SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13, or 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1999 Commission file No. 0-6028
BIRMINGHAM UTILITIES, INC.
(Exact Name of registrant as specified in its charter)
CONNECTICUT 06-0878647
(State or other jurisdiction of I.R.S. Employer Identification No.
incorporation or organization)
230 Beaver Street, Ansonia, CT 06401-0426
(Address of principal executive offices) Zip Code
Registrant's telephone number including area code (203) 735-1888
Securities registered pursuant to Section 12(b) of the Act
Title of each class Name of each exchange
None None
Securities registered pursuant to Section 12(g) of the Act
Common Stock (no par value)
Title of Class
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K (Section 229.405 of this chapter) is not
contained herein, and will not be contained, to the best of registrant's
knowledge, in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this Form
10-K. [ X ]
Aggregate market value of the voting stock held by non-affiliates* of
the registrant based on the average bid and asked prices of such stock
as of March 10, 2000: $18,124,736.
Indicate the number of shares outstanding or each of the registrant's
class of common stock, as of the latest practicable date.
Page Two
Class Outstanding at March 10, 2000
Common Stock, no par value 1,583,025
* For purposes of setting forth on the cover sheet of this Annual Report
on Form 10-K the aggregate market value of the voting stock held by non-
affiliates of the registrant, the registrant has deemed that all shares
beneficially held by officers, directors, and nominees are shares held
by affiliates.
Page Three
PART I
Item 1. Business
The Company is a specially chartered Connecticut public service
corporation in the business of collecting and distributing water for
domestic, commercial and industrial uses and fire protection in Ansonia
and Derby, Connecticut, and in small parts of the contiguous Town of
Seymour. Under its charter, the Company enjoys a monopoly franchise in
the distribution of water in the area which it serves. In conjunction
with its right to sell water, the Company has the power of eminent
domain and the right to erect and maintain certain facilities on and in
public highways and grounds, all subject to such consents and approvals
of public bodies and others as may be required by law.
The current sources of the Company's water are wells located in Derby
and Seymour and interconnections with the South Central Connecticut
Regional Water Authority's (the "Regional Water Authority") system (a)
at the border of Orange and Derby (the "Grassy Hill Interconnection")
and (b) near the border of Seymour and Ansonia (the "Woodbridge
Interconnection"). The Company maintains its interconnected Beaver Lake
Reservoir System, a 2.2 million gallon per day (MGD) surface supply in
case of emergency needs.
The Company's entire system has a safe daily yield (including only those
supplies that comply with the SDWA on a consistent basis) of
approximately 8.0 MGD, while the average daily demand and the maximum
daily demand on the system during 1999 were approximately 3.4 MGD and
4.7 MGD, respectively. The distribution system with the exception of
the well supplies, is mainly through gravity, but there are seven
distinct areas at higher elevations where pumping, pressure tanks and
standpipes are utilized. These higher areas serve approximately 25% of
the Company's customers.
During 1999 approximately 1.25 billion gallons of water from all
sources were delivered to the Company's customers. The Company has
approximately 8,990 customers of whom approximately 94% are residential
and commercial. No single customer accounted for as much as 10% of
total billings in 1999. The business of the Company is to some extent
seasonal, since greater quantities of water are delivered to customers
in the hot summer months.
The Company had, as of February 29, 2000, 20 full-time employees. The
Company's employees are not affiliated with any union organization.
The Company is subject to the jurisdiction of the Connecticut Department
of Public Utility Control ("DPUC") as to accounting, financing,
ratemaking, disposal of property, the issuance of long term securities
and other matters affecting its operations. The Connecticut Department
of Public Health (the "Health Department"or "DPH") has regulatory
powers over the Company under state law with respect to water quality,
sources of supply, and the use of watershed land. The Connecticut
Department of Environmental Protection ("DEP") is authorized to regulate
the Company's operations with regard to water pollution abatement,
diversion of water from streams and rivers, safety of dams and the
location, construction and alteration of certain water facilities. The
Company's activities are also subject to regulation with regard to
environmental and other operational matters by federal, state and
local authorities, including, without limitation, zoning authorities.
The Company is subject to regulation of its water quality under the
Federal Safe Drinking Water Act ("SDWA"). The United States
Environmental Protection Agency has granted to the Health Department the
primary enforcement responsibility in Connecticut under the SDWA. The
Health Department has established regulations containing maximum limits
on contaminants which have or may have an adverse effect on health.
Page Four
Executive Officers of the Registrant
Name, Age and Position Business Experience Past 5 Years
Betsy Henley-Cohn, 47
Chairwoman of the Board Chairwoman of the Board of Directors of
the Company since May of 1992; Chairman
of the Board of Directors and Treasurer,
Joseph Cohn & Sons, Inc.; Director,
United Illuminating Company; Director,
Aristotle Corp.; Director, Citizens Bank
of Connecticut (1997-1999).
John S. Tomac, 46
President President of the Company since October
1, 1998. Vice President and Treasurer of
the Company December 1, 1997-September
30, 1998.
Assistant Controller, BHC Company 1991-
1997.
Item 2. Properties
The Company's properties consist chiefly of land, wells, reservoirs,
and pipelines. The Company has 5 production wells with an aggregate
effective capacity of approximately 3.0 MGD. The Company's existing
interconnections with the Regional Water Authority can provide 5.0 MGD.
The Company's entire system has a safe daily yield (including only those
supplies that comply with the SDWA on a consistent basis) of
approximately 8.0 MGD, while the average daily demand and the maximum
daily demand on the system during 1999 were approximately 3.4 MGD and
4.7 MGD, respectively. The distribution system, with the exception of
the well supplies, is mainly through gravity, but there are seven
distinct areas at higher elevations where pumping, pressure tanks and
standpipes are utilized. These higher areas serve approximately 25% of
the Company's customers.
The Company has three emergency stand-by reservoirs (Peat Swamp,
Quillinan and Middle) with a storage capacity of 484 million gallons and
a safe daily yield of approximately 2.2 MGD. Because the water produced
by those reservoirs does not consistently meet the quality standards of
the SDWA, none of those reservoirs is actively being used by the Company
to supply water to the system. During 1996 and in January of 1998, the
Company sold to the City of Ansonia and the City of Derby the Sentinel
Hill Reservoir system and its watershed located in Ansonia and Derby.
In November of 1998, the Company sold to the Town of Seymour the Great
Hill reservoir system and its watershed located in the Towns of Seymour
and Oxford.
Page Five
The Company's dams are subject to inspection by and the approval of
the DEP. All of the Company's dams are in compliance with improvements
previously ordered by the U.S. Army Corps of Engineers.
The Company has an office building at 230 Beaver Street, in Ansonia.
That building was built in 1964, is of brick construction, and contains
4,200 square feet of office and storage space. In addition, the Company
owns two buildings devoted to equipment storage. The Company also
maintains some office space in a wood frame, residential building owned
by the Company at 228 Beaver Street, Ansonia.
The Company's approximately 3,400 acres of land were acquired over
the years principally in watershed areas to protect the quality and
purity of the Company's water at a time when land use was not regulated
and standards for water quality in streams were non-existent.
Under Connecticut law a water Company cannot abandon a source of
supply or dispose of any land holdings associated with a source of supply
until it has a "water supply plan" approved by the Health Department.
The Health Department approved the Company's first Water Supply Plan in
1988 and updated Water Supply Plan in 1993. Pursuant to abandonment
permits issued by the Health Department in 1988, the Company abandoned
its Upper and Lower Sentinel Hill Reservoirs, Steep Hill (Bungay)
Reservoir, and Fountain Lake Reservoir, and the land associated with
them then became available for sale. In 1994, the abandonment of Great
Hill Reservoir was approved by the Health Department.
Since 1988, the Company has sold approximately 1,364 acres of land
in Bethany, Ansonia, Derby, Seymour and Oxford, realizing net gains of
$6,994,974.
The Company believes that approximately 1,050 acres of its land
oldings will not be needed in the future for water supply purposes
and can be sold. The Company has proposed, and the DPUC has accepted
with respect to prior transactions, an accounting and ratemaking
mechanism by which the gain on the sale of the Company's land holdings
is shared between ratepayers and stockholders as contemplated by
Connecticut law. (See Note 1 to the Company's Financial Statements).
Page Six
Item 3. Legal Proceedings
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Market for the Registrant's Common Stock and Related Security
Holding Matters
Page 6 of the Company's Annual Report to shareholders for the year ended
December 31, 1999, (Financial Highlights), is incorporated herein by
reference, pursuant to Rule 12-23 of the Securities and Exchange Act of
1934 (the "Act") and to Instruction G(2) to Form 10-K.
