UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(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, 1996
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 1-4315
ORANGE AND ROCKLAND UTILITIES, INC.
(Exact name of registrant as specified in its charter)
New York 13-1727729
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
One Blue Hill Plaza, Pearl River, New York 10965
(Address of principal executive offices) (Zip Code)
(914) 352-6000
(Registrant's telephone number, including area code)
NONE
(Former name, former address and former fiscal year, if changed since
last report)
Indicate by check mark whether the registrant (l) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past
90 days.
Yes X No
Indicate the number of shares outstanding of each of the issuer's
class of common stock, as of the close of the latest practicable date.
Common Stock - $5 Par Value 13,653,899 Shares
(Class) (Outstanding at April 30, 1996)<PAGE>
TABLE OF CONTENTS
Page
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
Consolidated Balance Sheets (Unaudited)
at March 31, 1996 and December 31, 1995 1
Consolidated Statements of Income (Unaudited)
for the three months ended March 31, 1996
and March 31, 1995 3
Consolidated Cash Flow Statements (Unaudited)
for the three months ended March 31, 1996
and March 31, 1995 4
Notes to Consolidated Financial Statements 5
ITEM 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings 14
ITEM 4. Submission of Matters to a Vote of
Security Holders 14
ITEM 6. Exhibits and Reports on Form 8-K 15
Signatures 16
<PAGE>
<TABLE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
ORANGE AND ROCKLAND UTILITIES, INC. AND SUBSIDIARIES
Consolidated Balance Sheets (Unaudited)
Assets
<CAPTION>
March 31, December 31,
1996 1995
(Thousands of Dollars)
<S> <C> <C>
Utility Plant:
Electric $ 997,526 $ 993,926
Gas 212,115 211,135
Common 56,800 56,796
Utility Plant in Service 1,266,441 1,261,857
Less accumulated depreciation 428,424 419,844
Net Utility Plant in Service 838,017 842,013
Construction work in progress 33,195 31,655
Net Utility Plant 871,212 873,668
Non-utility Property:
Non-utility property 20,154 34,376
Less accumulated depreciation, depletion and amortization 3,282 12,945
Net Non-utility Property 16,872 21,431
Current Assets:
Cash and cash equivalents 5,481 5,164
Temporary cash investments 520 1,335
Customer accounts receivable, less allowance for
uncollectible accounts of $2,312 and $2,307 70,878 61,653
Accrued utility revenue 20,521 22,198
Other accounts receivable, less allowance for
uncollectible accounts of $148 and $169 9,601 9,752
Gas marketing accounts receivable, less allowance
for uncollectible accounts of $347 and $133 42,327 51,198
Materials and supplies (at average cost) 25,990 32,668
Prepaid property taxes 22,070 20,687
Prepayments and other current assets 23,192 26,463
Total Current Assets 220,580 231,118
Deferred Debits:
Income tax recoverable in future rates 72,252 72,631
Deferred revenue taxes 15,008 15,596
Deferred pension and other postretirement benefits 10,905 10,422
IPP settlements 39,685 40,034
Unamortized debt expense (amortized over
term of securities) 11,075 11,417
Other deferred debits 33,217 32,821
Total Deferred Debits 182,142 182,921
Total $1,290,806 $1,309,138
The accompanying notes are an integral part of these statements.
</TABLE>
<PAGE>
<TABLE>
ORANGE AND ROCKLAND UTILITIES, INC. AND SUBSIDIARIES
Consolidated Balance Sheets (Unaudited)
Capitalization and Liabilities
<CAPTION>
March 31, December 31,
1996 1995
(Thousands of Dollars)
<S> <C> <C>
Capitalization:
Common stock (13,653,754 and 13,653,613 shares
outstanding) $ 68,269 $ 68,268
Premium on capital stock 133,610 133,607
Capital stock expense (6,107) (6,107)
Retained earnings 188,972 184,008
Total Common Stock Equity 384,744 379,776
Non-redeemable preferred stock (428,443 shares
outstanding) 42,844 42,844
Non-redeemable cumulative preference stock (12,440
and 12,539 shares outstanding) 405 409
Total Non-Redeemable Stock 43,249 43,253
Redeemable preferred stock (13,896 shares outstanding) 1,390 1,390
Long-term debt 359,638 359,736
Total Capitalization 789,021 784,155
Non-current Liabilities:
Reserve for claims and damages 3,685 3,848
Postretirement benefits 14,421 13,756
Pension costs 39,940 38,740
Total Non-current Liabilities 58,046 56,344
Current Liabilities:
Notes Payable and obligations due within one year 58,479 68,550
Accounts payable 48,287 62,082
Gas marketing accounts payable 32,143 44,630
Accrued Federal income and other taxes 15,940 2,050
Refundable fuel and gas costs 19,916 11,314
Refunds to customers 16,699 13,903
Other current liabilities 29,557 38,192
Total Current Liabilities 221,021 240,721
Deferred Taxes and Other:
Deferred Federal income taxes 179,981 183,396
Deferred investment tax credits 16,014 16,217
Accrued IPP settlement agreements 17,500 17,500
Other deferred credits 9,223 10,805
Total Deferred Taxes and Other 222,718 227,918
Total $1,290,806 $1,309,138
The accompanying notes are an integral part of these statements.
