed during the
first quarter of 1999. As a contingency, the Company's production and
distribution facilities can be operated manually in the event of an
internal Year 2000 related failure.
In addition to the work being done on the Company's internal systems,
interfaces used to exchange information with banks and other entities are
being tested to ensure Year 2000 compliance. And where feasible, plans are
being formulated to minimize the impact of problems outside parties may
have in providing supplies and services.
The cost of the new financial and customer service software, implementation
consulting services, and the cost of upgrading and replacing computers and
other equipment will be capitalized by the utility subsidiaries and
included in future rate increase requests. The total cost of these capital
projects is expected to be approximately $45 million, of which
approximately $39 million has been incurred to date. Costs for specific
Year 2000 remediation projects will be charged to expense unless they meet
the requirements for deferral as regulatory assets. However, current
period expenses are not expected to be materially different from the usual
ongoing level of information systems related expenses.
<PAGE> Page 14 FORM 10-Q
New Accounting Standards
- ------------------------
In 1999, the Company will adopt Statement of Financial Accounting Standards
No. 133 "Accounting for Derivative Instruments and Hedging Activities"
(SFAS 133). This statement establishes accounting and reporting standards
for derivative instruments and hedging activities. SFAS 133 was issued by
the Financial Accounting Standards Board in June of 1998 and requires that
an entity recognize all derivatives as either assets or liabilities in the
statement of financial position and measure those instruments at fair
value. As of March 31, 1999, the Company had no derivative instruments or
hedging activities.
Forward Looking Information
- ---------------------------
Forward looking statements in this report, including, without limitation,
statements relating to the Company's plans, strategies, objectives,
expectations, intentions and adequacy of resources, are made pursuant to
the safe harbor provisions of the U.S. Private Securities Litigation Reform
Act of 1995. These forward looking statements involve known and unknown
risks, uncertainties and other factors which may cause the actual results,
performance or achievements of the Company to be materially different from
any future results, performance or achievements expressed or implied by
such forward looking statements. These factors include, among others, the
following: general economic and business conditions; competition; success
of operating initiatives, advertising and promotional efforts; existence of
adverse publicity or litigation; changes in business strategy or plans;
quality of management; availability, terms and development of capital;
business abilities and judgment of personnel; changes in, or the failure to
comply with governmental regulations; Year 2000 issues; and other factors
described in filings of the Company with the SEC. The Company undertakes
no obligation to publicly update or revise any forward looking statement,
whether as a result of new information, future events or otherwise.
<PAGE> Page 15 FORM 10-Q
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
-------------------------------------------------------------
(a) The Company held its annual meeting of shareholders on May 6, 1999.
(c) Class I Directors (with a term expiring in 2000) were elected by
a vote of:
For Withheld
--- --------
William O. Albertini 69,928,098 775,999
Rhoda W. Cobb 69,860,057 775,999
Ray J. Groves 69,884,789 775,999
Ross A. Webber 69,920,106 775,999
Horace Wilkins, Jr. 69,895,394 775,999
Class II Directors (with a term expiring in 2001) were elected by
a vote of:
For Withheld
--- --------
Henry G. Hager 69,933,145 775,999
Gerald C. Smith 69,937,464 775,999
Anthony P. Terracciano 69,904,972 775,999
Marilyn Ware 69,860,372 775,999
Class III Directors (with a term expiring in 2002) were elected by
a vote of:
For Withheld
--- --------
J. James Barr 69,957,056 775,999
Elizabeth H. Gemmill 69,909,836 775,999
Nancy Ware Wainwright 69,835,133 775,999
Paul W. Ware 69,860,206 775,999
The amendment of the Registrant's restated certificate of incorporation, as
amended, to provide for the classification of the board of directors into
three separate classes was approved by a vote of 44,369,613 for the
amendment, and 16,054,055 against, with 443,419 abstentions.
The appointment of the PricewaterhouseCoopers LLP as the Company's
independent accountants for the year ending December 1999 was approved by a
vote of 70,156,018 for the appointment and 295,873 against, with 221,593
abstentions.
<PAGE> Page 16 FORM 10-Q
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
-----------------------------------------
A. Exhibits
--------
Exhibit Number Description
- -------------- -----------
3 Articles of Incorporation and By-laws
(a) Certificate of Incorporation of the Registrant, as
amended to May 6, 1999, is filed herewith.
(b) By-laws of the Registrant, as amended to May 6, 1999,
are filed herewith.
10 Material Contracts
Amendment dated December 22, 1998 to Consulting Agreement
between Registrant and Anthony P. Terracciano, is filed
herewith.
27 Financial Data Schedule, is filed herewith
electronically.
B. Reports on Form 8-K
-------------------
No report on Form 8-K was filed by the registrant during the quarter ended
March 31, 1999.
<PAGE> Page 17 FORM 10-Q
SIGNATURES
- ----------
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.
AMERICAN WATER WORKS COMPANY, INC.
Date May 10, 1999 /s/ J. James Barr
- ---------------------- --------------------------------------
President and Chief Executive Officer
(Authorized Officer)
Date May 10, 1999 /s/ Robert D. Sievers
- ---------------------- --------------------------------------
Comptroller
(Chief Accounting Officer)
EXHIBIT 3(a)
RESTATED CERTIFICATE OF INCORPORATION
OF AMERICAN WATER WORKS COMPANY, INC.
American Water Works Company, Inc., a Corporation organized and
existing under the laws of the State of Delaware, hereby certifies as
follows:
A. The name of the Corporation is American Water Works Company, Inc. The
Corporation was originally incorporated under the name American Communities
Company, and the original Certificate of Incorporation of the Corporation
was filed with the Secretary of State of the State of Delaware on August
28, 1936.
B. Pursuant to Sections 242 and 245 of the General Corporation Law of the
State of Delaware, this Restated Certificate of Incorporation restates and
integrates and further amends the provisions of the Certificate of
Incorporation of this Corporation.
C. The text of the Restated Certificate of Incorporation as heretofore
amended or supplemented is hereby restated and further amended to read in
its entirety as follows:
First. The name of the Corporation is
AMERICAN WATER WORKS COMPANY, INC.
Second. The registered office the Corporation in the State of Delaware
is to be located at No. 1209 Orange Street, in the City of Wilmington,
County of New Castle; and the name and address of its registered agent is
The Corporation Trust Company, No. 1209 Orange Street, Wilmington, Delaware
19801.
Third. The nature of the business, or objects or purposes to be
transacted, promoted or carried on by the Corporation are as follows:
1. To invest in, purchase, acquire, hold, pledge, hypothecate,
exchange, sell, deal in, and dispose of, alone or in conjunction with
others, stocks, bonds and other evidences of indebtedness and
obligations, and evidences of any interest in respect thereof, of any
other corporation or corporations, including particularly (without
limitation of the generality of the foregoing) any corporation or
corporations engaged in the collection, purification, supply and sale
of water or controlling corporations so engaged, and while the owner
or holder of any such, to exercise all the rights, powers and
privileges of ownership in respect thereof; to issue in exchange for
any such stocks, bonds and other evidences of indebtedness and
obligations, and evidences of any interest in respect thereof, the
Corporation's own stocks, bonds or other obligations; to aid by loan,
subsidy, guaranty, or otherwise and to cause to be formed, merged or
reorganized or liquidated, those issuing or creating any such stocks,
bonds or other evidences of indebtedness or obligations, or evidences
of any interest in respect thereof, to the extent now or hereafter
permitted by law; to do and perform all such acts and things, to the
extent now or hereafter permitted by law, as may be necessary or
proper to protect, preserve, aid, enhance or improve the investment of
the Corporation in any such stocks, bonds or other evidences of
indebtedness or obligations, or evidences of any interest in respect
thereof, or those issuing or creating the same; and generally to do
all things incidental to such business.
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2. To purchase, acquire, hold, operate, mortgage, pledge,
hypothecate, exchange, sell, deal in and dispose of commodities and
other personal property and real property, plants, buildings and
equipment of every kind, character and description whatsoever and
wheresoever situated, and any interest therein, and to render
services to, or act as agent for, any other person or corporation.
3. To engage in any industrial, manufacturing, mercantile or
trading business of any kind or character.
4. To enter into, make, perform and carry out or cancel and
rescind contracts or arrangements of any kind or character for any
lawful purposes pertaining to its business with any person, entity,
partnership, association, corporation or governmental, municipal or
public authority, domestic or foreign.
5. To acquire all or any part of the good will, rights, property
and business of any person, entity, partnership, association or
corporation heretofore or hereafter engaged in any business similar
to any business which the Corporation is authorized to conduct, to
pay for the same in cash or in stock, bonds, or other obligations of
the Corporation or otherwise, to hold, utilize and in any manner
dispose of the whole or any part of the rights and property so
acquired, and to assume in connection therewith any liabilities of
any such person, entity, partnership, association or corporation and
conduct in any lawful manner the whole or any part of the business
thus acquired.
6. To make any guaranty respecting stocks, dividends, securities,
indebtedness, interest, contracts or other obligations for any lawful
purposes pertaining to its business, to the extent permitted to be
done by a corporation organized under the laws of the State of
Delaware.
7. To borrow or raise moneys for any of the purposes of the
Corporation and from time to time without limit as to amount, to
draw, make, accept, endorse, execute and issue promissory notes,
drafts, bills of exchange, warrants, bonds, debentures and other
negotiable or non-negotiable instruments and evidences of
indebtedness, and to secure the payment thereof and of the interest
thereon by mortgage on, or pledge, conveyance or assignment in trust
of, the whole or any part of the assets of the Corporation, real,
personal or mixed, including contract rights, whether at the time
owned or thereafter acquired, and to sell, pledge or otherwise dispose
of such securities or other obligations of the Corporation for its
corporate purposes.
8. To purchase, hold, sell, transfer, reissue or cancel the
shares of its own capital stock and/or any securities or other
obligations of the Corporation, in the manner and to the extent now or
hereafter permitted by the laws of the State of Delaware; provided
that shares of its own capital stock belonging to the Corporation
shall not be voted upon directly or indirectly.
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9. In general for any lawful purposes pertaining to its business,
to have and exercise all the powers conferred by the laws of the State
of Delaware upon corporations formed thereunder; and to do any and all
of the acts and things herein set forth to the same extent as natural
persons could do, and in any part of the world, as principal, factor,
agent, contractor, trustee or otherwise, either alone or in company
with others; to establish and maintain offices and agencies within,
and anywhere outside of, the State of Delaware; and to exercise all or
any of its corporate powers and rights in the State of Delaware and in
any and all other states, territories, districts, colonies,
possessions or dependencies of the United States of America and in any
foreign countries.
10. To do everything necessary, proper, advisable or convenient
for the accomplishment of any of the purposes or the attainment of any
of the objects or the furtherance of any of the powers herein set
forth and to do every other act and thing incidental thereto or
connected therewith, provided the same be not forbidden by the laws of
the State of Delaware.
The foregoing clauses shall be construed as powers as well as objects
and purposes, and the matters expressed in each clause shall, except as
otherwise expressly provided, be in no wise limited by reference to or
inference from the terms of any other clause; and the expression of one
thing shall not be deemed to exclude another not expressed, although it be
of like nature.
The Corporation shall be authorized to exercise and enjoy all other
powers, rights and privileges granted by an Act of the General Assembly of
the State of Delaware entitled "An Act providing a General Corporation
Law," approved March 10, 1899, to corporations of this character and all
the powers conferred upon such corporations by the laws of the State of
Delaware, as in force from time to time, so far as not in conflict
herewith, or which may be conferred by all acts heretofore or hereafter
amendatory of or supplemental to said Act or said laws; provided, however,
that the Corporation shall not in any state, territory, district,
possession or country carry on any business, or exercise any powers, which
a corporation organized under the laws thereof could not carry on or
exercise.
Fourth. The total number of shares of all classes of stock which the
Corporation shall have authority to issue shall be 80,704,400, of which (a)
1,954,400 shares shall be Cumulative Preferred Stock, of the par value of
$25 per share, issuable in series, (b) 750,000 shares shall be Cumulative
Preference Stock, of the par value of $25 per share, issuable in series,
(c) 3,000,000 shares shall be Cumulative Preferential Stock, of the par
value of $35 per share, issuable in series, and (d) 75,000,000 shares shall
be Common Stock, of the par value of $1.25 per share.
The minimum amount of capital with which the Corporation will commence
business is $1,000.
The designations and the voting powers, preferences and relative,
participating, optional or other special rights, and qualifications,
limitations or restrictions thereof, of the Cumulative Preferred Stock, the
Cumulative Preference Stock and the Cumulative Preferential Stock, and of
certain series thereof, and of the Common Stock, which are fixed by this
Certificate of Incorporation, and the express grant of authority to the
Board of Directors of
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the Corporation (hereinafter referred to as the Board of Directors) to fix
by resolution or resolutions providing for the issue of other series of the
Cumulative Preferred Stock, the Cumulative Preference Stock and the
Cumulative Preferential Stock the designations and the voting powers,
preferences and relative, participating, optional or other special rights,
and qualifications, limitations or restrictions thereof, of such other
series which are not fixed by this Certificate of Incorporation, shall be
as follows:
DIVISION A - CUMULATIVE PREFERRED STOCK
1. Issue in Series.
The Cumulative Preferred Stock may be issued at any time or from time
to time in any amount, not exceeding in the aggregate (including all shares
of any and all series thereof theretofore issued) the total number of
shares of Cumulative Preferred Stock hereinabove authorized, as Cumulative
Preferred Stock of one or more series, as hereinafter provided. All shares
of any one series of Cumulative Preferred Stock shall be alike in every
particular, each series thereof shall be distinctly designated by letter or
descriptive words, and all series of Cumulative Preferred Stock shall rank
equally and be identical in all respects except as permitted by the
provisions of Section 2 of this Division A.
2. Creation of Series.
Authority is hereby expressly granted to and vested in the Board of
Directors at any time or from time to time to issue the Cumulative
Preferred Stock as Cumulative Preferred Stock of any series, and in
connection with the creation of each such series to fix by the resolution
or resolutions providing for the issue of shares thereof the voting powers,
designations, preferences and relative, participating, optional or other
special rights, and qualifications, limitations or restrictions thereof, of
such series, to the full extent now or hereafter permitted by the laws of
the State of Delaware, in respect of the matters set forth in the following
paragraphs (a) to (i), inclusive:
(a) The distinctive designation of such series and the number of
shares which shall constitute such series, which number may be
increased or decreased (but not below the number of shares thereof
then outstanding) from time to time by action of the Board of
Directors;
(b) The dividend rate per annum of such series, and the date
from which dividends on shares of such series shall be cumulative
(hereinafter sometimes called the date of cumulation), which date of
cumulation shall be identical for all shares of such series;
(c) The price or prices at which, and the terms, times and
conditions on which, the shares of such series may be redeemed at
the option of the Corporation (hereinafter called the optional
redemption price);
(d) The amount or amounts payable upon the shares of such series
in the event of voluntary liquidation, dissolution or winding up of
the Corporation;
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(e) Whether or not the shares of such series shall be entitled
to the benefit of a sinking fund or a purchase fund to be applied to
the purchase or redemption of shares of such series, and if so
entitled, the amount of such fund and the manner of its application,
including the price or prices at which the shares of such series may
be redeemed or purchased through the application of such fund;
(f) Whether or not the shares of such series shall be made
convertible into, or exchangeable for, shares of any other class or
classes or of any other series of the same or any other class or
classes of stock of the Corporation, and if made so convertible or
exchangeable, the conversion price or prices, or the rates of
exchange, and the adjustments thereof, if any, at which such
conversion or exchange may be made, and any other terms and
conditions of such conversion or exchange;
(g) Whether or not the issue of any additional shares of such
series, or any future series in addition to such series, shall be
subject to restrictions in addition to the restrictions on the issue
of future series imposed by paragraph (c) of Section 7 of this
Division A or in the resolution or resolutions fixing the terms of
any series of Cumulative Preferred Stock theretofore issued pursuant
to this Article Fourth, and the terms of any such additional
restrictions;
(h) Whether or not the shares of such series shall be entitled
to the benefit of limitations restricting the purchase of, the payment
of dividends on, or the making of other distributions in respect of
stock of any class of the Corporation ranking junior to the Cumulative
Preferred Stock as to dividends or assets, and the terms of any such
restrictions; and
(i) With respect to any series of Cumulative Preferred Stock
created after October 1, 1961, whether or not the shares of such
series shall have the general power to vote in the election of
directors and for all other purposes, and if such power shall be
given, the qualifications, limitations and restrictions thereof, but
in no event shall the vote per share of such series be greater than
the vote per share of the Common Stock.
The three series of Cumulative Preferred Stock of the Corporation,
respectively designated as Cumulative Preferred Stock, 5 1/2% Series of
1961; Cumulative Preferred Stock, 5% Series; and Cumulative Preferred
Stock, 4.90% Series, heretofore created by resolutions of the Board of
Directors, shall have the voting powers, preferences and relative,
participating, optional or other special rights, and the qualifications,
limitations and restrictions thereof, which are applicable to the
Cumulative Preferred Stock of all series as set forth in this Article
Fourth, and shall also have the terms and provisions set forth in Sections
1 through 3, inclusive, of Division F of this Article Fourth which are
applicable to the respective series of such stock referred to therein,
being the same terms and provisions as were fixed in each case by
resolutions of the Board of Directors creating each of said series.
The voting powers, preferences and relative, participating, optional
or other special rights, and the qualifications, limitations and
restrictions thereof, applicable to the Cumulative Preferred Stock of all
series shall be as set forth in the following Sections 3 through 8,
inclusive, of this Division A and in Division D of this Article Fourth.
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3. Dividends.
(a) Out of the net profits or net assets of the Corporation legally
available therefor the holders of Cumulative Preferred Stock of each series
shall be entitled to receive, when and as declared by the Board of
Directors, dividends in cash at the rate per annum for such series fixed in
accordance with this Article Fourth, and no more, payable on the first days
of March, June, September and December in each year (the quarterly periods
ending on the first days of such months, respectively, being herein
designated as dividend periods), in each case from the date of cumulation
of such series, provided, that the initial dividend with respect to any
particular series shall be payable on such of said dates as shall be fixed
by the Board of Directors; and such dividends shall be cumulative (whether
or not in any dividend period or periods there shall be net profits or net
assets of the Corporation legally available for the payment of such
dividends), so that if at any time full cumulative dividends upon the
outstanding Cumulative Preferred Stock of all series to the end of the then
current dividend period shall not have been paid or declared and a sum
sufficient for the payment thereof set apart for such payment, the amount
of the deficiency shall be fully paid, but without interest, or dividends
in such amount declared on each such series and a sum sufficient for the
payment thereof set apart for such payment, before any sum or sums shall be
set aside for or applied to the purchase, redemption or other acquisition
of Cumulative Preferred Stock of any series and before any dividend shall
be declared or paid upon or set apart for, or any other distribution shall
be ordered or made in respect of, the Junior Stock and before any shares of
Junior Stock shall be purchased, redeemed, or otherwise acquired by the
Corporation.
(b) No dividends shall be declared or paid on any particular series of
the Cumulative Preferred Stock to the exclusion of any other series thereof
and all dividends declared on the Cumulative Preferred Stock of the
respective series outstanding shall be declared pro rata, so that the
amount of the dividend declared on any particular series of the Cumulative
Preferred Stock shall be in the proportion that the annual dividend
requirements of the shares of such series bear to the total annual dividend
requirements of the Cumulative Preferred Stock of all series at the time
outstanding.
(c) The holders of the Junior Stock shall not be entitled to receive
any dividends until full cumulative dividends to the end of the then
current dividend period upon the Cumulative Preferred Stock of all series
then outstanding shall have been paid or declared and a sum sufficient for
the payment thereof set apart for such payment and until the Corporation
shall have complied with the provisions of Section 5 of this Division A in
respect of any and all amounts then or theretofore required to be set aside
or applied in respect of any sinking fund or purchase fund referred to in
said Section 5.
(d) In the event of the issue of additional shares of Cumulative
Preferred Stock of any then existing series, all dividends paid on the
shares of Cumulative Preferred Stock of such series prior to the date of
issue of such additional shares thereof, and all dividends declared and
payable to holders of record of shares of Cumulative Preferred Stock of
such series on any date prior to the date of issue of such additional
shares thereof, shall be deemed to have been paid on the additional shares
of Cumulative Preferred Stock of such series so issued.
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4. Preference on Liquidation, etc.
In the event of any liquidation or dissolution or winding up of the
Corporation the holders of the Cumulative Preferred Stock of each series
shall be entitled to receive, out of the assets of the Corporation
available for distribution to its stockholders, before any distribution of
assets shall be made to the holders of the Junior Stock, (i) if such
liquidation, dissolution or winding up shall be involuntary, the sum of $25
per share plus full cumulative dividends thereon to the date of final
distribution to the holders of the Cumulative Preferred Stock, and (ii)
if such liquidation, dissolution or winding up shall be voluntary, the
amount per share fixed in accordance with Divisions A and F of this
Article Fourth plus full cumulative dividends thereon to the date of final
distribution to the holders of the Cumulative Preferred Stock; and the
holders of the Junior Stock shall be entitled, to the exclusion of the
holders of the Cumulative Preferred Stock of any and all series, to share
in all the assets of the Corporation then remaining as hereinafter
provided. If upon any liquidation or dissolution or winding up of the
Corporation the net assets of the Corporation shall be insufficient to pay
the holders of all outstanding shares of the Cumulative Preferred Stock the
full amounts to which they respectively shall be entitled, the holders of
shares of Cumulative Preferred Stock of all series shall share ratably in
any distribution of assets according to the respective amounts which would
be payable in respect of the shares held by them upon such distribution if
all amounts payable on or with respect to the Cumulative Preferred Stock of
all series were paid in full. Neither the merger nor consolidation of the
Corporation into or with any other corporation, nor the merger or
consolidation of any other corporation into or with the Corporation, nor a
sale, transfer or lease of all or any part of the assets of the
Corporation, shall be deemed to be a liquidation, dissolution or winding up
of the Corporation.
5. Sinking and Purchase Fund.
Out of any net profits or net assets of the Corporation legally
available therefor remaining after full cumulative dividends to the end of
the then current dividend period upon the Cumulative Preferred Stock of all
series then outstanding shall have been paid or declared and a sum
sufficient for the payment thereof set apart for such payment, and before
any dividends shall be declared or paid upon or set apart for, or any other
distribution shall be ordered or made in respect of, the Junior Stock and
before any shares of Junior Stock shall be purchased, redeemed, or
otherwise acquired by the Corporation, the Corporation shall set aside, in
respect of each series of Cumulative Preferred Stock any shares of which
shall at the time be outstanding and in respect of which a sinking fund or
purchase fund for the purchase or redemption thereof has been provided in
accordance with Divisions A and F of this Article Fourth, the sum or sums
then or theretofore required to be set aside by the terms of such
resolution or resolutions as a sinking fund or purchase fund, to be applied
in the manner specified in the provisions creating such fund. All shares of
Cumulative Preferred Stock redeemed or purchased through the application of
any such sinking fund or purchase fund shall be cancelled and shall not be
reissued.
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6. Redemption and Retirement.