Item 6. Selected Financial Data
Page 6 of the Company's Annual Report to shareholders for the year ended
December 31, 1999 (Financial Highlights) is incorporated herein by
reference, pursuant to Rule 12-23 of the Act and to Instruction G(2) to
Form 10-K.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Net Income
Pages 8 through 11 of the Company's Annual Report to Shareholders for
the year ended December 31, 1999 are incorporated herein by reference,
pursuant to Rule 12-23 of the Act and to Instruction G(2) to Form 10-K.
Item 8. Financial Statements and Supplementary Data
The consolidated financial statements, together with the report therein,
of Dworken, Hillman, LaMorte and Sterczala, P.C., dated January 28,
2000, appearing on pages 12 through 24 of the accompanying 1999 Annual
Report to Shareholders of Birmingham Utilities, Inc. are incorporated
herein by reference, pursuant to Rule 126-23 of the Act and Instruction
G(2) to Form 10-K.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
The Registrant has nothing to report on this item.
Page Seven
PART III
Item 10. Directors and Executive Officers of the Registrant
(a) The following list identifies all current directors of the
Company. No director or executive officer has (i) any family
relationship with any other such person or (ii) been involved in any
legal proceeding which would require disclosure under Item 401 of
Regulation S-K. There are no arrangements between any director or
officer and any other person pursuant to which he or she was or is to
be selected as a director or officer or as a nominee therefor.
<TABLE>
<S> <C> <C> <C>
Business Experience during the Last Director
Name Age Five Years and Other Directorships Since
Stephen P. Ahern 70 V.P., Unicco Security Services; 1994
Principal, Ahern Builders
Edward G. Brickett 70 Retired; Director of Finance, Town 1979
of Southington, CT until June 1995
James E. Cohen 53 Lawyer in Practice in Derby; 1982
Betsy Henley-Cohn 47 Chairwoman of the Board of Directors 1981
of the Company; Chairman and
Treasurer, Joseph Cohn & Sons, Inc.
(construction, sub-contractors);
Director, United Illuminating Corp.;
Director, Aristotle Corp.; Director,
Citizens Bank of Connecticut (1997-1999).
Alvaro da Silva 54 President, DSA Corp.(a management company); 1997
President, B.I.D.Inc (land development
and home building company); Managing
Partner Connecticut Commercial
Investors, LLC.,(a commercial real estate
and investment partnership); Chairman,
Shelton Inland Wetlands Commission; Board
of Governors Unquowa School; Director,
Great Country Bank ( 1991-1995).
Aldore J. Rivers 66 Retired; President of the Company until 1986
September 30, 1998.
B. Lance Sauerteig 54 Lawyer in Practice in Westport; Principal 1996
in BLS Strategic Capital, Inc. (financial
and inv. advisory company); Principal in
Tortoise Capital, Partners, LLC
(real estate investments); Director,
OFFITBANK (a New York based private
investment management bank)
Page Eight
Kenneth E. Schaible 58 Bank Consultant and Real Estate Developer; 1994
Senior Vice President, Webster Bank
(1995-1996); President, Shelton Savings
Bank and Shelton Bancorp.,Inc. (1972-1995)
David Silverstone, 53 Utility Consultant; previously Group 1994
Vice President-Chief Administrative
Officer The Southern Connecticut Gas
Company 1998-February 2000);
Lawyer in Practice in Hartford until 1998.
John S. Tomac, 46 President and Treasurer of the Company; 1998
previously, Vice President and Treasurer
of the Company (1997-1998); Assistant
Controller, BHC Company,(1991-1997).
</TABLE>
The Board of Directors' Audit Committee consisted of Messrs.
Brickett, da Silva and Schaible during 1999. It performs the function
of recommending the engagement and reviewing the performance of the
Company's independent public accountants. The Audit Committee met twice
in 1999. The Board of Directors' Personnel and Pension Committee
consisted of Ms. Henley-Cohn (ex-officio) and Messrs. Ahern, Brickett,
Sauerteig and Silverstone and performs the function of reviewing
Executive Office compensation and proposing the same to the full Board
of Directors for action. It also proposes to the full Board overall
payroll pool levels and pension plan arrangements for all employees.
The Personnel and Pension Committee met four times in 1999. In 1999,
five meetings of the full Board of Directors were held, and all
Directors attended at least 75% of the meetings of the full Board and
committees on which they served.
(b) Section 16(a) Beneficial Ownership Reporting Compliance.
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and directors, and persons who own more than ten
percent of a registered class of the Company's equity securities, to
file reports of ownership and changes in ownership with the Securities
and Exchange Commission and the Company.
Based solely on review of copies of such forms furnished to the
Company, or written representations that no reconciliation forms were
required, the Company believes that during fiscal year ending December
31, 1999, all section 16(a) filing requirements applicable to its
officers, directors and greater than ten percent shareholders were
complied with.
Item 11. Compensation of Directors and Executive Officers
Page 5 of the Company's Definitive Proxy Statement, dated April 6,
2000 relating to the proposed Annual Meeting of Shareholders to be held
on May 10, 2000, filed with the Commission pursuant to Regulation 14a
under the Act, are incorporated herein by reference, pursuant to Rule
126-23 of the Act and Instruction G(3) to Form 10-K.
Page Nine
Item 12. Security Ownership of Management and Certain Beneficial Owners
Pages 3 through 5 of the Company's Definitive Proxy Statement, dated
April 6, 2000, relating to the proposed Annual Meeting of Shareholders
to be held on May 10, 2000, filed with the Commission pursuant to
Regulation 14a under the Act, are incorporated herein by reference,
pursuant to Rule 126-23 of the Act and Instruction G(3) to Form 10-K.
Item 13. Certain Relationships and Related Transactions
Mr. Cohen is a partner in the law firm of Cohen and Thomas, which
has represented the Company on occasions in past years; the Company may
continue to employ that firm on occasion in the future.
Mr. Silverstone was, until March 31, 1998, a partner in the law
firm of Silverstone & Koontz, which represented the Company on rate
matters in 1997.
Mr. Sauerteig is a principal in the law firm of Levett, Rockwood
and Sanders, which provided legal services to the Company in past years
and may do so in the future.
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a) The following documents are filed as part of this report:
Page in
Annual Report*
(1) Statements of Income and Retained
earnings for the three years ended
December 31, 1999 14
Balance Sheets at December 31, 1999 13
(3) Statements of Cash Flows for the three
years ended December 31, 1999 15
Notes to the Consolidated Financial Statements 16-24
Report of Independent Accountants 12
Financial Highlights 6
Selected Financial Data 6
Management's Discussion and Analysis 8-11
* Incorporated by reference from
the indicated pages of the 1999 Annual Report.
(3) Certificate of Incorporation and By-Laws of Birmingham
Utilities, Inc. Incorporated herein by reference is Exhibit 3 of
Birmingham Utilities, Inc.'s Annual report on Form 10K for the period
ended December 31, 1994.
Page Ten
(4) Instruments Defining Rights of Security Holders
(i) Amended and Restated Mortgage Indenture by and between The
Ansonia Derby Water Company and The Connecticut National Bank as Trustee,
dated as of August 9, 1991. Incorporated herein by reference is Exhibit
(4)(i)of the Annual Report on Form 10-K of Birmingham Utilities, Inc.,
for the period ended December 31, 1998.
(ii) Commercial Term and Revolving Loan Agreement by and between
Birmingham Utilities, Inc. and Fleet Bank, N.A., dated April 29, 1994,
Amended and Restated on September 17, 1998. Incorporated herein by
reference is Exhibit 10(1) of the Quarterly Report on Form 10-Q/A of
Birmingham Utilities, Inc. for the period ended June 30, 1994.
(iii) Birmingham Utilities, Inc. Dividend Reinvestment Plan,
adopted by its Board of Directors on September 13, 1994. Incorporated
herein by reference is Exhibit 4 (iii) of Birmingham Utilities, Inc.'s
Annual Report on Form 10-K for the period ended December 31, 1994.
(10) Material Contracts
(10.1) Agreement to Purchase Water by and between The Ansonia
Derby Water Company and South Central Connecticut Regional Water
Authority dated January 18, 1984 for the sale of water by the Authority
to the Company and subsequent amendment dated December 29, 1988.
Attached hereto as pp. 15-23.
(10.2) Agreement to Purchase Water by and between The Ansonia
Derby Water Company and South Central Connecticut Regional Water
Authority dated November 30, 1984 for the sale by the Authority to the
company of water and for the construction of the pipeline and pumping
and storage facilities in connection therewith by the Authority at the
expense primarily of the Company and Bridgeport Hydraulic Company.