</TABLE>
<PAGE>
<TABLE>
ORANGE AND ROCKLAND UTILITIES, INC. AND SUBSIDIARIES
Consolidated Statements of Income (Unaudited)
<CAPTION>
Three Months
Ended March 31,
1996 1995
(Thousands of Dollars)
<S> <C> <C>
Operating Revenues:
Electric $108,019 $107,904
Gas 78,944 59,121
Total Utility Revenues 186,963 167,025
Diversified activities 98,709 144,782
Total Operating Revenues 285,672 311,807
Operating Expenses:
Operations:
Fuel used in electric production 7,746 18,018
Electricity purchased for resale 25,936 11,460
Gas purchased for resale 47,637 29,991
Non-utility gas marketing purchases 95,901 142,125
Other expenses of operation 34,436 36,322
Maintenance 9,754 9,471
Depreciation and amortization 8,261 9,009
Amortization of property losses 982 1,540
Taxes other than income taxes 25,857 25,224
Federal income taxes 12,004 7,917
Deferred Federal income taxes (4,339) 210
Amortization of investment tax credit (29) (29)
Total Operating Expenses 264,146 291,258
Income from Operations 21,526 20,549
Other Income and (Deductions):
Allowance for other funds used
during construction 5 11
Investigation costs - (381)
Other - net 1,034 5,039
Taxes other than income taxes (91) (438)
Federal income taxes (110) 523
Deferred Federal income taxes (172) (2,152)
Amortization of investment tax credit 174 177
Total Other Income and (Deductions) 840 2,779
Income Before Interest Charges 22,366 23,328
Interest Charges:
Interest on long-term debt 6,236 6,926
Other interest 1,357 1,201
Amortization of debt premium and expense-net 365 340
Allowance for borrowed funds used during
construction (147) (460)
Total Interest Charges 7,811 8,007
Net Income 14,555 15,321
Dividends on preferred and preference stock,
at required rates 756 784
Earnings applicable to common stock $ 13,799 $ 14,537
Avg. number of common shares outstanding (000's) 13,654 13,653
Earnings per average common share outstanding $ 1.01 $ 1.06
Dividends declared per common share outstanding $ .645 $ .64
The accompanying notes are an integral part of these statements.
</TABLE>
<PAGE>
<TABLE>
ORANGE AND ROCKLAND UTILITIES, INC. AND SUBSIDIARIES
Consolidated Cash Flow Statements (Unaudited)
<CAPTION>
Three Months Ended
March 31,
1996 1995
(Thousands of Dollars)
<S> <C> <C>
Cash Flow from Operations:
Net income $14,555 $15,321
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization 9,723 9,384
Deferred Federal income taxes (4,167) 2,362
Deferred investment tax credit (203) (206)
Deferred and refundable fuel and gas costs 8,602 9,099
Allowance for funds used during construction (152) (471)
Other non-cash charges 1,773 1,891
Changes in certain current assets and liabilities:
Accounts and gas marketing accounts receivable,
net and accrued utility revenues 1,474 12,057
Materials and supplies 6,420 8,226
Prepaid property taxes (1,383) (1,916)
Prepayments and other current assets 3,271 5,170
Operating and gas marketing accounts payable (26,282) (49,064)
Accrued Federal Income and other taxes 13,890 6,290
Accrued interest (2,430) (3,379)
Refunds to customers 2,796 (56)
Other current liabilities (6,099) (298)
Other-net 3,691 (4,920)
Net Cash Provided from Operations 25,479 9,490
Cash Flow from Investing Activities:
Additions to plant (6,246) (6,610)
Temporary cash investments 815 1,235
Allowance for funds used during construction 152 471
Net Cash Used in Investing Activities (5,279) (4,904)
Cash Flow from Financing Activities:
Retirements of:
Long-term debt (112) (150)
Capital lease obligations (138) (127)
Net borrowings (repayments) under
short-term debt arrangements* (10,071) 10,330
Dividends on preferred and common stock (9,562) (9,524)
Net Cash Provided From (Used in) Financing Activities (19,883) 529
Net Change in Cash and Cash Equivalents 317 5,115
Cash and Cash Equivalents at Beginning of Period 5,164 16,081
Cash and Cash Equivalents at End of Period $ 5,481 $21,196
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for:
Interest, net of amounts capitalized $ 9,784 $11,019
* Debt with maturities of 90 days or less.