(a) The Cumulative Preferred Stock of all or any series, or any part
thereof, at any time outstanding may be redeemed by the Corporation, at its
election expressed by resolution of the Board of Directors, at any time or
from time to time (which time, when fixed in each case and specified in the
notice of redemption, is hereinafter called the redemption date), upon not
less than thirty days previous notice to the holders of record of the
Cumulative Preferred Stock to be redeemed, given by mail in such manner as
may be prescribed by resolution of the Board of Directors, at the optional
redemption price or prices fixed in accordance with Divisions A and F of
this Article Fourth then applicable to the Cumulative Preferred Stock to be
redeemed, plus an amount equal to full cumulative dividends thereon to the
redemption date (the aggregate of which amounts is hereinafter in this
Section 6 called the redemption price); provided, however, that less than
all the Cumulative Preferred Stock of all series then outstanding may be
redeemed only after full cumulative dividends to the end of the then
current dividend period upon the Cumulative Preferred Stock of all series
then outstanding (other than the shares to be redeemed) shall have been
paid or declared and a sum sufficient for the payment thereof set apart for
such payment. If less than all the outstanding Cumulative Preferred Stock
of any series is to be redeemed, the selection of shares for redemption may
be made either by lot or pro rata in such manner as may be prescribed by
resolution of the Board of Directors. The Corporation may, if it shall so
elect, deposit the amount of the redemption price for the account of the
holders of Cumulative Preferred Stock entitled thereto with a bank or trust
company doing business in the State of New York, or in the Commonwealth of
Pennsylvania, and having capital and surplus of at least $5,000,000, at any
time prior to the redemption date (the date of such deposit being
hereinafter in this Section 6 referred to as the date of deposit).
(b) Notice of the Corporation's election to make such deposit,
including the date of deposit and the name and address of the bank or trust
company with which the deposit has been or will be made, shall be included
in the notice of redemption. On and after the redemption date (unless
default shall be made by the Corporation in providing moneys for the
payment of the redemption price pursuant to the notice of redemption), or,
if the Corporation shall make such deposit on or before the date specified
therefor in the notice of redemption, then on and after the date of
deposit, all dividends on the Cumulative Preferred Stock so called for
redemption shall cease to accrue, and, notwithstanding that any certificate
for shares of Cumulative Preferred Stock so called for redemption shall not
have been surrendered for cancellation, the shares represented thereby
shall no longer be deemed outstanding and all rights of the holders thereof
as stockholders of the Corporation shall cease and terminate, except the
right to receive the redemption price as hereinafter provided and except
any conversion or exchange rights not theretofore expired. Such conversion
or exchange rights, however, in any event shall cease and terminate upon
the redemption date or upon any earlier date fixed in accordance with this
Article Fourth for the termination of such rights. At any time on or after
the redemption date, or, if the Corporation shall elect to deposit the
moneys for such redemption as herein provided, then at any time on or after
the date of deposit, which time shall be specified by the Corporation in
the notice of redemption but shall not be later than the redemption date,
the respective holders of record of the Cumulative Preferred Stock to be
redeemed shall be entitled to receive the redemption price upon actual
delivery to the Corporation
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or, in the event of such deposit, to the bank or trust company with which
such deposit shall be made, of certificates for the shares to be redeemed,
such certificates, if required, to be properly stamped for transfer and
duly endorsed in blank or accompanied by proper instruments of assignment
and transfer thereof duly endorsed in blank. Any moneys so deposited which
shall remain unclaimed by the holders of such Cumulative Preferred Stock at
the end of five years after the redemption date shall be paid by such bank
or trust company to the Corporation; provided, however, that all moneys so
deposited which shall not be required for such redemption because of the
exercise of any right of conversion or exchange shall be returned to the
Corporation forthwith. Any interest accrued on moneys so deposited shall be
paid to the Corporation from time to time.
(c) All shares of Cumulative Preferred Stock redeemed pursuant to the
provisions of this Section 6 shall be cancelled and shall not be reissued.
7. Restrictions on Certain Corporate Action.
(a) So long as any shares of the Cumulative Preferred Stock of any
series shall be outstanding, the Corporation shall not, without the
consent, given in writing or by resolution adopted at a meeting duly called
for that purpose, of the holders of record of at least two-thirds of the
number of shares of the Cumulative Preferred Stock of all series then
outstanding, considered as a class without regard to series,
(1) alter or change the designations or the voting powers,
preferences or rights, or the qualifications, limitations or
restrictions thereof, of the Cumulative Preferred Stock or of any
series thereof in any material respect prejudicial to the holders
thereof; provided, however, that any such alteration or change of
the designations or of the voting powers, preferences or rights, or
the qualifications, limitations or restrictions thereof, of any
particular series of the Cumulative Preferred Stock which is not in
any material respect prejudicial to the holders of the Cumulative
Preferred Stock of any other series may be effected with the consent,
given as aforesaid, of the holders of record of at least two-thirds of
the number of shares of the particular series of Cumulative Preferred
Stock affected by such alteration or change; and provided, further,
that nothing in this subparagraph (1) shall require the vote or
consent of the holders of the Cumulative Preferred Stock for or in
respect of any increase in the authorized number of shares of Common
Stock or the creation or increase in the authorized number of shares
of any other class of stock which shall rank junior to the Cumulative
Preferred Stock as to both dividends and assets;
(2) create any new class of stock having preference over the
Cumulative Preferred Stock as to dividends or assets, or create any
obligation or security of the Corporation convertible into or
exchangeable for shares of stock of any class having such preference
over the Cumulative Preferred Stock;
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(3) sell, transfer or lease all, or substantially all, the assets
of the Corporation, unless as a part of such transaction or prior
thereto the Cumulative Preferred Stock of all series shall be retired
or called for redemption and the necessary funds therefor deposited as
provided in Section 6 of this Division A; provided, however, that
nothing in this subparagraph (3) shall require the vote or consent of
the holders of the Cumulative Preferred Stock for or in respect of the
creation of any mortgage or pledge of or other lien upon all or any
part of the assets of the Corporation; or
(4) effect a statutory merger or consolidation of or with any
other corporation or corporations; provided, however, that such
consent shall not be necessary if as a result of such merger or
consolidation: (i) the Corporation shall be the surviving corporation
and the Cumulative Preferred Stock then outstanding shall continue to
be outstanding; there shall be no alteration or change in the
designations or the voting powers, preferences or rights, or the
qualifications, limitations or restrictions thereof, of the Cumulative
Preferred Stock or any series thereof, in any material respect
prejudicial to the holders thereof and the number of authorized shares
of Cumulative Preferred Stock or shares being on a parity therewith as
to dividends or assets shall not exceed the number of such shares
which the Corporation shall have been authorized to issue immediately
preceding the date of such merger or consolidation (except with the
consent, given in writing or by resolution adopted at a meeting duly
called for that purpose, of the holders of record of at least a
majority of the number of shares of the Cumulative Preferred Stock of
all series then outstanding, considered as a class without regard to
series) and there shall not be created any new class of stock having
preference over the Cumulative Preferred Stock as to dividends or
assets; or (ii) if the Corporation shall not be the surviving
corporation, the shares of the Cumulative Preferred Stock of each
series then outstanding shall be converted into, or be exchangeable
for, a like number of shares of preferred stock of the surviving or
resulting corporation which preferred stock shall have substantially
the same designations, voting powers, preferences and rights, and
qualifications, limitations or restrictions thereof, as the Cumulative
Preferred Stock of such series, the number of authorized shares of
such preferred stock shall not exceed the number or shares of the
Cumulative Preferred Stock of all series which the Corporation shall
have been authorized to issue immediately preceding the date of such
merger or consolidation (except with the consent, given in writing
or by resolution adopted at a meeting duly called for that purpose,
of the holders of record of at least a majority of the number of
shares of the Cumulative Preferred Stock of all series then
outstanding, considered as a class without regard to series) and
there shall not be outstanding or created any class of stock of the
surviving or resulting corporation having preference over or being
on a parity with such preferred stock as to dividends or assets.
(b) So long as any shares of the Cumulative Preferred Stock of any
series shall be outstanding, the Corporation shall not, without the
consent, given in writing or by resolution adopted at a meeting duly called
for that purpose, of the holders of record of at least a majority of the
number of shares of the Cumulative Preferred Stock of all series then
outstanding, considered as a class
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without regard to series, increase the authorized number of shares of the
Cumulative Preferred Stock, or create any new class of stock which shall be
on a parity with the Cumulative Preferred Stock as to dividends or assets.
(c) (1) So long as any shares of Cumulative Preferred Stock of any
series shall be outstanding, the Corporation shall not, without the
consent, given in writing or by resolution adopted at a meeting duly called
for that purpose, of the holders of record of at least a majority of the
number of shares of the Cumulative Preferred Stock of all series then
outstanding, considered as a class without regard to series, issue any
shares of Cumulative Preferred Stock, in addition to the shares of the
first series thereof initially issued by the Corporation, or issue any
shares of any new class of stock which shall be on a parity with the
Cumulative Preferred Stock as to dividends or assets, unless the
consolidated net income of the Corporation and its subsidiaries (as
hereinafter defined) for any period of twelve consecutive calendar months
during the preceding 18 calendar months preceding a date not more than 60
days prior to the issue of such additional shares of Cumulative Preferred
Stock or of such other stock shall have been at least 1.35 times the sum of
(i) the annual interest charges on all indebtedness of the Corporation and
its subsidiaries to be outstanding immediately after the proposed issue of
such additional shares, (ii) the annual dividend requirements on all shares
of stock of any class ranking prior to or on a parity with the Cumulative
Preferred Stock as to dividends or assets to be outstanding immediately
after the proposed issue of such additional shares, (iii) the annual
dividend requirements on all shares of preferred stock of subsidiaries to
be outstanding immediately after the proposed issuance of such additional
shares, and (iv) the annual dividend requirements on all shares of
Cumulative Preferred Stock of all series to be outstanding immediately
after the proposed issue of such additional shares, provided, however, that
any interest and dividends payable to the Corporation or any subsidiary
shall be excluded from the foregoing calculation. If all or any part of the
proceeds of the additional shares of Cumulative Preferred Stock or such
other stock so proposed to be issued are to be coincidentally applied by
the Corporation, through subsidiaries, to the acquisition of plants or
other properties with a previous record of earnings, or to the acquisition
of subsidiaries with a previous record of earnings, there may be added to
such consolidated net income of the Corporation and its subsidiaries for
such period of twelve months, at the option of the Corporation, an amount
equal to the net income of such plants or properties or subsidiaries, for
the same twelve months' period, determined by the Board of Directors in a
manner consistent with the determination of consolidated net income of the
Corporation and its subsidiaries.
(2) Before issuing any shares of Cumulative Preferred Stock other than
the initial series or before issuing such other stock, there shall be
prepared and filed among the permanent records of the Corporation a
certificate of an independent public accountant of recognized standing,
selected in good faith by the Board of Directors, setting forth the
consolidated net income of the Corporation and its subsidiaries, as
hereinafter defined, for the twelve months' period selected by the
Corporation as the basis for compliance with the requirements of this
paragraph (c), setting forth such other financial information as may be
necessary to show compliance with the requirements of this paragraph (c),
and stating whether, in the opinion of such accountant, such requirements
are being complied with.
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(3) For the purposes of this paragraph (c) the following shall be
applicable:
(i) The term "consolidated net income of the Corporation and
its subsidiaries" shall be deemed to mean the total income (except
amortization of premium on debt), whether credited to surplus or
otherwise, of the Corporation and its subsidiaries and/or predecessor
company or companies from all sources for the period in question,
after deducting therefrom all operating and non-operating expenses and
charges, including maintenance expenses, such provisions for reserves
for retirements, renewals and replacements and for depreciation,
obsolescence and depletion as determined by the Board of Directors in
accordance with established practice of the Corporation and its
subsidiaries, taxes and rentals paid or accrued in respect of the
properties, license fees and franchise taxes paid or accrued, and
Federal and State taxes based on income paid or accrued, but excluding
interest charges on indebtedness of the Corporation and its
subsidiaries, dividends on preferred stocks of subsidiaries,
amortization of debt discount and expense, and profits or losses on
sales of capital assets, amortization of intangibles or property
adjustments, write-downs of property, or other adjustments, and
similar items.
(ii) The term "predecessor company or companies" shall be deemed
to mean any company substantially all the property of which shall have
been acquired by the Corporation or any subsidiary by purchase, merger
or otherwise during the period for which the consolidated net income
of the Corporation and its subsidiaries is to be determined and for
the purposes hereof shall be deemed to have been owned for the full
period considered.
(iii) The term "subsidiary" shall mean (A) any corporation of
which at least a majority of the voting stock is at the time directly
or indirectly owned or controlled by the Corporation, and (B) any
corporation of which at least a majority of the voting stock shall at
the time be owned or controlled, directly or indirectly, by the
Corporation and any subsidiary or subsidiaries as defined in the
foregoing clause (A) or by one or more such subsidiaries; provided,
however, that in no event shall there be included within the term
"subsidiary" any corporation substantially all of the physical
properties of which are located outside of the United States of
America.
(iv) The term "voting stock" shall mean stock entitled under
ordinary circumstances to vote for the election of directors and
does not mean or include stock so entitled to vote only upon failure
to pay dividends thereon or upon some other contingency or for some
special purpose or purposes.
8. Definitions.
(a) The term "Junior Stock" as used in this Article Fourth shall be
deemed to mean all stock of any class of the Corporation ranking junior to
the Cumulative Preferred Stock as to dividends or assets.
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(b) The term "full cumulative dividends" whenever used in this Article
Fourth with reference to any share of any series of the Cumulative
Preferred Stock shall be deemed to mean (whether or not in any dividend
period or any part thereof in respect of which such term is used there
shall have been net profits or net assets of the Corporation legally
available for the payment of such dividends) that amount which shall be
equal to dividends at the rate per share fixed for such series in
accordance with Divisions A and F of this Article Fourth, for the period of
time elapsed from the date of cumulation of such series to the date as of
which full cumulative dividends are to be computed (including the elapsed
portion of the current dividend period), less the amount of all dividends
paid or deemed paid upon such share.
DIVISION B - CUMULATIVE PREFERENCE STOCK
1. Series and Limitations of Variations between Series.
The shares of Cumulative Preference Stock may be divided into and
issued in series from time to time, as herein provided. All shares of
Cumulative Preference Stock of all series shall be of equal rank and all
shares of any particular series of Cumulative Preference Stock shall be
identical except as to the date or dates from which dividends on such
shares shall be cumulative, as permitted by Section 2 of this Division B.
The shares of Cumulative Preference Stock of different series, subject to
any applicable provisions of law, may vary as to the following terms and
provisions, which shall be determined and fixed in the case of each such
series at any time prior to the issuance of any shares thereof, in the
manner hereinafter in this Section 1 provided:
(a) The distinctive designation of such series and the number
of shares which shall constitute such series, which number may be
increased or decreased (but not below the number of shares thereof
then outstanding) from time to time by action of the Board of
Directors;
(b) The dividend rate per annum of such series, and the date
from which dividends on shares of such series shall be cumulative
(hereinafter sometimes called the date of cumulation);
(c) The price or prices at which, and the terms, times and
conditions on which, the shares of such series may be redeemed at
the option of the Corporation;
(d) The amount or amounts payable upon the shares of such series
in the event of voluntary liquidation, dissolution or winding up of
the Corporation (hereinafter sometimes called the voluntary
liquidation price);
(e) Whether or not the shares of such series shall be entitled
to the benefit of a sinking fund or a purchase fund to be applied to
the purchase or redemption of shares of such series, and if so
entitled, the amount of such fund and the manner of its application,
including the price or prices at which the shares of such series may
be redeemed or purchased through the application of such fund;
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(f) Whether or not the shares of such series shall be made
convertible into, or exchangeable for, shares of any other class or
classes or of any other series of the same or any other class or
classes of stock of the Corporation, and if made so convertible or
exchangeable, the conversion price or prices, or the rates of
exchange, and the adjustments thereof, if any, at which such
conversion or exchange may be made, and any other terms and conditions
of such conversion or exchange;
(g) Whether or not the shares of such series shall be entitled
to (1) any rights to vote or consent in connection with any particular
corporate acts (including, without limiting the generality of the
foregoing, the issuance of any additional shares of such series, or
any future series in addition to such series) in addition to the
rights set forth in Section 6 of this Division B or in any certificate
fixing the terms of any series of Cumulative Preference Stock
theretofore issued pursuant to this Article Fourth, and the terms of
any such rights, or (2) the right to elect directors in the event of
"six quarters' default in preference stock dividends" as provided in
Section 1 of Division D of this Article Fourth;
(h) Whether or not the shares of such series shall be entitled
to the benefit of limitations restricting the purchase of, the payment
of dividends on, or the making of other distributions in respect of
stock of any class of the Corporation ranking junior to the Cumulative
Preference Stock as to dividends or assets, and the terms of any such
restrictions; and
(i) Whether or not the shares of such series shall have the
general power to vote in the election of directors and for all other
purposes, and if such power shall be given, the qualifications,
limitations and restrictions thereof, but in no event shall the vote
per share of such series be greater than the vote per share of the
Common Stock.
The series of Cumulative Preference Stock of the Corporation
designated as 5% Cumulative Preference Stock shall have the terms and
provisions set forth in this Certificate of Incorporation which are
applicable generally to all series of Cumulative Preference Stock, and
shall also have the terms and provisions hereinafter set forth in Section 4
of Division F of this Article Fourth. In addition, authority is hereby
expressly granted to and vested in the Board of Directors at any time or
from time to time, within the then authorized number of shares of
Cumulative Preference Stock of all series, to establish or re-establish any
unissued shares of Cumulative Preference Stock as shares of Cumulative
Preference Stock of any series, to create one or more additional series of
Cumulative Preference Stock and to fix the terms and provisions of any such
series of Cumulative Preference Stock in the respects in which the shares
of any series may vary from the shares of other series of Cumulative
Preference Stock as hereinbefore in this Section 1 provided.
2. Dividends.
(a) Out of any net profits or net assets of the Corporation legally
available therefor remaining after full cumulative dividends to the end of
the then current dividend period upon the Cumulative Preferred Stock of all
series then outstanding shall have been paid or declared and a sum
sufficient for the payment thereof set apart for such payment, and after
the Corporation shall have complied with the provisions of the foregoing
Section 5 of Division A of this
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Article Fourth in respect of any and all amounts then or theretofore
required to be set aside or applied in respect of any sinking fund or
purchase fund referred to in said Section 5, then and not otherwise the
holders of Cumulative Preference Stock of each series shall, subject to the
provisions of this Article Fourth and of any certificate fixing the terms
of any series of the Cumulative Preferred Stock, be entitled to receive,
when and as declared by the Board of Directors, dividends in cash at the
rate per annum for such series fixed in accordance with this Article
Fourth, and no more, payable on the first days of March, June, September
and December in each year (the quarterly periods ending on the first days
of such months, respectively, being herein designated as dividend periods),
in each case from the date of cumulation of such series; provided that the
initial dividend with respect to any particular series shall be payable on
such of such dates as next succeeds the date of issue of the first shares
of such series to be issued, unless otherwise determined by the Board of
Directors; and such dividends shall be cumulative (whether or not in any
dividend period or periods there shall be net profits or net assets of the
Corporation legally available for the payment of such dividends), so that
if at any time full cumulative dividends upon the outstanding Cumulative
Preference Stock of all series to the end of the then current dividend
period shall not have been paid or declared and a sum sufficient for the
payment thereof set apart for such payment, the amount of the deficiency
shall be fully paid, but without interest, or dividends in such amount
declared on each such series and a sum sufficient for the payment thereof
set apart for such payment, before any sum or sums shall be set aside for
or applied to the purchase, redemption or other acquisition of Cumulative
Preference Stock of any series and before any dividend shall be declared or
paid upon or set apart for, or any other distribution shall be ordered or
made in respect of, Subordinate Stock and before any shares of Subordinate
Stock shall be purchased, redeemed, or otherwise acquired by the
Corporation.
(b) No dividends shall be declared or paid on any particular series of
the Cumulative Preference Stock to the exclusion of any other series
thereof and all dividends declared on the Cumulative Preference Stock of
the respective series outstanding shall be declared pro rata, so that the
amount of the dividend declared on any particular series of the Cumulative
Preference Stock shall be in the proportion that the annual dividend
requirements of the shares of such series bear to the total annual dividend
requirements of the Cumulative Preference Stock of all series at the time
outstanding.
(c) The holders of the Subordinate Stock shall not be entitled to
receive any dividends until full cumulative dividends to the end of the
then current dividend period upon the Cumulative Preference Stock of all
series then outstanding shall have been paid or declared and a sum
sufficient for the payment thereof set apart for such payment and until the
Corporation shall have complied with the provisions of Section 4 of this
Division B in respect of any and all amounts then or theretofore required
to be set aside or applied in respect of any sinking fund or purchase fund
referred to in said Section 4.
(d) Except as otherwise provided in Section 4 of Division F of this
Article Fourth with respect to the 5% Cumulative Preference Stock, the date
of cumulation of dividends on all shares of all series of Cumulative
Preference Stock shall be the quarterly dividend payment date next
preceding the date of their issue or, if issued on a quarterly dividend
payment date, then such date; provided that the certificate creating any
such series may specify that the date of cumulation of dividends on shares
of such series shall be the aforesaid date
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unless the Board of Directors shall determine when authorizing the issuance
of particular shares of such series that the date of cumulation of
dividends on such shares shall be the date of issue of each share thereof,
said date of issue for this purpose to be such date as the Board of
Directors shall authorize or fix; and provided further that if shares of
any such series, irrespective of the date of cumulation of dividends
thereon under the foregoing provisions, be issued after the record date for
the payment of a dividend on such Stock in respect of the then current
dividend period and prior to the payment date for such dividend, then said
Board, when declaring such dividend, may determine that said shares shall
not be entitled to participate in said dividend and the date of cumulation
of dividends thereon shall be such payment date, anything hereinabove to
the contrary notwithstanding; otherwise said dividend or the applicable
portion thereof shall be payable on said shares to the registered holder
thereof on said payment date from the commencement of said current dividend
period or, as the case may be, from the date of issue of said shares, as if
such shares had been registered in said holder's name on the record date
for said dividend.
3. Preference on Liquidation, etc.
In the event of any liquidation or dissolution or winding up of the
Corporation, after there shall have been paid or set aside in cash for the
holders of the Cumulative Preferred Stock of all series then outstanding
the full preferential amounts to which they are entitled under the
provisions of this Article Fourth, the holders of the Cumulative Preference
Stock of each series shall be entitled to receive, out of the assets of the
Corporation available for distribution to its stockholders, before any
distribution of assets shall be made to the holders of Subordinate Stock,
(i) if such liquidation, dissolution or winding up shall be involuntary,
the sum of $25 per share plus full cumulative dividends thereon to the date
of final distribution to the holders of the Cumulative Preference Stock,
and (ii) if such liquidation, dissolution or winding up shall be voluntary,
the voluntary liquidation price plus full cumulative dividends thereon to
the date of final distribution to the holders of the Cumulative Preference
Stock; and the holders of the Subordinate Stock shall be entitled, to the
exclusion of the holders of the Cumulative Preference Stock of any and all
series, to share in all the assets of the Corporation then remaining as
hereinafter provided. If upon any liquidation or dissolution or winding up
of the Corporation the net assets of the Corporation shall be insufficient
to pay the holders of all outstanding shares of the Cumulative Preference
Stock the full amounts to which they respectively shall be entitled, the
holders of shares of Cumulative Preference Stock of all series shall share
ratably in any distribution of assets according to the respective amounts
which would be payable in respect of the shares held by them upon such
distribution if all amounts payable on or with respect to the Cumulative
Preference Stock of all series were paid in full. Neither the merger nor
consolidation of the Corporation into or with any other corporation, nor
the merger or consolidation of any other corporation into or with the
Corporation, nor a sale, transfer or lease of all or any part of the assets
of the Corporation, shall be deemed to be a liquidation, dissolution or
winding up of the Corporation.