Incorporated herein by reference is Exhibit (10.2) of the Annual Report
on Form 10-K of Birmingham Utilities, Inc. for the period ended December
31, 1996.
(10.3) Employment Agreement between Birmingham Utilities, Inc. and
John S. Tomac dated October 1, 1998. Incorporated herein by reference
is Exhibit (10.3) of the Annual Report on Form 10-K of Birmingham
Utilities, Inc. for the period ended December 31, 1998.
(10.4) Birmingham Utilities, Inc. 1994 Stock Incentive Plan
adopted by its Board of directors on September 13, 1994. Incorporated
herein by reference is Exhibit (10.9) of Birmingham Utilities, Inc.'s
Annual Report on Form 10-K for the period ended December 31, 1994.
(10.5) Birmingham Utilities, Inc. Stock Option plan for
Non-Employee Directors adopted by its Board of Directors on September 13,
1994. Incorporated herein by reference is Exhibit (10.10) of Birmingham
Utilities, Inc.'s Annual Report on Form 10-K for the period ended
December 31, 1994.
Page Eleven
(10.6) Purchase and Sale Agreement by and between Birmingham
Utilities, Inc. and The Trust for Public Land, ("TPL"), dated September
16, 1999 for the sale by the Company to TPL of approximately 42.5 acres
of unimproved land in Ansonia, Connecticut. Incorporated by reference
is Exhibit (10)(b) of the Quarterly Report on Form 10-Q of Birmingham
Utilities, Inc. for the period ended September 30, 1999.
(10.7) Purchase and Sale Agreement by and between Birmingham
Utilities, Inc. and The Trust for Public Land, ("TPL"), dated September
16, 1999 for the sale by the Company to TPL of approximately 570 acres
of unimproved land in Ansonia and Seymour, Connecticut. Incorporated by
reference is Exhibit (10)(a) of the Quarterly Report on Form 10-Q of
Birmingham Utilities, Inc. for the period ended September 30, 1999.
(10.8) Birmingham Utilities, Inc. 1998 Stock Incentive Plan adopted
by its Board of Directors on December 9, 1998.
Attached hereto as pp 24-36.
(b) Reports on Form 8-K. No reports on Form 8-K were filed by the
Registrant during the last quarter of 1999.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
(Registrant) BIRMINGHAM UTILITIES, INC.
BY: /s/ Betsy Henley-Cohn
___________________________
Betsy Henley-Cohn
Chairwoman of the Board
BY: /s/ John S. Tomac
___________________________
John S. Tomac
President
Date: March 10,2000
______________
Page Twelve
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of
the registrant and in the capacities and on the dates indicated.
/s/ Stephen P. Ahern /s/ Aldore J. Rivers
________________________ ___________________________
Stephen P. Ahern, Director Aldore J. Rivers, Director
Date: March 10, 2000 Date: March 10, 2000
/s/ Edward G. Brickett /s/ B. Lance Sauerteig
________________________ ___________________________
Edward G. Brickett, Director B. Lance Sauerteig, Director
Date: March 10, 2000 Date: March 10, 2000
/s/ James E. Cohen /s/ Kenneth E. Schaible
________________________ ___________________________
James E. Cohen, Director Kenneth E. Schaible, Director
Date: March 10, 2000 Date: March 10, 2000
/s/ Betsy Henley-Cohn /s/ David Silverstone
________________________ ___________________________
Betsy Henley-Cohn, Chairwoman David Silverstone, Director
Board of Directors Date: March 10, 2000
Date: March 14,2000
/s/ Alvaro da Silva /s/ John S. Tomac
________________________ ___________________________
Alvaro da Silva, Director John S. Tomac, President/Treasurer
Date: March 10, 2000 Date: March 10, 2000
Page Thirteen
BIRMINGHAM UTILITIES, INC.
INDEX TO EXHIBITS
Item No. Page No.
10.1 Agreement to Purchase Water by and between
The Ansonia Derby Water Company and South
Central Connecticut Regional Water Authority
dated January 18, 1984..............................15-23
10.8 Birmingham Utilities, Inc. 1998 Stock Incentive
Plan ...............................................24-36
23 Consent of Dworken, Hillman, LaMorte
& Sterczala, P.C. ..................................37
Page Fourteen
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of
the registrant and in the capacities and on the dates indicated.
___________________________ __________________________
Stephen P. Ahern, Director Aldore J. Rivers, Director
Date: March , 2000 Date: March , 2000
___________________________ ____________________________
Edward G. Brickett, Director B. Lance Sauerteig, Director
Date: March , 2000 Date: March , 2000
____________________________ _____________________________
James E. Cohen, Director Kenneth E. Schaible, Director
Date: March , 2000 Date: March , 2000
____________________________ _____________________________
Betsy Henley-Cohn, Chairwoman David Silverstone, Director
Board of Directors Date: March , 2000
Date: March , 2000
_____________________________ __________________________________
Alvaro da Silva, Director John S. Tomac, President/Treasurer
Date: March , 2000 Date: March , 2000
Page Fifteen
AGREEMENT TO PURCHASE WATER
AGREEMENT entered into this 18th day of January, 1984 by and between
THE SOUTH CENTRAL CONNECTICUT REGIONAL WATER AUTHORITY (hereinafter
referred to as the "AUTHORITY") and THE ANSONIA DERBY WATER COMPANY
(hereinafter referred to as the "COMPANY").
WHEREAS, the COMPANY wishes to purchase a portion of its water
supply requirements from the AUTHORITY; and
WHEREAS, the AUTHORITY is willing to sell specific amounts of water
to the COMPANY; and
WHEREAS, in order to accomplish the purposes stated above, pipeline,
control facilities, and related items (collectively, the "Project") will
be required to be designed, constructed and installed between the
location of the AUTHORITY's existing water system and the COMPANY's
existing water system; and
WHEREAS, the parties hereto wish to set forth the respective rights,
responsibilities and remedies of the parties.
NOW THEREFORE, in consideration of the premises and of the mutual
agreements contained herein, the parties hereto, intending to be bound,
agree as follows:
1. Connection Between Water Systems - The AUTHORITY will construct a
pipeline from its Grassy Hill Tank in Orange, Connecticut to the
COMPANY's water system in Derby, Connecticut. The size of this
connecting pipeline, its location and necessary control facilities will
be as recommended by the COMPANY's Consulting Engineer, Roald Haestad,
Inc. of Waterbury, Connecticut and as approved by the AUTHORITY. The
design criteria for the connection will be that it is sufficient in
capacity to meet maximum day and peak hour demands for the portion of
the COMPANY's water system currently served by the Derby Hill (Sentinel
Hill) Reservoirs which will be abandoned: after this connection is
completed. The cost of constructing this connection is the
responsibility of the AUTHORITY.
2. Condition Precedent to Authority's Obligation - The AUTHORITY shall
have no obligation to commence construction of the connecting pipeline
or take any other action with respect to the Project unless and until
the City of Derby shall have approved, in form satisfactory to the
AUTHORITY,the connection of such pipeline to the 12-inch main owned by
the City of Derby which runs along New Haven Avenue from The Ansonia
Derby Water Company distribution system at Washington Avenue in Derby.
3. Ownership of Facilities - All facilities constructed pursuant to this
Agreement will be owned solely by the AUTHORITY.
4. Quantities - The AUTHORITY agrees to deliver up to 2 million gallons
of water per day to the COMPANY water system at a hydraulic gradient of
277 feet based on U.S.G.S. data. Commencing on the Purchase Effective
Date, the COMPANY agrees to purchase at least 200 million gallons per
year during each calendar year included in the term (including any
extensions pursuant to Section 7 hereof) of this Agreement and to
purchase at least 5 million gallons per month during each calendar month
included in such term. As used herein, the term "Purchase Effective Date"
shall mean the later to occur of (i) September 1, 1984 and (ii) the date
the pipeline described herein is placed in service.
Page Sixteen
5. Water Quality - The water supplied by the AUTHORITY under this
Agreement at all times shall, at the point of metering (which shall be
considered to be the point of delivery), satisfy all standards imposed
by any Federal or State agency having jurisdiction over the quality of
public drinking water. If the AUTHORITY shall fail to provide to the
COMPANY water which satisfies all such standards and such failure shall
continue for 30 days after receipt by the AUTHORITY of written notice
thereof, the COMPANY, in its sole discretion, by written notice to the
AUTHORITY may terminate its obligation to purchase water hereunder. Such
termination shall be effective upon receipt by the AUTHORITY of notice
thereof.