The accompanying notes are an integral part of these statements.
</TABLE>
<PAGE>
ORANGE AND ROCKLAND UTILITIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. The consolidated balance sheet as of March 31, 1996, the consolidated
statements of income for the three month periods ended March 31, 1996 and
1995, and the consolidated cash flow statements for the three month
periods then ended have been prepared by Orange and Rockland Utilities,
Inc. (the "Company") without an audit. In the opinion of management, all
adjustments (which include only normal recurring adjustments) necessary
to present fairly the financial position and results of operations at
March 31, 1996, and for all periods presented, have been made. The
amounts in the consolidated balance sheet as of December 31, 1995 are
from audited financial statements.
2. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been omitted. It is suggested that these
unaudited consolidated financial statements be read in conjunction with
the financial statements and notes thereto included in the Company's
December 31, 1995 Annual Report to Shareholders. The results of
operations for the period ended March 31, 1996 are not necessarily
indicative of the results of operations for the full year.
3. The consolidated financial statements include the accounts of the
Company, all subsidiaries and the Company's pro rata share of an
unincorporated joint venture. All significant intercompany balances and
transactions have been eliminated.
4. Contingencies at March 31, 1996 are substantially the same as the
contingencies described in the "Notes to Consolidated Financial
Statements" included in the Company's December 31, 1995 Annual Report to
Shareholders, which material is incorporated by reference to the
Company's December 31, 1995 Form 10-K Annual Report, except the status of
regulatory matters is updated in Part I, Item 2. under the caption
"Rate Activities".
5. Certain amounts from prior years have been reclassified to conform with
the current year presentation.
6. The Company has discontinued its gas production business, which it
operated through its subsidiary O&R Energy Development, Inc. ("ORED").
ORED sold all of its oil and gas interests effective December 1, 1995 and
has ceased operations. This will not have a material effect on the
Company's results of operations.
7. In March 1995, the Financial Accounting Standards Board issued SFAS
No. 121, "Accounting for Impairment of Long-Lived Assets and Long-Lived
Assets to be Disposed Of". This Statement imposes criteria for the
continued recognition of regulatory assets by requiring that such assets
be probable of future recovery at each balance sheet date. The Company
adopted this standard on January 1, 1996. Based on the current
regulatory structure in which the Company operates, the adoption did not
have any effect on the financial position or results of operations of the
Company. This conclusion may change in the future as competitive factors
influence wholesale and retail pricing in this industry.
<PAGE>
8. The Internal Revenue Service ("IRS") has completed their examination of
the Company's tax returns for 1990, 1991 and 1992. The Company and IRS
have agreed, during the second quarter, to an assessment for a tax
deficiency of approximately $1.7 million plus interest, which primarily
relates to the misuse and misappropriation of Company funds during this
period. After offsetting the assessment with established reserves and
other related items, this settlement will have a minimal effect on the
operating results of the Company.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Financial Condition:
Financial Performance
The Company's consolidated earnings per average common share outstanding for
the first quarter of 1996 were $1.01 as compared to $1.06 for the first
quarter of 1995. Fluctuations within the components of earnings are discussed
in the "Results of Operations". The average number of common shares
outstanding were 13.7 million for the first quarters of both 1996 and 1995.
The current quarterly dividend rate of $.645 is equivalent to an annual
dividend rate of $2.58 per share. Dividends declared during the twelve months
ended March 31, 1996 amounted to $2.575 with a dividend payout ratio of
101.57% as compared to $2.55 a year ago with a payout ratio of 98.46%.