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4. Sinking and Purchase Funds.
Out of any net profits or net assets of the Corporation legally
available therefor remaining after full cumulative dividends to the end of
the then current dividend period upon the Cumulative Preference Stock of
all series then outstanding shall have been paid or declared and a sum
sufficient for the payment thereof set apart for such payment, and before
any dividends shall be declared or paid upon or set apart for, or any other
distribution shall be ordered or made in respect of, Subordinate Stock and
before any shares of Subordinate Stock shall be purchased, redeemed, or
otherwise acquired by the Corporation, the Corporation shall set aside, in
respect of each series of Cumulative Preference Stock any shares of which
shall at the time be outstanding and in respect of which a sinking fund or
purchase fund for the purchase or redemption thereof has been provided in
accordance with this Article Fourth, the sum or sums then or theretofore
required to be set aside as a sinking fund or purchase fund, to be applied
in the manner specified in the provisions creating such fund.
5. Redemption and Retirement.
(a) The Cumulative Preference Stock of all or any series, or any part
thereof, at any time outstanding may, subject to any applicable
restrictions with respect to the redemption of shares ranking junior to the
Cumulative Preferred Stock as to dividends or assets, be redeemed by the
Corporation, at its election expressed by resolution of the Board of
Directors, at any time or from time to time (which time, when fixed in each
case and specified in the notice of redemption, is hereinafter called the
redemption date), upon not less than 30 days previous notice to the holders
of record of the Cumulative Preference Stock to be redeemed, given by mail
in such manner as may be prescribed by resolution of the Board of
Directors, at the optional redemption price or prices then applicable to
the Cumulative Preference Stock to be redeemed, plus an amount equal to
full cumulative dividends thereon to the redemption date (the aggregate of
which amounts is hereinafter in this Section 5 called the redemption
price); provided, however, that less than all the Cumulative Preference
Stock of all series then outstanding may be redeemed only after full
cumulative dividends to the end of the then current dividend period upon
the Cumulative Preference Stock of all series then outstanding (other than
the shares to be redeemed) shall have been paid or declared and a sum
sufficient for the payment thereof set apart for such payment. If less than
all the outstanding Cumulative Preference Stock of any series is to be
redeemed, the selection of shares for redemption may be made either by lot
or pro rata in such manner as may be prescribed by resolution of the Board
of Directors. The Corporation may, if it shall so elect, deposit the amount
of the redemption price for the account of the holders of Cumulative
Preference Stock entitled thereto with a bank or trust company doing
business in the State of New York, or in the Commonwealth of Pennsylvania,
and having capital and surplus of at least $5,000,000, at any time prior to
the redemption date (the date of such deposit being hereinafter in this
Section 5 referred to as the date of deposit).
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(b) Notice of the Corporation's election to make such deposit,
including the date of deposit and the name and address of the bank or trust
company with which the deposit has been or will be made, shall be included
in the notice of redemption. On and after the redemption date (unless
default shall be made by the Corporation in providing moneys for the
payment of the redemption price pursuant to the notice of redemption), or,
if the Corporation shall make such deposit on or before the date specified
therefor in the notice of redemption, then on and after the date of
deposit, all dividends on the Cumulative Preference Stock so called for
redemption shall cease to accrue, and, notwithstanding that any certificate
for shares of Cumulative Preference Stock so called for redemption shall
not have been surrendered for cancellation, the shares represented thereby
shall no longer be deemed outstanding and all rights of the holders thereof
as stockholders of the Corporation shall cease and terminate, except the
right to receive the redemption price as hereinafter provided and except
any conversion or exchange rights not theretofore expired. Such conversion
or exchange rights, however, in any event shall cease and terminate upon
the redemption date or upon any earlier date duly fixed for the termination
of such rights. At any time on or after the redemption date, or, if the
Corporation shall elect to deposit the moneys for such redemption as herein
provided, then at any time on or after the date of deposit, which time
shall be specified by the Corporation in the notice of redemption but shall
not be later than the redemption date, the respective holders of record of
the Cumulative Preference Stock to be redeemed shall be entitled to receive
the redemption price upon actual delivery to the Corporation or, in the
event of such deposit, to the bank or trust company with which such deposit
shall be made, of certificates for the shares to be redeemed, such
certificates, if required, to be properly stamped for transfer and duly
endorsed in blank or accompanied by proper instruments of assignment and
transfer thereof duly endorsed in blank. Any moneys so deposited which
shall remain unclaimed by the holders of such Cumulative Preference Stock
at the end of five years after the redemption date shall be paid by such
bank or trust company to the Corporation; provided, however, that all
moneys so deposited which shall not be required for such redemption because
of the exercise of any right of conversion or exchange shall be returned to
the Corporation forthwith. Any interest accrued on moneys so deposited
shall be paid to the Corporation from time to time.
6. Restrictions on Certain Corporate Action.
(a) So long as any shares of the Cumulative Preference Stock of any
series shall be outstanding, the Corporation shall not, without the
consent, given in writing or by resolution adopted at a meeting duly called
for that purpose, of the holders of record of at least two-thirds of the
number of shares of the Cumulative Preference Stock of all series then
outstanding, considered as a class without regard to series,
(1) alter or change the designations or the voting powers,
preferences or rights, or the qualifications, limitations or
restrictions thereof, of the Cumulative Preference Stock or of any
series thereof in any material respect prejudicial to the holders
thereof; provided, however, that any such alteration or change of the
designations or of the voting powers, preferences or rights, or the
qualifications, limitations or restrictions thereof, of any particular
series of the Cumulative Preference Stock which is not in any material
respect prejudicial to the holders of the Cumulative Preference Stock
of any other series may be effected with
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the consent, given as aforesaid, of the holders of record of at least
two-thirds of the number of shares of the particular series of
Cumulative Preference Stock affected by such alteration or change; and
provided, further, that nothing in this subparagraph (1) shall require
the vote or consent of the holders of the Cumulative Preference Stock
for or in respect of any increase in the authorized number of shares
of Common Stock or the creation or increase in the authorized number
of shares of any other class of stock which shall rank junior to the
Cumulative Preference Stock as to both dividends and assets;
(2) create any new class of stock having preference over the
Cumulative Preference Stock as to dividends or assets, or create
any obligation or security of the Corporation convertible into or
exchangeable for shares of stock of any class having such preference
over the Cumulative Preference Stock;
(3) sell, transfer or lease all, or substantially all, the assets
of the Corporation, unless as a part of such transaction or prior
thereto the Cumulative Preference Stock of all series shall be retired
or called for redemption and the necessary funds therefor deposited as
provided in Section 5 of this Division B; provided, however, that
nothing in this subparagraph (3) shall require the vote or consent of
the holders of the Cumulative Preference Stock for or in respect of
the creation of any mortgage or pledge of or other lien upon all or
any part of the assets of the Corporation; or
(4) effect a statutory merger or consolidation of or with any
other corporation or corporations; provided, however, that such
consent shall not be necessary if as a result of such merger or
consolidation: (i) the Corporation shall be the surviving corporation
and the Cumulative Preference Stock then outstanding shall continue to
be outstanding; there shall be no alteration or change in the
designations or the voting powers, preferences or rights, or the
qualifications, limitations or restrictions thereof, of the Cumulative
Preference Stock or any series thereof, in any material respect
prejudicial to the holders thereof and the number of authorized shares
of Cumulative Preference Stock or shares being on a parity therewith
as to dividends or assets shall not exceed the number of such shares
which the Corporation shall have been authorized to issue immediately
preceding the date of such merger or consolidation (except with the
consent, given in writing or by resolution adopted at a meeting duly
called for that purpose, of the holders of record of at least a
majority of the number of shares of the Cumulative Preference Stock of
all series then outstanding, considered as a class without regard to
series) and there shall not be created any new class of stock having
preference over the Cumulative Preference Stock as to dividends or
assets; or (ii) if the Corporation shall not be the surviving
corporation, the shares of the Cumulative Preference Stock of each
series then outstanding shall be converted into, or be exchangeable
for, a like number of shares of preference stock of the surviving or
resulting corporation which preference stock shall have substantially
the same designations, voting powers, preferences and rights, and
qualifications, limitations or restrictions thereof, as the Cumulative
Preference Stock of such series, the number of authorized shares of
such preference stock shall not exceed the number of shares of the
Cumulative Preference Stock of all series which the Corporation shall
have been
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authorized to issue immediately preceding the date of such
merger or consolidation (except with the consent, given in writing or
by resolution adopted at a meeting duly called for that purpose, of
the holders of record of at least a majority of the number of shares
of the Cumulative Preference Stock of all series then outstanding,
considered as a class without regard to series) and there shall not be
outstanding or created any class of stock of the surviving or
resulting corporation having preference over or being on a parity with
such preference stock as to dividends or assets.
(b) So long as any shares of Cumulative Preference Stock of any series
shall be outstanding, the Corporation shall not, without the consent, given
in writing or by resolution adopted at a meeting duly called for that
purpose, of the holders of record of at least a majority of the number of
shares of Cumulative Preference Stock of all series then outstanding,
considered as a class without regard to series,
(1) increase the authorized number of shares of Cumulative
Preferred Stock or increase the authorized number of shares of
Cumulative Preference Stock;
(2) create any new class of stock ranking on a parity with the
Cumulative Preference Stock as to dividends or assets; or
(3) issue any shares of Cumulative Preference Stock, in addition
to the shares of 5% Cumulative Preference Stock issued by the
Corporation upon the merger of Northeastern Water Company into
the Corporation, or issue any shares of any new class of stock which
shall be on a parity with the Cumulative Preference Stock as to
dividends or assets, unless the consolidated net income of the
Corporation and its subsidiaries (as hereinafter defined) for any
period of twelve consecutive calendar months during the preceding 18
calendar months preceding a date not more than 60 days prior to the
issue of such additional shares of Cumulative Preference Stock or of
such other stock shall have been at least 1.25 times the sum of (w)
the annual interest charges on all indebtedness of the Corporation
and its subsidiaries to be outstanding immediately after the proposed
issue of such additional shares, (x) the annual dividend requirements
on all shares of stock of any class ranking prior to or on a parity
with the Cumulative Preference Stock as to dividends or assets to be
outstanding immediately after the proposed issue of such additional
shares, (y) the annual dividend requirements on all shares of
preferred stock of subsidiaries to be outstanding immediately after
the proposed issuance of such additional shares, and (z) the annual
dividend requirements on all shares of Cumulative Preference Stock of
all series to be outstanding immediately after the proposed issuance
of such additional shares; provided, however, that any interest and
dividends payable to the Corporation or any subsidiary shall be
excluded from the foregoing calculation. Before issuing any shares of
Cumulative Preference Stock other than the shares thereof issued upon
such merger or before issuing such other stock, there shall be
prepared and filed among the permanent records of the Corporation a
certificate of an independent public accountant of recognized
standing, selected in good faith by the Board of Directors, setting
forth such information as may be necessary to show compliance with
the requirements of this subparagraph (3), and stating whether, in
the opinion of such accountant,
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such requirements are being complied with. For purposes of this
subparagraph (3) the following shall be applicable:
(i) The term "consolidated net income of the Corporation and
its subsidiaries" shall be deemed to mean the total income
(except amortization of premium on debt), whether credited to
surplus or otherwise, of the Corporation and its subsidiaries
from all sources for the period in question, after deducting
therefrom all operating and non-operating expenses and charges,
including maintenance expenses, such provisions for reserves for
retirements, renewals and replacements and for depreciation,
obsolescence and depletion as is determined by the Board of
Directors in accordance with established practice of the
Corporation and its subsidiaries, taxes and rentals paid or
accrued in respect of the properties, license fees and franchise
taxes paid or accrued, and Federal and State taxes based on
income paid or accrued, but excluding interest charges on
indebtedness of the Corporation and its subsidiaries, dividends
on preferred stocks of subsidiaries, amortization of debt
discount and expense, and profits or losses on sales of capital
assets, amortization of intangibles or property adjustments,
write-downs of property, or other adjustments, and similar items.
In case, within or after the period for which the computation of
consolidated net income of the Corporation and its subsidiaries
is made pursuant to this subparagraph (3), the Corporation or any
subsidiary shall have acquired any property (either directly or
through the acquisition of a subsidiary or by merger of any
entity into or with the Corporation), such acquired property may
be treated as having been owned by the Corporation for the whole
of such period of computation and the net income thereof for such
period may, at the option of the Corporation, be included in the
consolidated net income of the Corporation and its subsidiaries,
and there shall be excluded, in computing such consolidated net
income, an amount equal to the net income estimated to be
applicable to any property sold or disposed of by the Corporation
or any of its subsidiaries after the beginning of such period of
computation.
(ii) The term "subsidiary" shall mean (A) any corporation of
which at least a majority of the voting stock is at the time
directly or indirectly owned or controlled by the Corporation,
and (B) any corporation of which at least a majority of the
voting stock shall at the time be owned or controlled, directly
or indirectly, by the Corporation and any subsidiary or
subsidiaries as defined in the foregoing clause (A) or by one or
more such subsidiaries; provided, however, that in no event shall
there be included within the term "subsidiary" any corporation
substantially all of the physical properties of which are located
outside of the United States of America.
(iii) The term "voting stock" shall mean stock entitled
under ordinary circumstances to vote for the election of
directors and does not mean or include stock so entitled to vote
only upon failure to pay dividends thereon or upon some other
contingency or for some special purpose or purposes.
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7. Definitions.
(a) The term "Subordinate Stock" as used in this Article Fourth shall
be deemed to mean all stock of any class of the Corporation ranking junior
to the Cumulative Preference Stock as to dividends or assets.
(b) The term "full cumulative dividends" whenever used in this Article
Fourth with reference to any share of any series of the Cumulative
Preference Stock shall be deemed to mean (whether or not in any dividend
period or any part thereof in respect of which such term is used there
shall have been net profits or net assets of the Corporation legally
available for the payment of such dividends) that amount which shall be
equal to dividends at the rate per share fixed for such series in
accordance with this Article Fourth for the period of time elapsed from the
date of cumulation of such series to the date as of which full cumulative
dividends are to be computed (including the elapsed portion of the current
dividend period), less the amount of all dividends paid upon such share
DIVISION B-1 - CUMULATIVE PREFERENTIAL STOCK
1. Series and Limitations of Variations between Series.
The shares of Cumulative Preferential Stock may be divided into and
issued in series from time to time, as herein provided. All shares of
Cumulative Preferential Stock of all series shall be of equal rank and all
shares of any particular series of Cumulative Preferential Stock shall be
identical except as to the date or dates from which dividends on such
shares shall be cumulative, as permitted by Section 2 of this Division B-1.
The shares of Cumulative Preferential Stock of different series, subject to
any applicable provisions of law, may vary as to the following terms and
provisions, which shall be determined and fixed in the case of each such
series at any time prior to the issuance of any shares thereof, in the
manner hereinafter in this Section 1 provided:
(a) The distinctive designation of such series and the number
of shares which shall constitute such series, which number may be
increased or decreased (but not below the number of shares thereof
then outstanding) from time to time by action of the Board of
Directors;
(b) The dividend rate per annum of such series, and the date
from which dividends on shares of such series shall be cumulative
(hereinafter sometimes called the date of cumulation);
(c) The price or prices at which, and the terms, times and
conditions on which, the shares of such series may be redeemed at
the option of the Corporation;
(d) The amount or amounts payable upon the shares of such series
in the event of involuntary liquidation, dissolution or winding up of
the Corporation (hereinafter sometimes called the involuntary
liquidation price), and the amount or amounts payable upon the shares
of such series in the event of voluntary liquidation, dissolution or
winding up of the Corporation (hereinafter sometimes called the
voluntary liquidation price);
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(e) Whether or not the shares of such series shall be entitled
to the benefit of a sinking fund or a purchase fund to be applied
to the purchase or redemption of shares of such series, and if so
entitled, the amount of such fund and the manner of its application,
including the price or prices at which the shares of such series may
be redeemed or purchased through the application of such fund;
(f) Whether or not the shares of such series shall be made
convertible into, or exchangeable for, shares of any other class or
classes or of any other series of the same or any other class or
classes of stock of the Corporation, and if made so convertible or
exchangeable, the conversion price or prices, or the rates of
exchange, and the adjustments thereof, if any, at which such
conversion or exchange may be made, and any other terms and conditions
of such conversion or exchange;
(g) Whether or not the shares of such series shall be entitled
to (1) any rights not theretofore granted to shares of Cumulative
Preferential Stock to vote or consent in connection with any
particular corporate acts and the terms of any such rights, or
(2) the right to elect directors in the event of "six quarters'
default in preferential stock dividends" as provided in Section 1 of
Division D of this Article Fourth;
(h) Whether or not the shares of such series shall be entitled
to the benefit of limitations restricting the purchase of, the payment
of dividends on, or the making of other distributions in respect of
stock of any class of the Corporation ranking junior to the Cumulative
Preferential Stock as to dividends or assets, and the terms of any
such restrictions;
(i) Whether or not the shares of such series shall have the
general power to vote in the election of directors and for all other
purposes, and if such power shall be given, the qualifications,
limitations and restrictions thereof, but in no event shall the vote
per share of such series be greater than the vote per share of the
Common Stock; and
(j) Whether or not the shares of such series shall have any
rights to subscribe to shares of any class of stock of the
Corporation, and the terms of any such rights.
Authority is hereby expressly granted to and vested in the Board of
Directors at any time or from time to time, within the then authorized
number of shares of Cumulative Preferential Stock of all series, to
establish or re-establish any unissued shares of Cumulative Preferential
Stock as shares of Cumulative Preferential Stock of any series, to create
one or more additional series of Cumulative Preferential Stock and to fix
the terms and provisions of any such series of Cumulative Preferential
Stock in the respects in which the shares of any series may vary from the
shares of other series of Cumulative Preferential Stock as hereinbefore in
this Section 1 provided.
2. Dividends.
(a) Out of any net profits or net assets of the Corporation legally
available therefor remaining after full cumulative dividends to the end of
the then current dividend period upon the Cumulative Preferred Stock and
the Cumulative Preference Stock of all series then outstanding shall have
been paid
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or declared and a sum sufficient for the payment thereof set apart for such
payment, and after the Corporation shall have complied with the provisions
of the foregoing Section 5 of Division A and Section 4 of Division B of
this Article Fourth in respect of any and all amounts then or theretofore
required to be set aside or applied in respect of any sinking fund or
purchase fund referred to in said Section 5 and said Section 4, then and
not otherwise the holders of Cumulative Preferential Stock of each series
shall, subject to the provisions of this Article Fourth and of any
certificate fixing the terms of any series of the Cumulative Preferred
Stock or the Cumulative Preference Stock, be entitled to receive, when and
as declared by the Board of Directors, dividends in cash at the rate per
annum for such series fixed in accordance with this Article Fourth, and no
more, payable on the first days of March, June, September and December in
each year (the quarterly periods ending on the first days of such months,
respectively, being herein designated as dividend periods), in each case
from the date of cumulation of such series; provided that the initial
dividend with respect to any particular series shall be payable on such of
such dates as next succeeds the date of issue of the first shares of such
series to be issued, unless otherwise determined by the Board of Directors;
and such dividends shall be cumulative (whether or not in any dividend
period or periods there shall be net profits or net assets of the
Corporation legally available for the payment of such dividends), so that
if at any time full cumulative dividends upon the outstanding Cumulative
Preferential Stock of all series to the end of the then current dividend
period shall not have been paid or declared and a sum sufficient for the
payment thereof set apart for such payment, the amount of the deficiency
shall be fully paid, but without interest, or dividends in such amount
declared on each such series and a sum sufficient for the payment thereof
set apart for such payment, before any sum or sums shall be set aside for
or applied to the purchase, redemption or other acquisition of Cumulative
Preferential Stock of any series and before any dividend shall be declared
or paid upon or set apart for, or any other distribution shall be ordered
or made in respect of, Sub-Preferential Stock and before any shares of
Sub-Preferential Stock shall be purchased, redeemed, or otherwise acquired
by the Corporation.
(b) No dividends shall be declared or paid on any particular series of
the Cumulative Preferential Stock to the exclusion of any other series
thereof and all dividends declared on the Cumulative Preferential Stock of
the respective series outstanding shall be declared pro rata, so that the
amount of the dividend declared on any particular series of the Cumulative
Preferential Stock shall be in the proportion that the annual dividend
requirements of the shares of such series bear to the total annual dividend
requirements of the Cumulative Preferential Stock of all series at the time
outstanding.
(c) The holders of the Sub-Preferential Stock shall not be entitled to
receive any dividends until full cumulative dividends to the end of the
then current dividend period upon the Cumulative Preferential Stock of all
series then outstanding shall have been paid or declared and a sum
sufficient for the payment thereof set apart for such payment and until the
Corporation shall have complied with the provisions of Section 4 of this
Division B-1 in respect of any and all amounts then or theretofore required
to be set aside or applied in respect of any sinking fund or purchase fund
referred to in said Section 4.
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(d) The date of cumulation of dividends on all shares of all series of
Cumulative Preferential Stock shall be the quarterly dividend payment date
next preceding the date of their issue or, if issued on a quarterly
dividend payment date, then such date; provided that the certificate
creating any such series may specify that the date of cumulation of
dividends on shares of such series shall be the aforesaid date unless the
Board of Directors when authorizing the issuance of particular shares of
such series shall provide for a different date of cumulation of dividends;
and provided further that if shares of any such series, irrespective of the
date of cumulation of dividends thereon under the foregoing provisions, be
issued after the record date for the payment of a dividend on such Stock in
respect of the then current dividend period and prior to the payment date
for such dividend, then said Board, when declaring such dividend, may
determine that said shares shall not be entitled to participate in said
dividend and the date of cumulation of dividends thereon shall be such
payment date, anything hereinabove to the contrary notwithstanding;
otherwise said dividend or the applicable portion thereof shall be payable
on said shares to the registered holder thereof on said payment from the
commencement of said current dividend period or, as the case may be, from
the date of issue of said shares, as if such shares had been registered in
said holder's name on the record date for said dividend.
3. Preference on Liquidation, etc.
In the event of any liquidation or dissolution or winding up of the
Corporation, after there shall have been paid or set aside in cash for the
holders of the Cumulative Preferred Stock and the Cumulative Preference
Stock of all series then outstanding the full preferential amounts to which
they are entitled under the provisions of this Article Fourth, the holders
of the Cumulative Preferential Stock of each series shall be entitled to
receive, out of the assets of the Corporation available for distribution to
its stockholders, before any distribution of assets shall be made to the
holders of Sub-Preferential Stock, (i) if such liquidation, dissolution or
winding up shall be involuntary, the applicable involuntary liquidation
price plus full cumulative dividends thereon to the date of final
distribution to the holders of the Cumulative Preferential Stock, and (ii)
if such liquidation, dissolution or winding up shall be voluntary, the
applicable voluntary liquidation price plus full cumulative dividends
thereon to the date of final distribution to the holders of the Cumulative
Preferential Stock; and the holders of the Sub-Preferential Stock shall be
entitled, to the exclusion of the holders of the Cumulative Preferential
Stock of any and all series, to share in all the assets of the Corporation
then remaining as hereinafter provided. If upon any liquidation or
dissolution or winding up of the Corporation the net assets of the
Corporation shall be insufficient to pay the holders of all outstanding
shares of the Cumulative Preferential Stock the full amounts to which they
respectively shall be entitled, the holders of shares of Cumulative
Preferential Stock of all series shall share ratably in any distribution of
assets according to the respective amounts which would be payable in
respect of the shares held by them upon such distribution if all amounts
payable on or with respect to the Cumulative Preferential Stock of all
series were paid in full. Neither the merger nor consolidation of the
Corporation into or with any other corporation, nor the merger or
consolidation of any other corporation into or with the Corporation, nor a
sale, transfer or lease of all or any part of the assets of the
Corporation, shall be deemed to be a liquidation, dissolution or winding up
of the Corporation.