6. Term of Contract - This Agreement shall be effective as of the date
first above written, and will remain in full force and effect until the
Termination Date. As used herein, the term "Termination Date " shall
mean the earlier to occur of (i) the effective date of the merger of the
COMPANY with and into the AUTHORITY or any wholly-owned subsidiary of
the AUTHORITY, (ii) the effective date of the purchase by the AUTHORITY
of substantially all of the assets of the COMPANY, and (iii) that
date which is seven years after the Purchase Effective Date; provided
that in the event of each extension of the term of this Agreement
pursuant to Section 7 hereof, the date described in (iii) above shall
be automatically extended by the term of such extension. Subject to
Section 2 hereof, the AUTHORITY will use its best efforts to construct
the necessary facilities and commence delivery of water to the COMPANY
on or prior to September 1, 1984.
7. Extension - This Agreement may be extended for additional ten-year
periods after the expiration of the initial contract period referred to
in clause (iii) of Section 5 above with the written consent of both the
AUTHORITY and the COMPANY. In order to effect such an extension, the
COMPANY must give written notification of each such election no later
than two years prior to the last day of the immediately preceding term.
The AUTHORITY shall, no later than 90 days after receipt of such
notice from the COMPANY, give the COMPANY written notice of either its
approval or its disapproval, as the case may be, of such extension. The
terms and conditions applicable to any such period of extension shall be
the same as provided herein.
8. Metering - The parties hereto agree that metering shall be considered
to be a part of the Project and the obligations of the parties with
respect to metering shall be on the same terms and conditions as
provided for herein with respect to other portions of the Project.
Notwithstanding anything herein to the contrary, the AUTHORITY shall
have ownership of such meters and the right and obligation to maintain
such meters. The meters shall be tested at six-month intervals and if
there is a meter error of five percent or more, adjustment will be made
to the COMPANY's water service charge on the basis of one-half the time
elapsed since the last test of the meter in question, unless the exact
period of existence of said error can be conclusively established. In
the event of loss of registration of flow during any month, the COMPANY
will be deemed to have consumed during such month an amount of water
equal to the historical average monthly consumption by the COMPANY for
such month, determined by dividing (x) the sum of the consumption by
the COMPANY for such month in each year commencing with the first such
month after the Purchase Effective Date and extending to and including
such month in the immediately preceding year, by (y) that number which
represents the total number of years elapsed since the first such month
after the Purchase Effective Date; provided that if such loss of
registration should occur prior to twelve months after the Purchase
Effective Date, the COMPANY will be deemed to have consumed during such
month an amount of water equal to that consumed by it during the
immediately preceding month.
Page Seventeen
9. Cost of Water to be Delivered - The cost to the COMPANY of water
delivered pursuant to this Agreement will be computed using the cost
allocations detailed in the study entitled "Wholesale Rate Study"
prepared by Guastella Associates, Inc., and dated June 27, 1983, which
cost to the COMPANY as of the date hereof would be $680 per million
gallons. It is agreed that this study and the cost allocations detailed
therein will be updated at the time of each of the AUTHORITY'S rate
cases subsequent to the date of this Agreement. It is agreed that with
respect to each such updating: (i) the amount used for expenditures will
be based on the operating and maintenance budget used for rate making
purposes, and will include any adjustments made during the rate making
process; (ii) book value of Utility Plant will be based on the
AUTHORITY's most recent annual filing with the Connecticut Department of
Public Utility Control; and (iii) the percentages used to allocate
expenditures to general service, as used on Schedule B and Schedule C-1
of said study, will not change during the term (including any extension
pursuant to Section 7 hereof) of this Agreement.
The AUTHORITY will invoice the COMPANY each month for the cost of
the full amount of water delivered during the previous month. The
COMPANY will pay to the AUTHORITY the amount set forth on each invoice
no later than 30 days after the date thereof.
10. Approvals - It is understood by the parties that this Agreement is
subject to approval by all agencies and regulatory bodies of the State
of Connecticut which have jurisdiction with respect hereto, including
without limitation the Department of Public Utility Control, the
Department of Health Services and the Department of Environmental
Protection, and is also subject to the approval of the Representative
Policy Board of the AUTHORITY. The AUTHORITY and the COMPANY agree to
cooperate and use their best efforts in. securing all necessary
approvals.
11. Force Majeure - The AUTHORITY shall have no liability of any type
whatsoever to the COMPANY or any other party for any failure, or as a
result of any failure, to perform any obligation under this Agreement,
which failure is occasioned by or in consequence of any act of God,
act of public enemy, war, blockage, insurrection, riot, epidemic, land
slide, lightning, earthquake, fire, storm, flood, washout, civil
disturbance, power failure, explosion, breakage or accident to machinery
or lines of pipe, failure or want of water supply, binding order, decree,
regulation or judgment of any court or governmental authority, or any
other cause, whether of the kind herein enumerated or otherwise, not
within the control of the AUTHORITY which act, omission, or circumstance
the AUTHORITY is unable to prevent or overcome by the exercise of due
diligence.
Page Eighteen
12. Indemnification - Subject to Section 11 hereof, the AUTHORITY and
the COMPANY each hereby agree to indemnify and hold harmless the other
against all costs, fees, expenses, damages and losses of any type or
nature which may be incurred as a result of the breach of any of the
terms of this Agreement by the other party.
13. Non-Assignability - This Agreement shall inure to the benefit of the
parties hereto and their successors; neither this Agreement nor the
rights or obligations of the parties hereunder may be assigned to any
other party, either in whole or in part, by either party hereto without
the written consent of the other party hereto. For the purposes of this
Section 13, the term "successor" shall be deemed to include any entity
which purchases substantially all of the assets of either the AUTHORITY
or the COMPAMY, as well as any successor through merger to either the
AUTHORITY or the COMPANY.
14. Default - Upon the occurrence of any event of default hereunder, all
sums due to the AUTHORITY to date shall immediately become due and
payable. In addition to any other remedy provided for hereunder, upon
the occurrence of any event of default hereunder, the AUTHORITY shall
have the right, at its sole option, to terminate the supply of water
service to the COMPANY and to exercise all rights and remedies available
to it either at law or in equity. Each of the following shall be
deemed to be an event of default hereunder:
a. The COMPANY fails to promptly observe, perform or comply with
any obligation, condition, or covenant to be observed,
performed, or complied with by the COMPANY hereunder.
b. The COMPANY fails to pay to the AUTHORITY any amount due
hereunder on or prior to the 30th day after the date of the
invoice with respect to such amount.
c. The COMPANY makes an assignment for the benefit of creditors
or is generally unable to pay its debts as they become due;
or a decree or order appointing a receiver, custodian or
trustee for it or for substantially all of its properties is
entered and, if entered without its consent, remains in effect
for more than 30 days; or the COMPANY commences a voluntary
case under any law relating to bankruptcy, insolvency,
reorganization or other relief of debtors or any such case of
an involuntary nature is filed against it and is consented to
by it or, if not consented to, is not dismissed within 30 days.
Page Nineteen
15. Further Assurances - The COMPANY and the AUTHORITY each agrees to
perform all other acts and execute and deliver all other documents
reasonably requested by the other to facilitate and complete
construction of the project and to carry out the intent and purposes of
this Agreement, including without limitation the execution and delivery
by the COMPANY of such documents, instruments and agreements as are
necessary to grant to the AUTHORITY such easements and rights of access
as are resonably necessary for the construction and maintenance of the
Project.
16. Trade Secrets - The COMPANY and the AUTHORITY each agree that in
the event it shall obtain any trade secret or other information of a
confidential nature relating to the other, such information will be held
in confidence and not be disclosed to any other person or party.
17. Notice - Any notice or demand given pursuant to this Agreement shall
be deemed to have been given in accordance with the terms hereof when
delivered in person to the persons designated below or their successors
or permitted assigns, or when sent by registered mail, return receipt
requested, postage prepaid, addressed as follows:
If to the COMPANY:
The Ansonia Derby Water Company
230 Beaver Street
Ansonia, Connecticut 06401
Attn: John B. Dearborn
President
If to the AUTHORITY:
South Central Connecticut
Regional Water Authority
90 Sargent Drive
New Haven, Connecticut 06511-05966
Attn: George E. Block, Jr.
Director of Engineering
Either party may change its address or addresses by notice to the other
party.
18. Governing Law - This Agreement is being delivered in, and shall be
construed and interpreted according to the laws of, the State of
Connecticut.
Page Twenty
IN WITNESS WHEREOF, the parties hereto have hereunto set their
hands and seals this 18th day of January, 1984.
