Form 10-Q
UNITED STATES
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, 1998
----------------
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 1-8060
------------
AQUARION COMPANY
----------------
(Exact name of registrant as specified in its charter)
Delaware 06-0852232
----------------- -------------------
(State or other jurisdiction of (I.R.S. Employer Identificatin No.)
incorporation or organization)
835 Main Street, Bridgeport, Connecticut 06604-4995
- ---------------------------------------------- --------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including ara code: (203) 335-2333
-----------------
- ---------------------------------------------------------------------
(Former name, former address and former fiscal year, if changes since
last report)
Indicate by check mark whether the registrant (1) has filed all
reports require to be filed by Section 13 or 15 (d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90
days.
Yes X No
----- ------
Indicate the number of shares outstanding of each of the issuer's
classes of common stock as of May 7, 1998:
Common Stock
No Par Value (Stated Value: $1) 7,410,478
--------------------------------- -------------------------
Class Number of Shares
<PAGE>
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. Consolidated Financial Statements
AQUARION COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
UNAUDITED
<TABLE>
<CAPTION>
Three Months Ended March 31,
-----------------------------
1998 1997
------- ---------
(In thousands, except share data)
<S> <C> <C>
Operating revenues $25,383 $23,389
------- -------
Costs and expenses:
Operating 7,471 6,134
General and administrative 3,853 4,120
Depreciation 3,525 2,979
Interest expense 2,686 2,876
Taxes other than income taxes 2,532 3,230
------- -------
Total costs and expenses 20,067 19,339
------- -------
5,316 4,050
Allowance for funds used during construction 47 237
------- -------
Income before income taxes 5,363 4,287
Income taxes 2,328 1,899
------- -------
Net income $3,035 $2,388
======= =======
Basic earnings per share $0.41 $0.34
======= =======
Weighted average common shares outstanding 7,366,282 7,036,623
========= =========
Diluted earnings per share $0.40 $0.33
========= =========
Weighted average common shares outstanding 7,544,496 7,131,191
========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
-2-
<PAGE>
<PAGE>
AQUARION COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF RETAINED EARNINGS
UNAUDITED
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------
1998 1997
------ ------
<S> <C> <C>
(In thousands, except share data)
Beginning of period $19,624 $16,324
Net income 3,035 2,388
------- -------
22,659 18,712
Deduct: Cash dividends declared on
common stock, $.41 per
share and $.405 per share
for 1st quarter 1998 and
1997, respectively 3,031 2,860
------- -------
End of period $19,628 $15,852
======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
-3-
<PAGE>
<PAGE>
AQUARION COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
------------ ------------
(Unaudited)
(In thousands)
<S> <C> <C>
Property, plant and equipment $485,635 $481,833
Less: accumulated depreciation 145,672 142,125
-------- --------
Net property, plant and equipment 339,963 339,708
-------- --------
Current assets:
Cash and cash equivalents 413 851
-------- --------
Accounts receivable from customers 11,372 10,789
Less: allowance for doubtful accounts 1,902 1,782
-------- --------
9,470 9,007
Accrued revenues 9,166 10,411
Inventories 3,989 3,740
Prepaid expenses 12,095 10,980
Other current assets 6,130 6,443
-------- --------
Total current assets 41,263 41,432
-------- --------
Prepaid taxes 12,354 12,354
Recoverable income taxes 41,766 41,741
Other assets 18,787 19,774
-------- --------
$454,133 $455,009
======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
-4-
<PAGE>
<PAGE>
AQUARION COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
--------- ------------
(Unaudited)
(In thousands, except share data)
<S> <C> <C>
Shareholders' equity:
Preferred stock, no par value, authorized
2,500,000 shares not to exceed
aggregate value of $25,000,000,
issuable in series-none issued $ - $ -
Common stock, stated value: $1
Authorized-16,000,000 shares
Issued-7,393,329 shares in 1998
and 7,330,721 shares in 1997 7,393 7,331
Capital in excess of stated value 108,676 107,004
Retained earnings 19,628 19,624
Less: minimum pension liability
adjustment 81 97
-------- --------
Total shareholders' equity 135,616 133,862
-------- --------
Long-term debt and other obligations 141,380 151,380
-------- --------
Current liabilities
Short-term borrowings, unsecured 8,000 9,000
Current maturities of long-term debt 15,000 5,000
Accounts payable and accrued liabilities 12,135 15,592
Dividends payable 3,031 3,005
Accrued interest 2,548 3,011
Taxes other than income taxes 788 755
Income taxes 3,102 2,018
-------- --------
Total current liabilities 44,604 38,381
-------- --------
Advances for construction 24,564 24,263
Contributions in aid of construction 30,995 30,951
Deferred land sale gains 412 384
Accrued postretirement benefit cost 5,075 4,664
Recoverable income taxes 6,067 6,052
Deferred taxes 65,420 65,072
-------- --------
$454,133 $455,009
======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
-5-
<PAGE>
<PAGE>
AQUARION COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
UNAUDITED
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------
1998 1997
------ ------
(In thousands)
<S> <C> <C>
Cash flows from operating activities:
Net income $ 3,035 $ 2,388
Adjustments reconciling net income
to net cash provided by
operating activities:
Depreciation and amortization 3,719 3,241
Allowance for funds used during
construction (47) (237)
Provision for losses on accounts
receivable 90 88
Deferred and prepaid income taxes, net 337 (4,686)
Proceeds from sale of surplus land,
net of gains 964 (25)
Change in assets and liabilities (Note 3) (3,424) 5,666
------- -------
Net cash provided by operating activities 4,674 6,435
------- -------
Cash flows from investing activities:
Capital additions, excluding an
allowance for funds used during
construction (3,499) (6,010)
Advances and contributions in aid of
construction 425 481
Refunds on advances for construction (80) (57)
Proceeds from disposition of subsidiary - 7,616
Other investing activities 330 (154)
------- -------
Net cash (used in) provided by
investing activities (2,824) 1,876
Cash flows from financing activities:
Net repayments of short-term
borrowings (1,000) (8,300)
Proceeds from the issuance of common
stock, net 1,734 893
Proceeds from the issuance of long-
term debt - 4,892
Common dividends paid (3,005) (2,843)
Bond finance charges (17) (246)
------- -------
Net cash used in financing
activities (2,288) (5,604)
------- -------
Net (decrease) increase in cash and cash
equivalents (438) 2,707
Cash and cash equivalents, beginning of
period 851 470
-------- --------
Cash and cash equivalents, end of period $ 413 $ 3,177
======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
-6-
<PAGE>
<PAGE>
AQUARION COMPANY
----------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
UNAUDITED
---------
Aquarion Company (Aquarion) is a holding company whose
subsidiaries are engaged in the regulated utility business of public
water supply and various nonutility businesses. Aquarion's utility
subsidiaries, BHC Company (BHC) which consists of an Eastern division,
formerly Bridgeport Hydraulic Company, and a Western division,
formerly Stamford Water Company, New Canaan Water Company and
Ridgefield Water Supply Company, and Sea Cliff Water Company (SCWC)
(collectively, the Utilities) collect, treat and distribute water for
residential, commercial and industrial customers, to other utilities
for resale and for private and municipal fire protection. The
Utilities provide water to customers in 31 communities with a
population of approximately 500,000 people in Connecticut and Long
Island, New York, including communities served by other utilities to
which BHC makes water available on a wholesale basis for back-up
supply or peak demand purposes through BHC's Southwest Regional
Pipeline. BHC is the largest investor-owned water company in
Connecticut and, with SCWC, is among the ten largest investor-owned
water companies in the nation. The Utilities are regulated by several
Connecticut and New York agencies, including the Connecticut
Department of Public Utility Control (DPUC) and the New York Public
Service Commission (PSC). The Company conducts a timber processing
business, Timco, Inc. (Timco), owns a real estate subsidiary, Main
Street South Corporation (MSSC) and provides utility management
services through Aquarion Management Services, Inc. (AMS).
NOTE 1 - BASIS OF PRESENTATION
- ------------------------------
The accompanying consolidated financial statements of the Company
have been prepared in accordance with generally accepted accounting
principles for interim financial information, with the instructions to
Form 10-Q and Rule 10-01 of Regulation S-X and, as applied in the case
of rate-regulated public utilities, comply with the Uniform System of
Accounts and ratemaking practices prescribed by the authorities.
Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a
fair presentation have been included. The results of operations are
not necessarily indicative of the results of operations for the
calendar year. Water consumption is less in the first quarter of the
year than during the warmer months. Other factors affecting the
comparability of various accounting periods include the timing of rate
increases granted the Utilities and the timing and magnitude of
property sales. For further information, refer to the consolidated
financial statements and accompanying footnotes included in the
Company's Annual Report on Form 10-K for the year ended December 31,
1997.
In February 1997, the Financial Accounting Standards Board (FASB)
issued SFAS No. 128, "Earnings per Share" (SFAS 128), which
establishes new standards for computing and presenting basic and
diluted earnings per share. The Company has adopted SFAS 128
effective for financial statements issued for periods ending after
December 15, 1997.
-7-
<PAGE>
<PAGE>
In June 1997, the FASB issued SFAS No. 130, "Reporting
Comprehensive Income", which establishes standards for reporting and
display of comprehensive income and its components, such as minimum
pension liability, in a full set of general-purpose financial
statements. This statement is effective for fiscal years beginning
after December 15, 1997. Adoption of this statement did not have a
significant impact on the Company financial statements.
In June 1997, the FASB issued SFAS No. 131, "Disclosures about
Segments of an Enterprise and Related Information," which establishes
standards for the method of reporting information about operating
segments in annual financial statements and in interim reports issued
to shareholders. This statement is effective for fiscal years
beginning after December 15, 1997. In the initial year of
application, this statement does not apply to interim financial
statements. The Company does not expect adoption of this statement to
have a significant impact on its disclosures of segment related information.
NOTE 2 - INVENTORY
- ------------------
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
----------- -------------
(Unaudited)
<S> <C> <C>
Lumber and logs $2,881 $2,561
Materials and supplies 1,108 1,179
------ ------
$3,989 $3,740
====== ======
</TABLE>
NOTE 3 - SUPPLEMENTAL DISCLOSURE FOR CONSOLIDATED STATEMENTS OF CASH
- --------------------------------------------------------------------
FLOWS
- -----
Changes in assets and liabilities for the three-month period
ended March 31, are set forth below (in thousands):
<TABLE>
<CAPTION>
1998 1997
------- ------
(Unaudited)
<S> <C> <C>
Decrease in accounts receivable $ 692 $ 1,175
Increase in inventory (249) (489)
Increase in prepayments (1,115) (1,526)
Decrease in other current assets 313 7,737
Decrease in accounts payable and
accrued liabilities (3,457) (580)
Increase (decrease) in interest and
taxes payable 654 (1,380)
Net changes in other noncurrent
balance sheet items (262) 729
------- -------
$(3,424) $ 5,666
------- -------
Supplemental cash flow information:
Cash paid for:
Interest $ 3,092 $ 3,047
Income taxes $ 875 $ 700
</TABLE>
-8-
<PAGE>
<PAGE>
NOTE 4 - SALE AND DISCONTINUED OPERATIONS
- -----------------------------------------
On March 25, 1997, the Company executed the stock purchase
agreement, effective December 31, 1996, completing the stock sale of
Industrial and Environmental Analysts, Inc. (IEA), its environmental
testing laboratory business for approximately $10,000,000.
Accordingly, IEA's results were recorded as a discontinued operation
for the year ended December 31, 1996. For the period January 1, 1997
through March 25, 1997, operating revenues from discontinued
operations were approximately $4,984,000 and the pre-tax operating
loss was approximately $86,000. Losses for the period from January 1,
1997 through March 25, 1997 were fully reimbursed by the purchaser in
conjunction with the terms of the stock purchase agreement.
NOTE 5 - RATE MATTERS
- ---------------------
Rates. On March 16, 1998, BHC's Western division filed an application
with the DPUC for a 4.1 percent water service rate increase designed
to provide a $620,000 increase in annual water service revenues.
On July 31, 1997, BHC's Eastern Division received a decision from
the DPUC approving a 12.7 percent water service rate increase, which
became effective on August 1, 1997, designed to provide an $8,300,000
increase in annual water service revenues. This increase replaced
the Construction Work In Progress (CWIP) water service rate surcharge,
which was 9.49 percent prior to July 1, 1997 and resulted in a 3.2
percent marginal increase.
BHC's Eastern and Western Divisions' rates reflect the repeal of
the Connecticut gross earnings tax for services rendered after July 1,
1997, which resulted in a 5.0 percent reduction in rates and expenses.
-9-
<PAGE>
<PAGE>
NOTE 6 - SALE OF SURPLUS LAND
- -----------------------------
For the first three months of 1998, the Company sold
approximately 12 acres of surplus land with proceeds totaling
$1,227,000. Total gains, including recognition of deferred gains from
prior land sales of $132,000, approximated $364,000.
In February 1997, Aquarion and its BHC subsidiary entered into a
contract to sell its 730-acre Trout Brook Valley property for
approximately $14,000,000, contingent on the buyer's receipt of the
required permits, from various local and state agencies to develop the
property. The buyer has applied for the necessary project permits.