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4. Sinking and Purchase Funds.
Out of any net profits or net assets of the Corporation legally
available therefor remaining after full cumulative dividends to the end of
the then current dividend period upon the Cumulative Preferential Stock of
all series then outstanding shall have been paid or declared and a sum
sufficient for the payment thereof set apart for such payment, and before
any dividends shall be declared or paid upon or set apart for, or any other
distribution shall be ordered or made in respect of, Sub-Preferential Stock
and before any shares of Sub-Preferential Stock shall be purchased,
redeemed, or otherwise acquired by the Corporation, the Corporation shall
set aside, in respect of each series of Cumulative Preferential Stock any
shares of which shall at the time be outstanding and in respect of which a
sinking fund or purchase fund for the purchase or redemption thereof has
been provided in accordance with this Article Fourth, the sum or sums then
or theretofore required to be set aside as a sinking fund or purchase fund,
to be applied in the manner specified in the provisions creating such fund.
5. Redemption.
(a) The Cumulative Preferential Stock of all or any series, or any
part thereof, at any time outstanding may, subject to any applicable
restrictions with respect to the redemption of shares ranking junior to the
Cumulative Preferred Stock or the Cumulative Preference Stock as to
dividends or assets, be redeemed by the Corporation, at its election
expressed by resolution of the Board of Directors, at any time or from time
to time (which time, when fixed in each case and specified in the notice of
redemption, is hereinafter called the redemption date), upon not less than
30 days previous notice to the holders of record of the Cumulative
Preferential Stock to be redeemed, given by mail in such manner as may be
prescribed by resolution of the Board of Directors, at the optional
redemption price or prices then applicable to the Cumulative Preferential
Stock to be redeemed, plus an amount equal to full cumulative dividends
thereon to the redemption date (the aggregate of which amounts is
hereinafter in this Section 5 called the redemption price); provided,
however, that less than all the Cumulative Preferential Stock of all series
then outstanding may be redeemed only after full cumulative dividends to
the end of the then current dividend period upon the Cumulative
Preferential Stock of all series then outstanding (other than the shares to
be redeemed) shall have been paid or declared and a sum sufficient for the
payment thereof set apart for such payment. If less than all the
outstanding Cumulative Preferential Stock of any series is to be redeemed,
the selection of shares for redemption may be made either by lot or pro
rata in such manner as may be prescribed by resolution of the Board of
Directors. The Corporation may, if it shall so elect, deposit the amount of
the redemption price for the account of the holders of Cumulative
Preferential Stock entitled thereto with a bank or trust company doing
business in the State of New York, or in the Commonwealth of Pennsylvania,
and having capital and surplus of at least $5,000,000, at any time prior to
the redemption date (the date of such deposit being hereinafter in this
Section 5 referred to as the date of deposit).
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(b) Notice of the Corporation's election to make such deposit,
including the date of deposit and the name and address of the bank or trust
company with which the deposit has been or will be made, shall be included
in the notice of redemption. On and after the redemption date (unless
default shall be made by the Corporation in providing moneys for the
payment of the redemption price pursuant to the notice of redemption), or,
if the Corporation shall make such deposit on or before the date specified
therefor in the notice of redemption, then on and after the date of
deposit, all dividends on the Cumulative Preferential Stock so called for
redemption shall cease to accrue, and, notwithstanding that any certificate
for shares of Cumulative Preferential Stock so called for redemption shall
not have been surrendered for cancellation, the shares represented thereby
shall no longer be deemed outstanding and all rights of the holders thereof
as stockholders of the Corporation shall cease and terminate, except the
right to receive the redemption price as hereinafter provided and except
any conversion, exchange or subscription rights not theretofore expired.
Such conversion or exchange rights, however, in any event shall cease and
terminate upon the redemption date or upon any earlier date duly fixed for
the termination of such rights. At any time on or after the redemption
date, or, if the Corporation shall elect to deposit the moneys for such
redemption as herein provided, then at any time on or after the date of
deposit, which time shall be specified by the Corporation in the notice of
redemption but shall not be later than the redemption date, the respective
holders of record of the Cumulative Preferential Stock to be redeemed shall
be entitled to receive the redemption price upon actual delivery to the
Corporation or, in the event of such deposit, to the bank or trust company
with which such deposit shall be made, of certificates for the shares to be
redeemed, such certificates, if required, to be properly stamped for
transfer and duly endorsed in blank or accompanied by proper instruments of
assignment and transfer thereof duly endorsed in blank. Any moneys so
deposited which shall remain unclaimed by the holders of such Cumulative
Preferential Stock at the end of five years after the redemption date shall
be paid by such bank or trust company to the Corporation; provided,
however, that all moneys so deposited which shall not be required for such
redemption because of the exercise of any right of conversion or exchange
shall be returned to the Corporation forthwith. Any interest accrued on
moneys so deposited shall be paid to the Corporation from time to time.
6. Definitions.
(a) The term "Sub-Preferential Stock" as used in this Article Fourth
shall be deemed to mean all stock of any class of the Corporation ranking
junior to the Cumulative Preferential Stock as to dividends or assets.
(b) The term "full cumulative dividends" whenever used in this Article
Fourth with reference to any share of any series of the Cumulative
Preferential Stock shall be deemed to mean (whether or not in any dividend
period or any part thereof in respect of which such term is used there
shall have been net profits or net assets of the Corporation legally
available for the payment of such dividends) that amount which shall be
equal to dividends at the rate per share fixed for such series in
accordance with this Article Fourth for the period of time elapsed from the
date or dates of cumulation of shares of such series to the date as of
which full cumulative dividends are to be computed (including the elapsed
portion of the current dividend period), less the amount of all dividends
paid upon such share.
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DIVISION C - COMMON STOCK
1. Dividends.
Out of any net profits or net assets of the Corporation legally
available therefor remaining after full cumulative dividends to the end of
the then current dividend period upon the Cumulative Preferred Stock, the
Cumulative Preference Stock and the Cumulative Preferential Stock of all
series of each class of stock then outstanding shall have been paid or
declared and a sum sufficient for the payment thereof set apart for such
payment, and after setting aside the sum or sums then or theretofore
required to be set aside as a sinking fund or purchase fund provided for
any one or more series of the Cumulative Preferred Stock, the Cumulative
Preference Stock and the Cumulative Preferential Stock, then and not
otherwise the holders of the Common Stock shall, subject to the provisions
of this Article Fourth and of any certificate fixing the terms of any
series of the Cumulative Preferred Stock, the Cumulative Preference Stock
or the Cumulative Preferential Stock, be entitled to receive such dividends
as may from time to time be declared by the Board of Directors.
2. Distribution of Assets.
In the event of any liquidation, dissolution or winding up of the
Corporation, after there shall have been paid or set aside in cash for the
holders of the Cumulative Preferred Stock, the holders of the Cumulative
Preference Stock and the holders of the Cumulative Preferential Stock the
full preferential amounts to which they are entitled under the provisions
of this Article Fourth, the holders of the Common Stock shall be entitled
to receive pro rata all of the remaining assets of the Corporation
available for distribution to its stockholders.
DIVISION D - VOTING RIGHTS
1. (a) Except as otherwise required by the laws of the State of
Delaware and as otherwise provided in this Division D or elsewhere in this
Article Fourth or in any certificate creating any series of any class of
stock of the Corporation, and subject to the provisions of the by-laws of
the Corporation, as from time to time amended, with respect to the closing
of the transfer books and the fixing of a record date for the determination
of stockholders entitled to vote, the holders of the Common Stock and the
holders of such of the series of Cumulative Preferred Stock, Cumulative
Preference Stock and Cumulative Preferential Stock, if any, as shall have
been granted such power pursuant to this Article Fourth or to any
certificate creating any series of any class of stock of the Corporation
shall exclusively possess voting power in the election of directors and for
all other purposes, and the holders of the other series of Cumulative
Preferred Stock, Cumulative Preference Stock and Cumulative Preferential
Stock shall have no voting power and shall not be entitled to any notice of
any meeting of stockholders.
(b) If at the time of any annual meeting of stockholders for the
election of directors a "year's default in preferred dividends", as
hereinafter defined, shall exist, the holders of the Cumulative Preferred
Stock, voting separately as a class and without regard to series, shall
have the right to elect two members of the Board of Directors; provided
that if at the time of any annual meeting of
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stockholders for the election of directors a "two years' default in
preferred dividends", as hereinafter defined, shall exist, the holders of
the Cumulative Preferred Stock, voting separately as a class and without
regard to series, shall have the right to elect the smallest number of
directors necessary to constitute a majority of the Board of Directors. In
either such event the holders of the Cumulative Preferred Stock, as such,
voting separately as a class, shall not be entitled to vote in the election
of any of the other directors of the Corporation, and the holders of the
other classes of stock shall be entitled to elect the remaining members of
the Board of Directors as provided in this Division D, but the holders of
such other classes of stock shall not, as such, be entitled to vote in the
election of the directors of the Corporation to be elected by the holders
of the Cumulative Preferred Stock; and any other provision of this
Certificate of Incorporation or of any certificate creating any series of
Cumulative Preferred Stock to the contrary notwithstanding, if and so long
as a "default in preferred dividends", as hereinafter defined, shall exist,
the holders of such series of the Cumulative Preferred Stock, if any, as
shall have been granted the general power to vote in the election of
directors pursuant to this Article Fourth shall be entitled to vote as
holders of the Cumulative Preferred Stock and shall not be entitled to vote
with the holders of the Common Stock in the election of directors or for
any other purposes pertinent to the provisions of this Division D.
(c) If at the time of any annual meeting of stockholders for the
election of directors a "six quarters' default in preference stock
dividends," as hereinafter defined, shall exist, the holders, if any, of
the "special voting series", as hereinafter defined, of Cumulative
Preference Stock shall have the right, voting separately as a class and
without regard to series, to elect two members of the Board of Directors.
In such event the holders of the "special voting series" of Cumulative
Preference Stock shall not be entitled to vote, as such, in the election of
any other directors of the Corporation, and the holders of the other
classes of stock shall be entitled to elect the remaining members of the
Board of Directors as provided in this Division D; but the holders of such
other classes of stock shall not, as such, be entitled to vote in the
election of directors of the Corporation to be elected by the holders of
the "special voting series" of Cumulative Preference Stock; and any other
provision of this Certificate of Incorporation or of any certificate
creating any series of Cumulative Preference Stock to the contrary
notwithstanding, if and so long as a "default in preference stock
dividends," as hereinafter defined, shall exist, the holders of such
"special voting series" of Cumulative Preference Stock, if any, as shall
have been granted the general power to vote in the election of directors
pursuant to this Article Fourth shall be entitled to vote as the holders of
the Cumulative Preference Stock and shall not be entitled to vote with the
holders of the Common Stock in the election of directors or for any other
purposes pertinent to the provisions of this Division D.
(d) If at the time of any annual meeting of stockholders for the
election of directors a "six quarters' default in preferential stock
dividends," as hereinafter defined, shall exist, the holders, if any, of
the "special voting series", as hereinafter defined, of Cumulative
Preferential Stock shall have the right, voting separately as a class and
without regard to series, to elect two members of the Board of Directors.
In such event the holders of the "special voting series" of Cumulative
Preferential Stock shall not be entitled to vote, as such, in the election
of any other directors of the Corporation, and the holders of the other
classes of stock shall be entitled to elect the remaining
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members of the Board of Directors as provided in this Division D; but the
holders of such other classes of stock shall not, as such, be entitled to
vote in the election of directors of the Corporation to be elected by the
holders of the "special voting series" of Cumulative Preferential Stock;
and any other provision of this Certificate of Incorporation or of any
certificate creating any series of Cumulative Preferential Stock to the
contrary notwithstanding, if and so long as a "default in preferential
stock dividends," as hereinafter defined, shall exist, the holders of such
"special voting series" of Cumulative Preferential Stock, if any, as shall
have been granted the general power to vote in the election of directors
pursuant to this Article Fourth shall be entitled to vote as the holders of
the Cumulative Preferential Stock and shall not be entitled to vote with
the holders of the Common Stock in the election of directors or for any
other purposes pertinent to the provisions of this Division D.
(e) Any Preferred Director shall continue to serve as such director
until the next annual meeting of stockholders and until his successor shall
be elected and qualified, unless prior to the end of such term a default in
preferred dividends shall cease to exist, in which event the term of all
Preferred Directors shall terminate and the resulting vacancies, if any, in
the Board of Directors shall be filled by the Common Directors. So long as
a default in preferred dividends shall exist, any vacancy in the office of
a Preferred Director shall be filled for the unexpired term by a majority
of the remaining Preferred Directors (or, if there is only one remaining
Preferred Director, by that Director) or, if there shall at the time be no
Preferred Director in office, by the remaining members of the Board of
Directors. Any Preference Stock Director shall continue to serve as such
director until the next annual meeting of stockholders and until his
successor shall be elected and qualified, unless prior to the end of such
term a default in preference stock dividends shall cease to exist, in which
event the term of all Preference Stock Directors shall terminate, and the
resulting vacancies, if any, in the Board of Directors shall be filled by
the Common Directors. So long as a default in preference stock dividends
shall exist, any vacancy in the office of a Preference Stock Director shall
be filled for the unexpired term by the remaining Preference Stock Director
or, if there shall at the time be no Preference Stock Director in office,
by the remaining members of the Board of Directors. Any Preferential Stock
Director shall continue to serve as such director until the next annual
meeting of stockholders and until his successor shall be elected and
qualified, unless prior to the end of such term a default in preferential
stock dividends shall cease to exist, in which event the term of all
Preferential Stock Directors shall terminate, and the resulting vacancies,
if any, in the Board of Directors shall be filled by the Common Directors.
So long as a default in preferential stock dividends shall exist, any
vacancy in the office of a Preferential Stock Director shall be filled for
the unexpired term by the remaining Preferential Stock Director or, if
there shall at the time be no Preferential Stock Director in office, by the
remaining members of the Board of Directors. Any vacancy in the office of a
Common Director shall be filled for the unexpired term by a majority of the
remaining Common Directors or, if at the time there shall be no Common
Director in office or if there are an even number of Common Directors in
office and it is not possible within 30 days after the vacancy occurred to
fill the vacancy by a majority vote of the remaining Common Directors, then
any such vacancy or vacancies shall be filled at a special meeting of the
holders of the Common Stock which shall promptly be called by the
Secretary.
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(f) For the purposes of this Section 1, a "year's default in preferred
dividends" shall be deemed to exist whenever at the time of any annual
meeting of stockholders for the election of directors the amount of full
cumulative dividends upon the shares of any series of the Cumulative
Preferred Stock shall be equivalent to four quarterly dividends or more, up
to and including seven quarterly dividends, and a "two-years' default in
preferred dividends" shall be deemed to exist whenever at the time of any
annual meeting for the election of directors the amount of full cumulative
dividends upon the shares of any series of the Cumulative Preferred Stock
shall be equivalent to eight quarterly dividends or more. If a "year's
default in preferred dividends" shall exist, such default in preferred
dividends shall be deemed to exist thereafter until, but only until, full
cumulative dividends on all shares of Cumulative Preferred Stock of all
series then outstanding shall have been paid to the end of the last
preceding quarterly dividend period. If a "two years' default in preferred
dividends" shall exist, such default shall be deemed to exist thereafter
until either (i) full cumulative dividends on all shares of Cumulative
Preferred Stock of all series then outstanding shall have been paid to the
end of the last preceding dividend period, or (ii) until the date when the
aggregate of the "available dividend income of the Corporation", as
hereinafter defined (calculated from the first date when the amount of full
cumulative dividends on all shares of Cumulative Preferred Stock of all
series then outstanding was equivalent to eight quarterly dividends)
exceeds the amount of full cumulative dividends on all shares of Cumulative
Preferred Stock of all series then outstanding (calculated to the end of
the last preceding quarterly dividend period), whichever shall first occur.
For the purposes of this Section 1, the term "available dividend
income" of the Corporation for the period under consideration shall be
deemed to mean the sum of:
(i) the lesser of (A) 75% of the net income (but not losses) for
such period which would be available for dividends on the common stock
of each operating subsidiary owned by the Corporation or any
subsidiary, or (B) the amount which would be available under
applicable state law, indenture, charter or other dividend
restrictions for payment to the Corporation or any subsidiary during
such period in the form of dividends on the common stock of each
operating subsidiary owned by the Corporation or any subsidiary,
excluding, in each case, any cash dividends received by the
Corporation or a subsidiary on common stock of an operating
subsidiary; plus
(ii) all income of the Corporation during such period from all
sources other than dividends on common stock of subsidiaries; plus
(iii) all income of each non-operating subsidiary of the
Corporation during such period from all sources other than dividends
on common stock of operating subsidiaries;
after deducting from such sum the total of:
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(x) all expenses and charges of the Corporation and all expenses
and charges of its non-operating subsidiaries (but only to the extent
of the income available to each such non-operating subsidiary for the
payment of such expenses and charges) for such period, including fixed
charges and income and franchise taxes paid or accrued; plus
(y) all dividends paid on the Cumulative Preferred Stock during
such period;
all as determined in accordance with generally accepted accounting
practices followed by the Corporation in reports required to be filed by
the Corporation with the Securities and Exchange Commission or other
similar governmental body with which the Corporation is required to file
periodic reports, or, if there is no such governmental body, with the New
York Stock Exchange; provided, that in making such determination, there
shall be included all items of income whether credited to surplus or
otherwise, but there shall be excluded any profits or losses on sales of
investments (after reflecting applicable expenses and taxes), any charges
arising in connection with or resulting from amortization of intangibles or
property adjustments, any write-downs of property or similar adjustments,
and any write-downs or other adjustments of the carrying value of
investments in subsidiaries.
For the purposes of this Section 1, the term "common stock" of any
subsidiary (including an operating subsidiary) shall mean stock (including
capital stock if only one class of stock be outstanding), whether or not
voting stock, not limited as to the amount payable thereon upon any
liquidation, dissolution or winding up of the issuing corporation, and the
term "operating subsidiary" shall mean any subsidiary, as defined in
Section 7 of Division A of this Article Fourth, principally engaged in the
ownership and operation of water supply and distribution systems.
(g) For the purposes of this Article Fourth, the following terms shall
have the following meanings:
(i) "special voting series" as applied to the Cumulative
Preference Stock shall mean all series of the Cumulative Preference
Stock which have been granted in Division F of this Article Fourth
or in any certificate creating any series of Cumulative Preference
Stock the right to vote for directors in the event of a "six quarters'
default in preference stock dividends" as provided in this Section 1;
(ii) "special voting series" as applied to the Cumulative
Preferential Stock shall mean all series of the Cumulative Preference
Stock which have been granted in Division F of this Article Fourth or
in any certificate creating any series of Cumulative Preferential
Stock the right to vote for directors in the event of a "six quarters'
default in preferential stock dividends" as provided in this Section
1;
(iii) "Common Director" shall mean a director elected by the
holders of the Common Stock and the holders of any series of
Cumulative Preferred Stock, Cumulative Preference Stock or Cumulative
Preferential Stock which shall have been granted and then possess the
general power to vote in the election of directors pursuant to this
Article Fourth or to any certificate creating any series of such
Stocks, all voting together as a class;
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(iv) "Preferred Director" shall mean a director elected by the
holders of the Cumulative Preferred Stock, voting separately as a
class;
(v) "Preference Stock Director" shall mean a director elected
by the holders of the "special voting series" of Cumulative Preference
Stock, voting separately as a class;
(vi) "Preferential Stock Director" shall mean a director elected
by the holders of the "special voting series" of Cumulative
Preferential Stock, voting separately as a class;
(vii) "default in preferred dividends," otherwise unqualified,
shall mean the failure to pay full cumulative dividends on all shares
of all Cumulative Preferred Stock then outstanding to the end of the
last preceding quarterly dividend period;
(viii) "default in preference stock dividends," otherwise
unqualified, shall mean the failure to pay full cumulative dividends
on all shares of all "special voting series" of Cumulative Preference
Stock then outstanding to the end of the last preceding quarterly
dividend period;
(ix) "default in preferential stock dividends," otherwise
unqualified, shall mean the failure to pay full cumulative dividends
on all shares of all "special voting series" of Cumulative
Preferential Stock then outstanding to the end of the last preceding
quarterly dividend period;
(x) "six quarters' default in preference stock dividends" shall
be deemed to exist whenever at the time of any annual meeting of
stockholders for the election of directors the amount of full
cumulative dividends upon the shares of any "special voting series"
of Cumulative Preference Stock shall be equivalent to six quarterly
dividends or more. If a "six quarters' default in preference stock
dividends" shall exist, such default shall be deemed to exist
thereafter until, but only until, full cumulative dividends on all
shares of Cumulative Preference Stock of all series then outstanding
shall have been paid to the end of the last preceding quarterly
dividend period; and
(xi) "six quarters' default in preferential stock dividends"
shall be deemed to exist whenever at the time of any annual meeting
of stockholders for the election of directors the amount of full
cumulative dividends upon the shares of any "special voting series"
of Cumulative Preferential Stock shall be equivalent to six quarterly
dividends or more. If a "six quarters' default in preferential stock
dividends" shall exist, such default shall be deemed to exist
thereafter until, but only until, full cumulative dividends on all
shares of Cumulative Preferential Stock of all series then outstanding
shall have been paid to the end of the last preceding quarterly
dividend period.
(h) If and so long as a "two years' default in preferred dividends",
as defined in this Section 1, shall exist, (i) a majority of the Board of
Directors of the Corporation shall constitute a quorum for all purposes,
unless the by-laws shall specify a lesser number, and (ii) no amendment of
the by-laws of the Corporation shall be effected by the Board of Directors
which would (x) change the number of directors necessary to constitute a
quorum of the Board of
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Directors without the consent, given in writing or by resolution adopted at
a meeting of stockholders (of which at least ten days' written notice of
the proposed amendment of the by-laws was given), of the holders of at
least a majority of the shares of Common Stock then outstanding, or (y)
change the date of the annual meeting for the election of directors.
(i) Nothing in this Section 1 shall be deemed to prevent an amendment
of the by-laws of the Corporation, in the manner therein provided, which
shall increase the number of directors of the Corporation so as to provide
additional places on the Board of Directors for either one or both of the
two directors so to be elected by the holders of the Cumulative Preferred
Stock or either one or both of the two directors to be elected by the
holders of the "special voting series" of Cumulative Preference Stock or
either one or both of the two directors to be elected by the holders of the
"special voting series" of Cumulative Preferential Stock, or so as to
increase the number of directors to be elected by the holders of the Common
Stock, nor shall anything in this Section 1 be deemed to prevent any other
change in the number of the directors of the Corporation, in case a "year's
default in preferred dividends," or a "two years' default in preferred
dividends", or a "six quarters' default in preference stock dividends", or
a "six quarters' default in preferential stock dividends", shall occur.