SOUTH CENTRAL CONNECTICUT
REGIONAL WATER AUTHORITY
By: ___________________________
Its
THE ANSONIA DERBY WATER COMPANY
By: ___________________________
Its
Page Twenty-One
[Letterhead of Regional Water Authority]
December 29, 1988
Mr. Aldore J. Rivers, President
The Ansonia Derby Water Company
230 Beaver Street
Ansonia, CT 06401
Dear Mr. Rivers:
Approval of Extension for Ten-Year Period of the Agreement to Purchase
Water by and Between the South Central Connecticut Regional Water
Authority and The Ansonia Derby Water Companv Dated January 18. 1984 as
Amended by Letter Agreement Dated November 8. 1984
In response to your written request dated November 8, 1988 to extend the
above Agreement for a ten-year period, the South Central Connecticut
Regional Water Authority ("Authority") approves said request and the
contract period is herewith extended pursuant to Section 7 of the
Agreement from December 3, 1991 to December 3, 2001. For convenience,
this Letter Agreement will be referred to as Amendment Number 2 to the
Agreement.
Will you kindly indicate the acceptance of The Ansonia Derby Water
Company by signing below and returning the executed counterpart of this
Letter Agreement to the undersigned.
SOUTH CENTRAL CONNECTICUT REGIONAL WATER AUTHORITY
By_______________________
Richard P. McHugh
Its Executive Director
THE ANSONIA DERBY WATER COMPANY
By ____________________________
Aldore J. Rivers
Its President
Page Twenty-Two
[Letterhead of South Central Connecticut Regional Water Authority]
November 8, 1984
RECEIVED
The Ansonia Derby Water Company
230 Beaver Street
Ansonia, Connecticut 06401 NOV 1 3 1984
Attention: John B. Dearborn THE ANSONIA DERBY
WATER COMPANY
Gentlemen:
SOUTH CENTRAL CONNECTICUT REGIONAL WATER AUTHORITY (the "AUTHORITY")
hereby agrees with you to amend the Agreement to Purchase Water dated
January 18, 1984, between the AUTHORITY and you (the "Agreement") and
such Agreement is hereby amended as follows:
1. Section 1 of the Agreement is amended by deleting the word "size"
in the second sentence thereof and inserting in lieu thereof the
word "location."
2. Section 1 of the Agreement is further amended by deleting the
comma following the word "pipeline" in the second sentence
thereof, and by deleting the phrase "its location and necessary
control facilities" from the second sentence thereof.
3. Section 4 of the Agreement is amended by inserting the phrase
(the "Annual Minimum")" in the second sentence thereof between
the words "year" and "during", and by inserting the phrase
"(the "Monthly Minimum")" in the second sentence thereof between
the words "month" and "during".
4. Section 4 of the Agreement is further amended by inserting the
following as the second paragraph thereof:
If the COMPANY should fail to take the Monthly Minimum in
any calendar month included in the term of this Agreement
and during such calendar month such Monthly Minimum was
available for deliver at the point of delivery to the
COMPANY, then the COMPANY shall be deemed to have taken
and the AUTHORITY shall be deemed to have delivered the
Monthly Minimum during such month. If the COMPANY should
fail to take the Annual Minimum in any calendar year
included in the term of this Agreement (including for
purposes of determining the amount taken during any such
calendar year all amounts previously deemed to have been
taken during such year) and during such calendar year such
Annual Minimum was available for delivery at the point of
delivery to the COMPANY, then the COMPANY shall be deemed
to have taken and the AUTHORITY shall be deemed to have
Page Twenty-Three
delivered during December of such year that amount of water
equal to the difference between the Annual Minimum and the
amount of water taken during such calendar year (including
for purposes of determining the amount taken during any such
calendar year all amounts previously deemed to have been
taken during such year). In the event any partial calendar
year is included in the term of this Agreement, then the
COMPANY shall be deemed to have taken during the last
calendar month so included that amount of water, if any,
necessary in order to result in the ratio of (w) water taken
during such partial calendar year (including for purposes of
determining the amount taken during any such partial calendar
year all amounts previously deemed to have been taken during
such calendar year) to (x) the Annual Minimum being greater
than or equal to the ratio derived by dividing (y) the number
of calendar months in such partial year by (z) 12; provided,
however, that during such partial calendar year an amount of
water equal to (i) the Annual Minimum divided by (ii) the
number of calendar months in such partial calendar year must
have been available for delivery at the point of delivery to
the COMPANY.
5. Section 5 of the Agreement is amended by deleting the phrase "the
point of metering (which shall be considered to be the point of
delivery)" in the first sentence thereof and inserting in lieu thereof
the phrase "the downside face of the meter located at the end of the
connecting pipeline referred to in Section 1 of this Agreement (which
for all purposes of this Agreement shall be deemed to be the point of
delivery)".
6. Section 9 of the Agreement is amended by inserting in the first
sentence of the second paragraph thereof between the words "delivered"
and "during" the phrase "(or deemed to be delivered)". If the foregoing
amendment is satisfactory to you, please so indicate by signing the
acceptance at the foot of a counterpart of this letter and return such
counterpart to the AUTHORITY, whereupon this Amendment to the Agreement
will become binding between us in accordance with its terms and as if
fully set forth in the Agreement.
THE ANSONIA DERBY WATER COMPANY SOUTH CENTRAL CONNECTICUT
REGIONAL WATER AUTHORITY
By ____________________________ By ___________________________
Its Its
Page Twenty-Four
BIRMINGHAM UTILITIES, INC.
1998 STOCK INCENTIVE PLAN
ARTICLE I.
Purpose and Scope of the Plan
-----------------------------
1.01 Purpose. The purpose of the Birmingham Utilities, Inc. 1998
Stock Incentive Plan (the "Plan") is to promote the long-term success of
Birmingham Utilities, Inc. by providing financial incentives to key
employees who are in a position to make significant contributions toward
such success. The Plan is designed to attract and retain key employees
and to encourage them to acquire a proprietary interest in the Company
and thereby to increase their personal interest in the long-term success
of the Company.
1.02 Definitions. Unless the context clearly indicates otherwise,
the following terms have the meanings set forth below:
"Board of Directors" or "Board" means the Board of Directors of the
Company.
"Business Day" shall mean any day except Saturday, Sunday or a legal
holiday in the State of Connecticut.
"Code" means the Internal Revenue Code of 1986, as amended.
"Committee" means the Personnel and Pension Committee of three or
more members appointed by the Board of Directors and selected from
those directors who are not employees of the Company, its parent or
any Subsidiary, as defined in Section 424(e) and (f) of the Code.
The Board may at any time and from time to time remove any member
of the Committee, with or without cause, appoint additional members
to the Committee and fill vacancies, however caused, in the
Committee. A majority of the members of the Committee shall
constitute a quorum. All determinations of the Committee shall be
made by a majority of its members. Any decision or determination
of the Committee reduced to writing and signed by all of the
members of the Committee shall be fully as effective as if it had
been made at a meeting duly called and held.
"Common Stock" means the common stock, without par value, of the
Company.
"Company" means Birmingham Utilities, Inc., a Connecticut
corporation.
"Disability", as applied to a Grantee, means permanent and total
disability as defined in Section 22(e)(3) of the Code.
"Employee" means any employee of the Company or any of its
Subsidiaries.
Page Twenty-Five
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Fair Market Value" of a share of Common Stock on any particular
date is the average of the high and low sales price of a share of
Common Stock on the NASDAQ Small Cap Market (or any exchange on
which the Common Stock is then traded) as reported for that date
by NASDAQ or, if no sales price is reported for that date, the
average bid quotation for the Common Stock on that date as
reported by NASDAQ; provided, however, that if no such sales or
quotation are reported by NASDAQ for such date, the Fair Market
Value of a share of Common Stock on such date shall be the average
of the high and low sales price or, if no sales price is reported
for that date, the average bid quotation as reported by NASDAQ for
the first Business Day immediately after such date on which such
sales or quotation are reported.
"Grant Date," as used with respect to a particular award, means the
date on which such award is granted by the Committee pursuant to
the Plan.
"Grantee" means an individual to whom an award has been granted by
the Committee pursuant to the Plan.
"Immediate family members" of a Grantee means the Grantee's
children, grandchildren and spouse.
"Incentive Stock Option" means an Option that qualifies as an
Incentive Stock Option as described in Section 422 of the Code.
"Key Employee" means any Employee who, in the judgment of the
Committee, is in a position to contribute significantly to the
growth and prosperity of the Company.
"Non-qualified Stock Option" means any Option other than an
Incentive Stock Option.