Trout Brook Valley consists of 640 acres owned by BHC and 90 acres
owned by Aquarion. The sale has been approved by the DPUC and the
anticipated closing date is expected to be in 1999, but could be
extended because of regulatory appeals. The Company anticipates that
the after-tax gain from this transaction will be approximately
$6,000,000 over applicable amortization period. In its decision
approving the sale, the DPUC granted the company a 10-year
amortization period, which provides ratepayers with 55 percent and
shareholders with 45 percent of the after-tax gain on approximately
60 percent of BHC's portion of the property. Certain environmental
groups and others have opposed the granting of the required permits
and approvals. No assurances can be given at this time that such
permits and approvals will be granted. A statutory right of first
refusal provision allows various governmental and not for profit
organizations to purchase the land at contract terms. Several of
these groups have expressed an interest and are attempting to raise
the necessary funds. The developer continues to negotiate with these
interested parties to reach an amicable solution.
In March 1997, the Company also entered into a non-binding letter
of intent with the City of Shelton, Connecticut to sell six parcels of
land located in Shelton for approximately $7,000,000. The purchase is
contingent upon the execution of a contract of sale, regulatory and
board approvals. The anticipated closing date is expected to be late
1998 or early 1999. The Company anticipates that the after-tax gain
from this transaction will be approximately $2,500,000 over an
applicable amortization period, assuming similar treatment is allowed
by the DPUC as in the past with regard to the sharing of proceeds
between the shareholders and the ratepayers. No assurances can be
given at this time that the required contingencies will be satisfied.
-10-
<PAGE>
<PAGE>
MSSC presently owns a two-third share, through a joint venture of
approximately 7.7 acres of real property in Shelton, Connecticut. In
December 1997, the joint venture was formally notified of an eminent
domain action undertaken on behalf of the City of Shelton, with an
accompanying notice of value of approximately $95,000. The Company
does not concur with this value and plans to negotiate a higher value
or appeal this notification. Based on this notice of value, the loss
to be recognized by the Company on this transaction will be
approximately $387,000.
ITEM 2. Management's Discussion and Analysis of Financial
--------------------------------------------------
Condition and Results of Operations
-----------------------------------
Management's Discussion and Analysis of the Results of Operations
and Financial Condition contained in Aquarion's Annual Report on Form
10-K for the year ended December 31, 1997 should be read in
conjunction with the comments below.
Capital Resources and Liquidity
- -------------------------------
Capital Expenditures
--------------------
The Company invested $3,499,000 in property, plant and equipment
in the first three months of 1998, compared with $6,010,000 for the
same 1997 period. The Utilities accounted for approximately
$3,149,000 of plant additions during the current three month period.
Management estimates that capital expenditures will total $18,000,000
in 1998, of which approximately $17,000,000 will be for water utility
construction programs.
Financing Activities
--------------------
The Company's capital expenditures have historically been
financed from several sources including internally generated funds,
rate relief, proceeds from debt financings, sale of common stock, and
short-term borrowings under the Company's revolving credit agreements.
-11-
<PAGE>
<PAGE>
The Company's has decided not to renew its unsecured revolving
committed credit agreements that expire on May 10, 1998 and has
negotiated with some of its lenders to establish $30,000,000 of
uncommitted lines of credit to finance short-term borrowings,
thereafter.
The percentage of capital expenditures financed by net cash from
operating activities was 100 percent for the three months ended March
31, 1998 and 1997, respectively. (See "Consolidated Financial
Statements-Consolidated Statements of Cash Flows.") The Company also
obtained funds of $788,000 from issuances of Common Stock under its
Dividend Reinvestment and Common Stock Purchase Plan for the three
months ended March 31, 1998. The Utilities also received $425,000
from advances and contributions in aid of construction from developers
and customers for the three months ended March 31, 1998.
On February 3, 1997, BHC converted the interest rate on its
$30,000,000 unsecured note, issued in 1995 in consideration for a loan
of the proceeds from the issuance by the Connecticut Development
Authority of an equal amount of tax-exempt Water Facilities Revenue
Bonds, from a variable rate to a fixed rate of 6.15 percent, for a
term of 38 years.
Future Financing Requirements
-----------------------------
The Company's ability to finance future utility construction
programs depends substantially on rate relief. Rate relief has an
impact on cash flow from operating activities and consequently affects
the Company's ability to obtain external financing. Additionally,
rate relief will have an impact on the Company's ability to generate
sufficient cash flows to provide a reasonable return in the form of
dividends to the Company's shareholders. The type, amount and timing
of new financings will be based on the Company's general financial
policies regarding capitalization, as well as on market conditions and
other economic factors.
-12-
<PAGE>
<PAGE>
Results of Operations for the three months
- -------------------------------------------
ended March 31, 1998 and 1997
- -----------------------------
Net income for the three months ended March 31, 1998 was
$3,035,000 compared with $2,388,000 for the same 1997 period.
Operating results during the first three months of 1998 are higher due
to increased land sales and improved results from Company's Utility
Operations.
Operating revenues for the first three months of 1998 increased
$1,994,000 from the comparable 1997 period. This increase was
primarily attributable to increased real estate sales of $1,184,000
and higher revenues from the Utilities of $707,000 due to rate relief
granted BHC's Eastern Division effective August 1, 1997. This
increase in water service rates was partially offset by the reduction
in rates associated with the repeal of the Connecticut gross earnings
tax.
Operating expenses for the first three months of 1998 increased
$1,377,000 from the comparable 1997 period which was largely
attributable to higher costs associated with increased land sales of
$778,000 and increased operating expenses at the Utilities of $501,000
which was primarily due to costs associated with the Warner Water
Treatment Plant.
General and administrative expenses for the first three months of
1998 decreased $267,000 from the comparable 1997 period. Expenses
from the Utilities decreased $228,000 due primarily to a higher
pension credit as well as lower healthcare costs.
Depreciation expense for the first three months of 1998 was
$546,000 higher than the 1997 comparable period due to the Warner
Water Treatment Plant being placed into service on July 1, 1997.
Interest expense for the first three months of 1998 was $190,000
lower than the 1997 comparable period due to reduced debt in 1998.
Taxes other than income taxes for the first three months of 1998
decreased $698,000 over the comparable 1997 period due primarily to
the repeal of the Connecticut gross earnings tax.
-13-
<PAGE>
<PAGE>
Income taxes for the three months of 1998 were $429,000 higher
than the comparable 1997 period due to higher taxable income in 1998.
Significant changes in balance sheet accounts
- ----------------------------------------------
for the three months ended March 31, 1998
- -----------------------------------------
The increase of $1,115,000 in prepaid expenses is largely the
result of prepaid property taxes that were paid in January 1998 and
will be expensed over the first half of the year as well as an
increase in the net pension credit.
PART II. OTHER INFORMATION
------------------------------
ITEM 1. - LEGAL PROCEEDINGS
- ----------------------------
All legal proceedings have previously been reported on the Annual
Report on Form 10-K in Part I, Item 3 for the year ended December 31,
1997.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- ------------------------------------------------------------
At the Annual Meeting of Shareholders of the Company held on
April 29, 1998, three directors were elected to a three-year term.
The shareholders elected Geoffrey Etherington with 5,955,903
affirmative votes cast and 89,205 withheld, Edgar G. Hotard with
5,954,512 affirmative votes cast and 90,596 withheld and Jack E.
McGregor with 5,949,804 votes cast and 95,304 withheld.
Shareholders ratified the selection of Price Waterhouse LLP as
independent accountants for 1998 with 5,980,854 affirmative votes
cast, 27,958 negative votes and 36,296 abstentions.
-14-
<PAGE>
<PAGE>
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
- -----------------------------------------
a) Exhibits
3(a) Restated Certificate of Incorporation of Aquarion
Company
3(b) Amended and Restated By-laws of Aquarion Company
4(a) Certificate of Designation of Series A Junior
Participating Preferred Stock of Aquarion Company
4(b) Certificate of Designation of $5.50 Convertible
Preferred Stock of Aquarion Company
27(a) Financial Data Schedule for the quarter ended
March 31, 1998
27(b) Restated Financial Data Schedule for years ended
December 31, 1997, 1996 and 1995
27(c) Restated Financial Data Schedule for quarters 1, 2
and 3 of 1997
27(d) Restated Financial Data Schedule for quarters 1, 2
and 3 of 1996
(b) The Company did not file a report on Form 8-K for the three
months ended March 31, 1998.
-15-
<PAGE>
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
AQUARION COMPANY
Date: May 14, 1998 By /s/JANET M. HANSEN
-------------------- -------------------------------
Janet M. Hansen
Executive Vice President
Chief Financial Officer and
Treasurer
-16
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE MARCH
31, 1998, AQUARION COMPANY FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 413
<SECURITIES> 0
<RECEIVABLES> 11372
<ALLOWANCES> 1902
<INVENTORY> 3989
<CURRENT-ASSETS> 41263
<PP&E> 485635
<DEPRECIATION> 145672
<TOTAL-ASSETS> 454133
<CURRENT-LIABILITIES> 44604
<BONDS> 141380
0
0
<COMMON> 7393
<OTHER-SE> 128223
<TOTAL-LIABILITY-AND-EQUITY> 454133
<SALES> 25383
<TOTAL-REVENUES> 25383
<CGS> 0
<TOTAL-COSTS> 17381
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 90
<INTEREST-EXPENSE> 2686
<INCOME-PRETAX> 5363
<INCOME-TAX> 2328
<INCOME-CONTINUING> 3035
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3035
<EPS-PRIMARY> .41
<EPS-DILUTED> .40
</TABLE>
EXHIBIT 3(A)
RESTATED CERTIFICATE OF INCORPORATION
of
AQUARION COMPANY
-----------------
Pursuant to Section 245 of the
General Corporation Law of the State of Delaware
AQUARION COMPANY, a corporation organized and existing under and
by virtue of the General Corporation Law of the State of Delaware,
hereby certifies as follows:
1. The present name of the corporation is AQUARION COMPANY (the
"Corporation"). The Corporation was originally incorporated under the
name THE HYDRAULIC COMPANY, and the date of filing of the original
Certificate of Incorporation of the Corporation with the Secretary of
State of the State of Delaware was October 17, 1968.
2. The provisions of the Certificate of Incorporation of the
Corporation are hereby restated and integrated into the single
instrument that is hereinafter set forth, and that is entitled
"Restated Certificate of Incorporation of Aquarion Company."
3. The restatement of the Certificate of Incorporation herein
certified has been duly adopted and approved by the Board of Directors
without a vote of the stockholders in accordance with the provisions
of Section 245 of the Delaware General Corporation Law.
4. The Restated Certificate of Incorporation of Aquarion
Company only restates and integrates and does not further amend the
provisions of the Corporation's Certificate of Incorporation as
heretofore amended or supplemented, and there is no discrepancy
between those provisions and the provisions of the Restated
Certificate of Incorporation of Aquarion Company.
<PAGE>
<PAGE>
RESTATED CERTIFICATE OF INCORPORATION
of
AQUARION COMPANY
----------------
Article 1. The name of the Corporation is AQUARION COMPANY.
----------
Article 2. The address of the Corporation s registered office
----------
in the State of Delaware is 229 South State Street, City of Dover,
County of Kent. The name of the Corporation s registered agent at
such address is The Prentice-Hall Corporation System, Inc.
Article 3. The nature of the business and the purposes to be
----------
conducted and promoted by the Corporation are to engage in any lawful
act or activity for which corporations may be organized under the
General Corporation Law of the State of Delaware.
Article 4. The amount of the total authorized capital stock
----------
of Corporation shall be 2,500,000 shares of preferred stock, no par
value, provided that the Corporation shall not issue shares of such
Preferred Stock if such issue would increase the aggregate stated
value of the Corporation s issued and outstanding Preferred Stock to
an amount in excess of 25,000,000 and 16,000,000 shares of Common
Stock, no par value. Holders of Common Stock shall have no pre-
emptive rights to subscribe to any future issues of shares of Common
Stock. The Board of Directors shall be empowered to issue and dispose
of both the Preferred Stock and the Common Stock from time to time
with such voting powers, full or limited, or no voting powers, and
such designations, preferences and relative, participating, optional
or other special rights, and qualifications, limitations and
restrictions thereof as the Board may provide for in the resolution or
resolutions providing for the issue of such stock adopted by the Board
of Directors.
Series B Junior Participating Preferred Stock:
----------------------------------------------
Section a. Designation and Amount. The shares of such series
-----------------------
shall be designated as "Series B Junior Participating Preferred Stock"
(the "Series B Preferred Stock") and the number of shares constituting
the Series B Preferred Stock shall be 100,000. Such number of shares
may be increased or decreased by resolution of the Board of Directors;
provided, that no decrease shall reduce the number of shares of Series
B Preferred Stock to a number less than the number of shares then
outstanding plus the number of shares reserved for issuance upon the
exercise of outstanding options, rights or warrants or upon the
conversion of any outstanding securities issued by the Company
convertible into Series B Preferred Stock. Shares of Series B
Preferred Stock shall have a stated capital of $10.00 per share, which
for purposes of Article 4 of the Certificate of Incorporation shall
constitute the "stated value" of such shares.