(j) So long as a default in preferred dividends shall exist, the
presence in person or by proxy of the holders of 25% of the outstanding
shares of the Cumulative Preferred Stock, considered as a class without
regard to series, shall be required to constitute a quorum of such class at
any meeting of stockholders or at any meeting of the holders of shares of
Cumulative Preferred Stock called for the purpose of electing a Preferred
Director; provided, however, that a majority of the holders of the
Cumulative Preferred Stock who are present in person or represented by
proxy at any such meeting at which there shall be no quorum of such class
shall have power to adjourn the meeting from time to time, without notice
other than announcement at the meeting, solely for the purpose of electing
a Preferred Director at an adjourned session of such meeting at which there
shall be a quorum of such class.
So long as a default in preference stock dividends shall exist, the
presence in person or by proxy of the holders of 25% of the outstanding
shares of the "special voting series" of Cumulative Preference Stock,
considered as a class and without regard to series, shall be required to
constitute a quorum of such "special voting series" at any meeting of
stockholders or at any meeting of the holders of the shares of such
"special voting series" called for the purpose of electing a Preference
Stock Director; provided, however, that a majority of the holders of such
"special voting series" who are present in person or represented by proxy
at any such meeting at which there shall be no quorum of such "special
voting series" shall have the power to adjourn the meeting from time to
time, without notice other than announcement at the meeting, solely for the
purpose of electing a Preference Stock Director at an adjourned session of
such meeting at which there shall be a quorum of such "special voting
series".
So long as a default in preferential stock dividends shall exist, the
presence in person or by proxy of the holders of 25% of the outstanding
shares of the "special voting series" of Cumulative Preferential Stock,
considered as a class and without regard to series, shall be required to
constitute a quorum of such "special voting series" at any meeting of
stockholders or at any meeting of
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the holders of the shares of such "special voting series" called for the
purpose of electing a Preferential Stock Director; provided, however, that
a majority of the holders of such "special voting series" who are present
in person or represented by proxy at any such meeting at which there shall
be no quorum of such "special voting series" shall have the power to
adjourn the meeting from time to time, without notice other than
announcement at the meeting, solely for the purpose of electing a
Preferential Stock Director at an adjourned session of such meeting at
which there shall be a quorum of such "special voting series".
So long as a default in preferred dividends or a default in preference
stock dividends or a default in preferential stock dividends shall exist,
the presence in person or by proxy of the holders of shares entitled to
cast a majority of the votes in the election of a Common Director shall be
required to constitute a quorum of such shares at any meeting of
stockholders at which the holders of such shares shall be entitled to vote
for the election of directors of the Corporation.
No delay or failure by the holders of any class of stock to elect one
or more of the directors they shall be entitled as a class to elect shall
invalidate the election of the members of the Board of Directors elected by
the holders of any other class of stock of the Corporation. Holders of
Cumulative Preferred Stock shall be entitled to notice of each meeting of
stockholders at which they shall have the right to elect a Preferred
Director. The holders of the "special voting series" of Cumulative
Preference Stock shall be entitled to notice of each meeting of
stockholders at which they shall have the right to elect a Preference Stock
Director. The holders of the "special voting series" of Cumulative
Preferential Stock shall be entitled to notice of each meeting of
stockholders at which they shall have the right to elect a Preferential
Stock Director.
(k) So long as a default in preferred dividends shall exist, the
provisions of this Section 1 with respect to the election of directors by
the holders of the Cumulative Preferred Stock, voting as a class as
aforesaid, shall be controlling, notwithstanding any other provisions of
this Certificate of Incorporation inconsistent with such provisions of this
Section 1. So long as a default in preference stock dividends shall exist,
except as otherwise required by reason of the preceding sentence, the
provisions of this Section l with respect to the election of directors by
the holders of the "special voting series" of the Cumulative Preference
Stock, voting as a class as aforesaid, shall be controlling at all times,
notwithstanding any other provision of this Certificate of Incorporation
(except the preceding sentence) inconsistent with such provisions of this
Section 1. So long as a default in preferential stock dividends shall
exist, except as otherwise required by reason of the two preceding
sentences, the provisions of this Section l with respect to the election of
directors by the holders of the "special voting series" of the Cumulative
Preferential Stock, voting as a class as aforesaid, shall be controlling at
all times, notwithstanding any other provision of this Certificate of
Incorporation (except the two preceding sentences) inconsistent with such
provisions of this Section 1.
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2. At all elections of directors by the stockholders of the
Corporation, each holder of any class of stock of the Corporation, as such,
shall be entitled to as many votes as shall equal the number of his shares
of such class entitled to vote for directors multiplied by the number of
directors to be elected by the holders of such class, as such, and he may
cast all of such votes for a single director or may distribute them among
the number of directors to be elected as aforesaid, or any two or more of
them as he may see fit; provided that if in Division F of this Article
Fourth or in any certificate creating any series of the Cumulative
Preferred Stock or Cumulative Preference Stock or Cumulative Preferential
Stock, the shares of any such series are given less than one vote per share
in the election of directors, each holder of the stock of any such series
of Cumulative Preferred Stock when voting with the Common Stock in any
election of directors during the absence of a "default in preferred
dividends" and each holder of the stock of any such series of Cumulative
Preference Stock when voting with the Common Stock in any election of
directors during the absence of a "default in preference stock dividends"
and each holder of the stock of any such series of Cumulative Preferential
Stock when voting with the Common Stock in any election of directors during
the absence of a "default in preferential stock dividends" shall, in each
case, be entitled to as many votes as the number of his shares of any such
series shall entitle him to vote in the election of directors multiplied by
the number of directors to be elected by the holders of the Common Stock
and the holders of such series, and he may cast all of such votes for a
single director of may distribute them among the number of directors to be
elected as aforesaid, or any two or more of them as he may see fit; and
provided further, that any provision of this Section 2 to the contrary
notwithstanding, the rights of the holders of any series of Cumulative
Preferred Stock in respect of any election of directors at a time when the
holders of such series vote with the Common Stock in the election of
directors during the absence of such a "default in preferred dividends",
and the rights of the holders of any series of Cumulative Preference Stock
in respect of any election of directors at a time when the holders of such
series vote with the Common Stock in the election of directors during the
absence of a "default in preference stock dividends", and the rights of the
holders of any series of Cumulative Preferential Stock in respect of any
election of directors at a time when the holders of such series vote with
the Common Stock in the election of directors during the absence of a
"default in preferential stock dividends", shall always be subject to such
qualifications, limitations and restrictions as are prescribed in the
certificate creating such series.
3. Unless otherwise mandatorily required by law, or by this
Certificate of Incorporation, or by a certificate creating any series of
Cumulative Preferred Stock or Cumulative Preference Stock or Cumulative
Preferential Stock, the vote or consent of the holders of shares
constituting a majority of the total vote of all shares having voting power
for the election of directors and for all other purposes at the time issued
and outstanding shall be sufficient in all respects to authorize, effect,
or validate any action required to be authorized, effected or validated by
vote or consent of the stockholders of the Corporation. The authorized
number of shares of Cumulative Preferential Stock may be increased or
decreased by the affirmative vote of the holders of record of not less than
a majority of the shares of stock of the Corporation having the general
power to vote for the election of directors and for all other purposes.
Except to the extent that any series of the Cumulative Preferential Stock
shall have been granted the general power to vote in the election of
directors and for all other purposes, no holders of shares of any series of
the Cumulative Preferential
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Stock shall have any right to vote or consent for or in respect of any
increase or decrease in the authorized number of shares of any class of
stock (whether ranking senior to, on a parity with, or junior to the
Cumulative Preferential Stock as to dividends or assets or whether now
existing or hereafter created) or for or in respect of the creation of any
new class of stock ranking junior to the Cumulative Preferential Stock as
to dividends or assets.
DIVISION E - GENERAL
1. Anything contained herein or in any certificate creating any series
of Cumulative Preferred Stock, Cumulative Preference Stock or Cumulative
Preferential Stock to the contrary notwithstanding, the rights of the
holders of all classes of stock of the Corporation in respect of dividends
shall at all times be subject to the power of the Board of Directors from
time to time to set aside such reserves and to make such other provisions,
if any, as said Board shall deem to be necessary or advisable for working
capital, for advances to and investments in subsidiaries, for expansion of
the Corporation's business (including the acquisition of real and personal
property for that purpose) and for any other purpose of the Corporation.
2. The net consideration received by the Corporation upon the issuance
of shares of its capital stock in excess of the par value of said shares
shall be credited to a capital surplus account. Capital surplus so created
shall not be available for the payment of cash dividends on the Common
Stock of the Corporation.
3. (a) Except as otherwise provided in Division F of this Article
Fourth or in any certificate creating any series of Cumulative Preferential
Stock, no holder of Cumulative Preferred Stock, Cumulative Preference Stock
or Cumulative Preferential Stock of the Corporation shall, as such holder,
have any right to purchase or subscribe for (i) any stock of any class, or
any warrant or warrants, option or options or other instrument or
instruments that shall confer upon the holder or holders thereof the right
to subscribe for or purchase or receive from the Corporation any stock of
any class or classes which the Corporation may issue or sell, whether or
not such stock shall be convertible into or exchangeable for any other
stock of the Corporation of any class or classes and whether or not such
stock shall be unissued shares authorized by the Certificate of
Incorporation or by any amendment thereto or shares of stock of the
Corporation acquired by it after the issue thereof, or (ii) any obligation
which the Corporation may issue or sell that shall be convertible into or
exchangeable for any shares of stock of the Corporation of any class or
classes, or to which shall be attached or appurtenant any warrant or
warrants, option or options or other instrument or instruments that shall
confer upon the holder or holders of such obligation the right to subscribe
for or purchase or receive from the Corporation any shares of its stock of
any class or classes.
(b) Upon any issue for money or other consideration of any stock of
the Corporation that may be authorized from time to time, no holder of
stock, irrespective of the kind of such stock, shall (except as otherwise
provided in Division F of this Article Fourth or in any certificate
creating any series of Cumulative Preferential Stock) have any preemptive
or other right to subscribe for, purchase or receive any proportionate or
other share of the stock so issued, but the Board of Directors may dispose
of all or any portion of such stock as and when it may determine free of
any such rights, whether by offering
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<PAGE>
the same to stockholders or by sale or other disposition as said Board may
deem advisable; provided, however, that if the Board of Directors shall
determine to offer any new or additional shares of Common Stock, or any
security convertible into Common Stock, for money, other than by a public
offering of all of such shares or an offering of all of such shares to or
through underwriters or investment bankers who shall have agreed promptly
to make a public offering of such shares, the same shall first be offered
pro rata to the holders of the then outstanding shares of Common Stock, and
to the holders of the then outstanding shares of any other class (or series
thereof) of capital stock that has expressly been granted subscription
rights, upon terms not less favorable to the purchaser (without deduction
of such reasonable compensation, allowance or discount for the sale,
underwriting or purchase as may be fixed by the Board of Directors) than
those on which the Board of Directors issues and disposes of such stock or
securities to other than such holders of Common Stock and such holders of
any such other class (or series); and provided further, that the time
within which such preemptive rights shall be exercised may be limited by
the Board of Directors to such time as to said Board may seem proper, not
less, however, than twenty days after mailing of notice that such stock
rights are available and may be exercised.
DIVISION F - TERMS AND PROVISIONS OF OUTSTANDING SERIES OF
CUMULATIVE
PREFERRED STOCK, 5% CUMULATIVE PREFERENCE STOCK AND
4.10% CONVERTIBLE CUMULATIVE PREFERENTIAL STOCK
1. Cumulative Preferred Stock, 5 1/2% Series of 1961.
In addition to the terms and provisions set forth in this Certificate
of Incorporation which are applicable to all series of Cumulative Preferred
Stock, the Cumulative Preferred Stock, 5 1/2% Series of 1961 shall have the
following terms and provisions:
(a) The designation of such series of Cumulative Preferred Stock
of the par value of $25 per share shall be Cumulative Preferred Stock,
5 1/2% Series of 1961 (hereinafter called the 1961 Series Stock), and
the number of shares which shall constitute such series shall be
50,000 shares.
(b) The dividend rate of the 1961 Series Stock shall be 5 1/2%
per annum upon the par value thereof, the date from which dividends on
shares of the 1961 Series Stock shall be cumulative shall be the date
of issue of said 250,000 shares, and the initial dividend shall be
payable December 1, 1961.
(c) (1) The shares of the 1961 Series Stock shall be subject to
redemption at the option of the Corporation, on the terms and
conditions specified in Section 6 of Division A of this Article
Fourth, at any time or from time to time, at the applicable redemption
prices set forth below plus, as provided in said Section 6, an amount
equal to full cumulative dividends thereon to the redemption date,
except that shares of the 1961 Series Stock shall not be redeemable at
the option of the Corporation prior to September 1, 1966 by the use of
the proceeds from, or in anticipation of the receipt of the proceeds
from, borrowings or the sale of securities by the Corporation at a
cost of less than 5 1/2% per annum.
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(2) The prices at which the shares of the 1961 Series Stock may
be redeemed at the option of the Corporation except as hereinbelow
provided, shall be as follows:
Period Redemption Price
(both dates inclusive) Per Share
----------------------------------------- ----------------
Date of issue to August 31, 1964 ........ $26.375
September 1, 1964 to August 31, 1967..... 26.00
September 1, 1967 to August 31, 1970..... 25.625
September 1, 1970 to August 31, 1980..... 25.25
September 1, 1980 and thereafter ........ 25.00
(3) If shares of the 1961 Series Stock shall be redeemed at the
option of the Corporation by the use of the proceeds from, or in
anticipation of the receipt of the proceeds from, (A) the sale or
other disposition by the Corporation of any of its fixed assets or of
securities of any of its subsidiaries [as defined in subparagraph
(3)(iii) of paragraph (c) of Section 7 of Division A of this Article
Fourth], or (B) a distribution paid or payable to the Corporation by a
subsidiary upon its dissolution or partial or total liquidation or in
connection with a reduction of its capital following a sale of assets
of such subsidiary, the redemption price shall be as follows:
Period Redemption Price
(both dates inclusive) Per Share
----------------------------------------- ----------------
Date of issue to August 31, 1964 ........ $25.6875
September 1, 1964 to August 31, 1967 .... 25.50
September l, 1967 to August 31, 1970 .... 25.3125
September 1, 1970 to August 31, 1980 .... 25.125
September 1, 1980 and thereafter ........ 25.00
(d) The amounts payable upon the shares of the 1961 Series Stock
in the event of any voluntary liquidation or dissolution or winding up
of the Corporation shall be an amount equal to the redemption price
(exclusive of dividends) specified in subparagraph (2) of paragraph
(c) of this Section 1 then in effect, plus, as provided in Section 4
of Division A of this Article Fourth, an amount equal to full
cumulative dividends thereon to the date of final distribution to the
holders of the Cumulative Preferred Stock.
(e) As a sinking fund for the 1961 Series Stock, the Corporation
shall, so long as any shares of the 1961 Series Stock shall be
outstanding, set aside, out of any funds legally available therefor,
on or before July 25 of each of the years beginning with the year 1966
to and including the year 1991, sums sufficient to redeem on the next
September 1 at the par value thereof, plus full cumulative dividends
thereon to the redemption date, shares of the 1961 Series Stock having
the following aggregate par values:
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1966..................... $208,300
1967..................... 208,300
1968..................... 208,400
1969..................... 208,300
1970..................... 208,300
1971..................... 208,400
1972 and thereafter...... 250,000
In the event the number of shares constituting the 1961 Series
Stock shall be increased at any time by action of the Board of
Directors pursuant to paragraph (a) of Section 2 of Division A of
this Article Fourth, the number of shares of the 1961 Series Stock
to be redeemed annually by operation of the sinking fund on each
September 1 after the July 25 next following the date of such increase
shall be equal to 3-1/3% of the increased number of shares to and
including September 1, 1971 and 4% of the increased number of shares
on each September 1 thereafter (subject to adjustment in each case to
the nearest whole share).
The Corporation shall be entitled to receive a credit against
the foregoing obligation to redeem on any date when such redemption
is required to be made, for the aggregate par value of the number of
shares of the 1961 Series Stock which shall have theretofore been
purchased by it at a cost not exceeding the redemption price for
sinking fund purposes and which shall not have been previously so
credited.
Sums so set aside for the sinking fund for the 1961 Series Stock
shall be applied to the redemption of shares of 1961 Series Stock on
the applicable September 1 in the same manner and with the same effect
as set forth in Section 6 of Division A of this Article Fourth.
All shares of the 1961 Series Stock so redeemed or purchased and
credited against the foregoing obligation to redeem shall be cancelled
by the Corporation and shall not be reissued.
(f) So long as any shares of the 1961 Series Stock shall be
outstanding, the Corporation shall not declare or pay or set apart any
dividend (other than dividends payable in Junior Stock) on its Junior
Stock, nor order or make any other distribution in respect of its
Junior Stock, nor purchase, redeem or otherwise acquire any shares of
its Junior Stock, unless, after giving effect thereto, the aggregate
of (1) the total net income of the Corporation earned after December
31, 1960, computed as hereinafter stated (provided that, if such
computation shall result in an accumulated net loss for any particular
period, such net loss shall be deducted from the amounts referred to
in clauses (2) and (3) following), plus (2) $4,250,000, plus (3) the
net amount received by the Corporation after December 31, 1960 on the
issue or sale of any shares of its Junior Stock, shall exceed the
aggregate of (i) all dividends (other than dividends payable in Junior
Stock) and other distributions declared, paid or made by the
Corporation after December 31, 1960 on its shares of Junior Stock of
all classes, and (ii) an amount equal to the cost to the Corporation
of any shares of its Junior Stock purchased, redeemed or otherwise
acquired by it after December 31, 1960. As used in this paragraph (f),
the term "net income of the Corporation" shall be deemed to mean the
total income of the Corporation from all sources for the period in
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question, whether recorded in the accounts as income or surplus
transactions, including all gains on the sale or other disposition
of assets, after deducting therefrom all expenses and charges,
including all losses on the sale or other disposition of assets, all
franchise taxes paid or accrued and all Federal and State taxes based
on income paid or accrued, but excluding any dividends declared or
paid on the stock of the Corporation of any class, any amortization of
capital stock expense, any write-downs, write-ups, or other
adjustments of the carrying value of its investments in subsidiaries,
and similar items, all as determined by the Board of Directors in
accordance with generally accepted accounting principles consistently
applied.
(g) The 1961 Series Stock shall not be convertible into any other
shares of the Corporation.
2. Cumulative Preferred Stock, 5% Series.
In addition to the terms and provisions set forth in this Certificate
of Incorporation which are applicable to all series of Cumulative Preferred
Stock, the Cumulative Preferred Stock, 5% Series shall have the following
terms and provisions:
(a) The designation of such series of Cumulative Preferred Stock
of the par value of $25 per share shall be Cumulative Preferred Stock,
5% Series (hereinafter called the 5% Series Stock), and the number of
shares which shall constitute such series shall be 101,777 shares.
(b) The dividend rate of the 5% Series Stock shall be 5% per
annum upon the par value thereof, the date from which dividends on
each share of the 5% Series Stock shall be cumulative shall be
January 1, 1962, and the initial dividend on each of said shares
shall be payable on the first day of March, June, September or
December next following the date of its issue.
(c) (1) The shares of the 5% Series Stock shall be subject to
redemption at the option of the Corporation, on the terms and
conditions specified in Section 6 of Division A of this Article
Fourth, at any time or from time to time, at the applicable redemption
prices set forth below plus, as provided in said Section 6, an amount
equal to full cumulative dividends thereon to the redemption date,
except that shares of the 5% Series Stock shall not be redeemable at
the option of the Corporation prior to January 1, 1967.
(2) The prices at which the shares of the 5% Series Stock may be
redeemed at the option of the Corporation shall be as follows:
Period Redemption Price
(both dates inclusive) Per Share
----------------------------------------- ----------------
January 1, 1967 to December 31, 1969..... $25.75
January 1, 1970 to December 31, 1972..... 25.50
January 1, 1973 and thereafter........... 25.25
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(d) The amounts payable upon the shares of the 5% Series Stock in
the event of any voluntary liquidation or dissolution or winding up of
the Corporation shall be:
(1) $26 per share if the date of final distribution to the
holders of Cumulative Preferred Stock pursuant to such
liquidation, dissolution or winding up is prior to January 1,
1967, and
(2) if the date of final distribution to the holders of
Cumulative Preferred Stock pursuant to such liquidation,
dissolution or winding up is after December 31, 1966, an amount
equal to the redemption price specified in subparagraph (2) of
paragraph (c) of this Section 2 in effect on such date,
plus, in each case, as provided in Section 4 of Division A of this
Article Fourth, an amount equal to full cumulative dividends thereon
to the date of such final distribution.
(e) In addition to the voting rights to which the shares of
Cumulative Preferred Stock are entitled as otherwise provided in this
Article Fourth and subject to the qualifications, limitations and
restrictions thereof as therein set forth, the shares of 5% Series
Stock shall have the general power to vote in the election of
directors and for all other purposes on the basis of one-tenth of a
vote per share.
(f) The 5% Series Stock shall not be convertible into any other
shares of the Corporation. No sinking fund shall be established for
the purchase or redemption of shares of the 5% Series Stock.
3. Cumulative Preferred Stock, 4.90% Series.
In addition to the terms and provisions set forth in this Certificate
of Incorporation which are applicable to all series of Cumulative Preferred
Stock, the Cumulative Preferred Stock, 4.90% Series shall have the
following terms and provisions:
(a) The designation of such series of Cumulative Preferred Stock
of the par value of $25 per share shall be Cumulative Preferred Stock,
4.90% Series (hereinafter called the 4.90% Series Stock), and the
number of shares which shall constitute such series shall be 134,400
shares.
(b) The dividend rate of the 4.90% Series Stock shall be 4.90%
per annum upon the par value thereof, the date from which dividends on
shares of the 4.90% Series Stock shall be cumulative shall be the date
of issue of the first of said shares to be issued, and the initial
dividend shall be payable on September l, 1963.
(c) (l) The shares of the 4.90% Series Stock shall be subject to
redemption at the option of the Corporation, on the terms and
conditions specified in Section 6 of Division A of this Article Fourth
at any time or from time to time, at the applicable redemption prices
set forth below plus, as provided in said Section 6, an amount equal
to full cumulative dividends thereon to the redemption date, except
that shares of the 4.90%
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Series Stock shall not be redeemable at the option of the Corporation
prior to June 1, 1968 by the use of the proceeds from, or in
anticipation of the receipt of the proceeds from, borrowings or the
sale of securities by the Corporation at a cost of less than 4.90% per
annum.