"Option" means an option, granted by the Committee pursuant to
Article II, to purchase shares of Common Stock and which shall be
designated as either an "Incentive Stock Option" or a
"Non-qualified Stock Option."
"Option Period" means the period beginning on the Grant Date and
ending such day as determined by the Committee with such day being
prior to the tenth anniversary of the Grant Date.
"Performance Stock" means an award entitling the Grantee to payment
of shares of Common Stock or cash or a combination thereof
contingent upon the attainment of performance objectives
determined in the discretion of the Committee.
"Plan" means the Birmingham Utilities, Inc. 1994 Stock Option
Plan as set forth herein and as amended from time to time.
Page Twenty-Six
"Restricted Stock" means an award of Common Stock with such
restrictions placed thereon as the Committee in its discretion
deems appropriate.
"Retirement", as applied to an Employee, shall mean a termination
of employment with the Company which qualifies for the payment of
retirement benefits under the qualified pension plan applicable
to such employee or a termination of employment which occurs
following the Employee's attaining age 62 with ten years of
service to the Company.
"Subsidiary" shall mean a "subsidiary corporation" of the Company
as defined in Section 425(f) of the Code.
1.03 Aggregate Limitation.
(a) The aggregate number of shares of Common Stock to be
delivered under the Plan shall not exceed 30,000 shares, subject to
adjustment in accordance with Section 3.06.
(b) Any shares of Common Stock to be delivered or purchased
or used for reference purposes under the Plan shall be issued from the
Company's authorized but unissued shares of Common Stock or from shares
of Common Stock held in the treasury, at the discretion of the Board.
(c) If any shares are subject to an award which for any
reason expires or terminates during the term of the Plan prior to the
issuance of such shares or other payment of such awards, the shares
subject to but not delivered under such award shall be available for
issuance under the Plan. In the case of an award of Restricted Stock any
part of which is forfeited prior to full vesting, such shares as are
forfeited prior to vesting shall be available for issuance under the
Plan. The shares referenced in an exercised stock appreciation right,
shares in lieu of which an optionee elects to receive cash, or shares
under a related option which is surrendered upon the exercise of a stock
appreciation right shall all be charged against the aggregate number of
shares available for issuance under the Plan.
1.04 Administration of the Plan.
(a) The Committee shall have all the powers vested in it by
the terms of the Plan, including exclusive authority (within the
limitations described herein) to select the employees to be granted
awards under the Plan, to determine the type, size and terms of awards
to be made to each employee selected, to determine the time when awards
will be granted to employees, to establish objectives and conditions, if
any, for earning such awards and to determine whether such awards will
be paid after the end of an award period. The Committee shall have full
power and authority to administer and interpret the Plan, to adopt such
rules, regulations, agreements, guidelines and instruments for the
administration of the Plan and for the conduct of its business as the
Committee deems necessary or advisable, to accelerate the exercisability
or vesting of all or any portion of any Option or to extend the period
during which an Option is exercisable and to make all other
determinations necessary or advisable in order to administer the Plan.
Page Twenty-Seven
The Committee's interpretation of the Plan and all actions taken and
determinations made by the Committee pursuant to the powers vested in it
hereunder shall be conclusive and binding on all parties concerned,
including the Corporation, its stockholders, any Grantees and any other
employee of the Corporation or any of its subsidiaries.
(b) Options, stock appreciation rights, dividend equivalents,
Restricted Stock and Performance Stock shall be evidenced by written
agreements which shall contain such terms and conditions consistent with
the Plan as may be determined by the Committee. Each agreement shall be
signed on behalf of the Corporation by the Chief Executive Officer or
other duly authorized officer of the Corporation.
(c) All decisions made by the Board of Directors pursuant to
the provisions of the Plan shall be final and conclusive.
1.05 Effective Date and Duration of Plan. The Plan shall become
effective upon its adoption by the Board; provided that no Option or
award granted pursuant to the Plan shall be exercised or will vest prior
to the approval of the Plan by (1) the shareholders of the Company
within twelve (12) months of its adoption by the Board, and (2) the
Connecticut Department of Public Utility Control ("DPUC"). Unless
previously terminated by the Board, the Plan shall terminate, as to any
shares as to which Options or awards have not theretofore been granted,
on the tenth anniversary of its adoption by the Board. Subject to the
provisions of Section 2.02(f) hereof, the period during which an award
under the Plan may be exercised shall be the period, expiring not later
than the tenth anniversary of the Grant Date of the award, as may be
determined by the Committee.
1.06 Awards.
(a) Types. Awards under the Plan shall be made with
reference to shares of Common Stock and may include, but need not be
limited to, shares of stock, which may be granted with or without
restrictions in the discretion of the Committee, options, stock
appreciation rights, dividend equivalents and Performance Stock. The
Committee may make any other type of award which it shall determine is
consistent with the objectives and limitations of the Plan.
(b) Performance Goals. The Committee may, but need not,
establish performance goals to be achieved within such performance
periods as may be selected by it in its sole discretion, using such
measures of the performance of the Corporation and/or its subsidiaries
as it may select.
(c) Guidelines. From time to time, the Committee may adopt
written policies implementing the Plan. Such policies may include, but
need not be limited to, the type, size and terms of awards to be made to
Employees and the conditions for payment of such awards. The Committee
may determine the amount and form of consideration, if any, payable on
the issuance or exercise of awards of stock, whether granted with or
without restrictions, and awards of Performance Stock. However, Common
Stock to be issued for such awards shall be issued either at no cost,
provided the consideration received for such shares is, in the opinion
of counsel to the Company, adequate under the laws of the Company's
state of incorporation, or a price not to exceed the par value of such
shares. Grantees of awards of stock, whether granted with or without
restrictions, and awards of Performance Stock must accept such awards by
execution of a written agreement with the Company in such form as the
Committee determines not more than sixty (60) days following the award
date or else such rights shall expire.
Page Twenty-Eight
ARTICLE II.
Stock Options and Other Awards
------------------------------
2.01 Grant of Options. Key Employees shall be eligible to receive
Options under the Plan. Directors who are not Employees shall not be
eligible to receive Options.
Each Option shall be exercisable from time to time during such
periods and in such manner and number of shares as determined by the
Committee and set forth in the Agreement evidencing such Option,
provided that no Option granted under the Plan to a person subject to
the requirements of Section 16 of the Exchange Act shall be exercisable
in whole or in part prior to the expiration of six (6) months from its
Grant Date except in the case of death or Disability. The date of
exercise shall be the date on which payment is received by the Company.
The term of each Option shall be determined and may be extended by the
Committee, but in no event shall the term of an Option exceed ten (10)
years.
2.02 Option Requirements.
(a) Each Option shall be designated as an Incentive Stock
Option or a Non-Qualified Stock Option and shall be evidenced by a
written instrument specifying the number of shares of Common Stock that
may be purchased by its exercise and containing such terms and
conditions consistent with the Plan as the Committee may determine.
(b) An Option shall not be granted on or after the tenth
anniversary of the date upon which the Plan is adopted by the Board or,
if earlier, the tenth anniversary of the date upon which the Plan is
approved by the shareholders of the Company.
(c) An Option shall not be exercisable after the expiration
of the Option Period.
(d) The Committee may provide, in the instrument evidencing
an Option, for the lapse of the Option, prior to the expiration of the
Option Period, upon the occurrence of any event specified by the
Committee.
Page Twenty-Nine
(e) The option price per share of Common Stock shall not be
less than the Fair Market Value of a share of Common Stock on the Grant
Date, provided, however, that the option price per share of Common Stock
on the date of exercise shall not be less than the par value per share
of Common Stock, if any, on the date of exercise.
(f) Upon the termination of a Grantee's employment by the
Company or any of its Subsidiaries for any reason the Grantee may
exercise an Option, to the extent such Option was exercisable on the
date of such termination, until the earlier of the expiration of its
original term or:
(i) If such termination is due to Retirement, three (3)
months after such termination in the case of an
Incentive Stock Option and twelve months after such
termination in the case of a Non-Qualified Stock
Option;
(ii) If such termination is due to Disability, one (1)
year after such termination in the case of an
Incentive Stock Option and three years after such
termination in the case of a Non-Qualified Stock
Option;
(iii) Upon the death of any such Grantee while in active
service or of any such disabled or retired Grantee
within the above-referenced period, the person or
persons to whom the rights under the Option are
transferred by will or the laws of descent and
distribution may, within twelve months after the
date of the Grantee's death, exercise some or all of
the Grantee's Options which were exercisable on the
date of death by the Grantee.