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Section b. Dividends and Distributions.
----------------------------
(1) Subject to the rights of the holders of any shares of any
series of Preferred Stock of the Company (the "Preferred Stock") (or
any similar stock) ranking prior and superior to the Series B
Preferred Stock with respect to dividends, the holders of shares of
Series B Preferred Stock, in preference to the holders of Common
Stock, no par value ($1 per share stated value) of the Company (the
"Common Stock") and of any other stock of the Company ranking junior
to the Series B Preferred Stock, shall be entitled to receive, when,
as and if declared by the Board of Directors out of funds legally
available for the purpose, quarterly dividends payable in cash on the
last day of January, April, July, and October in each year (each such
date being referred to herein as a "Dividend Payment Date"),
commencing on the first Dividend Payment Date after the first issuance
of a share or fraction of a share of Series B Preferred Stock, in an
amount per share (rounded to the nearest cent) equal to the greater of
(a) $1 or (b) subject to the provision for adjustment hereinafter set
forth, 100 times the aggregate per share amount of all cash dividends,
and 100 times the aggregate per share amount (payable in kind) of all
non-cash dividends or other distributions other than a dividend
payable in shares of Common Stock, declared on the Common Stock since
the immediately preceding Dividend Payment Date or, with respect to
the first Dividend Payment Date, since the first issuance of any share
or fraction of a share of Series B Preferred Stock. In the event the
Company shall at any time after June 25, 1996 declare or pay any
dividend on the Common Stock payable in shares of Common Stock, or
effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise
than by payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, then in each such
case the amount to which holders of shares of Series B Preferred Stock
were entitled immediately prior to such event under clause (b) of the
preceding sentence shall be adjusted by multiplying such amount by a
fraction, the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were outstanding
immediately prior to such event.
(2) The Company shall declare a dividend or distribution on the
Series B Preferred Stock as provided in paragraph (A) of this Section
immediately after it declares a dividend or distribution on the Common
Stock (other than a dividend payable in shares of Common Stock);
provided that, in the event no dividend or distribution shall have
been declared on the Common Stock during the period between any
Dividend Payment Date and the next subsequent Dividend Payment Date, a
dividend of $1 per share on the Series B Preferred Stock shall
nevertheless be payable, when, as and if declared, on such subsequent
Dividend Payment Date.
(3) Dividends shall begin to accrue and be cumulative, whether
or not earned or declared, on outstanding shares of Series B Preferred
Stock from the Dividend Payment Date next preceding the date of issue
of such shares, unless the date of issue of such shares is prior to
the record date for the first Dividend Payment Date, in which case
dividends on such shares shall begin to accrue from the date of issue
of such shares, or unless the date of issue is a Dividend
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<PAGE>
Payment Date or is a date after the record date for the determination of
holders of shares of Series B Preferred Stock entitled to receive a quarterly
dividend and before such Dividend Payment Date, in either of which
events such dividends shall begin to accrue and be cumulative from
such Dividend Payment Date. Accrued but unpaid dividends shall not
bear interest. Dividends paid on the shares of Series B Preferred
Stock in an amount less than the total amount of such dividends at the
time accrued and payable on such shares shall be allocated pro rata on
a share-by-share basis among all such shares at the time outstanding.
The Board of Directors may fix a record date for the determination of
holders of shares of Series B Preferred Stock entitled to receive
payment of a dividend or distribution declared thereon, which record
date shall be not more than 60 days prior to the date fixed for the
payment thereof.
Section c. Voting Rights. The holders of shares of Series B
--------------
Preferred Stock shall have the following voting rights:
(1) Subject to the provision for adjustment hereinafter set
forth and except as otherwise provided in the Certificate of
Incorporation or required by law, each share of Series B Preferred
Stock shall entitle the holder thereof to 100 votes on all matters
upon which the holders of the Common Stock of the Company are entitled
to vote. In the event the Company shall at any time after June 25,
1996 declare or pay any dividend on the Common Stock payable in shares
of Common Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares
of Common Stock) into a greater or lesser number of shares of Common
Stock, then in each such case the number of votes per share to which
holders of shares of Series B Preferred Stock were entitled
immediately prior to such event shall be adjusted by multiplying such
number by a fraction, the numerator of which is the number of shares
of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(2) Except as otherwise provided herein, in the Certificate
of Incorporation or in any other Certificate of Designations creating
a series of Preferred Stock or any similar stock, and except as
otherwise required by law, the holders of shares of Series B Preferred
Stock and the holders of shares of Common Stock and any other capital
stock of the Company having general voting rights shall vote together
as one class on all matters submitted to a vote of stockholders of the
Company.
(3) Except as set forth herein, or as otherwise provided by
law, holders of Series B Preferred Stock shall have no special voting
rights and their consent shall not be required (except to the extent
they are entitled to vote with holders of Common Stock as set forth
herein) for taking any corporate action.
Section d. Certain Restrictions.
---------------------
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<PAGE>
(1) Whenever quarterly dividends or other dividends or
distributions payable on the Series B Preferred Stock as provided in
Section 2 are in arrears, thereafter and until all accrued and unpaid
dividends and distributions, whether or not earned or declared, on
shares of Series B Preferred Stock outstanding shall have been paid in
full, the Company shall not:
(a) declare or pay dividends, or make any other
distributions, on any shares of stock ranking junior (as to dividends)
to the Series B Preferred Stock;
(b) declare or pay dividends, or make any other
distributions, on any shares of stock ranking on a parity (as to
dividends) with the Series B Preferred Stock, except dividends paid
ratably on the Series B Preferred Stock and all such parity stock on
which dividends are payable or in arrears in proportion to the total
amounts to which the holders of all such shares are then entitled;
(c) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the
Series B Preferred Stock, provided that the Company may at any time
redeem, purchase or otherwise acquire shares of any such junior stock
in exchange for shares of any stock of the Company ranking junior (as
to dividends and upon dissolution, liquidation or winding up) to the
Series B Preferred Stock or rights, warrants or options to acquire
such junior stock;
(d) redeem or purchase or otherwise acquire for
consideration any shares of Series B Preferred Stock, or any shares of
stock ranking on a parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series B Preferred Stock, except
in accordance with a purchase offer made in writing or by publication
(as determined by the Board of Directors) to all holders of such
shares upon such terms as the Board of Directors, after consideration
of the respective annual dividend rates and other relative rights and
preferences of the respective series and classes, shall determine in
good faith will result in fair and equitable treatment among the
respective series or classes.
(2) The Company shall not permit any subsidiary of the
Company to purchase or otherwise acquire for consideration any shares
of stock of the Company unless the Company could, under paragraph (A)
of this Section d, purchase or otherwise acquire such shares at such
time and in such manner.
Section e. Reacquired Shares. Any shares of Series B Preferred
------------------
Stock purchased or otherwise acquired by the Company in any manner
whatsoever shall be retired and canceled promptly after the
acquisition thereof. All such shares shall upon their retirement
become authorized but unissued shares of Preferred Stock and may be
reissued as part of a new series of Preferred Stock to be created by
resolution or resolutions of the Board of Directors, subject to any
conditions and restrictions on issuance set forth herein.
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<PAGE>
Section f. Liquidation, Dissolution or Winding Up. Upon any
---------------------------------------
liquidation, dissolution or winding up of the Company, no distribution
shall be made (A) to the holders of the Common Stock or of shares of
any other stock of the Company ranking junior, upon liquidation,
dissolution or winding up, to the Series B Preferred Stock unless,
prior thereto, the holders of shares of Series B Preferred Stock shall
have received $100 per share, plus an amount equal to accrued and
unpaid dividends and distributions thereon, whether or not earned or
declared, to the date of such payment, provided that the holders of
shares of Series B Preferred Stock shall be entitled to receive an
aggregate amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 100 times the aggregate amount to be
distributed per share to holders of shares of Common Stock, or (B) to
the holders of shares of stock ranking on a parity upon liquidation,
dissolution or winding up with the Series B Preferred Stock, except
distributions made ratably on the Series B Preferred Stock and all
such parity stock in pro-portion to the total amounts to which the
holders of all such shares are entitled upon such liquidation,
dissolution or winding up. In the event, however, that there are not
sufficient assets available to permit payment in full of the Series B
liquidation preference and the liquidation preferences of all other
classes and series of stock of the Company, if any, that rank on a
parity with the Series B Preferred Stock in respect thereof, then the
assets available for such distribution shall be distributed ratably to
the holders of the Series B Preferred Stock and the holders of such
parity shares in the proportion to their respective liquidation
preferences. In the event the Company shall at any time after June 25,
1996 declare or pay any dividend on the Common Stock payable in
shares of Common Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares
of Common Stock) into a greater or lesser number of shares of Common
Stock, then in each such case the aggregate amount to which holders of
shares of Series B Preferred Stock were entitled immediately prior to
such event under the proviso in clause (A) of the preceding sentence
shall be adjusted by multiplying such amount by a fraction the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately
prior to such event.
Section g. Consolidation, Merger, etc. In case the Company
---------------------------
shall enter into any consolidation, merger, combination or other
transaction in which the shares of Common Stock are converted into,
exchanged for or changed into other stock or securities, cash and/or
any other property, then in any such case each share of Series B
Preferred Stock shall at the same time be similarly converted into,
exchanged for or changed into an amount per share (subject to the
provision for adjustment hereinafter set forth) equal to 100 times the
aggregate amount of stock, securities, cash and/or any other property
(payable in kind), as the case may be, into which or for which each
share of Common Stock is converted, exchanged or converted. In the
event the Company shall at any time after June 25, 1996 declare or pay
any dividend on the Common Stock payable in shares of Common Stock, or
effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise
than by payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares
-5-
<PAGE>
<PAGE>
of Common Stock, then in each such case the amount set forth in the preceding
sentence with respect to the conversion, exchange or change of shares of
Series B Preferred Stock shall be adjusted by multiplying such amount by a
fraction, the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately
prior to such event.
Section h. No Redemption. The shares of Series B Preferred Stock
--------------
shall not be redeemable from any holder.
Section i. Rank. The Series B Preferred Stock shall rank, with
-----
respect to the payment of dividends and the distribution of assets
upon liquidation dissolution or winding up of the Company, junior to
all other series of Preferred Stock and senior to the Common Stock.
Section j. Amendment. If any proposed amendment to the
----------
Certificate of Incorporation (including this Certificate of
Designations) would alter, change or repeal any of the preferences,
powers or special rights given to the Series B Preferred Stock so as
to affect the Series B Preferred Stock adversely, then the holders of
the Series B Preferred Stock shall be entitled to vote separately as a
class upon such amendment, and the affirmative vote of two-thirds of
the outstanding shares of the Series B Preferred Stock, voting
separately as a class, shall be necessary for the adoption thereof, in
addition to such other vote as may be required by the General
Corporation Law of the State of Delaware.
Section k. Fractional Shares. Series B Preferred Stock may be
------------------
issued in fractions of a share that shall entitle the holder, in
proportion to such holder's fractional shares, to exercise voting
rights, receive dividends, participate in distributions and to have
the benefit of all other rights of holders of Series B Preferred
Stock.
Article 5. The vote of the stockholders of the Corporation
----------
required to approve any Business Combination shall be as set forth in
this Article 5. The term "Business Combination" shall have the
meaning ascribed to it in Paragraph 1.(B) of this Article. Each other
capitalized term shall have the meaning ascribed to it in Paragraph 3
of this Article.
1. (A) In addition to any affirmative vote required by law or
this Restated Certificate of Incorporation and except as otherwise
expressly provided in Paragraph 2 of this Article 5:
(1) any merger or consolidation of the Corporation or
any Subsidiary with (i) any Interested Stockholder or (ii) any other
Person (whether or not itself an Interested Stockholder) which is, or
after such merger or consolidation would be, an Affiliate of an
Interested Stockholder; or
-6-
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<PAGE>
(2) any sale, lease, exchange, mortgage, pledge,
transfer or other disposition (in one transaction or a series of
transactions) to or with any Interested Stockholder or any Affiliate
of any Interested Stockholder of assets of the Corporation or any
Subsidiary having an aggregate Fair Market Value of $5,000,000 or
more; or
(3) the issuance or transfer by the Corporation or any
Subsidiary (in one transaction or a series of transactions) of any
securities of the Corporation or any Subsidiary to any Interested
Stockholder or any Affiliate of any Interested Stockholder in exchange
for cash, securities or other property (or a combination thereof)
having an aggregate Fair Market Value of $5,000,000 or more, other
than the issuance of securities upon the conversion of convertible
securities of the Corporation or any Subsidiary which were not
acquired by such Interested Stockholder (or such Affiliate) from the
Corporation or a Subsidiary; or
(4) the adoption of any plan or proposal for the
liquidation or dissolution of the Corporation proposed by or on behalf
of an Interested Stockholder or any Affiliate of any Interested
Stockholder; or
(5) any transaction involving the Corporation or any
Subsidiary (whether or not with or into or otherwise involving an
Interested Stockholder), and including, without limitation, any
reclassification of securities (including any reverse stock split), or
recapitalization or reorganization of the Corporation, or any merger
or consolidation of the Corporation with any of its Subsidiaries or
any self tender offer for or repurchase of securities of the
Corporation by the Corporation or any Subsidiary or any other
transaction (whether or not with or into or otherwise involving an
Interested Stockholder), which in any such case has the effect,
directly or indirectly, of increasing the proportionate share of the
outstanding shares of any class of equity securities or securities
convertible into equity securities of the Corporation or any
Subsidiary which is directly or indirectly beneficially owned by any
Interested Stockholder or any Affiliate of any Interested Stockholder;
shall require the affirmative vote of the holders of at least 80
percent of the combined voting power of the then outstanding shares of
the Voting Stock, in each case voting together as a single class (it
being understood that for purposes of this Article 5, each share of
the Voting Stock shall have the number of votes granted to it pursuant
to Article 4 of this Restated Certificate of Incorporation or any
designation of the rights, powers and preferences of any class or
series of Preferred Stock made pursuant to said Article 4 (a
"Preferred Stock Designation")), which vote shall include the
affirmative vote of at least two-thirds (2/3) of the combined voting
power of the outstanding shares of Voting Stock held by stockholders
other than the Interested Stockholder. Such affirmative vote shall be
required notwithstanding any provision of law or any other provision
of this Restated Certificate of Incorporation or any agreement with
any national securities exchange or otherwise which might permit a
lesser vote or no vote and in addition to any affirmative vote
required of the holders of any class or series of Voting Stock
pursuant to law, this Restated Certificate of Incorporation or any
Preferred Stock Designation.