(2) The prices at which the shares of the 4.90% Series Stock may
be redeemed at the option of the Corporation, except as hereinbelow
provided, shall be as follows:
Period Redemption Price
(both dates inclusive) Per Share
----------------------------------------- ----------------
Date of issue to May 31, 1966............ $26.225
June 1, 1966 to May 31, 1969............. 25.90
June 1, 1969 to May 31, 1972............. 25.40
June 1, 1972 to May 31, 1975............. 25.25
June 1, 1975 to May 31, 1978............. 25.15
June 1, 1978 and thereafter.............. 25.00
(3) If shares of the 4.90% Series Stock shall be redeemed at the
option of the Corporation by the use of the proceeds from, or in
anticipation of the receipt of the proceeds from (A) the sale or other
disposition by the Corporation of any of its fixed assets or of
securities of any of its subsidiaries [as defined in subparagraph (3)
(iii) of paragraph (c) of Section 7 of Division A of this Article
Fourth] or (B) a distribution paid or payable to the Corporation by a
subsidiary upon its dissolution or partial or total liquidation or in
connection with a reduction of its capital following a sale of assets
with a reduction of its capital following a sale of assets of such
subsidiary, the redemption price shall be as follows:
Period Redemption Price
(both dates inclusive) Per Share
----------------------------------------- ----------------
Date of issue to May 31, 1966............ $25.6125
June 1, 1966 to May 31, 1969............. 25.45
June 1, 1969 to May 31, 1972............. 25.20
June 1, 1972 to May 31, 1975............. 25.125
June 1, 1975 to May 31, 1978............. 25.075
June 1, 1978 and thereafter.............. 25.00
(d) The amounts payable upon the shares of the 4.90% Series Stock
in the event of any voluntary liquidation or dissolution or winding up
of the Corporation shall be an amount equal to the redemption price
(exclusive of dividends) specified in subparagraph (c)(2) hereof then
in effect, plus, as provided in Section 4 of Division A of this
Article Fourth, an amount equal to full cumulative dividends thereon
to the date of final distribution to the holders of the Cumulative
Preferred Stock.
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(e) As a sinking fund for the 4.90% Series Stock, the Corporation
shall, so long as any shares of the 4.90% Series Stock shall be
outstanding, set aside, out of any funds legally available therefor,
on or before April 25 of each of the years beginning with the year
1968 to and including the year 1993, sums sufficient to redeem on the
next June 1 at the par value thereof, plus full cumulative dividends
thereon to the redemption date, the following numbers of such shares:
commencing on June 1, 1968 and continuing thereafter to and including
June 1, 1973, 3-1/3% of the largest number of such shares at any one
time theretofore outstanding; and on each June 1 thereafter, 4% of the
largest number of such shares at any one time theretofore outstanding
(subject to adjustment in each case to the nearest whole share).
The Corporation shall be entitled to receive a credit against the
foregoing obligation to redeem on any date when such redemption is
required to be made, for the aggregate par value of the number of
shares of the 4.90% Series Stock which shall have theretofore been
purchased by it at a cost not exceeding the redemption price for
sinking fund purposes and which shall not have been previously so
credited.
Sums so set aside for the sinking fund for the 4.90% Series Stock
shall be applied to the redemption of shares of 4.90% Series Stock on
the applicable June 1 in the same manner and with the same effect as
set forth in Section 6 of Division A of this Article Fourth.
All shares of the 4.90% Series Stock so redeemed or purchased and
credited against the foregoing obligation to redeem shall be cancelled
by the Corporation and shall not be reissued.
(f) So long as any shares of the 4.90% Series Stock shall be
outstanding, the Corporation shall not declare or pay or set apart any
dividend (other than dividends payable in stock) on its Common Stock,
nor order or make any other distribution in respect of its Common
Stock, nor purchase, redeem or otherwise acquire any shares of its
Common Stock, if, after giving effect thereto, the sum of the Common
Stock and surplus of the Company shall be less than $27,000,000. As
used in this paragraph (f), the term "Common Stock and surplus of the
Company" shall mean the sum of the par or stated value of all
outstanding Common Stock of the Company, all paid-in premiums on stock
and all paid-in surplus, capital surplus, earned surplus and other
surplus accounts of the Company, all as would be shown in a balance
sheet of the Company prepared in accordance with generally accepted
accounting practice consistently maintained; provided that in
determining surplus for this purpose, no additions or deductions shall
be made for any charges or credits to surplus made after December 31,
1962 and representing any write up, write down or other adjustment of
the carrying value of the Company's assets including investment in
subsidiaries, and all such surplus shall be calculated as of the end
of a monthly period ended not more than 120 days prior to the date of
the transaction in respect of which such determination is made.
(g) The 4.90% Series Stock shall not be convertible into any
other shares of the Corporation.
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<PAGE>
4. 5% Cumulative Preference Stock.
In addition to the terms and provisions set forth in this Certificate
of Incorporation which are applicable to all series of Cumulative
Preference Stock, the 5% Cumulative Preference Stock shall have the
following terms and provisions:
(a) The designation of such series of Cumulative Preference Stock
of the par value of $25 per share shall be 5% Cumulative Preference
Stock (hereinafter referred to as this Series) and the number of
shares which shall constitute this Series shall be 365,158 shares.
(b) The dividend rate of this Series shall be 5% per annum upon
the par value thereof; and the date from which dividends shall be
cumulative shall be the effective date of the merger of Northeastern
Water Company into the Corporation; provided that dividends on any
shares of this Series issued in addition to the shares thereof issued
upon the effectiveness of said merger shall commence to accrue from
the date of issue of said additional shares, said date of issue for
this purpose to be such date as the Board of Directors shall authorize
or fix.
(c) (i) The shares of this Series shall be subject to redemption
at the option of the Corporation, on the terms and conditions
specified in Section 5 of Division B of Article Fourth of this
Certificate of Incorporation, at any time or from time to time, at the
applicable redemption prices set forth below plus, as provided in said
Section 4, an amount equal to full cumulative dividends thereon to the
redemption date.
(ii) The prices at which the shares of this Series may be
redeemed at the option of the Corporation shall be as follows:
Period Redemption Price
(both dates inclusive) Per Share
----------------------------------------- ----------------
Date of issue to December 31, 1962....... $26.25
January 1, 1963 to December 31, 1963..... 26.00
January 1, 1964 to December 31, 1964..... 25.75
January 1, 1965 to December 31, 1965..... 25.50
January 1, 1966 to December 31, 1966..... 25.25
January 1, 1967 and thereafter........... 25.00
(d) The amounts payable upon the shares of this Series in the
event of any voluntary liquidation or dissolution or winding up of
the Corporation shall be an amount equal to the redemption price
(exclusive of dividends) specified in paragraph (c)(ii) of this
Section 4 then in effect, plus, as provided in Section 3 of Division
B of Article Fourth of this Certificate of Incorporation, an amount
equal to full cumulative dividends thereon to date of final
distribution to the holders of the Cumulative Preference Stock.
(e) Holders of the shares of this Series shall have the right to
vote for directors in the event of "six quarters' default in
preference stock dividends" as provided in Section 1 of Division D of
this Article Fourth.
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<PAGE>
(f) Shares of this Series shall not be convertible into any other
shares of the Corporation. No sinking fund or purchase fund shall be
established for the redemption or purchase of shares of this Series.
5. 4.10% Convertible Cumulative Preferential Stock.
In addition to the terms and provisions set forth in this Certificate
of Incorporation which are applicable to all series of Cumulative
Preferential Stock, the 4.10% Convertible Cumulative Preferential Stock
shall have the following terms and provisions:
(a) The designation of such series of Cumulative Preferential
Stock of the par value of $35 per share shall prior to March 1, 1970
be 4.10% Cumulative Preferential Stock and on and after March 1, 1970
be 4.10% Convertible Cumulative Preferential Stock. Such series is
hereinafter called the 4.10% Preferential Stock and the number of
shares which shall constitute such series shall be 656,218 shares.
(b) The dividend rate of the 4.10% Preferential Stock shall be
4.10% per annum upon the par value thereof, and no more; and the date
from which dividends shall be cumulative on shares of such series
shall be the quarterly dividend payment date next preceding the date
of issue of such shares or, if issued on a quarterly dividend payment
date, then such date; provided that the Board of Directors may
determine when authorizing the issuance of particular shares of such
series that the date of cumulation of dividends on such shares shall
be the date of issue of each of such shares, said date of issue for
this purpose to be such date as the Board of Directors shall authorize
and fix; and provided further that January 15, 1965 shall be the date
of cumulation of dividends on all shares of such series which are
issued prior to the record date for the determination of stockholders
entitled to the first dividend on shares of such series.
(c) No shares of the 4.10% Preferential Stock shall be subject to
redemption prior to March 1, 1975. On and after March 1, 1975, the
shares of 4.10% Preferential Stock may be redeemed at the option of
the Corporation, at any time or from time to time, on the terms and
conditions specified in Section 5 of Division B-1 of this Article
Fourth. If redeemed on or after March 1, 1975 and before March 1, 1980
the redemption price shall be $40.00 per share, and if redeemed on or
after March 1, 1980 the redemption price shall be $37.50 per share,
plus in each case, as provided in said Section 5, an amount equal to
full cumulative dividends thereon to the redemption date.
(d) The amounts payable upon the shares of 4.10% Preferential
Stock in the event of any voluntary or involuntary liquidation or
dissolution or winding up of the Corporation shall be $30 per share
plus, as provided in Section 3 of Division B-1 of this Article Fourth,
an amount equal to full cumulative dividends thereon to the date of
final distribution to the holders of the Cumulative Preferential
Stock, and no more.
(e) The 4.10% Preferential Stock shall not be entitled to the
benefit of any sinking fund or purchase fund.
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<PAGE>
(f) (1) On and after March 1, 1970, the shares of 4.10%
Preferential Stock shall be convertible, at the option of the
respective holders thereof, into fully paid and nonassessable shares
of the Common Stock of the Corporation, in accordance with the
provisions of this paragraph (f). The rate of such conversion shall
be one and three-tenths shares of Common Stock for each one share of
4.10% Preferential Stock, subject to the further provisions of this
paragraph(f).
(2) Any holder of shares of 4.10% Preferential Stock
electing to exercise the conversion privilege with respect to any of
such shares shall surrender the certificate therefor at the principal
office of any Transfer Agent for said Stock, with the form of written
notice to the Corporation endorsed on such certificate of his election
to convert such shares of 4.10% Preferential Stock into Common Stock
duly filled out and executed, and, if necessary under the
circumstances of such conversion, with such certificate properly
endorsed for, or accompanied by duly executed instruments of, transfer
(and such other transfer papers as said Transfer Agent may reasonably
require). The Corporation or such Transfer Agent may require, as a
condition to the exercise of such conversion privilege, the payment of
a sum equal to any transfer tax or other governmental charge (but not
including any tax payable upon the issue of stock deliverable upon
such conversion) that may be imposed or required by law upon any
transfer incidental or prior thereto, or the submission of proper
proof that the same has been paid. The conversion privilege shall be
deemed to have been exercised, and the shares of Common Stock issuable
upon such conversion shall, subject to the provisions of subparagraph
4 of this paragraph (f), be deemed to have been issued, upon the date
of receipt by such Transfer Agent for conversion of the certificate
representing such shares of 4.10% Preferential Stock with the
requirements for conversion satisfied, except that if the conversion
privilege may not be exercised at the time of such receipt, it shall
be deemed to have been exercised on the first date thereafter on which
such privilege may be exercised; and the person entitled to receive
the Common Stock issuable upon such conversion shall on the date such
conversion privilege is deemed to have been exercised and thereafter
be treated for all purposes as the record holder of such Common Stock
and shall on the same date cease to be treated for any purpose as the
record holder of such 4.10% Preferential Stock so converted. The
conversion privilege shall also be subject to the following terms and
conditions:
(i) if any shares of 4.10% Preferential Stock shall be
called for redemption, the conversion privilege in respect of
such shares shall terminate at the close of business on the last
business day next preceding the date fixed for the redemption of
such shares;
(ii) if the Corporation shall at any time be liquidated,
dissolved or wound up, the conversion privilege shall terminate
at the close of business on the last business day next preceding
the effective date of such liquidation, dissolution or winding
up;
(iii) if a certificate for 4.10% Preferential Stock is
surrendered for conversion on a date which is less than five
business days preceding the date fixed for the determination of
holders of Common Stock entitled to receive rights to subscribe
for or purchase shares of Common Stock or other securities of
the Corporation
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<PAGE>
convertible into its Common Stock, then the effective date of
conversion shall be the business day next succeeding the date
fixed for such determination; and
(iv) no adjustment or payment will be made upon conversion
of 4.10% Preferential Stock for dividends accrued thereon or for
dividends upon the Common Stock issuable upon such conversion.
(3) The Corporation shall not be required, in connection with any
conversion of 4.10% Preferential Stock, to issue a fraction of a share
of its Common Stock nor to deliver any stock certificate representing
a fraction thereof, but in lieu thereof the Corporation may make a
cash payment equal to such fraction multiplied by the market price of
the Common Stock determined as hereinafter set forth, or the
Corporation may issue non-dividend bearing, non-voting Common Stock
scrip (exchangeable for Common Stock, during the life of such scrip as
hereinbelow specified, when surrendered in amounts aggregating a full
share) in such form, bearer or registered, in such denominations, and
containing such other terms and provisions as the Board of Directors
of the Corporation may from time to time determine prior to the issue
thereof. The market price of the Common Stock for the purpose of
computing payments to be made for fractional shares shall be the
closing sales price (or if there were no sales, the closing bid price)
on the principal stock exchange on which the Common Stock is listed
or, if the Common Stock is not so listed, the closing bid price on the
New York over-the-counter market; such price shall be determined as of
the close of business on the last business day of each week and such
price as so determined shall continue in effect during the next
succeeding week. Common Stock scrip issued as aforesaid shall not
entitle the holder thereof to any dividends or to any voting rights or
other rights as a stockholder of the Corporation, and all rights
represented by such scrip shall terminate six years after the date of
the conversion of shares of 4.10% Preferential Stock in connection
with which such scrip was issued.
(4) As soon as practicable after the effective date of conversion
of any 4.10% Preferential Stock into Common Stock, the Corporation
shall deliver to the person entitled thereto, at the principal office
of the Transfer Agent for the 4.10% Preferential Stock at which such
Stock was surrendered for conversion as aforesaid, certificates
representing the shares of Common Stock and the cash or Common Stock
scrip, if any, to which such person shall be entitled on such
conversion. Nothing herein shall be construed to give any holder of
4.10% Preferential Stock surrendering the same for conversion the
right to receive any additional shares of Common Stock or other
property which results from an adjustment in conversion rights under
the provisions of subparagraphs 5 or 6 of this paragraph (f) until
holders of Common Stock are entitled to receive the shares or other
property giving rise to the adjustment. The Corporation shall not be
required to deliver certificates for shares of its Common Stock or new
certificates for unconverted shares of its 4.10% Preferential Stock
while the stock transfer books for such respective classes of stock
are duly closed for any purpose; but the right of surrendering shares
of 4.10% Preferential Stock for conversion shall not be suspended
during any period that the stock transfer books of either of such
classes of stock are closed.
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<PAGE>
(5) The conversion rate set forth hereinabove shall be subject to
adjustment from time to time in certain instances, as follows:
(i) if the Corporation shall at any time effect a
subdivision of its Common Stock, by reclassification or
otherwise, then in each such case the conversion rate then in
effect shall be increased proportionately, and in like manner if
the Corporation shall effect any combination of Common Stock, by
reclassification or otherwise, then in each such case the
conversion rate then in effect shall be decreased
proportionately; in each such case the adjustment in the
conversion rate shall be effective at the time that such
subdivision or combination shall become effective; and
(ii) if the Corporation shall at any time pay a dividend, or
make a distribution, upon its Common Stock in Common Stock, then
in each such case, from and after the record date for determining
the stockholders entitled to receive such dividend, the
conversion rate then in effect shall be increased in proportion
to the increase in the number of outstanding shares of Common
Stock through such dividend. For purposes of the preceding
sentence, if the Corporation issues as a dividend a security
which is convertible into Common Stock without the payment to the
Corporation of any consideration other than the surrender of such
convertible security, then the issuance of Common Stock upon the
conversion of such convertible security shall be considered the
payment of a dividend in Common Stock, but no adjustment in the
conversion rate of the 4.10% Preferential Stock shall be made by
reason of the issuance of Common Stock under the circumstances
just referred to until the amount of such adjustment, cumulated
since the last adjustment in the conversion rate made by reason
of the issuance of Common Stock under such circumstances, shall
be at least .01 of a share of Common Stock, and any such
adjustment shall become effective at the close of business on the
date of issuance of the Common Stock that gives rise to such
adjustment.
(6) In case of any reclassification or change of the Common Stock
of the Corporation (other than a change in par value thereof, or a
change from par value to no par value, or a case provided for in
clauses (i) or (ii) of subparagraph (5) of this paragraph (f)), or in
case of a merger or consolidation in which the Corporation is not the
continuing corporation, provision shall be made so that holders of
4.10% Preferential Stock shall thereafter have the right to convert
each share of such Stock into the kind and amount of shares of stock
and/or other securities or property receivable upon such
reclassification, change, merger or consolidation by a holder of the
number and kind of shares of capital stock of the Corporation into
which such share of 4.10% Preferential Stock might have been converted
immediately prior to such reclassification, change, merger or
consolidation. In any such case, provision shall be made as and to the
extent the Board of Directors may determine for the application of the
adjustments provided for in subparagraphs (5) and (6) of this
paragraph (f) after such reclassification, change, merger or
consolidation.
(7) Whenever the conversion rate is required to be adjusted as
provided in this paragraph (f):
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<PAGE>
(i) the Corporation shall forthwith prepare a certificate
setting forth such adjusted conversion rate and the facts upon
which such adjustment is based, and such certificate shall
forthwith be filed with the Transfer Agents for the 4.10%
Preferential Stock and the Transfer Agents for the Common Stock
and thereafter (until further adjusted) the adjusted conversion
rate shall be as set forth in said certificate; and
(ii) the Corporation shall mail to each holder of record of
4.10% Preferential Stock notice of such adjusted conversion rate.
(8) So long as any shares of the 4.10% Preferential Stock shall
remain outstanding and the holders thereof shall have the right to
convert said shares in accordance with the provisions of this
paragraph (f), the Corporation shall at all times reserve from the
authorized and unissued shares of its Common Stock a sufficient number
of shares to provide for such conversions.
(9) As a condition precedent to the taking of any action that
would cause an adjustment requiring the issuance upon the conversion
of 4.10% Preferential Stock of shares of capital stock with an
aggregate par value in excess of the 4.10% Preferential Stock so
converted, the Corporation will take any corporate action which the
Board of Directors may, with the advice of counsel, determine to be
necessary in order that the Corporation may validly and legally issue
fully paid and nonassessable shares of such capital stock at such
adjusted conversion price.
(10) Whenever reference is made in this paragraph (f) to the
Common Stock of the Corporation, such reference is to the Common Stock
of the Corporation as such stock exists on the date of filing and
recording pursuant to Section 151 of the Delaware General Corporation
Law of the certificate creating the 4.10% Preferential Stock, or to
stock into which such Common Stock may be changed from time to time.
(g) (1) So long as any shares of the 4.10% Preferential Stock
shall be outstanding, the Corporation shall not, without the consent,
given in writing or by resolution adopted at a meeting duly called for
that purpose, of the holders of record of at least two-thirds of the
number of shares of the 4.10% Preferential Stock and of any other
series of the Cumulative Preferential Stock then outstanding which
have similar voting rights, voting separately as a class and without
regard to series,
(i) alter or change the preferences, special rights or
powers given to the 4.10% Preferential Stock and such other
series so as to affect the 4.10% Preferential Stock and such
other series adversely; provided, however, that any such change
of the preferences, special rights or powers of the 4.10%
Preferential Stock which does not affect adversely any other
series of the Cumulative Preferential Stock may be effected with
the consent, given as aforesaid, of the holders of record of at
least two-thirds of the number of shares of 4.10% Preferential
Stock then outstanding;
(ii) increase or decrease the par value of the 4.10%
Preferential Stock; or
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(iii) create any new class of stock having preference over
the Cumulative Preferential Stock as to dividends or assets;
provided, however, that no such consent by holders of 4.10%
Preferential Stock shall be required in order for the Corporation to
take any corporate action with respect to which such holders of 4.10%
Preferential Stock have the right to object and, upon complying with
procedures prescribed by the Delaware General Corporation Law, to
become entitled to payment of the appraised value of such shares (it
not being the intent of this provision, however, to limit in any
manner the voting rights expressly granted to holders of shares of
4.10% Preferential Stock by the Delaware General Corporation Law); and
provided further, however, that, except for the general power to vote
in the election of directors and for all other purposes granted to the
4.10% Preferential Stock in paragraph (i) below, no holders of 4.10%
Preferential Stock shall have any right to vote or consent for or in
respect of any increase or decrease in the authorized number of shares
of any class of stock (whether ranking senior to, on a parity with, or
junior to the Cumulative Preferential Stock as to dividends or assets
or whether now existing or hereafter created) or for or in respect of
the creation of any new class of stock ranking on a parity with or
junior to the Cumulative Preferential Stock as to dividends or assets.
(2) Holders of 4.10% Preferential Stock shall have the right to
vote for directors in the event of a "six quarters' default in
Preferential Stock dividends" as provided in Section 1 of Division D
of Article Fourth of this Certificate of Incorporation.
(h) Holders of the shares of 4.10% Preferential Stock shall not
be entitled to the benefit of any additional limitations restricting
the purchase of, the payment of dividends on, or the making of other
distributions in respect of stock of any class of the Corporation
ranking junior to the Cumulative Preferential Stock as to dividends
or assets.
(i) In addition to the voting rights to which the holders of
shares of 4.10% Preferential Stock are entitled as otherwise provided
in Article Fourth of this Certificate of Incorporation and in
paragraph (g) above, and subject to the qualifications, limitations
and restrictions thereof as therein set forth, the holders of shares
of 4.10% Preferential Stock shall have the general power to vote in
the election of directors and for all other purposes on the basis of
one-tenth of a vote per share.
(j) If the Corporation shall at any time offer shares of its
Common Stock to holders of its then outstanding Common Stock at a
price less than $27 per share, the Corporation shall grant each holder
of the then outstanding shares of 4.10% Preferential Stock
proportionate subscription rights (i) based on the number of full
shares of Common Stock of the Corporation into which such holder's
shares of 4.10% Preferential Stock are convertible at the time fixed
for determination of holders of Common Stock to whom such offer
shall be made, and (ii) in the manner and upon the conditions that the
Board of Directors shall deem appropriate in order to afford all
holders of 4.10% Preferential Stock a similar subscription privilege
to that granted the holders of the Common Stock. For purposes only of
determining the number of shares of Common Stock to which the holders
of 4.10% Preferential Stock may subscribe, the 4.10% Preferential
Stock will be deemed convertible immediately upon its issuance.
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Fifth: The names and places of residence of the incorporators are
as follows:
Names Places of Residence
---------------------- -------------------
Oliver B. Merrill, Jr. 17 East 97th Street,
New York, N. Y.
J. Edward Mount 308 East 79th Street,
New York, N. Y.
Robert T. Kimberlin 1 University Place,
New York, N. Y.
Sixth: The Corporation is to have perpetual existence.
Seventh: The private property of the stockholders shall not be subject
to the payment of corporate debts to any extent whatever.
Eighth: 1. All corporate powers of the Corporation shall be exercised
by the Board of Directors, except as otherwise provided by law. The Board
of Directors may, by resolution or resolutions passed by a majority of the
whole Board, designate one or more committees, each committee to consist of
two or more of the directors of the Corporation, which, to the extent
provided in said resolution or resolutions or in the by-laws of the
Corporation, shall have and may exercise the powers of the Board of
Directors in the management of the business and affairs of the Corporation,
and may have power to authorize the seal of the Corporation to be affixed
to all papers which may require it, provided that no such committee shall
have or exercise any such power or powers if and so long as a "two years'
default in preferred dividends", as defined in Section 1 of Division D of
Article Fourth hereof, shall exist.