The return on average common equity for the twelve months ended March 31, 1996
was 9.16% as compared to 9.33% for the twelve months ended March 31, 1995.
Capital Resources and Liquidity
At March 31, 1996, the Company and its utility subsidiaries had unsecured bank
lines of credit totaling $67.5 million. The Company may borrow under the
lines of credit through the issuance of promissory notes to the banks. The
Company, however, utilizes such lines of credit to fully support commercial
paper borrowings. The aggregate amount of borrowings through the issuance of
promissory notes and commercial paper cannot exceed the aggregate lines of
credit. In addition, non-utility lines of credit amounted to $20.0 million at
March 31, 1996, and the non-utility subsidiaries may undertake short-term
borrowings or make short-term investments. The average daily balance of
short-term borrowings for the three months ended March 31, 1996 amounted to
$61.7 million at an effective interest rate of 5.8% as compared to $38.6
million at an effective interest rate of 6.4% for the same period of 1995.
The level of temporary cash investments for the three months ended March 31,
1996 decreased to an average daily balance of $1.5 million at an effective
interest rate of 5.2% from $17.1 million at an effective interest rate of
5.8% for the same period of 1995.
The New York Public Service Commission ("NYPSC") has authorized the Company to
issue up to 750,000 shares of common stock under its Dividend Reinvestment and
Stock Purchase Plan ("DRP") and its Employee Stock Purchase and Dividend
Reinvestment Plan ("ESPP"). At the option of the Company, however, common
stock used to satisfy the requirements of the DRP and ESPP may be purchased on
the open market. Effective November 1, 1994, common stock needed to satisfy
the DRP and ESPP requirements is being purchased on the open market.
<PAGE>
Rate Activities
New York
Gas:
On January 16, 1992, the Company filed an application for an increase in gas
rates with the NYPSC. The Settlement Agreement in that case, which was
approved by the NYPSC on September 30, 1992 provided, among other things, for
multi-year rate adjustments through 1996 and for certain gas incentives. The
second adjustment to gas rates under the Settlement Agreement, which amounted
to an increase of $3.8 million or 2.5%, was to become effective on January 1,
1994. As a result of the ongoing investigation of alleged financial
improprieties, however, the increase was first extended to June 30, 1994 and
then further extended to December 30, 1994. On November 4, 1994, the NYPSC
issued an Order terminating the Settlement Agreement effective December 31,
1994. The Order denies the Company the opportunity for rate adjustments in
the third and fourth years (1995 and 1996) of the four-year Settlement
Agreement. However, the Order authorizes the Company to defer the second-
stage rate adjustments and all previously authorized reconciliations
pertaining to periods prior to December 31, 1994, pending review and audit by
the NYPSC Staff and the conclusion of the NYPSC's investigation of alleged
financial improprieties. In addition, on February 7, 1995, the Accounting and
Finance Division of the NYPSC issued an interpretation of the November 4, 1994
termination order which stated that the gas incentive mechanism related to the
attainment of certain goals is no longer available. The Company did not
contest this interpretation.
On October 2, 1995, the Company, the NYPSC Staff and the New York State
Consumer Protection Board ("CPB"), reached a settlement which resolves all
outstanding issues relating to the NYPSC investigation of alleged financial
improprieties as described below. The settlement provides for, among other
things, the cancellation of the second stage gas base rate increase discussed
above. All deferred balances resulting from expense reconciliations and
deferral of the second stage rate adjustment are to be offset with an equal
amount of deferred credits resulting from certain changes approved as part of
the original multi-year rate plan. In addition, the settlement provides for
the recognition in gas rates of the change in accounting required by SFAS 106
- - Employer Accounting for Postretirement Benefits Other Than Pensions. The
annual cost increase due to gas operations as a result of SFAS 106 will be
offset by an equal amount of previously deferred credits. On January 25,
1996, the Administrative Law Judge ("ALJ") recommended approval of the
settlement. On May 3, 1996 the NYPSC issued an order approving the
settlement.
Electric:
On June 10, 1994, the NYPSC issued an Order (the "June Order") which
terminated the Company's January 1993 electric rate increase application. The
June Order provided, among other things, for a reduction in the threshold for
measuring excess earnings from 12.0% to 10.6% effective retroactively to
January 1, 1994. All earnings in excess of 10.6% were to be deferred for
future disposition pending the conclusion of the ongoing investigation.