-7-
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<PAGE>
(B) The term "Business Combination" as used in this Article
5 shall mean any transaction that is referred to in any one or more
clauses (1) through (5) of Paragraph 1.(A) of this Article.
2. The provisions of Paragraph 1.(A) of this Article 5 shall
not be applicable to any particular Business Combination, and such
Business Combination shall require only such affirmative vote as is
required by law, any other provision of this Restated Certificate of
Incorporation, any Preferred Stock Designation or any agreement with
any national securities exchange, if, in the case of a Business
Combination that does not involve any cash or other consideration
being received by the stockholders of the Corporation, solely in their
respective capacities as stockholders of the Corporation, the
condition specified in the following paragraph (A) is met, or, in the
case of any other Business Combination, the conditions specified in
the following paragraph (A) or the conditions specified in the
following paragraph (B) are met:
(A) such Business Combination shall have been approved by a
majority of the Disinterested Directors, or
(B) each of the five conditions specified in the following
clauses (1) through (5) shall have been met:
(1) the aggregate amount of the cash and the Fair
Market Value as of the Consummation Date of any consideration other
than cash to be received per share by holders of Common Stock in such
Business Combination shall be at least equal to the highest of the
following (it being intended that the requirements of this clause
(B)(1) shall be required to be met with respect to all shares of
Common Stock outstanding whether or not the Interested Stockholder has
acquired any shares of the Common Stock):
(i) if applicable, the highest per share price
(including any brokerage commissions, transfer taxes and soliciting
dealers fees) paid in order to acquire any shares of Common Stock
beneficially owned by the Interested Stockholder which were acquired
beneficially by such Interested Stockholder (x) within the two-year
period immediately prior to the Announcement Date or (y) in the
transaction in which it became an Interested Stockholder, whichever is
higher; or
(ii) the Fair Market Value per share of Common
Stock on the Announcement Date or on the Determination Date, whichever
is higher; or
(iii) an amount which bears the same or
greater percentage relationship to the Fair Market Value of the Common
Stock on the Announcement Date as the highest per share price
determined in (B)(1)(i) above bears to the Fair Market Value of the
Common Stock on the date of the commencement of the acquisition of the
Common Stock by such Interested Stockholder; and
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<PAGE>
(2) the aggregate amount of the cash and the Fair
Market Value as of the Consummation Date of any consideration other
than cash to be received per share by holders of shares of any class
or series of Voting Stock (other than Common Stock) shall be at least
equal to the highest of the following (it being intended that the
requirements of this clause (B)(2) shall be required to be met with
respect to every class and series of such outstanding Voting Stock,
whether or not the Interested Stockholder has previously acquired any
shares of a particular class or series of Voting Stock):
(i) if applicable, the highest per share price
(including any brokerage commissions, transfer taxes and soliciting
dealers fees) paid in order to acquire any shares of such class or
series of Voting Stock beneficially owned by the Interested
Stockholder which were acquired beneficially by such Interested
Stockholder (x) within the two-year period immediately prior to the
Announcement Date or (y) in the transaction in which it became an
Interested Stockholder, whichever is higher;
(ii) if applicable, the highest preferential
amount per share to which the holders of shares of such class or
series of Voting Stock are entitled in the event of any voluntary or
involuntary liquidation, dissolution or winding up of the Corporation;
(iii) the Fair Market Value per share of such
class or series of Voting Stock on the Announcement Date or the
Determination Date, whichever is higher; or
(iv) an amount which bears the same or
greater percentage to the Fair Market Value of such class of Voting
Stock on the Announcement Date as the highest per share price in
(B)(2)(i) above bears to the Fair Market Value of such Voting Stock on
the date of the commencement of the acquisition of such Voting Stock
by such Interested Stockholder; and
(3) the consideration to be received by holders of a
particular class or series of outstanding Voting Stock (including
Common Stock) shall be in cash or in the same form as was previously
paid in order to acquire beneficially shares of such class or series
of Voting Stock that are beneficially owned by the Interested
Stockholder and, if the Interested Stockholder beneficially owns
shares of any class or series of Voting Stock that were acquired with
varying forms of consideration, the form of consideration to be
received by each holder of such class or series of Voting Stock shall
be, at the option of such holder, either cash or the form used by the
Interested Stockholder to acquire beneficially the largest number of
shares of such class or series of Voting Stock beneficially acquired
by it prior to the Announcement Date; and
(4) after such Interested Stockholder has become an
Interested Stockholder and prior to the consummation of such Business
Combination:
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<PAGE>
(i) such Interested Stockholder shall not have
become the beneficial owner of any additional shares of Voting Stock
of the Corporation, except as part of the transaction in which it
became an Interested Stockholder or upon conversion of convertible
securities acquired by it prior to becoming an Interested Stockholder
or as a result of a pro rata stock dividend or stock split; and
(ii) such Interested Stockholder shall not
have received the benefit, directly or indirectly (except
proportionately as a stockholder), of any loans, advances, guarantees,
pledges or other financial assistance or tax credits or other tax
advantages provided by the Corporation or any Subsidiary, whether in
anticipation of or in connection with such Business Combination or
otherwise; and
(iii) such Interested Stockholder shall not
have caused any material change in the Corporation's business or
capital structure, including, without limitation, the issuance of
shares of capital stock of the Corporation to any third party; and
(iv) there shall have been (x) no failure to
declare and pay at the regular date therefor the full amount of
dividends (whether or not cumulative) on any outstanding Preferred
Stock, except as approved by a majority of the Disinterested
Directors, (y) no reduction in the annual rate of dividends paid on
Common Stock (except as necessary to reflect any subdivision of the
Common Stock), except as approved by a majority of the Disinterested
Directors, and (z) an increase in such annual rate of dividends (as
necessary to prevent any such reduction) in the event of any
reclassification (including any reverse stock split),
recapitalization, reorganization, self tender offer or any similar
transaction which has the effect of reducing the number of outstanding
shares of the Common Stock, unless the failure so to increase such
annual rate was approved by a majority of the Disinterested Directors; and
(5) a proxy or information statement describing
the proposed Business Combination and complying with the requirements
of the Securities Exchange Act of 1934 and the rules and regulations
thereunder (or any subsequent provisions replacing such Act, rules and
regulations), whether or not the Corporation is then subject to such
requirements, shall be mailed by and at the expense of the Interested
Stockholder at least thirty (30) days prior to the consummation of
such Business Combination to the public stockholders of the
Corporation (whether or not such proxy or information statement is
required to be mailed pursuant to such Act or subsequent provisions),
and shall contain at the front thereof in a prominent place (i) any
recommendations as to the advisability (or inadvisability) of the
Business Combination which the Disinterested Directors, if any, may
choose to state, and (ii) the opinion of a reputable national
investment banking firm as to the fairness (or not) of such Business
Combination from the point of view of the remaining public
stockholders of the Corporation (such investment banking firm to be
engaged solely on behalf of the remaining public stockholders, to be
paid a reasonable fee for their services by the Corporation upon
receipt of such opinion, to be unaffiliated with such Interested
Stockholder, and, if there are at the time any Disinterested
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<PAGE>
Directors, to be selected by a majority of the Disinterested
Directors).
3. For purposes of this Article 5:
(A) A "person" shall include, without limitation, any
individual, firm, corporation, group (as such term is used in
Regulation 13D-G of the General Rules and Regulations under the
Securities Exchange Act of 1934, as in effect on March, 1985) or other
entity.
(B) "Interested Stockholder" shall mean any person (other
than the Corporation or any Subsidiary or any employee benefit plan of
the Corporation or any Subsidiary) who or which:
(1) is the beneficial owner, directly or indirectly,
of more than 10 percent of the combined voting power of the then
outstanding shares of Voting Stock; or
(2) is an Affiliate of the Corporation and at any time
within the two-year period immediately prior to the date in question
was the beneficial owner, directly or indirectly, of 10 percent or
more of the combined voting power of the then outstanding shares of
Voting Stock; or
(3) is an assignee of or has otherwise succeeded to
the beneficial ownership of any shares of Voting Stock that were at
any time within the two-year period immediately prior to the date in
question beneficially owned by an Interested Stockholder, if such
assignment or succession shall have occurred in the course of a
transaction or series of transactions not involving a public offering
within the meaning of the Securities Act of 1933.
(C) A person shall be a "beneficial owner" of any Voting
Stock:
(1) which such person or any of its Affiliates or
Associates beneficially owns, directly or indirectly; or
(2) which such person or any of its Affiliates or
Associates has (a) the right to acquire (whether or not such right is
exercisable immediately) pursuant to any agreement, arrangement or
understanding or upon the exercise of conversion rights, exchange
rights, warrants or options, or otherwise, or (b) the right to vote or
direct the vote pursuant to any agreement, arrangement or
understanding; or
(3) which are beneficially owned, directly or
indirectly, by any other person with which such person or any of its
Affiliates or Associates has any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or
disposing of any shares of Voting Stock.
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<PAGE>
(D) For the purposes of determining whether a person is an
Interested Stockholder pursuant to Paragraph 3.(B) of this Article 5,
the number of shares of Voting Stock deemed to be outstanding shall
include shares deemed owned by such Interested Stockholder through
application of Paragraph 3.(C) of this Article but shall not include
any other shares of Voting Stock that may be issuable pursuant to any
agreement, arrangement or understanding, or upon exercise of
conversion rights, warrants or options, or otherwise.
(E) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as in effect on
March, 1985.
(F) "Subsidiary" shall mean any corporation more than 50
percent of whose outstanding equity securities having ordinary voting
power in the election of directors is owned, directly or indirectly,
by the Corporation or by a Subsidiary or by the Corporation and one or
more Subsidiaries; provided, however, that for the purposes of the
definition of Interested Stockholder set forth in Paragraph 3.(B) of
this Article 5, the term "Subsidiary" shall mean only a corporation of
which a majority of each class of Voting Stock is owned, directly or
indirectly, by the Corporation.
(G) "Disinterested Director" shall mean any member of the
Board of Directors of the Corporation who is unaffiliated with, and
not a nominee of, the Interested Stockholder and was a member of the
Board prior to the time that the Interested Stockholder became an
Interested Stockholder, and any successor of a Disinterested Director
who is unaffiliated with, and not a nominee of, the Interested
Stockholder and who is recommended to succeed a Disinterested Director
by a majority of Disinterested Directors then on the Board of
Directors.
(H) "Fair Market Value" shall mean: (1) in the case of
stock, the highest closing sale price during the 30-day period
commencing on the 40th day preceding the date in question of a share
of such stock on the Composite Tape for New York Stock Exchange-Listed
Stocks, or, if such stock is not quoted on the New York Stock
Exchange-Composite Tape, on the principal United States securities
exchange registered under the Securities Exchange Act of 1934 on which
such stock is listed, or, if such stock is not listed on any such
exchange, the highest closing sales price or bid quotation with
respect to a share of such stock during the 30-day period commencing
on the 40th day preceding the date in question on the National
Association of Securities Dealers, Inc. Automated Quotations System or
any system then in use, or if no such quotations are available, the
fair market value on the date in question of a share of such stock as
determined by a majority of the Disinterested Directors in good faith;
and (2) in the case of stock of any class or series which is not
traded on any United States registered securities exchange nor in the
over-the-counter market or in the case of property other than cash or
stock, the fair market value of such property on the date in question
as determined by a majority of the Disinterested Directors in good
faith.
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(I) In the event of any Business Combination in which the
Corporation survives, the phrase "any consideration other than cash to
be received" as used in Paragraphs 2.(B)(1) and (2) of this Article 5
shall include the shares of Common Stock and/or the shares of any
other class of outstanding Voting Stock retained by the holders of
such shares.
(J) "Announcement Date" shall mean the date of first public
announcement of the proposed Business Combination.