2. In furtherance of and not in limitation of the powers conferred
upon the Board of Directors by law, the Board of Directors is expressly
authorized, without action by the stockholders:
(a) To issue, from time to time, and to sell or otherwise dispose
of any and all bonds, debentures, notes and other obligations of the
Corporation and, subject to the provisions of Divisions A and B of
Article Fourth hereof, to issue, from time to time, and to sell or
otherwise dispose of any and all shares of its stock of any class, in
such amounts, for such consideration (not less than the par value
thereof in the case of stock having a par value) and upon such terms
as the Board of Directors shall determine, and to mortgage or pledge
any and all property and assets of the Corporation, then owned or
thereafter acquired, as security for the payment of any such bonds,
debentures, notes or other obligations.
(b) Subject to the provisions of paragraph (a) of Section 7 of
Division A and paragraph (a) of Section 6 of Division B of Article
Fourth hereof, to sell, assign, convey or otherwise dispose of any
part of the property, assets and business of the Corporation if less
than substantially the whole thereof, on such terms and conditions
as the Board of Directors shall determine.
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(c) Subject to the provisions of Section 2 of Division E of
Article Fourth hereof, to fix the amount to be reserved by the
Corporation over and above its capital stock paid in and to fix and
determine and vary the amount of the working capital of the
Corporation, and to direct and determine the use and disposition of
the working capital and any surplus or net profits over and above the
capital stock paid in.
(d) To determine to what extent and at what times and places and
under what conditions and regulations the accounts and books of the
Corporation, or any of them, shall be opened to the inspection of the
stockholders, and no stockholder shall have any right to inspect any
account, book, or document of the Corporation except as conferred by
statute or as authorized by resolution of the Board of Directors.
(e) To establish, amend, alter or repeal and put into effect and
carry out such plan or plans, of general application, as the Board may
determine from time to time with respect to pensions, retirement
allowances, life, accident and other insurance and similar matters for
officers and employees of the Corporation and its subsidiaries in
consideration for or in recognition of the services rendered or to be
rendered by such officers and employees.
3. The number of directors of the Corporation shall be fixed from time
to time by, or in the manner provided in, the by-laws but shall never be
less than nine. Subject to the provisions of Division D of Article Fourth
hereof, in case of any increase in the number of directors, the additional
directors shall be elected as may be provided in the by-laws.
4. Any director of the Corporation may be removed for cause in such
manner as may be provided in the by-laws.
5. The directors and stockholders may hold their meetings and have an
office or offices outside the State of Delaware if the by-laws so provide.
6. None of the directors need be a stockholder of the Corporation,
except as otherwise provided in the by-laws, or a resident of the State of
Delaware. Elections of directors need not be by ballot if the by-laws so
provide.
7. In addition to reimbursement of his reasonable expenses incurred in
attending meetings or otherwise in connection with his attention to the
affairs of the Corporation, each director as such, and as a member of the
Executive Committee or of any other committee of the Board of Directors,
shall be entitled to receive such remuneration as may be fixed from time to
time by the Board of Directors.
8. Subject to (i) any limitations that may be imposed by the
stockholders and (ii) the provisions of Division D of Article Fourth
hereof, the Board of Directors may make by-laws and from time to time may
alter, amend or repeal any by-laws, but any by-laws made by the Board of
Directors or the stockholders may be altered, amended or repealed by the
stockholders at any annual meeting or at any special meeting, provided that
notice of such proposed alteration, amendment or repeal is included in the
notice of such special meeting.
53
<PAGE>
9. A director of the Corporation shall not, in the absence of fraud,
be disqualified by his office from dealing or contracting with the
Corporation either as vendor, purchaser or otherwise, nor in the absence of
fraud, shall any contract or other transaction of the Corporation be
affected or invalidated in any way by the fact that any of the directors of
the Corporation are in anywise interested in or connected with any other
party to such contract or transaction or are themselves parties to such
contract or transaction; provided, however, that such interest and
connection either shall be fully disclosed to a meeting of the Board of
Directors, or of a committee thereof having authority in the premises, at
which such contract or transaction is authorized, confirmed or approved, or
shall at the time be otherwise known to the directors present at such
meeting, and provided further that there shall be present at the meeting of
the Board of Directors, or such committee, authorizing, confirming or
approving such contract or transaction, and such contract or transaction
shall be authorized, confirmed or approved by the vote of, directors not so
interested or connected constituting a majority of the directors then in
office. No director of the Corporation shall be liable to the Corporation
or to any stockholder or creditor thereof or to any other person, for any
loss incurred under or by reason of any contract or transaction of the
Corporation, and no such director shall be accountable for any gains or
profits realized therefrom, provided, however, that any such contract or
transaction shall, at the time it was entered into, have been a reasonable
one to have been entered into and shall have been upon terms that at the
time were fair, and provided further that, if such director shall have been
so interested or connected as to such contract or transaction, such
contract or transaction shall have been authorized, confirmed or approved
as aforesaid after the disclosure or knowledge of such interest or
connection as aforesaid. A director of the Corporation shall not be deemed
interested in or connected with a party to a contact or transaction between
the Corporation and a parent, subsidiary or affiliated corporation by
reason of the fact that he is also a director, officer or stockholder of
such parent, subsidiary or affiliated corporation.
10. Nothing in this Certificate of Incorporation contained shall be
deemed to restrict any power which, as a matter of law, the Board of
Directors or any committee thereof would otherwise have to act by written
consent signed by all members of the Board or of such committee, as the
case may be.
11. No director of the Corporation shall be liable to the Corporation
or its stockholders for monetary damages for breach of fiduciary duty as a
director, except for liability (i) for any breach of the director's duty of
loyalty to the Corporation or its stockholders, (ii) for acts or omissions
not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the General Corporation Law of
the State of Delaware, or (iv) for any transaction from which the director
derived an improper personal benefit. Any repeal or modification of this
Section 11 of Article Eighth by the stockholders of the Corporation shall
be prospective only, and shall not affect, to the detriment of any
director, any limitation on the personal liability of a director of the
Corporation existing at the time of such repeal or modification.
54
<PAGE>
Ninth: Whenever a compromise or arrangement is proposed between this
Corporation and its creditors or any class of them and/or between this
Corporation and its stockholders or any class of them, any court of
equitable jurisdiction within the State of Delaware may, on the application
in a summary way of this Corporation or of any creditor or stockholder
thereof, or on the application of any receiver or receivers appointed for
this Corporation under the provisions of section 291 of Title 8 of the
Delaware Code or on the application of trustees in dissolution or of any
receiver or receivers appointed for this Corporation under the provisions
of section 279 of Title 8 of the Delaware Code order a meeting of the
creditors or class of creditors, and/or of the stockholders or class of
stockholders of this Corporation, as the case may be, to be summoned in
such manner as the said court directs. If a majority in number representing
three-fourths in value of the creditors or class of creditors, and/or of
the stockholders or class of stockholders of this Corporation, as the
case may be, agree to any compromise or arrangement and to any
reorganization of this Corporation as consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which the said application has been
made, be binding on all the creditors or class of creditors, and/or on all
the stockholders or class of stockholders, of this Corporation, as the case
may be, and also on this Corporation.
Tenth: The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this Certificate in the manner now or
hereafter prescribed by statute, and all rights herein conferred upon the
stockholders, except as otherwise herein expressly provided, are granted
subject to this reservation.
D. The effective date of this Restated Certificate of Incorporation is
May 15, 1987. Upon the effective date, each of the issued shares of Common
Stock of the Company, par value $2.50 per share (including any shares
thereof held in the treasury of the Company), shall be changed and
reclassified into two shares of Common Stock of the Company, par value
$1.25 per share, and the aggregate amount of capital of the Company
represented by said shares of Common Stock, par value $2.50 per share,
shall be and become the capital represented by said shares of Common Stock,
par value $1.25 per share.
IN WITNESS WHEREOF, this Restated Certificate of Incorporation has
been signed under the seal of the Company this 6th day of May, 1987.
AMERICAN WATER WORKS COMPANY, INC.
By James V. LaFrankie
President
(Seal)
Attest:
George H. Roberts
Secretary
55
<PAGE>
AMERICAN WATER WORKS COMPANY, INC.
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
American Water Works Company, Inc., a corporation organized and
existing under the laws of the State of Delaware (the "Company"), does
hereby certify:
FIRST: That the Board of Directors of the Company, at a meeting
thereof held on March 2, 1989, adopted a resolution declaring it advisable
that the Restated Certificate of Incorporation, as amended, of the Company
be further amended as follows:
1. Article Tenth of the Restated Certificate of Incorporation, as
amended, shall be amended to read in its entirety as follows:
"TENTH: The Board of Directors of the Corporation, when
evaluating any proposal from another party involving:
(i) a tender offer for any securities of the Corporation,
(ii) a merger or consolidation of the Corporation with or
into any other person,
(iii) a sale, lease, exchange or other disposition by the
Corporation, or any subsidiary of the Corporation,
whether or not in partial or complete liquidation, of
all or any substantial part of the assets of the
Corporation to or with any other person,
<PAGE>
(iv) any issuance or transfer by the Corporation or any
subsidiary of the Corporation of any securities of the
Corporation having voting power (whether generally or
upon the happening of any contingency), or any
securities or instruments convertible into or
exchangeable for securities having voting power, to any
other person in exchange for securities, cash or other
property or a combination thereof, or
(v) any other transaction having an effect similar to any of
the foregoing upon the properties, operations or control
of the Corporation,
shall, in connection with the exercise of its judgment in
determining what is in the best interests of the Corporation and
its stockholders, give due consideration to the following:
(1) the character, integrity, business philosophy and
financial status of the other party or parties to the
transaction;
(2) the consideration to be received by the Corporation or
its stockholders in connection with such transaction, as
compared to:
(a) the current market price or value of the
Corporation's properties or securities;
(b) the estimated future value of the Corporation, its
properties or securities;
- 2 -
<PAGE>
(c) such other measures of the value of the Corporation,
its properties or securities as the Board of
Directors may deem appropriate;
(3) the projected social, legal and economic effects of the
proposed action or transaction upon the Corporation, its
employees, suppliers, regulatory agencies and customers
and the communities in which the Corporation and its
subsidiaries do business;
(4) the general desirability of the continuance of the
Corporation as an independent entity; and
(5) such other factors as the Board of Directors may deem
relevant.
In giving such consideration to the foregoing factors, the Board of
Directors and each individual director shall be deemed to be
performing their duly authorized duties and acting in good faith and
in the best interests of the Corporation."
2. Article Eighth, Paragraph 4, of the Restated Certificate of
Incorporation, as amended, shall be amended to read in its entirety as
follows:
"4. No director of the Corporation may be removed except for
cause, and the vote of the holders of a majority of the outstanding
shares of all classes of capital stock of the Corporation entitled
to vote generally in the election of directors, considered for this
purpose as one class, shall be required to remove a director for
cause. Cause for removal shall be deemed to exist only if the
director whose removal is proposed has been convicted in a court of
competent jurisdiction of a felony or has been adjudged by a court
of competent jurisdiction to be liable for gross negligence or
misconduct in the performance of such director's duty to the
Corporation, and such conviction or adjudication has become final
and non-appealable."
- 3 -
<PAGE>
3. A new Article Eleventh shall be added to the restated
Certificate of Incorporation, as amended, to read in its entirety as
follows:
"ELEVENTH: The Corporation reserves the right to amend, alter,
change or repeal any provision contained in this Certificate of
Incorporation in the manner now or hereafter prescribed by statute,
and all rights herein conferred upon the stockholders, except as
otherwise herein expressly provided, are granted subject to this
reservation. Any provision in this Certificate of Incorporation or
in the By-laws of the Corporation to the contrary notwithstanding,
no provisions of Article Eighth, Paragraph 4, or of Articles Tenth
or Eleventh of this Certificate of Incorporation, or Article II,
Section l(a) or Article X of the By-laws of the Corporation, shall
be altered, amended, supplemented or repealed by the stockholders
of the Corporation, and no provision of this Certificate of
Incorporation or of the By-laws of the Corporation inconsistent
with such provisions shall be adopted by the stockholders of the
Corporation, except by the affirmative vote of the holders of at
least 80% of the voting power of the outstanding shares of capital
stock of the Corporation entitled to vote generally in the election
of directors, considered for this purpose as one class. This
Article Eleventh shall not limit the right of the Board of
Directors to amend the By-laws of the Corporation."
SECOND: That thereafter, an annual meeting of stockholders of the
Company was duly called and held on May 4, 1989, upon notice in accordance
with Section 222 of the General Corporation law of the State of Delaware,
at which meeting the necessary number of votes as required by statute were
voted in favor of each of the amendments.
THIRD: That said amendments were duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
- 4 -
<PAGE>
IN WITNESS WHEREOF, the Company has caused its corporate seal to be
hereunto affixed and this Certificate to be executed by James V. LaFrankie,
its President and by W. Timothy Pohl, its Secretary, this 4th day of May,
1989.
American Water Works Company, Inc.
By: James V. LaFrankie
President
[Corporate Seal]
Attest:
W. Timothy Pohl
Secretary
- 5 -
<PAGE>
AMERICAN WATER WORKS COMPANY, INC.
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
American Water Works Company, Inc., a corporation organized and
existing under the laws of the State of Delaware (the "Company"), does
hereby certify:
FIRST: That the Board of Directors of the Company, at a meeting
thereof held on January 4, 1990, adopted resolutions declaring it advisable
that the Restated Certificate of Incorporation, as amended, of the Company
be further amended as follows:
1. The first paragraph of Article Fourth of the Restated Certificate
of Incorporation, as amended, shall be amended to read in its entirety as
follows:
"FOURTH: The total number of shares of all classes of stock
which the Corporation shall have authority to issue shall be
105,616,800, of which (a) 1,866,800 shares shall be Cumulative
Preferred Stock, of the par value of $25 per share, issuable in
series, (b) 750,000 shares shall be Cumulative Preference Stock,
of the par value of $25 per share, issuable in series,
(c) 3,000,000 shares shall be Cumulative Preferential Stock, of
the par value of $35 per share, issuable in series, and
(d) 100,000,000 shares shall be Common Stock, of the par value
of $1.25 per share."
2. Section 3 of Division E of Article Fourth of the Restated
Certificate of Incorporation, as amended, shall be amended to read in its
entirety as follows:
"3.(a) No holder of Cumulative Preferred Stock, Cumulative
Preference Stock or Cumulative Preferential Stock of the
Corporation shall, as such holder, have any right to purchase or
subscribe for (i) any stock of any class, or any warrant or warrants,
option or options, or other instrument or instruments that shall
confer upon the holder or holders thereof the right to subscribe
for or purchase or receive from the Corporation any stock of any
class or classes which the Corporation may issue or sell, whether
or not such stock shall be convertible into or exchangeable for
any other stock of the Corporation of any class or classes and
whether or not such stock shall be unissued shares authorized by
the Certificate of Incorporation or by any amendment thereto or
<PAGE>
shares of stock of the Corporation acquired by it after
the issue thereof, or (ii) any obligation which the Corporation
may issue or sell that shall be convertible into or exchangeable
for any shares of stock of the Corporation of any class or classes,
or to which shall be attached or appurtenant any warrant or warrants,
option or options, or other instrument or instruments that shall
confer upon the holder or holders of such obligation the right to
subscribe for or purchase or receive from the Corporation any
shares of its stock of any class or classes.
(b) Upon any issue for money or other consideration of
any stock of the Corporation that may be authorized from time to
time, no holder of stock, irrespective of the kind of such stock,
shall have any preemptive or other right to subscribe for, purchase
or receive any proportionate or other share of the stock so issued,
and the Board of Directors may dispose of all or any portion of
such stock as and when it may determine free of any such rights,
whether by offering the same to stockholders or by sale or other
disposition as said Board may deem advisable."
3. Subparagraph (j) of the first paragraph of Section 1 of Division
B-1 of Article Fourth of the Restated Certificate of Incorporation, as
amended, shall be deleted in its entirety.
4. Subparagraph (h) of the first paragraph of Section 1 of Division
B-1 of Article Fourth of the Restated Certificate of Incorporation, as
amended, shall be amended by inserting the word "and" following the semi-
colon at the end of the subparagraph.
5. Subparagraph (i) of the first paragraph of Section 1 of Division
B-1 of Article Fourth of the Restated Certificate of Incorporation, as
amended, shall be amended by deleting the semi-colon and the following word
"and" at the end of the subparagraph and inserting a period in lieu
thereof.
SECOND: That thereafter, an annual meeting of stockholders of the
Company was duly called and held on May 3, 1990, upon notice in accordance
with Section 222 of the General Corporation Law of the State of Delaware,
at which meeting the necessary number of votes as required by statute were
voted in favor of each of the amendments.
THIRD: That said amendments were duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
<PAGE>
IN WITNESS WHEREOF, the Company has caused its corporate seal to be
hereunto affixed and this Certificate to be executed by James V. LaFrankie,
its President, and by W. Timothy Pohl, its Secretary, this 3rd day of May,
1990.
American Water Works Company, Inc.
By: James V. LaFrankie
President
(Corporate Seal)
Attest:
W. Timothy Pohl
Secretary
<PAGE>
AMERICAN WATER WORKS COMPANY, INC.
CERTIFICATE OF DESIGNATIONS
American Water Works Company, Inc., a corporation organized under the
laws of the State of Delaware (the "Company"), does hereby certify:
THAT the Board of Directors of the Company, at a meeting thereof held
on January 3, 1991, duly adopted the following resolution:
RESOLVED, that pursuant to the authority expressly
granted to and vested in the Board of Directors of the
Corporation by the provisions of the Restated Certificate of
Incorporation, as amended, of the Company, the Board of
Directors hereby creates a series of Cumulative Preferred
Stock of the par value of $25 per share of the Corporation
from the authorized but unissued Cumulative Preferred Stock
and hereby fixes the number of shares which shall constitute
such series and the voting powers, designations, preferences
and relative, participating, optional or other special
rights, qualifications, limitations or restrictions thereof,
of the shares of such series as follows:
In addition to the terms and provisions set forth in
the Restated Certificate of Incorporation, as amended, which
are applicable to all series of Cumulative Preferred Stock,
the Cumulative Preferred Stock, 8.50% Series shall have the
following terms and provisions:
(a) The designation of such series of
Cumulative Preferred Stock of the par value of
$25 per share shall be Cumulative Preferred Stock,
8.50% Series(hereinafter called the 8.50% Preferred
Stock), and the number of shares which shall
constitute such series shall be 1,600,000 shares.
(b) The dividend rate of the 8.50% Preferred
Stock shall be 8.50% per annum upon the par value
thereof, the date from which dividends on shares
of the 8.50% Preferred Stock shall be cumulative
shall be the date of issue of the first of said
shares to be issued, and the initial dividend shall
be payable on June 1, 1991.
(c) The shares of the 8.50% Preferred Stock
shall be redeemed by the Corporation on December 1,
2000 at the par value thereof plus, as provided in
Section 6 of Division A of Article Fourth an amount
equal to full cumulative dividends thereon to the
redemption date; provided, however, the shares of
the 8.50% Preferred Stock shall not be otherwise
subject to redemption at the option of the Corporation.
<PAGE>
(d) The amounts payable upon the shares of the
8.50% Preferred Stock in the event of any voluntary
liquidation or dissolution or winding up of the
Corporation shall be an amount equal to the par value
per share (exclusive of dividends) plus, as provided
in Section 4 of Division A of Article Fourth, an amount
equal to full cumulative dividends thereon to the date
of final distribution to the holders of the Cumulative
Preferred Stock.
(e) No sinking fund or purchase fund shall be
established for the purchase or redemption of shares
of the 8.50% Preferred Stock.
(f) The shares of the 8.50% Preferred Stock shall
not be convertible into any other shares of the
Corporation.
(g) The shares of the 8.50% Preferred Stock shall
not be entitled to the benefit of any limitations
restricting the purchase of, the payment of dividends
on, or the making of other distributions in respect of
stock of any class of the Corporation ranking junior
to the Cumulative Preferred Stock as to dividends or
assets in addition to those set forth in Division A of
Article Fourth.
(h) Except as otherwise provided in Division D of
Article Fourth, the shares of the 8.50% Preferred Stock
shall not have the general power to vote in the
election of directors and for other purposes.
IN WITNESS WHEREOF, the Company has caused its corporate seal to be
hereunto affixed and this Certificate of Designations to be executed by
James V. LaFrankie, its President, and by W. Timothy Pohl, its Secretary,
this 4th day of February, 1991.
AMERICAN WATER WORKS COMPANY, INC.
By: James V. LaFrankie,President
ATTEST:
W. Timothy Pohl, Secretary
2
<PAGE>
AMERICAN WATER WORKS COMPANY, INC.
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
American Water Works Company, Inc., a corporation organized and
existing under the laws of the State of Delaware (the "Company"), does
hereby certify:
FIRST: That the Board of Directors of the Company, at a meeting
thereof held on March 7, 1996, adopted a resolution declaring it advisable
that the Restated Certificate of Incorporation, as amended, of the Company
be further amended as follows:
The first paragraph of Article Fourth of the Restated Certificate of
Incorporation, as amended, shall be amended to read in its entirety as
follows:
"FOURTH: The total number of shares of all classes of stock
which the Corporation shall have authority to issue shall be
305,520,000 of which (a) 1,770,000 shares shall be Cumulative
Preferred Stock, of the par value of $25 per share, issuable
in series, (b) 750,000 shares shall be Cumulative Preference
Stock, of the par value of $25 per share, issuable in series,
(c) 3,000,000 shares shall be Cumulative Preferential Stock,
of the par value of $35 per share, issuable in series, and
(d) 300,000,000 shares shall be Common Stock, of the par value
of $1.25 per share."
SECOND: That thereafter, an annual meeting of stockholders of the
Company was duly called and held on May 2, 1996, upon notice in accordance
with Section 222 of the General Corporation Law of the State of Delaware,
at which meeting the necessary number of votes as required by statute were
voted in favor of the amendment.
THIRD: That said amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
<PAGE>
IN WITNESS WHEREOF, the Company has caused its corporate seal to be
hereunto affixed and this Certificate to be executed by George W.
Johnstone, its President and Chief Executive Officer, and by W. Timothy
Pohl, its General Counsel and Secretary, this 2nd day of May, 1996.
AMERICAN WATER WORKS COMPANY, INC.
By: George W. Johnstone
President and Chief Executive Officer
(Corporate Seal)
Attest:
W. Timothy Pohl
General Counsel and Secretary
2
<PAGE>
AMERICAN WATER WORKS COMPANY, INC.