(iv) If such termination is for any other reason, Grantee
may, within three months after the date of such
termination, purchase some or all of the shares
covered by the Grantee's Options which were
exercisable immediately prior to such termination,
provided that, notwithstanding the foregoing, the
Options of a Grantee shall automatically terminate as
of the date his or her employment is terminated, if
terminated on account of any act of (a) fraud or
intentional misrepresentation, or (b) embezzlement,
misappropriation or conversion of assets or
opportunities of the Company or any Subsidiary.
(v) An Incentive Stock Option not exercised within three
months (twelve months in the case of Disability) after
the date of termination due to Disability or Retirement
may be exercised within twelve months in the case of
Retirement and three years in the case of Disability
after the date of such termination but no longer will
be eligible for the treatment afforded Incentive Stock
Options under Section 422 of the Code.
Page Thirty
Leaves of absence for such periods and purposes conforming to the
personnel policy of the Company as may be approved by the Committee shall
not be deemed terminations or interruptions of employment.
In the event that a Grantee to whom a stock appreciation right has
been granted ceases employment with the Company, its parent and
subsidiaries for any reason, including death, Disability or Retirement,
such stock appreciation right shall be exercisable only to the extent
and upon the conditions that its related Option, if any, is exercisable
under this subparagraph (f) of this Article, or as provided in a stock
appreciation rights agreement, if such right is granted without a related
option.
The Committee may adopt rules and regulations, whether or not
inconsistent with this Article, but not inconsistent with the provisions
of Section 422 of the Code, setting forth the terms and conditions of
awards relating to the Grantee's rights in the event of termination of
employment.
(g) A person electing to exercise an Option shall give written
notice, in such form as the Committee may require, of such election to
the Company and shall tender to the Company the full purchase price of
the shares of Common Stock for which the election is made. Payment of
the purchase price shall be made in cash or in such other form as the
Committee may approve, including shares of Common Stock valued as
provided in Section 3.02 hereof or a combination of cash and/or such
other form of property.
2.03 Incentive Stock Option Requirements.
(a) An Option designated by the Committee as an "Incentive
Stock Option" is intended to qualify as an "incentive stock option"
within the meaning of Subsection (b) of Section 422 of the Code and
shall satisfy, in addition to the conditions of Section 2.02, the
conditions set forth in this Section 2.03.
(b) An Incentive Stock Option shall not be granted to an
individual who, on the date of grant, owns stock possessing more than
ten percent (10%) of the total combined voting power of all classes of
stock of the Company or of its parent or any Subsidiary unless the
requirements of subsection (c) hereof are satisfied.
(c) If any employee to whom an Incentive Stock Option is to
be granted pursuant to the provisions of the Plan is on the date of grant
the owner of stock possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Company or of its
parent or any Subsidiary, then the following special provisions shall be
applicable to the Incentive Stock Option granted to such individual:
(i) The option price per share of the Common Stock
subject to such Incentive Stock Option shall not be
less than one hundred ten percent (110%) of the Fair
Market Value of one share of Common Stock on the date
of grant; and
Page Thirty-One
(ii) The option exercise period shall not exceed five
years from the date of the grant.
In determining whether the ten percent (10%) threshold has
been reached, the stock attribution rules of Section 424(d) of the Code
shall apply.
(d) The aggregate Fair Market Value, determined on the Grant
Date, of the shares of Common Stock with respect to which Incentive
Stock Options are exercisable for the first time by a Grantee during any
calendar year (under all such plans of the Grantee's employer corporation
and its parent and Subsidiary corporations) shall not exceed $100,000.
(e) Except as modified by the preceding provisions of this
Section 2.03, all of the provisions of the Plan shall be applicable to
Incentive Stock Options granted hereunder.
2.04 Stock Appreciation Rights.
The Committee may also grant stock appreciation rights to Key
Employees. Stock appreciation rights granted in conjunction with
Options under the Plan may be granted either at the time of grant of
such Options pursuant to the Plan or by subsequent action prior to the
exercise, termination or expiration of such Options. Such stock
appreciation rights hall be subject to the same terms and conditions as
the related Options and may be exercised only at a time when the Fair
Market Value of a share of Common Stock exceeds the option price for
such shares, the Options are otherwise exercisable, and if, at the time
of such exercise, the Grantee surrenders the privilege of exercising the
related Options to the extent that the Grantee exercises a stock
appreciation right. In the event of a grant of stock appreciation right
without a related option, the Common Stock price referenced in such
grant shall not be less than the Fair Market Value per share of Common
Stock on the Grant Date.
Upon exercise of a stock appreciation right and surrender of the
related Option (or any portion of such Option), if any, the Grantee
shall be entitled to receive, subject to the provisions of the Plan and
such rules and regulations as may be established by the Committee, a
payment equal to the product of (A) the excess of (i) the Fair Market
Value of one share of Common Stock at the time of such surrender over
(ii) the price per share specified in such related Option or stock
appreciation rights agreement, times (B) the number of such shares
called for by the related Option, or portion thereof, which is so
surrendered or specified in such stock appreciation rights agreement.
Such payment shall be made as determined by the Committee, in its sole
discretion, either in (i) cash, or (ii) shares of Common Stock valued at
Fair Market Value as of the date of exercise, or (iii) partly in cash
and partly in shares of Common Stock. Neither a stock appreciation right
held by a Grantee who is an officer or director of the Company, the
exercise of which would result in a cash payment, nor any related Option
Page Thirty-Two
shall be exercisable during the first six months of the option period
(or during the first six months from the Grant Date of the stock
appreciation right if granted subsequently to the related Option). If,
upon settlement of a stock appreciation right, a Grantee is to receive
payment or a portion thereof in shares of Common Stock, the number of
shares shall be determined by dividing such payment or portion by the
Fair Market Value of a share of Common Stock on the date of exercise.
However, if the Committee, in its discretion, decides to permit a
Grantee who is an officer or director of the Corporation to elect to
receive cash in full or partial settlement of the exercise of a stock
appreciation right, then such election shall be made during the period
beginning on the third business day following the date of release for
publication of quarterly and annual summary statements of sales and
earnings of the Corporation and ending on the twelfth business day
following such date, unless a different period is specified in Rule
16b-3 under the Exchange Act, as in effect at the time of such exercise,
or any law, rule, regulation or other provision that may hereafter
replace such Rule (the "Window Period").
The Committee shall also determine whether, and if so to what
extent, the exercise of an Option shall be required as a condition to
the exercise of a related stock appreciation right. No stock
appreciation right can be exercised by a Grantee who is an officer or
director of the Company unless the Company has been subject to the
reporting requirements of Section 13 of the Exchange Act for at least
one year prior to the date of said exercise and has filed all reports
and statements required to be filed pursuant to that section during that
period.
2.05 Dividend Equivalents.
The Committee may also grant dividend equivalents to employees
granted related awards under the Plan pursuant to rules and regulations
adopted by the Committee. The Committee may require or permit the
immediate payment or the waiver, deferral or investment of (1) dividends
paid on awards under the Plan, and (2) amounts equal to dividends which
would have been paid if shares subject to an award had been outstanding
on the dividend record date. No payment, credits or accruals shall be
made on shares subject to an award which are not yet issued and
outstanding on account of the payment of a stock dividend or other
distribution in kind on the Common Stock.
Page Thirty-Three
Article III.
General Provisions
------------------
3.01 Exercise of Options and Stock Appreciation Rights and Payment
of Other Awards.
(a) No Option or stock appreciation right may be exercised
and no other award will vest or be paid prior to the approval of the
Plan by the Company's shareholders and the DPUC.
(b) No Option or stock appreciation right may at any time be
exercised with respect to a fractional share or exercised in part with
respect to fewer than twenty-five (25) shares. No fractional shares
shall be issued and the Committee shall determine whether cash shall be
paid in lieu of such fractional shares or such fractional shares shall
be eliminated.
(c) No shares shall be delivered pursuant to the exercise of
any Option or in payment of an award, in whole or in part, until
qualified for delivery under such securities laws and regulations as the
Committee may deem to be applicable thereto and until payment in full of
the option price is received by the Company in cash, by check or in stock
as provided in Section 3.02 hereof or, if authorized by the Committee's
regulations and accomplished in accordance therewith, by delivery of a
properly executed exercise notice together with irrevocable instructions
to a broker to deliver promptly to the Company sale or loan proceeds
sufficient to pay the option price. Neither a Grantee nor such Grantee's
legal representative, legatee or distributee shall be or be deemed to be
a holder of any shares subject to such Option unless and until a
certificate or certificates therefor is issued in his or her name or in
the name of a person designated by him or her.