(K) "Determination Date" shall mean the date on which the
Interested Stockholder became an Interested Stockholder.
(L) "Consummation Date" shall mean the date of the
consummation of the Business Combination.
(M) The term "Voting Stock" shall mean all outstanding
shares of capital stock of all classes and series of the Corporation
entitled to vote generally in the election of directors of the
Corporation, in each case voting together as a single class. The term
"Voting Stock" as defined in this Paragraph 3 shall apply to the term
"Voting Stock" as used in Article 6 of this Restated Certificate of
Incorporation.
4. A majority of the Disinterested Directors shall have the
power and duty to determine, on the basis of information known to them
after reasonable inquiry, all facts necessary to determine compliance
with this Article 5 including, without limitation:
(A) whether a person is an Interested Stockholder;
(B) the number of shares of Voting Stock beneficially owned
by any person;
(C) whether a person is an Affiliate or Associate of
another person;
(D) whether the requirements of Paragraph 2.(B) of this
Article 5 have been met with respect to any Business Combination;
(E) whether the assets which are the subject of any
Business Combination have, or the consideration to be received for the
issuance or transfer of securities by the Corporation or any
Subsidiary in any Business Combination has, an aggregate Fair Market
Value of $5,000,000 or more; and
(F) such other matters with respect to which a
determination is required under this Article.
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The good faith determination of a majority of the Disinterested
Directors on such matters shall be conclusive and binding for all
purposes of this Article 5.
5. Nothing contained in this Article 5 shall be construed to
relieve any Interested Stockholder from any fiduciary obligation
imposed by law.
6. Notwithstanding anything contained in this Restated
Certificate of Incorporation to the contrary, the affirmative vote of
the holders of at least 80 percent of the combined voting power of the
Voting Stock, voting together as a single class, shall be required to
alter, amend, or repeal this Article 5 or to adopt any provision
inconsistent therewith provided, however, that if there is an
Interested Stockholder on the record date for the meeting at which
such action is submitted to the stockholders for their consideration,
such 80 percent vote must include the affirmative vote of at least
two-thirds (2/3) of the combined voting power of the outstanding
shares of Voting Stock held by stockholders other than the Interested
Stockholder.
Article 6. The following provisions are adopted for the
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management of the business and for the conduct of the affairs of the
Corporation and for creating, defining, limiting and regulating the
powers of the Corporation, the directors and the stockholders:
(a) Both stockholders and directors of the Corporation shall
have power to hold their meetings within or without the State of
Delaware; and the books and records of the Corporation may be kept
within or without the State of Delaware at such place or places as
may, from time to time, be designated by the Board of Directors.
(b) (i) Except as otherwise fixed pursuant to Article 4 of
the Restated Certificate of Incorporation relating to the rights of
the holders of any class or series of Preferred Stock having a
preference over the Common Stock as to dividends or upon liquidation
to elect additional directors under specified circumstances, the Board
of Directors shall consist of not less than nine or more than fifteen
persons, the exact number to be fixed from time to time exclusively by
the Board of Directors pursuant to a resolution adopted by a majority
of the total number of authorized directors (whether or not there
exists any vacancies in previously authorized directorships at the
time any such resolution is presented to the Board for adoption). The
directors (other than those who may be elected by the holders of any
class or series of Preferred Stock having a preference over Common
Stock as to dividends or upon liquidation) shall be classified, with
respect to the time for which they severally hold office, into three
classes, as nearly equal in number as possible, as shall be provided
in the manner specified in the By-Laws, one class to hold office
initially for a term expiring at the annual meeting of stockholders to
be held in 1986, another class to hold office initially for a term
expiring at the annual meeting of stockholders to be held in 1987, and
another class to hold office initially for a term expiring at the
annual meeting of stockholders to be held in 1988, with the members of
each class to hold office until their successors are elected and
qualified. At each annual meeting of the stockholders of the
Corporation, the successors to the class of directors whose term expires at
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that meeting shall be elected to hold office for a term
expiring at the annual meeting of stockholders held in the third year
following the year of their election. The election of directors need
not be by ballot.
(ii) Advance notice of nominations for the election of
directors, other than by the Board of Directors or a committee
thereof, shall be given in the manner provided in the By-Laws.
(iii) Except as otherwise fixed pursuant to the
provisions of Article 4 hereof relating to the rights of the holders
of any class or series of Preferred Stock having a preference over the
Common Stock as to dividends or upon liquidation to elect directors
under specified circumstances, newly created directorships resulting
from any increase in the authorized number of directors or any
vacancies in the Board of Directors resulting from death, resignation,
retirement, disqualification, removal from office or other cause may
be filled only by a majority vote of the directors then in office,
though less than a quorum of the Board of Directors. If any
applicable provision of the Delaware General Corporation Law expressly
confers power on stockholders to fill such a directorship at a special
meeting of stockholders, such a directorship may be filled at such a
meeting only by the affirmative vote of at least 80 percent of the
combined voting powers of the outstanding shares of Voting Stock. Any
director elected in accordance with the two preceding sentences shall
hold office for the remainder of the full term of the class of
directors in which the new directorship was created or the vacancy
occurred and until such director's successor shall have been elected
and qualified. No decrease in the number of authorized directors
constituting the entire Board of Directors shall shorten the term of
any incumbent director.
(iv) Subject to the rights of the holders of any class
or series of Preferred Stock having preference over the Common Stock
as to dividends or upon liquidation to elect directors under specified
circumstances, any director, or the entire Board of Directors, may be
removed from office at any time, but only for cause and only by the
affirmative vote of the holders of at least 80 percent of the combined
voting power of all of the then-outstanding shares of the Voting
Stock, voting together as a single class (it being understood that for
all purposes of this Article 6, each share of the Voting Stock shall
have the number of votes granted to it pursuant to Article 4 of this
Restated Certificate of Incorporation or any Preferred Stock
Designation).
(c) The original By-Laws of the Corporation shall be adopted by
the Board of Directors. The Board of Directors shall have the power
to make, alter, amend and repeal the By-Laws of the Corporation,
subject to the power of the holders of the Voting Stock to alter,
amend or repeal the By-Laws; provided, however, that, notwithstanding
any other provisions of this Restated Certificate of Incorporation or
any provision of law which might otherwise permit a lesser vote or no
vote, but in addition to any affirmative vote of the holders of any
particular class or series of the Voting Stock required by law, this
Restated Certificate of Incorporation or any Preferred Stock
Designation, the affirmative vote of the holders of at least 80
percent of the
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<PAGE>
combined voting power of all the then-outstanding shares of the Voting
Stock, voting together as a single class, shall be required to (i) alter,
amend or repeal any provision of the By-Laws which is to the same effect as
paragraphs (b), (c), (i) and (j) of Article 6 of this Restated Certificate
of Incorporation, or Article 5 of this Restated Certificate of Incorporation.
(d) The business of the Corporation shall be managed by its
Board of Directors, and the Board of Directors may exercise all of the
powers of the Corporation without any action or consent by the
stockholders, except as may otherwise be provided by the statutes of
the State of Delaware, by this Restated Certificate of Incorporation,
or by the By-Laws.
(e) The Board of Directors shall have the power, in its
discretion, from, time to time to fix and vary the amounts to be
maintained as surplus and as working capital and to create and set
apart reserves for any proper purposes and to abolish any such
reserves; and to fix and determine, subject to limitations imposed by
law, what portion of the consideration received upon any issue of
stock shall constitute capital and what portion, if any, paid-in or
capital surplus; and to cause dividends to be paid from paid-in or
capital surplus or from any surplus due to appreciation in value of
any property of the Corporation; to determine whether and when
dividends shall be declared and paid and in what manner and form; and
to determine the use and disposition of any surplus or net profits of
the Corporation.
(f) The Board of Directors shall have the power to subject the
whole or any part of the real and personal properties of the
Corporation, including after-acquired property, to liens, mortgages
and encumbrances, without limit as to amount.
(g) Any director of the Corporation may vote upon any contract
or other transaction between the Corporation and any subsidiary or
affiliated corporation without regard to the fact that he is also a
director or officer of such subsidiary or affiliated corporation.
(h) The directors may, acting in good faith and in their
discretion, submit any contract, act or proposal for authorization,
approval or ratification at any meeting of stockholders, and any such
contract, act or proposal authorized, approved or ratified by a vote
of the holders of a majority of the shares of capital stock of the
Corporation represented in person or by proxy at such meeting and
entitled to vote shall be as valid and as binding upon the Corporation
and upon all stockholders as though it had been authorized, approved,
or ratified, as the case may be, by every stockholder of the
Corporation.
(i) Any action required or permitted to be taken by the
stockholders of the Corporation must be effected at an annual or
special meeting of stockholders of the Corporation and may not be
effected by any consent in writing by such stockholders. Except as
otherwise required by law and subject to the rights of the holders of
any class or any series of Preferred Stock having a preference over the
Common Stock as to dividends or upon liquidation, special meetings of
stockholders of the Corporation may be called only by the Board of Directors
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<PAGE>
pursuant to a resolution adopted by a majority of the total
number of authorized directors (whether or not there exist any
vacancies in previously authorized directorships at the time any such
resolution is presented to the Board for adoption).
(j) Notwithstanding any other provision of this Restated
Certificate of Incorporation or any provision of law which might
otherwise permit a lesser vote or no vote, but in addition to any
affirmative vote of the holders of any particular class or series of
the Voting Stock required by law, this Restated Certificate of
Incorporation or any Preferred Stock Designation, the affirmative vote
of the holders of at least 80 percent of the combined voting power of
all of the then-outstanding shares of the Voting Stock, voting
together as a single class, shall be required to alter, amend or
repeal this Article 6, or any provision hereof.
Article 7. No director of the Corporation shall be personally
----------
liable to the Corporation or its stockholders for monetary damages for
breach of fiduciary duty as a director; provided, however, that this
Article shall not eliminate or limit the liability of a director (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 Delaware General Corporation law, or
(iv) for any transaction from which the director derived an improper
personal benefit. This Article shall not eliminate or limit the
liability of a director for any act or omission occurring prior to the
date on which this Article becomes effective. Any repeal or
modification of this Article 7 shall not adversely affect any right or
protection of a director of the Corporation existing hereunder with
respect to any act or omission occurring prior to the time of such
repeal or modification.
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<PAGE>
IN WITNESS WHEREOF, the undersigned do execute this Restated
Certificate of Incorporation and affirm and acknowledge, under
penalties of perjury, that this Restated Certificate of Incorporation
is their act and deed and that the facts stated herein are true, this
11th day of May, 1998.
- ---- ----
/s/RICHARD K. SCHMIDT
--------------------------------
Name: Richard K. Schmidt
Title: President
Attest:
/s/LARRY L. BINGAMAN
- -----------------------------
Name: Larry L. Bingaman
Title: Secretary
<PAGE>
EXHIBIT 3(b)
AMENDED AND RESTATED BY-LAWS
of
AQUARION COMPANY
________________
ARTICLE I
OFFICES
Section 1.01. The registered office of the Corporation shall be
------------
in the city of Dover, County of Kent, State of Delaware.
Section 1.02. The Corporation may also have offices at such
------------
other places both within and without the State of Delaware as the
Board of Directors may from time to time determine or the business of
the Corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 2.01. All meetings of the stockholders for the election
------------
of directors shall be held in the City of Bridgeport, State of
Connecticut, at such place as may be fixed from time to time by the
Board of Directors, or at such other place either within or without
the State of Delaware as shall be designated from time to time by the
Board of Directors and stated in the notice of the meeting. Meetings
of stockholders for any other purpose may be held at such time and
place, within or without the State of Delaware, as shall be stated in
the notice of the meeting or in a duly executed waiver of notice
thereof.
Section 2.02. Commencing with the year 1974, annual meetings of
-------------
stockholders entitled to vote at such meetings pursuant to the
provisions of the Certificate of Incorporation shall be held on the
fourth Tuesday of April of each year, if not a legal holiday, and if a
legal holiday, then on the next succeeding day not a legal holiday, at
9:30 A.M., or at such other date and time as shall be designated from
time to time by the Board of Directors and stated in the notice of the
meeting.
Section 2.03. Written notice of the annual meeting stating the
-------------
place, date and hour of the meeting shall be given to each stockholder
entitled to vote at such meeting not less than ten (10) nor more than
sixty (60) days before the date of the meeting.
Section 2.04. The Secretary shall prepare and make, at least ten
-------------
(10) days before every meeting of stockholders, a complete list of the
stockholders entitled to vote at the meeting,
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<PAGE>
arranged in alphabetical order, and showing the address of each stockholder
and the number of shares of any class of stock the holders of which are
entitled to vote at such meeting, registered in the name of each
stockholder. Such list shall be open to the examination of any stockholder
entitled to vote at such meeting, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten (10) days prior
to the meeting, either at a place within the city in which the meeting
is to be held, which place shall be specified in the notice of the
meeting, or if not so specified, at the place where the meeting is to
be held. The list shall also be produced and kept at the time and
place of the meeting during the whole time thereof, and may be
inspected by any stockholder entitled to vote at such meeting, who is
present.