<PAGE>
On September 19, 1994, the Company filed an appeal with the Supreme Court of
New York challenging the legality of the June Order. The appeal argued that
by changing the excess earnings threshold from 12.0% to 10.6% for the first
six months of 1994, the NYPSC engaged in retroactive ratemaking. The appeal
also argued that there was no evidence in the record to support a
determination that the cost of equity was 10.6%. This appeal was withdrawn
pursuant to a Stipulation approved by the NYPSC on August 1, 1995, as
described below.
On February 17, 1995, O&R submitted a compliance filing regarding the
operation of the Revenue Decoupling Mechanism ("RDM"). The filing included a
proposal to reduce the RDM Adjustment Factor from $7.7 million to $0 effective
May 1, 1995 reflecting the completion of the recovery of an RDM
undercollection applicable to the year 1993. This equates to a 2.3% annual
reduction in revenues. In addition, the filing requested that a net RDM
overcollection of $0.7 million for the year 1994 be retained by the Company as
a future rate moderator, subject to NYPSC verification. On April 19, 1995,
the NYPSC approved the proposals, and the reduction of $7.7 million in the RDM
Adjustment Factor became effective on May 1, 1995.
On May 25, 1995, the Company filed with the NYPSC for a decrease in electric
revenues of $6.1 million to be effective April 1, 1996 (Case 95-E-0491). This
equates to an overall reduction of 1.8 percent in annual retail revenues. The
filing reflects a reduction in operating expenses due to the complete recovery
of the Company's share of the Sterling Nuclear Project and other cost
reductions. The Company proposed a multi-year rate plan covering the three-
year period ending on March 31, 1999 with no base rate increases in the second
and third year of the plan. The Company proposed an overall return on capital
of 9.17% with a sharing mechanism governing any return on common equity above
11.2%.
On August 1, 1995, the NYPSC approved a Stipulation which provides for the
early implementation of the Company's proposed annual rate reduction of $6.1
million. As a result, reduced rates became effective August 1, 1995, which
produced a revenue reduction of approximately $3.8 million for the period
August 1, 1995 to March 31, 1996. The Stipulation also increased the excess
earnings threshold from 10.6% to 11.3%, with equal sharing of earnings above
11.3% between shareholders and ratepayers for the period January 1, 1995
through March 31, 1996. The Stipulation also provided that the Company would
withdraw its September 19, 1994 appeal to the Supreme Court of New York
challenging the June Order.
The revenue reduction has been offset by the deferred revenue associated
with the 1994 electric equity return in excess of 10.6% and the customers'
share of earnings under the new sharing mechanism effective January 1,
1995. On April 2, 1996, the Company, NYPSC Staff, the CPB and the Industrial
Energy Users Association ("IEUA") reached a settlement agreement which
resolves all the remaining outstanding revenue requirement issues in the
electric rate proceeding (Case 95-E-0491). Under the agreement, the Company
will reduce its annual retail revenues from electric utility service by an
additional $7.75 million, or 2.3% effective May 1, 1996. The base rate
decrease will remain effective until April 30, 1999.
<PAGE>
For the three year term of the settlement agreement, the authorized return on
equity will be 10.4% and the Company will be permitted to retain all earnings
up to 10.9%. Earnings in excess of 10.9% will be shared equally between
customers and shareholders.
The agreement also provides for the recovery of all non-utility generator
contract termination costs over approximately a four year amortization period.
In addition, the settlement agreement contains several performance mechanisms
(related to service reliability and customer service), a service guarantee pro-
gram as well as a retail access pilot program called "PowerPickTM"(trademark).
The PowerPickTM(trademark) pilot program will allow a limited number of
customers to choose an alternative supplier of energy. The Company will
continue to provide all other services such as reliability, customer service
and billing. PowerPickTM(trademark) is designed to have a minimal impact on
shareholders and non-participating customers. The settlement agreement also
eliminates all revenue and expense reconciliation provisions of the RDM.
On May 3, 1996 the NYPSC issued an order approving the settlement agreement.
Other:
On November 10, 1994, the Company filed with the NYPSC, a quantification of
the rate-making effects of its ongoing investigation into prior financial
improprieties. The Company requested that the NYPSC approve a refund of
approximately $3.4 million to its New York electric and gas customers. That
amount is in addition to the $369,000 already refunded by the Company. This
amount was charged to operations in the fourth quarter of 1994. The NYPSC has
instituted a proceeding (Case 93-M-0849) to provide the opportunity for other
parties, including the NYPSC Staff which was conducting an independent
investigation of the Company, to be heard on this matter. On July 6, 1995,
the NYPSC issued an order stating that the issues of the amount, timing and
allocation of New York ratepayer refunds as a result of the investigation in
Case 93-M-0849 should be considered in the context of the Company's current
electric base rate case and ordered the consolidation of the two cases.