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
American Water Works Company, Inc., a corporation organized and
existing under the laws of the State of Delaware (the "Company"), does
hereby certify:
FIRST: That the Board of Directors of the Company, at a meeting
thereof held on February 4, 1999, adopted a resolution declaring it
advisable that the Restated Certificate of Incorporation, as amended, of
the Company be further amended as follows:
1. A new Article Twelfth shall be added to the Restated Certificate
of Incorporation, as amended, to read in its entirety as follows:
"TWELFTH: The Board of Directors shall be divided into
three classes, designated Classes I, II and III, as nearly
equal in number as the then total number of directors
constituting the whole Board of Directors permits, with the
term of office of one class expiring each year. At the annual
meeting of stockholders in 1999, directors of Class I shall be
elected to hold office for a term expiring at the next succeeding
annual meeting, directors of Class II shall be elected to hold
office for a term expiring at the second succeeding annual meeting
and directors of Class III shall be elected to hold office for a
term expiring at the third succeeding annual meeting. No decrease
in the number of directors shall shorten the term of any incumbent
director. Notwithstanding the foregoing, and except as otherwise
required by law, directors, if any, elected by the holders of any
one or more series of Cumulative Preferred Stock, Cumulative
Preference Stock or Cumulative Preferential Stock, voting
separately as a class, shall be elected to the Class with a term
expiring at the next following annual meeting of shareholders, and
the number of members of such class shall be increased accordingly.
Subject to the foregoing, at each annual meeting of stockholders the
successors to the class of directors whose term shall then expire
shall be elected to hold office for a term expiring at the third
succeeding annual meeting and until their successors shall be elected
and qualified."
<PAGE>
SECOND: That thereafter, an annual meeting of shareholders of the
Company was duly called and held on May 6, 1999, upon notice in accordance
with Section 222 of the General Corporation law of the State of Delaware,
at which meeting the necessary number of votes as required by statute were
voted in favor of the amendment.
THIRD: That said amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
IN WITNESS WHEREOF, the Company has caused its corporate seal to be
hereunto affixed and this Certificate to be executed by J. James Barr, its
President and Chief Executive Officer and by W. Timothy Pohl, its General
Counsel and Secretary, this 6th day of May, 1999.
AMERICAN WATER WORKS COMPANY, INC.
By: J. James Barr
President and Chief Executive Officer
[Corporate Seal]
Attest:
W. Timothy Pohl
General Counsel and Secretary
-2-
<PAGE>
EXHIBIT 3(b)
AMERICAN WATER WORKS COMPANY, INC.
BY-LAWS
Adopted April 16, 1970
As Amended to May 6, 1999
<PAGE>
AMERICAN WATER WORKS COMPANY, INC.
BY-LAWS
Adopted April 16, 1970
As Amended to May 6, 1999
Article I
SHAREHOLDERS
Section 1. [As amended January 2, 1986, and further amended July 6,
1989 and May 6, 1999] The annual meeting of the stockholders of the
Corporation shall be held at its office at 1025 Laurel Oak Road, Voorhees,
New Jersey, on the first Thursday in May of each year (or if said day be a
legal holiday, then on the next succeeding day not a holiday), at eleven
o'clock in the forenoon, daylight saving time or standard time whichever
shall be legally in effect in the Township of Voorhees, New Jersey, on that
date, or on such other date or at such other time or at such other place
within the continental United States as may be designated in the notice of
the annual meeting, for the purpose of electing directors to a Class in
accordance with Article Twelfth of the Company's Certificate of
Incorporation, and for the transaction of such other business as may
properly be brought before the meeting.
Section 2. [As amended July 6, 1989 and further amended February 4,
1999] Special meetings of the stockholders may be held only upon call of
the Board of Directors or the Executive Committee or the Chairman of the
Board or the President, at such place and at such time and date as may be
fixed by the body or person or persons giving such call, and as may be
stated in the notice setting forth such call.
Section 3. [As amended July 6, 1989] Notice of the place, time and
date of every meeting of stockholders shall be delivered personally or
mailed at least ten days prior thereto to each stockholder of record
entitled to vote at such meeting at his address as it appears on the
records of the Corporation. Such further notice shall be given as may be
required by law.
Section 4. Except as otherwise provided by law or in the Certificate
of Incorporation, as amended, of the Corporation, at all meetings of the
stockholders the presence in person or the representation by proxy of the
holders of the outstanding shares that would be entitled to cast at least a
majority of votes on a particular matter shall constitute a quorum for the
purpose of considering such matter. If there be no such quorum present for
considering a particular matter, the meeting on such matter may be
adjourned from time to time, by vote of a majority of those present or
represented and entitled to vote on such matter, without notice other than
by announcement at the meeting, until such a quorum be present.
<PAGE>
Section 5. Meetings of the stockholders shall be presided over by the
Chairman of the Board, the Vice Chairman of the Board or the President or,
if none of such officers is present, by a Vice President or, if no such
officer is present, by a chairman to be chosen at the meeting. The
Secretary of the Corporation or, in his absence, an Assistant Secretary, or
in the absence of both the Secretary and an Assistant Secretary, a person
appointed by the Chairman of the meeting shall act as secretary of the
meeting.
Section 6. Any stockholder entitled to vote at any meeting of
stockholders may so vote in person or by proxy, but no proxy shall be acted
upon after three years from its date, unless such proxy provides for a
longer period.
Section 7. [As amended January 2, 1986 and further amended March 5,
1992] At all elections of directors by the stockholders of the
Corporation, each stockholder shall be entitled to vote as provided in the
Certificate of Incorporation, as amended, of the Corporation. The Chairman
of the Board or the chairman of each meeting at which directors are to be
elected shall appoint an inspector of election, unless such appointment
shall be unanimously waived by those stockholders present or represented by
proxy at the meeting and entitled to vote at the election of directors. No
director or candidate for the office of director shall be appointed as such
inspector. Before undertaking his duties at any such meeting, the
inspector shall take and subscribe an oath or affirmation faithfully to
execute the duties of inspector at such meeting, with strict impartiality
and according to the best of his ability, and shall take charge of the
polls and after the balloting shall make a certificate of the result of the
vote taken.
Section 8. In order that the Corporation may determine the
stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, or to express consent to corporate
action in writing without a meeting, or entitled to receive payment of any
dividend or other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion or exchange of
stock or for the purpose of any other lawful action, the Board of Directors
may fix, in advance, a record date, which shall not be more than sixty nor
less than ten days before the date of such meeting, or such other action.
Section 9. Any action required or permitted to be taken at any
meeting of stockholders may be taken without a meeting, without prior
notice and without a vote, if a consent in writing, setting forth the
action so taken, shall be signed by the holders of outstanding stock having
not less than the minimum number of votes necessary to authorize or take
such action at a meeting at which all shares entitled to vote thereon were
present and voted. Prompt notice of the taking of the corporate action
without a meeting by less than unanimous consent shall be given to those
stockholders who have not consented in writing.
2
<PAGE>
Article II
BOARD OF DIRECTORS
Section 1. (a) [As amended January 16, 1975 and further amended May
4, 1989, March 5, 1992 (effective May 7, 1992), September 4, 1997, March 5,
1998 (effective May 7, 1998) and October 1, 1998] The Board of Directors
shall consist of thirteen directors, but the number of directors may be
increased or decreased from time to time, within the limits as to the
number specified in the Certificate of Incorporation, as amended, of the
Corporation, in the manner hereinafter provided for amendment of the
by-laws of the
Corporation, but subject to Article Eleventh of the Certificate
of Incorporation, as amended.
(b) [Added May 6, 1999] The members of the Board of Directors shall
be divided into classes in a manner provided by Article Twelfth of the
Corporation's Certificate of Incorporation and shall be elected and serve
for such terms of office as are provided therein.
(c) [As amended January 16, 1975, and further amended March 5, 1992
and May 6, 1999] A majority of the number of directors shall constitute a
quorum; provided, however, no amendment of this sentence shall be adopted
which is in violation of the provisions of paragraph (h) of Section 1 of
Division D of Article FOURTH of the Certificate of Incorporation, as
amended.
(d) [As amended January 16, 1975 and further amended May 6, 1999]
Commencing with the annual election of directors in the year 1975, no
person shall be qualified to serve as a director of the Corporation unless
he is the beneficial holder of at least 100 shares of the common stock of
the Corporation.
(e) [As amended January 16, 1975, and further amended August 26,
1976, December 21, 1978, June 19, 1980, February 16, 1984 (effective June
1, 1984), January 2, 1986, January 6, 1994 and May 6, 1999] (i) No person
shall be eligible for election to the Board of Directors of the Corporation
in any year if such person shall be 72 years of age or older on the first
day of the year of such election.
(ii) Each member of the Board of Directors who ceases to be a
director for any reason other than death after reaching the age of 65 shall
thereupon become a Director Emeritus and shall serve as a Director Emeritus
until the date of the second Annual Meeting following the date when such
person first became a Director Emeritus. Each Director Emeritus will have
the right to receive notice of meetings and to attend meetings of the Board
of Directors and of each Committee thereof on which such Director Emeritus
was serving immediately prior to becoming a Director Emeritus but will not
have the right to vote on matters which come before the Board of Directors
or any committee thereof.
Section 2. [As amended May 6, 1999] Vacancies in the Board of
Directors shall be filled by a majority of the remaining directors though
less than a quorum and a director so chosen shall hold office for the
balance of the unexpired term of the class to which elected and until the
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election and qualification of his successor. In case of any increase in the
number of directors as provided in Section 1 of this Article II, the
stockholders or the Board of Directors (by a majority of the directors
constituting the Board prior to such increase), as the case may be, may, at
the meeting at which such increase is voted, or at any adjournment or
adjournments thereof, elect such additional directors as shall be required,
and the directors so chosen shall hold office for the balance of the
unexpired term of the class to which elected and until the election and
qualification of their respective successors.
Section 3. Meetings of the Board of Directors shall be held at such
place as may from time to time be fixed by resolution of the Board or as
may be specified in the call of any meeting. Regular meetings of the Board
of Directors shall be held at such times as may from time to time be fixed
by resolution of the Board; and special meetings may be held at any time
upon the call of the Executive Committee or of the Chairman of the Board or
the President, by oral, telegraphic or written notice, duly served on or
sent or mailed to each director not less than two days before the meeting.
A meeting of the Board may be held without notice immediately after the
annual meeting of stockholders at the same place at which such annual
meeting is held. Notice need not be given of regular meetings of the Board
held at times fixed by resolution of the Board.
Section 4. [As amended June 4, 1998] The Board of Directors may, by
resolution or resolutions, passed by a majority of the whole Board,
designate an Executive Committee, to consist of two or more of the
directors, as the Board may from time to time determine. The Executive
Committee shall have and may exercise, when the Board is not in session,
all the powers of the Board of Directors in the management of the business
and affairs of the Corporation, and shall have power to authorize the seal
of the Corporation to be affixed to all papers which may require it;
provided that the Executive Committee shall not have or exercise any such
power or powers if and so long as a "two years' default in preferred
dividends," as defined in subdivision (f) of Section 1 of Division D of
Article FOURTH of the Certificate of Incorporation, as amended, of the
Corporation shall exist. The Executive Committee shall not have power to
(i) fill vacancies in the Board, (ii) to change the membership of or to
fill vacancies in this or any Committee of the Board, (iii) approve or
adopt, or recommend to the stockholders, any action or matter expressly
required by the laws of Delaware to be submitted to stockholders for
approval and (iv) adopt, amend or repeal any by-law of the Corporation.
The Board shall have the power at any time to change the membership of the
Executive Committee, to fill vacancies in it, or to dissolve it. The Board
of Directors shall also have the power to designate one or more alternate
members of said Executive Committee, which alternate members shall have
power to serve, subject to such conditions as the Board of Directors may
prescribe, as a member or members of said Executive Committee during the
absence or inability to act of any one or more members of said Committee.
The Executive Committee may make rules for the conduct of its business and
may appoint such committees and assistants as it shall from time to time
deem necessary. A majority of the members of the Executive Committee shall
constitute a quorum.
Section 5. The Board of Directors may also, by resolution or
resolutions, passed by a majority of the whole Board, designate one or more
other committees, each such committee to consist of one or more of the
directors of the Corporation, which, to the extent provided in said
resolution or resolutions, shall have and may exercise the powers of the
Board of Directors in the management of the business affairs of the
Corporation, and may have power to authorize the seal
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of the Corporation to be affixed to all papers which may require it;
provided that no such committee shall have or exercise any such power or
powers if and so long as a "two years' default in preferred dividends," as
defined in subdivision (f) of Section 1 of Division D of Article FOURTH of
the Certificate of Incorporation, as amended, of the Corporation shall
exist. Such committee or committees shall have such name or names as may
be determined from time to time by resolution adopted by the Board of
Directors. A majority of the members of any such committee may determine
its action and fix the time and place of its meetings unless the Board of
Directors shall otherwise provide. The Board of Directors shall have power
at any time to change the membership of, to fill vacancies in, or dissolve
any such committee.
Section 6. One or more of members of the Board of Directors or any
committee thereof may participate in a meeting of the Board or a committee
thereof by means of conference telephone or similar communications
equipment by means of which all persons participating in the meeting can
hear each other.
Section 7. [As amended January 16, 1975] In addition to
reimbursement of his reasonable expenses incurred in attending meetings or
otherwise in connection with his attention to the affairs of the
Corporation, each Director and each Director Emeritus as such, and as a
member of the Executive Committee or of any other committee of the Board of
Directors, shall be entitled to receive such compensation as may be fixed
from time to time by the Board of Directors, subject to any applicable
restriction imposed by the Certificate of Incorporation, as amended, of the
Corporation.
Section 8. [As amended February 4, 1987] (a) The Corporation shall
indemnify any person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, by reason of the
fact that such person is or was a director, officer or employee of the
Corporation or a constituent Corporation absorbed in a consolidation or
merger or is or was serving at the request of the Corporation or a
constituent Corporation absorbed in a consolidation or merger, as a
director, officer or employee of another Corporation, partnership, joint
venture, trust or other enterprise, including an employee benefit plan,
against expenses (including attorneys' fees), judgments, fines and amounts
paid in settlement actually and reasonably incurred by such person in
connection with such action, suit or proceeding to the extent that such
person is not otherwise indemnified and to the extent that such
indemnification is not prohibited by applicable law. For this purpose the
Board of Directors may, and on request of any such person shall be required
to, determine in each case whether or not the applicable standards in any
applicable statute have been met, or such determination shall be made by
independent legal counsel if the Board of Directors so directs or if the
Board of Directors is not empowered by statute to make such determination.
Expenses incurred by an officer, director or employee of the Corporation in
defending a civil or criminal action, suit or proceeding shall be paid by
the Corporation in advance of the final disposition of such action, suit or
proceeding subject to the provisions of any applicable statute. The
obligations of the Corporation to indemnify a director, officer or employee
under this Article II, including the duty to advance expenses, shall be
considered a contract between the Corporation and such individual, and no
modification or repeal of any provision of this Article II shall affect, to
the detriment of the individual, such obligations of the Corporation in
connection with a claim based on any act or failure to act occurring before
such modification or repeal.
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(b) The indemnification and advancement of expenses provided by this
Article II shall not be deemed exclusive of any other right to which one
indemnified may be entitled, both as to action in such person's official
capacity and as to action in another capacity while holding such office,
and shall inure to the benefit of the heirs, executors and administrators
of any such person.
(c) The Board of Directors shall have the power to (i) authorize the
Corporation to purchase and maintain, at the Corporation's expense,
insurance on behalf of the Corporation and on behalf of others to the
extent that power to do so has been or may be granted by statute, and (ii)
give other indemnification to the extent permitted by law.
Article III
OFFICERS
Section 1. The Board of Directors as soon as may be after its
election shall choose a President of the Corporation, one or more Vice
Presidents, a Secretary and a Treasurer and from time to time may appoint
such Assistant Secretaries, Assistant Treasurers and such other officers,
agents and employees as it may deem proper. The President shall be chosen
from among the directors. The Board in its discretion may also choose a
Chairman of the Board and a Vice Chairman of the Board from among the
directors.
Section 2. The term of office of each officer shall be one year, or
until his successor is elected and qualified or until his earlier
resignation or removal. Any officer may resign at any time upon written
notice to the Corporation. Any officer may be removed from office at any
time by the affirmative vote of a majority of the members of the Board then
in office.
Section 3. [As amended May 17, 1984 (effective June 1, 1984) and
further amended May 4, 1988] The Chairman of the Board shall preside at
all meetings of the stockholders (except as otherwise provided by statute)
and of the Board of Directors, and shall have such other powers and duties
as may from time to time be prescribed by the Board of Directors, but shall
not participate in the day-to-day management or operations of the
Corporation except as provided in Section 4 of this Article III in the
event of a vacancy in the office of President. The Vice Chairman of the
Board shall assist the Chairman of the Board in carrying out the Chairman's
duties and, in the absence of the Chairman of the Board, shall have the
powers and duties of the Chairman of the Board. The Vice Chairman shall
also have such other powers and duties as may from time to time be assigned
to such officer by the Board of Directors.
Section 4. The President shall be the chief executive officer of the
Corporation and shall supervise the carrying out of the policies adopted or
approved by the Board. He shall have general power to execute bonds, deeds
and contracts in the name of the Corporation and to affix the corporate
seal; to appoint and fix the compensation of all employees and agents of
the Corporation whose appointment is not otherwise provided for; to remove
or suspend such employees or agents
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as shall not have been appointed by the Board of Directors, and to exercise
all the powers usually appertaining to the chief executive officer of a
corporation, except those required by statute or by these by-laws to be
exercised by another officer. In the absence of the Chairman and the Vice
Chairman of the Board, he shall preside at all meetings of the stockholders
and of the Board of Directors. In the event of a vacancy in the office of
President, the powers and duties of the President as chief executive
officer of the Corporation shall, without further action of any kind,
devolve upon and to the Chairman of the Board. Upon the filling of such
vacancy, such powers and duties as chief executive officer shall, without
further action of any kind, revert to the President of the Corporation.
Section 5. The several Vice Presidents shall perform all such duties
and services as shall be assigned to or required of them, from time to
time, by the Board of Directors or the President, respectively, and, unless
their authority be expressly limited, shall act, in the order of their
election, in the place of the President, exercising all his powers and
performing his duties, during his absence or disability.
Section 6. Subject to such limitations as the Board of Directors may
from time to time prescribe, the other officers of the Corporation shall
each have such powers and duties as generally pertain to their respective
offices, as well as such powers and duties as from time to time may be
conferred by the Board of Directors. Any officer, agent or employee of the
Corporation may be required to give bond for the faithful discharge of his
duties, in such sum and with such surety or sureties as the Board of
Directors may from time to time prescribe.
Article IV
CERTIFICATES OF STOCK
Section 1. [As amended January 2, 1986] The interest of each
stockholder of the Corporation shall be evidenced by certificates for
shares of stock in such form as the Board of Directors may from time to
time prescribe. The shares in the stock of the Corporation shall be
transferable on the books of the Corporation by the holder thereof in
person or by his attorney, upon compliance with Section 3 below or upon
surrender for cancellation of certificates for the same number of shares,
with an assignment and power of transfer endorsed thereon or attached
thereto, duly executed, and with such proof of the authenticity of the
signature as the Corporation or its agents may reasonably require.
Section 2. [As amended January 8, 1998] The certificates of stock
shall be signed by the Chairman of the Board, the President or a Vice
President and by the Secretary or the Treasurer or an Assistant Secretary
or an Assistant Treasurer of the Corporation (except that where any such
certificate is manually countersigned by a transfer agent other than the
Corporation or its employee or by a registrar other than the Corporation or
its employee, any other signature on the certificate may be facsimile,
engraved or printed), shall be sealed with the seal of the Corporation (or
shall bear a facsimile of such seal, engraved or printed) and shall be
countersigned and registered in
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such manner, if any, as the Board of Directors may by resolution prescribe.
In case any officer or officers who shall have signed, or whose facsimile
signature or signatures shall have been used on any such certificate or
certificates, shall cease to be such officer or officers of the
Corporation, whether because of death, resignation or otherwise, before
such certificate or certificates shall have been delivered by the
Corporation, such certificate or certificates may nevertheless be adopted
by the Corporation and be issued and delivered as though the person or
persons who signed such certificate or certificates, or whose facsimile
signature or signatures shall have been used thereon, had not ceased to be
such officer or officers of the Corporation.
Section 3. No certificate for shares of stock in the Corporation
shall be issued in place of any certificate alleged to have been lost,
stolen or destroyed, except upon production of such evidence of such loss,
theft or destruction and upon delivery to the Corporation of a bond of
indemnity in such amount, upon such terms and with such surety, as the
Board of Directors in its discretion may require.
Article V
CORPORATE RECORDS
The books and records of the Corporation may be kept outside of
Delaware at such other place or places as the Board of Directors may from
time to time determine.
Article VI
CHECKS, NOTES, ETC.
All checks and drafts on the Corporation bank accounts and all bills
of exchange and promissory notes, and all acceptances, obligations and
other instruments for the payment of money, shall be signed by such officer
or officers or agent or agents or other employee or employees as shall be
thereunto authorized from time to time by the Board of Directors.
Article VII
FISCAL YEAR
The fiscal year of the Corporation shall begin on the first day of
January in each year and shall end on the thirty-first day of December
following.
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Article VIII
CORPORATE SEAL
The corporate seal shall have inscribed thereon the name of the
Corporation and the words "Incorporated Delaware 1936." In lieu of the
corporate seal, when so authorized by the Board of Directors or a duly
empowered committee thereof, and permitted by law, a facsimile thereof may
be impressed or affixed or reproduced.
Article IX
OFFICES
The Corporation and the stockholders and the directors may have
offices outside of the State of Delaware at such places as shall be
determined from time to time by the Board of Directors.
Article X
AMENDMENTS
[As amended May 4, 1989] Subject to the provisions of Section 1 of
Division D of Article Fourth and of Article Eleventh of the Certificate of
Incorporation, as amended, of the Corporation, the by-laws of the
Corporation, regardless of whether made by the stockholders or by the Board
of Directors, may be altered, added to, or repealed at any meeting of the
Board of Directors or of the stockholders, provided notice of the proposed
change is given in the notice of the meeting. No change of the time or
place for the annual meeting of the stockholders for the election of
directors shall be made except in accordance with the Certificate of
Incorporation, as amended, of the Corporation and the laws of Delaware.
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EXHIBIT 10
AMENDMENT TO CONSULTING AGREEMENT
This is an Amendment to the Consulting Agreement dated May 7, 1998
by and between Anthony P. Terracciano, an individual whose mailing address
is 1123 3rd Avenue, Spring Lake, New Jersey 07762 ("Consultant") and
American Water Works Company, Inc. (the "Company"), a Delaware corporation.
BACKGROUND
Consultant and Company entered into a consulting agreement dated
May 7, 1998. Consultant has provided the consulting and advisory services
requested to date by the Company. Consultant and Company anticipate that
the prospective services which may be requested by the Company from the
Consultant will be more limited than those services previously rendered by
the Consultant.
NOW, THEREFORE, intending to be legally bound hereby, the parties
agree to amend Section 4 of the Agreement in its entirety as follows:
4. Compensation. Effective as of January 1, 1999, as compensation
and consideration for such services and responsibilities under this
Agreement, the Company agrees to pay Consultant and Consultant agrees to
accept compensation of $150,000 annually. Such compensation shall be
payable in equal, or as nearly equal as practicable, monthly installments
during each month, beginning January 1, 1999 in which the Consultant
provides services hereunder. The Company shall not be required to provide
Consultant with any other payments or benefits for his services hereunder,
provided that the services to be performed hereunder, and the compensation
to be paid therefor, shall be in addition to Consultant's services and
compensation as a member of the Board.
IN WITNESS WHEREOF, the undersigned have executed this Amendment.
AMERICAN WATER WORKS COMPANY, INC.
By: Marilyn Ware
Chairman of the Board of Directors
CONSULTANT:
Anthony P. Terracciano
Dated: December 22, 1998
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