Section 2.05. Special meetings of stockholders of the
-------------
Corporation may be called only by the Board of Directors pursuant to a
resolution adopted by a majority of the total number of authorized
directors (whether or not there exist any vacancies in previously
authorized directorships at the time any such resolution is presented
to the Board for adoption).
Section 2.06. Written notice of a special meeting stating the
-------------
place, date and hour of the meeting and the purpose or purposes for
which the meeting is called, shall be given not less than ten (10) nor
more than sixty (60) days before the date of the meeting, to each
stockholder entitled to vote at such meeting.
Section 2.07. Business transacted at any special meeting of
-------------
stockholder shall be limited to the purposes stated in the notice of
meeting.
Section 2.08. The holders of a majority of the stock issued and
-------------
outstanding of any class which is entitled to vote at a meeting of
stockholders, present in person or represented by proxy, shall
constitute a quorum at all meetings of the stockholders for the
transaction of business in respect of any vote required to be taken by
such class except as otherwise provided by statute or by the
Certificate of Incorporation. If, however, such quorum shall not be
present or represented at any meeting of the stockholders, the
stockholders of such class present in person or represented by proxy,
shall have power to adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum of such
class shall be present or represented. At such meeting at which a
quorum of such class shall be present or represented any business may
be transacted which might have been transacted at the meeting as
originally notified. If the adjournment is for more than thirty (30)
days, or if after the adjournment a new record date is fixed for the
adjourned meeting, a notice of the adjourned meeting shall be given to
each stockholder of record entitled to vote at the meeting.
Section 2.09. When a quorum of any class of stock is present at
-------------
any meeting, the vote of the holders of a majority of the stock of
such class present in person or represented by proxy, shall decide any
question in respect of any vote required to be taken by such class
brought before such meeting, unless the question is one upon which by
express provision of the General Corporation Law of the State of
Delaware or of the Certificate of Incorporation a different vote
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<PAGE>
is required, in which case such express provision shall govern and
control the decision of such question.
Section 2.10. Except as otherwise provided in the Certificate of
-------------
Incorporation, each stockholder shall at every meeting of the
stockholders be entitled to one vote in person or by proxy for each
share of the capital stock having voting power held by such
stockholder, but no proxy shall be voted on after three years from its
date, unless the proxy expressly provides for a longer period. Unless
otherwise provided by law, no vote on any question upon which a vote
of the stockholders may be taken need be by ballot unless the chairman
of the meeting shall order that such vote be taken by ballot. If a
vote is to be taken by ballot, each ballot shall state the number of
shares voted of each class entitled to vote and the name of the
stockholder or proxy voting.
Section 2.11. Any action required or permitted to be taken by
-------------
the stockholders of the Corporation must be effected at a duly called
annual or special meeting of stockholders of the Corporation and may
not be effected by any consent in writing by such stockholders.
PRESIDING OFFICER/ORDER OF BUSINESS
Section 2.12. Meetings of stockholders shall be presided over by
-------------
the President of the Corporation or, if he is not present, then by the
Chairman of Board, or, if he is not present, by a Vice President, or
if neither the Chairman of the Board nor the President nor a Vice
President is present, by a chairman to be chosen by a majority of the
stockholders entitled to vote at the meeting who are present in person
or by proxy. The Secretary of the Corporation, or, in his absence, an
Assistant Secretary, shall act as secretary of every meeting, but if
neither the Secretary nor an Assistant Secretary is present, the
meeting shall choose any person present to. act as secretary of the
meeting.
Section 2.13. The Board of Directors of the Corporation may
-------------
adopt such procedural rules for the conduct of meetings of
stockholders as the Board of Directors, in its sole discretion, shall
deem to be in the best interests of the stockholders and to ensure
that all meetings of stockholders are conducted in a fair and
reasonable manner.
ARTICLE III
DIRECTORS
Section 3.01. The business of the Corporation shall be managed
-------------
by or under the direction of its Board of Directors, which may
exercise all such powers of the Corporation and do all such lawful
acts and things as are not by statute or by the Certificate of
Incorporation or by these By-laws directed or required to be exercised
or done by the stockholders.
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Section 3.02. In addition to any rights or duties prescribed by
-------------
statute, any director shall perform his duties as such in good faith,
in a manner he reasonably believes to be in the best interests of the
Corporation, and with such care as a ordinarily prudent person in a
like position would use under similar circumstances. In performing
his duties, a director shall be entitled to rely on information,
opinions, reports or statements, including financial statements and
other financial data, in each case prepared or presented by:
(a) one or more officers or employees of the Corporation whom
the director reasonably believes to be reliable and competent in the
matters presented,
(b) counsel, public accountants, or other persons as to matters
which the director reasonably believes to be within such person's
professional or expert competence, or
(c) a committee of the board upon which he does not serve, duly
designated in accordance with a provision of the Certificate of
Incorporation or these By-laws, as to matters within its designated
authority, which committee the director reasonably believes to merit
confidence, but he shall not be considered to be acting in good faith
if he has knowledge concerning the matter in question that would cause
such reliance to be unwarranted. A person who so performs his duties
shall have no liability by reason of being or having been a director
of the Corporation.
Section 3.03. A director of the Corporation who is present at a
-------------
meeting of the Board of Directors at which action on any corporate
matter is taken shall be presumed to have assented to the action taken
unless his dissent shall be entered in the minutes of the meeting or
unless he shall file his written dissent to such action with the
person acting as the Secretary of the meeting before the adjournment
thereof or shall forward such dissent by registered mail to the
Secretary of the Corporation immediately after the adjournment of the
meeting. Such right to dissent shall not apply to a director who
voted in favor of such action. Any director who may have been absent
from a meeting of the Board of Directors at which action on a
corporate matter is taken shall be presumed to have assented to the
action taken unless he shall file his written dissent to such action
with the person acting as Secretary of the Corporation immediately
after he has notice of the same.
Section 3.04. The Board of Directors shall consist of not less
-------------
than nine or more than fifteen persons, the exact number to be fixed
from time to time exclusively by the Board of Directors pursuant to a
resolution adopted by a majority of the total number of authorized
directors (whether or not there exist any vacancies in previously
authorized directorships at the time any such resolution is presented
to the Board for adoption). Each director shall be a stockholder of
the Corporation. At the 1985 annual meeting of stockholders, the
directors shall be divided into three classes, as nearly equal in
number as possible, with the term of office of the first class to
expire at the 1986 annual meeting of stockholders, the term of office
of the second class to expire at the 1987 annual meeting of
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stockholders and the term of office of the third class to expire at
the 1988 annual meeting of stockholders. At each annual meeting of
stockholders following such initial classification and election,
directors elected to succeed those directors whose terms expire shall
be elected for a term of office to expire at the third succeeding
annual meeting of stockholders after their election.
Section 3.05. Any director of the Corporation may resign at any
-------------
time either by oral tender of resignation at any meeting of the Board
of Directors or by giving written notice thereof to the Corporation.
Such resignation shall take effect at the time specified therefor, and
unless otherwise specified with respect thereto the acceptance of such
resignation shall not be necessary to make it effective. Subject to
the rights of the holders of any class or series of Preferred Stock
having preference over the Common Stock as to dividends or upon
liquidation to elect directors under specified circumstances, any
directors, or the entire Board of Directors, may be removed from
office at any time, but only for cause and only by the affirmative
vote of the holders of at least 80 percent of the combined voting
power of all of the then-outstanding shares of stock of all classes
and series of the Corporation entitled to vote generally (the "Voting
Stock"), voting together as a single class (it being understood that,
for all purposes of these By-laws, each share of the Voting Stock
shall have the number of votes granted to it pursuant to Article 4 of
the Restated Certificate of Incorporation of the Corporation or any
designation of the rights, powers and preferences of any class or
series of the Preferred Stock of the Corporation made pursuant to said
Article 4 (a "Preferred Stock Designation")). The Corporation must
notify the director of the grounds of his impending removal and the
director shall have an opportunity, at the expense of the Corporation,
to present his defense to the stockholders by a statement which
accompanies or precedes the Corporation's solicitation of proxies to
remove him. The term "Entire Board" as used in these By-laws means
the total number of directors which the Corporation would have if
there were no vacancies.
Section 3.06. Except as otherwise fixed pursuant to the
-------------
provisions of Article 4 of the Restated Certificate of Incorporation
relating to the rights of the holders of any class or series of
Preferred Stock having a preference over the Common Stock as to
dividends or upon liquidation to elect directors under specified
circumstances, newly created directorships resulting from any increase
in the authorized number of directors or any vacancies in the Board of
Directors resulting from death, resignation, retirement,
disqualification, removal from office or other cause may be filled
only by a majority vote of the directors then in office, even though
less than a quorum of the Board of Directors, acting at a regular or
special meeting. Any director elected in accordance with the
preceding sentence shall hold office for the remainder of the full
term of the directors in which the new directorship was created or the
vacancy occurred and until such director's successor shall have been
elected and qualified. No decrease in the authorized number of
directors constituting the entire Board of Directors shall shorten the
term of any incumbent director.
MEETINGS OF THE BOARD OF DIRECTORS
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Section 3.07. The Board of Directors of the Corporation may hold
-------------
meetings, both regular and special, either within or without the State
of Delaware. Members of the Board of Directors, or any committee
designated by such Board, may participate in a meeting of such Board
or committee by means of a conference telephone or similar
communications equipment by means of which all persons participating
in the meeting can hear each other, and such participation in a
meeting shall constitute presence in person at such meeting.
Section 3.08. Regular meetings of the Board of Directors may be
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held without notice six (6) times each year in accordance with a
schedule to be adopted annually by the Board in advance of the first
such meeting. At least one regular meeting shall be scheduled in each
calendar quarter, and only one regular meeting shall be scheduled in
any month. Any regular meeting of the Board may be held on the fourth
Tuesday of the month or on such other days as the Board may designate
in advance of the meeting. Any business of the Corporation may be
transacted at any such regular meeting.
Section 3.09. Special meetings of the Board may be called by the
-------------
Secretary on two (2) days written or oral notice to each director, as
provided in Article IV, on the request of the Chairman of the Board or
the President or on the written request of three (3) directors.
Section 3.10. A whole number of directors equal to at least one
-------------
third of the total number of authorized directors of the Corporation
(whether or not there exist any vacancies in previously authorized
directorships at the time at which the existence of a quorum is to be
determined with respect to the transaction of any business by the
Board) shall constitute a quorum for the transaction of business, but
if at any meeting of the Board there shall be less than a quorum
present a majority of those present may adjourn the meeting from time
to time until a quorum shall have been obtained.
Section 3.11. Unless otherwise restricted by the Certificate of
-------------
Incorporation or these By-laws, any action required or permitted to be
taken at any meeting of the Board of Directors or of any committee
thereof may be taken without a meeting, if all members of the Board or
committee, as the case may be, consent thereto in writing, and the
writing or writings are filed with the minutes of proceedings of the
Board or committee.
Section 3.12. Subject to the rights of holders of any class or
-------------
series of Preferred Stock having a preference over the Common Stock as
to dividends or upon liquidation, nominations for the election of
directors may be made by the Board of Directors or a committee
appointed by the Board of Directors or by any stockholder entitled to
vote in the election of directors generally. However, any stockholder
entitled to vote in the election of directors generally may nominate
one or more persons for election as directors at a meeting only if
written notice of such stockholder's intent to make such nomination or
nominations has been given, either by personal delivery or by United
States mail, postage prepaid, to the Secretary of the Corporation not later
-6-
<PAGE>
<PAGE>
than (i) with respect to an election to be held at an annual
meeting of stockholders, ninety days prior to the anniversary date of
the immediately preceding annual meeting, and (ii) with respect to an
election to be held at a special meeting of stockholders for the
election of directors, the close of business on the tenth day
following the date on which notice of such meeting is first given to
stockholders. Each such notice shall set forth: (a) the name and
address of the stockholder who intends to make the nomination and of
the person or persons to be nominated; (b) a representation that the
stockholder is a holder of record of stock of the Corporation entitled
to vote at such meeting and intends to appear in person or by proxy at
the meeting to nominate the person or persons specified in the notice;
(c) a description of all arrangements or understandings between the
stockholder and each nominee and any other person or persons (naming
such person or persons) pursuant to which the nomination or
nominations are to be made by the stockholder; (d) such other
information regarding each nominee proposed by such stockholder as
would be required to be included in a proxy statement filed pursuant
to the proxy rules of the Securities and Exchange Commission; and (e)
the consent of each nominee to serve as a director of the Corporation
if so elected. The presiding officer of the meeting may refuse to
acknowledge the nomination of any person not made in compliance with
the foregoing procedure.
COMMITTEES OF DIRECTORS
Section 3.13. The Board of Directors may create one or more
-------------
committees and appoint members of the Board to serve on them. Each
committee shall have one or more directors, who serve at the pleasure
of the Board. The creation of a committee and the appointment of
directors to it shall be approved by a majority of all the directors
in office when the action is taken. To the extent specified by the
Board of Directors, each committee may exercise the authority of the
Board, except that a committee may not (i) declare a dividend or
authorize the issuance of stock; (ii) recommend to stockholders
actions enumerated in Section 141(c)(1) of the General Corporation Law
of the State of Delaware; (iii) amend the Certificate of
Incorporation; (iv) adopt, amend or repeal these By-laws, (v) adopt an
agreement of merger or consolidation; or (vi) exercise any other
authority prohibited by law. Each committee shall keep regular
minutes of its meetings and report the same to the Board of Directors
when required.