3.02 Stock as Form of Exercise Payment. A Grantee may elect to
use Common Stock valued at the Fair Market Value on the last business day
preceding the exercise date to pay all or part of the exercise price of
an award, provided, however, that such form of payment shall not be
permitted unless at least one hundred (100) shares of Common Stock are
delivered for such purpose and the shares delivered have been held by the
Grantee for at least six months.
3.03 Withholding Taxes for Awards. Each Grantee exercising an
award as a condition to such exercise shall pay to the Company the
amount, if any, required to be withheld from distributions resulting from
such exercise under applicable Federal and State income tax laws
("Withholding Taxes"). Such Withholding Taxes shall be payable as of the
date income from such exercise is includable in the Grantee's gross
income for Federal income tax purposes (the "Tax Date"). The Grantee may
satisfy this requirement by electing one of the following methods (or a
combination thereof), which election is subject to the approval of the
Committee:
(i) remitting to the Company in cash or by check the amount of
such Withholding Taxes;
Page Thirty-Four
(ii) remitting to the Company a number of shares of Common Stock
having an aggregate Fair Market Value as of the last
business day preceding the Tax Date equal to the amount of
such Withholding Taxes;
(iii) electing to have the Company withhold from such
distribution the number of shares of Common Stock having
an aggregate Fair Market Value as of the last business day
preceding the Tax Date equal to the amount of such
Withholding Taxes.
Any election by a Grantee pursuant to clause (ii) or (iii) of this
Section 3.03 must be made on or prior to the Tax Date and will be
irrevocable. In addition, if the Grantee is subject to Section 16 of the
Exchange Act, an election pursuant to clause (ii) or (iii) of this
Section 3.03 cannot be made until at least six (6) months after the Grant
Date of the Option (except that this limitation shall not apply in the
event the death or Disability of the Grantee occurs prior to the
expiration of the six (6) month period), and such election must be made
either by the date which is at least six (6) months prior to the Tax Date
or during any period beginning prior to the Tax Date which begins on the
third business day following the date of release for publication by the
Company of quarterly or annual summary statements of earnings and ending
on the twelfth business day following such date.
3.04 Transfer of Awards. An award shall not be transferable other
than by will or the laws of descent and distribution or pursuant to a
qualified domestic relations order, as defined in the Code, and, during
the Grantee's lifetime, shall be exercisable only by the Grantee, except
that the Committee may:
(i) permit exercise, during the Grantee's lifetime, by the
Grantee's guardian or legal representative; and
(ii) permit transfer, upon the Grantee's death, to
beneficiaries designated by the Grantee in a manner
authorized by the Committee, provided that the Committee
determines that such exercise and such transfer are
consonant with requirements for exemption from Section
16(b) of the Exchange Act and, with respect to an
Incentive Stock Option, the requirements of Section
422(b)(5) of the Code.
(iii) grant Non-Qualified Stock Options that are transferable
in accordance with such transferability restrictions, if
any, as may be imposed by Rule 16b-3, as hereafter
amended, or amend outstanding Non-Qualified Stock Options
to make them so transferable, without payment of
consideration, to immediate family members of the Grantee
or to trusts or partnerships for such family members.
Page Thirty-Five
3.05 Change in Ownership. In the event of (x) a dissolution or
liquidation of the Company, (y) a merger or consolidation in which the
Company is not the surviving corporation, or (z) any other capital
reorganization in which more than fifty percent (50%) of the shares of
the Company entitled to vote are exchanged, the Company shall give to
each Grantee, at the time of adoption of the plan for liquidation,
dissolution, merger, consolidation or reorganization, either (i) a
reasonable time thereafter within which to exercise the Option or other
award, prior to the effectiveness of such liquidation, dissolution,
merger, consolidation or reorganization, at the end of which time the
Option shall terminate, or (ii) the right to exercise the Option or
award (or a substitute Option or award) as to an equivalent number of
shares of stock of the corporation succeeding the Company or acquiring
its business by reason of such liquidation, dissolution, merger,
consolidation or reorganization.
3.06 Adjustment Upon Changes in Capitalization.
(a) Changes in Capitalization. If the number of shares of
Common Stock of the Company as a whole are increased, decreased or
changed into, or exchanged for, a different number or kind of shares or
securities of the Company, whether through merger, consolidation,
reorganization, recapitalization, reclassification, stock dividend,
stock split, combination of shares, exchange of shares, change in
corporate structure or the like, an appropriate and proportionate
adjustment shall be made in the number and kind of shares subject to
this Plan, and in the number, kind, and per share exercise price of the
shares of Common Stock subject to unexercised Options, rights and other
awards or portions thereof granted prior to any such change. Any such
adjustment in an outstanding Option or award, however, shall be made
without a change in the total price applicable to the unexercised
portion of the Option or award but with a corresponding adjustment in
the price for each share covered by the Option or award.
(b) Acquisition. Upon a reorganization, merger or
consolidation in which the Company is not the surviving corporation,
or upon the sale of all or substantially all of the property of the
Company to another corporation, provision shall be made in connection
with such transaction for the assumption of the Plan and the Options
and awards theretofore granted by the successor corporation. Provision
may, alternatively, be made for the substitution for such Options and
awards of new options and awards of the successor corporation or a
parent or subsidiary thereof. In any such case, appropriate adjustment
as to the number and kind of shares and the per share exercise prices
shall be made. No fractional shares of stock shall be issued under the
Plan on account of any adjustment specified above.
(c) Dissolution or Liquidation. Upon the dissolution or
liquidation of the Company, this Plan and the Options and issued
thereunder shall terminate.
3.07 Additional Conditions. Any shares of Common Stock issued or
transferred under any provision of the Plan may be issued or transferred
subject to such conditions (including, without limitation, restrictions
on transferability), in addition to those specifically provided in the
Plan, as the Committee may impose.
Page Thirty-Six
3.08 No Right to Employment. Nothing in the Plan or any
instrument executed pursuant hereto shall confer upon any Employee any
right to continue in the employ of the Company or any of its
Subsidiaries nor shall anything in the Plan affect the right of the
Company or any of its Subsidiaries to terminate the employment of any
Employee, with or without cause.
3.09 Legal Restrictions. The Company will not be obligated to
issue shares of Common Stock or make any payment if counsel to the
Company determines that such issuance or payment would violate any law
or regulation of any governmental authority or any agreement between the
Company and any national securities exchange upon which the Common Stock
is listed. In connection with any stock issuance or transfer, the
person acquiring the shares shall, if requested by the Company, give
assurances satisfactory to counsel to the Company regarding such matters
as the Company may deem desirable to assure compliance with all legal
requirements. The Company shall in no event be obliged to take any
action in order to permit the exercise of any Option.
3.10 No Rights as Shareholders. No Grantee, and no beneficiary or
other person claiming through a Grantee, shall have any interest in any
shares of Common Stock allocated for the purposes of the Plan or subject
to any Option or award until such shares of Common Stock shall have been
transferred to the Grantee or such person. Furthermore, the existence
of the Options and awards shall not affect: the right or power of the
Company or its stockholders to make adjustments, recapitalization,
reorganizations or other changes in the Company's capital structure;
the dissolution or liquidation of the Company, or sale or transfer of
any part of its assets or business; or any other corporate act, whether
of a similar character or otherwise.
3.11 Choice of Law. The validity, interpretation and
administration of the Plan and of any rules, regulations, determinations
or decisions made thereunder, and the rights of any and all persons
having or claiming to have any interest therein or thereunder, shall be
determined exclusively in accordance with the laws of the State of
Connecticut (regardless of the laws that might be applicable under
principles of conflicts of laws). Without limiting the generality of the
foregoing, the period within which any action in connection with the
Plan must be commenced shall be governed by the laws of the State of
Connecticut (regardless of the laws that might be applicable under
principles of conflicts of laws), without regard to the place where the
act or omission complained of took place, the residence of any party to
such action or the place where the action may be brought.
3.12 Amendment, Suspension and Termination of Plan. The Board may
at any time terminate, suspend or amend the Plan.
Page Thirty-Seven
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We hereby consent to the incorporation by reference in (a) the
Registration Statements of Birmingham Utilities, Inc. on Form S-8 dated
July 25, 1995, (b) the Prospectus constituting part of the Registration
Statement of Birmingham Utilities, Inc., on Form S-3 dated June 12, 1995,
and (c) the Registration Statement of Birmingham Utilities, Inc. on Form
S-8 dated February 24, 2000, and filed on February 28, 2000, of our
report dated January 28, 2000 and appearing in the Annual Report on Form
10-K of Birmingham Utilities, Inc. for the year ended December 31, 1999.
March 16, 2000 /s/ Dworken, Hillman, LaMorte & Sterczala
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