On October 2, 1995, the Company, the NYPSC Staff, the CPB and IEUA reached a
settlement which resolves all outstanding issues relating to the NYPSC
investigation of alleged financial improprieties. The settlement provides for
a total of $8.5 million in rate relief for the Company's New York customers.
The amount attributable to electric operations is $6.5 million and the amount
attributable to gas operations is $2.0 million. The full impact of the
settlement is reflected in the Company's results of operations after recording
a charge of approximately $2.8 million during the third quarter of 1995. On
January 25, 1996, the ALJ recommended approval of the settlement. On May 3,
1996 the NYPSC issued an order approving the settlement.
New Jersey
Under an agreement with the New Jersey Board of Public Utilities ("NJBPU") to
return to customers any funds found to be misappropriated or otherwise
questionable as a result of its investigation of certain Company officers and <PAGE>
former employees, Rockland Electric Company ("RECO"), a wholly-owned utility
subsidiary of the Company, refunded to New Jersey ratepayers $93,000 through
reductions in the applicable fuel adjustment charges in February and March
1994. In December 1994, RECO submitted a proposal to the NJBPU to refund an
additional $704,000. By order dated January 27, 1995, the NJBPU approved this
proposal and the refund was made in February 1995.
On November 3, 1993, the NJBPU commenced its periodic management audit of
RECO. The NJBPU audit included, in addition to a standard review of operating
procedures, policies and practices, a review of the posture of RECO management
regarding business ethics and a determination regarding the effect of such
events on RECO ratepayers. The audit findings are contained in a report
titled "Final Report on An Ethics Review of Rockland Electric Company" (Docket
No. EA900302-48) dated December 1, 1994. The NJBPU subsequently initiated an
examination of senior management appointments and changes to the composition
of the Company's Board of Directors and the development of an ethics program.
The results of this examination are contained in a report titled "Final Report
of an Ethics Oversight Review of Rockland Electric Company".
The final Management Audit, Ethics Review, and Oversight Ethics Review reports
were approved by the NJBPU on July 7, 1995. The Oversight Ethics Review
report acknowledges that the NJBPU has approved refunds to the Company's
New Jersey customers and generally comments favorably about the changes
instituted by the Company. On February 21, 1996, the NJBPU approved RECO's
1996 Levelized Energy Adjustment Clause ("LEAC") filing whereby RECO will pass
back an additional $482,000 of refunds related to the investigation of certain
former officers of the Company, making the total amount refunded to RECO's
customers $1,279,000. The Company believes that this is the final refund
applicable to RECO. In addition, as part of this LEAC filing, RECO has been
granted full recovery of its share of buyout costs associated with non-utility
generator contracts entered into by the Company.
QUARTERLY COMPARISON
Results of Operations:
Earnings per average common share outstanding for the first quarter of 1996
amounted to $1.01 per share as compared to $1.06 per share for the first
quarter of 1995.
While the Company experienced improvements in this quarter's utility and
diversified operations, the lower earnings result from the impact of the gain
realized on the formation of NORSTAR Holdings, Inc. ("NORSTAR") which was
reflected in the first quarter of 1995.
Electric and Gas Revenues
Electric and gas operating revenues, including fuel cost and purchased gas
cost recoveries, increased by $19.9 million in the first quarter of 1996 as
compared to the same quarter of 1995.
Electric operating revenues during the current quarter were $108.0 million as
compared to $107.9 million for the first quarter of 1995, an increase of $0.1 <PAGE>
million. Revenues were increased by $7.8 million as a result of increased
sales volume changes of $4.0 million and fuel cost recoveries of $3.8 million.
This was offset by price changes of $1.5 million and regulatory
reconciliations, including the RDM revenue target reconciliation, of $6.2
million.
Actual total sales of electric energy to retail customers during the first
quarter of 1996 were 1,128,698 megawatt hours ("Mwh"), compared with 1,072,163
Mwh during the comparable period a year ago. This increase is attributable to
increased usage and average number of customers when compared to the same
period a year ago. Before reflecting the effect of the RDM revenues in the
Company's New York jurisdiction, electric revenues associated with these sales
were $111.6 million during the current quarter compared to $105.2 million
during the first quarter of 1995, an increase of $6.4 million.