COMPENSATION
Section 3.14. Directors, and members of any committee of the
-------------
Board of Directors, shall be entitled to such reasonable compensation
for their services as directors and members of any such committee as
shall be fixed from time to time by resolution of the Board of
Directors, and shall also be entitled to reimbursement for any
reasonable expenses incurred in attending such meetings. The
compensation of directors may be on such basis as is determined in the
resolution of the Board of Directors. Any director receiving
compensation under these provisions shall not be barred from serving
the Corporation in any other capacity and receiving reasonable
compensation for such other services.
-7-
<PAGE>
<PAGE>
ARTICLE IV
NOTICES
Section 4.01. Whenever, under the provisions of the statutes or
-------------
of the Certificate of Incorporation or of these By-laws, notice is
required to be given to any director or stockholder, it shall not be
construed to mean personal notice, but notice may be given in writing,
by mail, addressed to such director or stockholder, at his address as
it appears on the records of the Corporation, with postage thereon
prepaid, and such notice shall be deemed to be given at the time when
the same shall be deposited in the United States mail. Notice to
directors may also be given by telegram or cable.
Section 4.02. Whenever any notice is required to be given under
-------------
the provisions of the statutes or of the Certificate of Incorporation
or of these By-laws, a waiver thereof in writing, signed by the person
or persons entitled to said notice, whether before or after the time
stated therein, shall be deemed equivalent to such notice. Attendance
of a person at a meeting of stockholders shall constitute a waiver of
notice of such meeting, except when the stockholder attends a meeting
for the express purpose of objecting, at the beginning of the meeting,
to the transaction of any business because the meeting is not lawfully
called or convened.
ARTICLE V
OFFICERS
Section 5.01. The Board of Directors at its initial meeting, and
-------------
thereafter at its first meeting after each meeting of stockholders at
which directors are elected, shall elect, by majority vote of the
directors present, a Chairman of the Board, a President, one or more
Vice Presidents (one or more of whom may be designated as Executive
Vice Presidents or Senior Vice Presidents), a Secretary, and
Treasurer, each of whom shall hold office until the first meeting of
the Board after the next annual meeting of the stockholders and until
his successor is elected and qualified or until his earlier
resignation or removal. At any time the Board of Directors may fill
any vacancy that may occur in any office by reason of death,
resignation, removal or otherwise. At any time the Board of Directors
may also elect a Vice Chairman of the Board, one or more additional
Vice Presidents (one or more of whom may be designated as Executive
Vice President or Senior Vice President), a Controller, one or more
Assistant Secretaries, Assistant Treasurers, Assistant Controllers,
and such other officers and agents as in its judgment the business of
the Corporation may require, who shall perform such duties as the
Board shall from time to time determine. No officer of the
Corporation need be a member of the Board of Directors except the
Chairman of the Board and the President. Two or more offices may be
held by the same person.
Section 5.02. Any officer of the Corporation may resign at any
-------------
time by giving written notice thereof to the Board of Directors. Such
resignation shall take effect at the time specified
-8-
<PAGE>
<PAGE>
therefor, and unless otherwise specified with respect thereto the acceptance
of such resignation shall not be necessary to make it effective. Any officer
of the Corporation may be removed with or without cause at a meeting
by a majority of the members of the Board of Directors or by written
consent of all such members.
Section 5.03. The compensation of all officers and agents of the
-------------
Corporation shall be fixed by the Board of Directors except to the
extent such power shall be delegated by resolution of the Board to a
committee of directors or to the President.
THE CHAIRMAN OF THE BOARD
Section 5.04. The Chairman of the Board shall preside at all
-------------
meetings of the Board of Directors at which he is present. He shall
perform such other duties as the Board may from time to time
prescribe.
When such office is constituted by election by the Board of
Directors, the Vice Chairman of the Board shall preside at all
meetings of the Board of Directors at which the Chairman of the Board
is not present. He shall perform such other duties as the Board may
from time to time prescribe.
THE PRESIDENT
Section 5.05. The President shall be the chief executive officer
-------------
of the Corporation and, subject to the authority of the Board of
Directors, shall have general and active charge, control and
supervision of all its business and affairs. He shall preside at all
meetings of the stockholders at which he is present. He shall perform
such other duties as the Board of Directors may from time to time
prescribe.
EXECUTIVE VICE PRESIDENTS
Section 5.06. The Executive Vice Presidents, each of whom shall
-------------
have such primary responsibilities as may from time to time be
established and defined by the Board of Directors, shall each have
general executive powers. Each Executive Vice President shall perform
such other duties and exercise such other powers as the Board of
Directors or the President may from time to time prescribe.
In the absence of or in the event of the disability of the
President, the senior Executive Vice President shall perform the
duties of the President.
THE VICE PRESIDENTS
-9-
<PAGE>
<PAGE>
Section 5.07. The several Vice Presidents may be designated by
-------------
such title or titles and in such order of seniority as the Board of
Directors may determine. They shall perform such duties and exercise
such powers as the Board of Directors or the President may from time
to time prescribe.
THE SECRETARY AND ASSISTANT SECRETARIES
Section 5.08. The Secretary shall give, or cause to be given,
-------------
notice of all meetings of the stockholders and special meetings of the
Board of Directors; attend all meetings of the Board of Directors and
all meetings of the stockholders and record the proceedings of all
such meetings in a book kept for that purpose; perform like duties for
the standing committees when required; keep and account for all books,
documents, papers and records of the Corporation, except those for
which some other officer or agent is properly accountable; and perform
such other duties as may be prescribed from time to time by the Board
of Directors or the President, under whose supervision he shall be.
He shall have custody of the corporate seal of the Corporation and he,
or an Assistant Secretary, shall have authority to affix the same to
any instrument requiring it and when so affixed, it may be attested by
his signature or by the signature of such Assistant Secretary. The
Board of Directors may give general authority to any other officer to
affix the seal of the Corporation and to attest the affixing by his
signature.
Section 5.09. The Assistant Secretary, or if there be more than
-------------
one, the Assistant Secretaries, shall perform such duties and exercise
such powers as the Board of Directors or the President or the
Secretary may from time to time prescribe.
THE TREASURER AND ASSISTANT TREASURERS
Section 5.10. The Treasurer shall have the custody of the
-------------
corporate funds and securities and shall deposit all moneys and other
valuable effects in the name and to the credit of the Corporation in
such depositories as may be designated by the Board of Directors. He
shall disburse the funds of the Corporation as may be ordered by the
Board of Directors and shall render to the President and to the Board,
whenever the President or the Board shall require, an account of all
his transactions as Treasurer.
Section 5.11. The Assistant Treasurer, or if there shall be more
-------------
than one, the Assistant Treasurers, shall perform such duties and
exercise such powers as the Board of Directors or the President or the
Treasurer may from time to time prescribe.
THE CONTROLLER AND ASSISTANT CONTROLLER
Section 5.12. When such office is constituted by appointment by
-------------
the Board of Directors, the Controller shall be the chief auditing and
accounting officer of the Corporation and shall have control of and be
responsible for all matters pertaining to the accounting policy of the
-10-
<PAGE>
<PAGE>
Corporation. He shall continuously examine the affairs of the
Corporation. He shall maintain adequate and complete records of all
assets, liabilities and transactions of the Corporation, shall
supervise the arrangement and classification of such records, and
shall supervise the accounting and auditing practices of the
Corporation. He shall receive, audit and consolidate all operating
and financial statements of the Corporation and its various
departments and divisions. He shall have the power to make and sign
all reports required by law to be made, published or filed by the
Corporation, or on its behalf, with any public officer, or if there
shall be more than one, the Assistant Controller, shall perform such
duties and exercise such powers as the Board of Directors or the
President or the Controller may from time to time prescribe.
ARTICLE VI
CERTIFICATES OF STOCK
Section 6.01. Every holder of shares of capital stock of the
Corporation shall be entitled to have a certificate in a form approved
by the Board of Directors, signed by the Chairman of the Board, the
President, an Executive Vice President or a Vice President and the
Treasurer or an Assistant Treasurer, or the Secretary or an Assistant
Secretary, certifying the number of such shares owned by him.
Section 6.02. Where any such certificate is signed either by a
-------------
transfer agent or an assistant transfer agent, or by a transfer clerk
acting on behalf of the Corporation and by a registrar, the signature
of any such Chairman of the Board, President, Executive Vice
President, Vice President, Treasurer, Assistant Treasurer, Secretary
or Assistant Secretary may be facsimile. In case any such officer who
has signed, or whose facsimile signature has been used on, any
certificate shall cease to be such officer, whether because of
resignation, removal or otherwise, before such certificate has been
delivered by the Corporation, such certificate may nevertheless be
issued and delivered by the Corporation with the same effect as if
such officer had not ceased to be such at the date of such delivery.
LOST CERTIFICATES
Section 6.03. In case any certificate of stock shall be lost,
-------------
stolen or destroyed, any officer or officers may authorize the
issuance of a substitute certificate in place of the certificate so
lost, stolen or destroyed; provided, however, that in each such case
the applicant for a substitute certificate shall furnish evidence to
the Corporation which any officer or officers determines is
satisfactory, of the loss, theft or destruction of such certificate
and of the ownership thereof, and also such security or indemnity as
may be required by and office or officers.
TRANSFER OF STOCK
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<PAGE>
<PAGE>
Section 6.04. Upon surrender to the Corporation or the transfer
-------------
agent of the Corporation of a certificate of stock duly endorsed or
accompanied by proper evidence of succession, assignment or authority
to transfer, it shall be the duty of the proper officers of the
Corporation or of the transfer agent to issue a new certificate to the
person entitled thereto, cancel the old certificate and record the
transaction upon its books.
FIXING RECORD DATE
Section 6.05. 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 (60) nor less than ten (10) days
before the date of such meeting, nor more than sixty (60) days prior
to any other action. A determination of stockholders of record
entitled to notice of or to vote at a meeting of stockholders shall
apply to any adjournment of the meeting; provided, however, that the
Board of Directors may fix a new record date for the adjournment
meeting.
REGISTERED STOCKHOLDERS
Section 6.06. The Corporation shall be entitled to recognize the
-------------
exclusive right of a person registered on its books as the owner of
shares to receive dividends, and to vote as such owner, and shall not
be bound to recognize any equitable or other claim to or interest in
such share or shares on the part of any other person, whether or not
it shall have express or other notice thereof, except as otherwise
provided by the laws of Delaware.
ARTICLE VII
GENERAL PROVISIONS
DIVIDENDS
Section 7.01. Dividends upon the capital stock of the
-------------
Corporation, subject to the provisions of the Certificate of
Incorporation and the General Corporation Law of the State of
Delaware, may be declared by the Board of Directors at any regular or
special meeting. Dividends may be paid in cash, in property, or in
shares of the capital stock, subject to the provisions of the
Certificate of Incorporation and the General Corporation Law of the
State of Delaware.
Section 7.02. Before payment of any dividend, there may be set
-------------
aside out of any funds of the Corporation available for dividends such
sum or sums as the directors from time to time, in
-12-
<PAGE>
<PAGE>
their absolute discretion, think proper as a reserve or reserves to meet
contingencies, or for qualifying dividends, or for repairing or
maintaining any property of the Corporation, or for such other purpose
as the directors shall think conducive to the interest of the
Corporation, and the directors may modify or abolish any such reserve
in the manner in which it was created.
FISCAL YEAR
Section 7.03. The fiscal year of the Corporation shall be the
-------------
calendar year unless otherwise fixed by resolution of the Board of
Directors.
DEPOSITS
Section 7.04. The Board of Directors shall select banks, trust
-------------
companies, or other depositories in which all funds of the Corporation
not otherwise employed shall, from time to time be deposited to the
credit of the Corporation.
VOTING SECURITIES HELD BY THE CORPORATION
Section 7.05. Unless otherwise ordered by the Board of
-------------
Directors, the Chairman of the Board or the President shall have full
power and authority on behalf of the Corporation to attend and to act
and to vote at any meeting of security holders of other corporations
in which the Corporation may hold securities. At such meeting the
Chairman of the Board or the President shall possess any and all
rights and powers incident to the ownership of such securities which
the Corporation might have possessed and exercised if it had been
present. The Board of Directors may, from time to time confer like
powers upon any other person or persons.
SEAL
Section 7.06. The corporate seal shall have inscribed thereon
-------------
the name of the Corporation, the year of its organization and the
words "Corporate Seal, Delaware". The seal may be used by causing it
or a facsimile thereof to be impressed or affixed or reproduced or
otherwise.
ARTICLE VIII
INDEMNIFICATION
Section 8.01. 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 (other than an action by or
in the right of the Corporation) by reason of the fact that he is or
was a director or officer of the Corporation, against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
-13-
<PAGE>
<PAGE>
actually and reasonably incurred by him in connection with
such action, suit or proceeding if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best
interests of the Corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was
unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner
which he reasonably believed to be in or not opposed to the best
interests of the Corporation, and, with respect to any criminal action
or proceeding, had reasonable cause to believe that his conduct was
unlawful.
Section 8.02. 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 or suit by or in the right of the
Corporation to procure a judgment in its favor by reason of the fact
that he is or was a director or officer of the Corporation, against
expenses (including attorneys' fees) actually and reasonably incurred
by him in connection with the defense or settlement of such action or
suit if he acted in good faith and in a manner he reasonably believed
to be in or not opposed to the best interests of the Corporation and
except that no indemnification shall be made in respect to any claim,
issue or matter as to which such person shall have been adjudged to be
liable for negligence or misconduct in the performance of his duty to
the Corporation unless and only to the extent that the Court of
Chancery of the State of Delaware or the court in which such action or
suit was brought shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances of the
case, such person is fairly and reasonably entitled to indemnity for
such expenses which the Court of Chancery of the State of Delaware or
such other court shall deem proper.
Section 8.03. The Corporation may indemnify any person who is
-------------
or was an employee or agent of the Corporation, or is or was serving
at the request of the Corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or
other enterprise to the extent and under the circumstances provided by
paragraphs 1 and 2 of this Article VIII with respect to a person who
is or was a director or officer of the Corporation.
Section 8.04. Any indemnification under paragraphs 1, 2 and 3
-------------
of this Article VIII (unless ordered by a court) shall be made by the
Corporation only as authorized in the specific case upon a
determination that indemnification of the director or officer is
proper in the circumstances because he has met the applicable standard
of conduct set forth therein. Such determination shall be made (a) by
the Board of Directors by a majority vote of only those directors who
were not parties to such action, suit or proceeding, (b) if such
quorum is not obtainable, or, even if obtainable a quorum of
disinterested directors so directs, by independent legal counsel in a
written opinion, or (c) by the stockholders.
Section 8.05. Expenses incurred in defending a civil or criminal
-------------
action, suit or proceeding may be paid by the Corporation in advance
of the final disposition of such action,
-14-
<PAGE>
<PAGE>
suit or proceeding as authorized by the Board of Directors of the
Corporation in the manner provided in the next preceding paragraph upon
receipt of an undertaking by or on behalf of the director, officer,
employee or agent to repay such amount unless it shall ultimately be
determined that he is entitled to be indemnified by the Corporation as
authorized in this Article VIII.
Section 8.06. The indemnification provided by this Article VIII
-------------
shall not be deemed exclusive of any other rights to which those
seeking indemnification may be entitled under any statute, by-law,
agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in his official capacity and as to action
in another capacity while holding such office, and shall continue as
to a person who has ceased to be a director, officer, employee or
agent and shall inure to the benefit of the heirs, executors and
administrators of such a person.
Section 8.07. By action of its Board of Directors,
-------------
notwithstanding any interest of the directors in the action, the
Corporation may purchase and maintain insurance, in such amounts as
the Board of Directors deems appropriate, on behalf of any person who
is or was a director, officer, employee or agent of the Corporation,
or of any corporation a majority of the voting stock of which is owned
by the Corporation, or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise,
against any liability asserted against him and incurred by him in any
such capacity, or arising out of his status as such, whether or not
the Corporation would have the power or would be required to indemnify
him against such liability under the provisions of this Article VIII
or of the General Corporation Law of the State of Delaware.
Section 8.08. For the purposes of this Article VIII, references
-------------
to "the corporation" shall include, in addition to the resulting
corporation, any constituent corporation (including any constituent of
a constituent) absorbed in a consolidation or merger which, if its
separate existence had continued, would have power and authority to
indemnity its directors, officers, and employees or agents, so that
any person who is or was a director, officer, employee or agent of
such constituent corporation, or is or was serving at the request of
such constituent corporation as a director, officer, employee or agent
of another corporation, partnership, joint venture, trust or other
enterprise, shall stand in the same position under the provisions of
this Article VIII with respect to the resulting or surviving
corporation as he would have with respect to such constituent
corporation if its separate existence had continued.
ARTICLE IX
AMENDMENTS
Section 9.01. These By-laws may be amended, added to rescinded
-------------
or repealed at any meeting of the Board of Directors or of the
stockholders, provided notice of the proposed change was given in the
notice of the meeting or, in the case of a meeting of the Board of
Directors, in a notice given not less than two days prior to the
meeting; provided, however, that,
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<PAGE>
<PAGE>
notwithstanding any other provisions of these By-laws or any provision
of law which might otherwise permit a lesser vote or no vote, but in
addition to any affirmative vote of the holders of any particular class
or series of the Voting Stock required by law, the Restated Certificate
of Incorporation, any Preferred Stock Designation or these By-laws, the
affirmative vote of the holders of at least 80 percent of the combined
voting power of all the then-outstanding shares of the Voting Stock, voting
together as a single class, shall be required to alter, amend or repeal
Sections 2.05 and 2.11 of ARTICLE II of these By-laws, Sections 3.04, 3.05,
3.06, 3.10 and 3.12 of ARTICLE III of these By-laws or this proviso to
this Section 9.01 of ARTICLE IX of these By-laws.
ARTICLE X
REFERENCES
Reference in these By-Laws to a provision of the General
Corporation Law of the State of Delaware or any provision of Delaware
law set forth therein is to such provision of the Delaware Code 1953,
as amended, or the corresponding provision(s) of any subsequent
Delaware law.
-16-
<PAGE>
EXHIBIT 4(a)
CERTIFICATE OF DESIGNATION
of
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
of
AQUARION COMPANY
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
AQUARION COMPANY, a corporation organized and existing under and
by virtue of the General Corporation Law of the State of Delaware
(hereinafter called the "Corporation"), hereby certifies that the
following resolution was duly adopted by the Board of Directors of the
Corporation as required by Section 151 of the General Corporation Law
of the State of Delaware at a meeting duly called and held on April 29,
1998:
RESOLVED, that none of the authorized shares of Series A Junior
Participating Preferred Stock of the Corporation are outstanding and
no such shares will be issued subject to the Certificate of
Designations filed with the Secretary of State of the State of
Delaware on December 3, 1986 with respect to such shares.
IN WITNESS WHEREOF, the undersigned do execute this Certificate
of Designations and affirm and acknowledge, under penalties of
perjury, that this Certificate of Designations is their act and deed
and that the facts stated herein are true, this 11 day of May, 1998.
/s/RICHARD K. SCHMIDT
-------------------------------
Richard K. Schmidt
Title: President
Attest:
/s/LARRY L. BINGAMAN
- ---------------------------------
Name: Larry L. Bingaman
Title: Secretary
<PAGE>
EXHIBIT 4(b)
CERTIFICATE OF DESIGNATION
of
$5.50 CONVERTIBLE PREFERRED STOCK
of
AQUARION COMPANY
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
AQUARION COMPANY, a corporation organized and existing under and
by virtue of the General Corporation Law of the State of Delaware
(hereinafter called the "Corporation"), hereby certifies that the
following resolution was duly adopted by the Board of Directors of the
Corporation as required by Section 151 of the General Corporation Law
of the State of Delaware at a meeting duly called and held on April 29,
1998:
RESOLVED, that none of the authorized shares of $5.50 Convertible
Preferred Stock of the Corporation are outstanding and no such shares
will be issued subject to the Certificate of Designations filed with
the Secretary of State of the State of Delaware on June 25, 1970 with
respect to such shares.
IN WITNESS WHEREOF, the undersigned do execute this Certificate
of Designations and affirm and acknowledge, under penalties of
perjury, that this Certificate of Designations is their act and deed
and that the facts stated herein are true, this 11th day of May, 1998.
/s/RICHARD K. SCHMIDT
____________________________________
Name: Richard K. Schmidt
Title: President <PAGE>
Attest:
/s/LARRY L. BINGAMAN
____________________________________
Name: Larry L. Bingaman
Title: Secretary
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE DECEMBER
31, 1997, 1996 & 1995 AQUARION COMPANY FORM 10-K AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1000
<S> <C> <C> <C>
<PERIOD-TYPE> YEAR YEAR YEAR
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1996 DEC-31-1995
<PERIOD-END> DEC-31-1997 DEC-31-1996 DEC-31-1995
<CASH> 851 470 635
<SECURITIES> 0 0 0
<RECEIVABLES> 10789 10796 15859
<ALLOWANCES> 1253 1782 2916
<INVENTORY> 3740 2883 4105
<CURRENT-ASSETS> 41432 49622 35791
<PP&E> 481833 454716 432480
<DEPRECIATION> 142125 131328 136726
<TOTAL-ASSETS> 455009 449092 413980
<CURRENT-LIABILITIES> 38381 47763 35200
<BONDS> 151380 148487 131991
0 0 285
0 0 0
<COMMON> 7331 7080 6937
<OTHER-SE> 126531 115871 114565
<TOTAL-LIABILITY-AND-EQUITY> 455009 449092 413980
<SALES> 107102 94804 94569
<TOTAL-REVENUES> 107102 94804 94569
<CGS> 0 0 0
<TOTAL-COSTS> 69747 63492 63794
<OTHER-EXPENSES> 0 0 0
<LOSS-PROVISION> 0 0 842
<INTEREST-EXPENSE> 11187 9311 8469
<INCOME-PRETAX> 26927 23124 23178
<INCOME-TAX> 11916 9284 9882
<INCOME-CONTINUING> 15011 13840 13296
<DISCONTINUED> 0 (4835) (410)
<EXTRAORDINARY> 0 0 0
<CHANGES> 0 0 0
<NET-INCOME> 15011 9005 12886
<EPS-PRIMARY> 2.10 1.30 1.90
<EPS-DILUTED> 2.08 1.29 1.89
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE MARCH
31, 1997, JUNE 30, 1997 AND SEPTEMBER 30, 1997 AQUARION COMPANY FORM 10-Q'S AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1000
<S> <C> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS 9-MOS
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1997 DEC-31-1997
<PERIOD-END> MAR-31-1997 JUN-30-1997 SEP-30-1997
<CASH> 3177 484 656
<SECURITIES> 0 0 0
<RECEIVABLES> 9998 11766 11516
<ALLOWANCES> 1326 1405 1706
<INVENTORY> 3372 3840 3992
<CURRENT-ASSETS> 37728 36793 39433
<PP&E> 460961 467841 477910
<DEPRECIATION> 134408 137389 140412
<TOTAL-ASSETS> 445506 448827 458622
<CURRENT-LIABILITIES> 37519 33737 39058
<BONDS> 153379 156380 156380
0 0 0
0 0 0
<COMMON> 7115 7154 7189
<OTHER-SE> 116467 119280 122914
<TOTAL-LIABILITY-AND-EQUITY> 445506 448827 458622
<SALES> 23389 49911 79137
<TOTAL-REVENUES> 23389 49911 79137
<CGS> 0 0 0
<TOTAL-COSTS> 16463 33918 50126
<OTHER-EXPENSES> 0 0 0
<LOSS-PROVISION> 88 175 482
<INTEREST-EXPENSE> 2876 5812 8837
<INCOME-PRETAX> 4287 10632 20862
<INCOME-TAX> 1899 4708 9206
<INCOME-CONTINUING> 2388 5924 11656
<DISCONTINUED> 0 0 0
<EXTRAORDINARY> 0 0 0
<CHANGES> 0 0 0
<NET-INCOME> 2388 5924 11656
<EPS-PRIMARY> .34 .84 1.64
<EPS-DILUTED> .34 .83 1.62
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE MARCH
31, 1996, JUNE 30, 1996 AND SEPTEMBER 30, 1996 AQUARION COMPANY FORM 10-Q'S AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1000
<S> <C> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS 9-MOS
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1996 DEC-31-1996
<PERIOD-END> MAR-31-1996 JUN-30-1996 SEP-30-1996
<CASH> 539 502 76
<SECURITIES> 0 0 0
<RECEIVABLES> 16727 17033 18626
<ALLOWANCES> 2962 2882 2313
<INVENTORY> 4323 4194 3926
<CURRENT-ASSETS> 37338 39765 41954
<PP&E> 439877 457463 465758
<DEPRECIATION> 139147 143429 144568
<TOTAL-ASSETS> 420648 437507 446205
<CURRENT-LIABILITIES> 34713 44346 50371
<BONDS> 138026 141388 141387
285 285 285
0 0 0
<COMMON> 6971 7008 7044
<OTHER-SE> 114646 115806 118083
<TOTAL-LIABILITY-AND-EQUITY> 420648 437507 446205
<SALES> 20993 44006 69505
<TOTAL-REVENUES> 20993 44006 69505
<CGS> 0 0 0
<TOTAL-COSTS> 15180 30771 46926
<OTHER-EXPENSES> 0 0 0
<LOSS-PROVISION> 57 44 82
<INTEREST-EXPENSE> 2092 4382 6717
<INCOME-PRETAX> 3998 9416 16789
<INCOME-TAX> 1685 3774 6753
<INCOME-CONTINUING> 2313 5642 10036
<DISCONTINUED> (239) (403) (661)
<EXTRAORDINARY> 0 0 0
<CHANGES> 0 0 0
<NET-INCOME> 2074 5239 9375
<EPS-PRIMARY> .30 .76 1.36
<EPS-DILUTED> .30 .76 1.35
</TABLE>