New York electric revenue targets under the Company's RDM, as established in a
base rate case, net of fuel and taxes, amounted to $46.9 million for the first
quarter of 1996. In accordance with RDM procedures, deviations between
revenue targets and actual sales revenue are either recovered from or returned
to customers. The variation between the target revenue and the Company's
actual sales revenue of $50.3 million for the first quarter of 1996 was $3.4
million, which was recorded as a reduction to revenues. In the first quarter
of 1995, the Company recorded $.1 million as a reduction to revenue.
Pending the final NYPSC decision on the settlement agreement, which is
expected in early May 1996, the Company anticipates elimination of all revenue
and expense reconciliation provisions of the RDM. Reference is made to the
information contained under the caption "Rate Activities" in this Part I, Item
2, Management's Discussion and Analysis of Financial Condition and Results of
Operations, of this Quarterly Report on Form 10-Q.
Gas operating revenues during the quarter were $78.9 million compared to $59.1
million for the first quarter of 1995, an increase of $19.8 million. Revenues
were increased by gas cost recoveries of $14.5 million and sales volume
changes of $6.6 million. This was offset by price changes of $1.3 million.
Gas sales to firm customers during the first quarter of 1996 totaled 9,943
million cubic feet ("Mmcf"), compared with 8,802 Mmcf during the same period a
year ago. Gas revenues from firm customers were $72.8 million, compared with
$56.1 million in the first quarter of 1995.
Fuel, Purchased Electricity and Purchased Gas Costs, Excluding Gas
Marketing
The cost of fuel used in the production of electricity and purchased
electricity costs increased by $4.2 million during the first quarter of 1996
when compared to the same quarter of 1995. This increase reflects the
increase in the cost of fuel and purchased power as well as increased demand.
Purchased gas costs for utility operations were $47.6 million in the first
quarter of 1996 compared to $30.0 million in 1995, an increase of $17.6
million. This increase in gas costs is attributable to the volume of gas
purchased for resale and higher price.
<PAGE>
Other Operating and Maintenance Expenses
The Company's total operating and maintenance expenses excluding fuel,
purchased power and gas purchased for resale for the first quarter, decreased
by $2.7 million compared with the same period in 1995. The decrease in
expenses associated with utility operating expenses amounted to $2.5 million.
The change in diversified operation and maintenance expenses was a decrease of
$.2 million.
The decrease in other utility operation and maintenance expense is the result
of a decrease in operation expenses of $2.1 million, of which $.7 million is
attributable to Demand Side Management costs, a decrease in depreciation and
amortization of $.9 million and a decrease in Federal income taxes of $.4
million. These decreases were offset by increases in maintenance expense of
$.3 million and other taxes of $.6 million.
Diversified Activities
The Company's diversified activities consist of gas marketing and land
development businesses conducted by wholly owned non-utility subsidiaries.
Revenues from diversified activities decreased by $46.1 million for the first
quarter of 1996 as compared to the same quarter of 1995. The decrease in
operating expenses for all diversified activities of $46.4 million is the
result of decreased gas purchases of $46.2 million and by decreased operation
expenses of $.2 million. The primary reason for the decrease in revenues and
gas purchases is a result of restructuring the gas marketing business from
large volume, low margin, wholesale customers towards securing higher margin
retail customers.
Other Income, Deductions and Interest Charges - Net
Other income, net of interest charges and other deductions, decreased by $1.7
million during the first quarter of 1996 when compared to the same quarter of
1995. The decrease reflects the impact of the gain realized on the formation
of NORSTAR in the first quarter of 1995 which amounted to $2.9 million,
somewhat offset by decreases in interest charges of $.5 million and
investigation charges of $.4 million.
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
None.
Regulatory Matters
Reference is made to the information contained under the caption
"Rate Activities" in Part I, Item 2, Management's Discussion and Analysis of
Financial Condition and Results of Operations, of this Quarterly Report on
Form 10-Q for background on the Company's electric base rate case filed with
the NYPSC (Case 95-E-0491) on May 25, 1995.
Item 4. Submission of Matters to a Vote of Security Holders:
(a) The Company's Annual Meeting of Shareholders was held on April 10,
1996.
(b) The following directors were elected at the Annual Meeting of
Shareholders on April 10, 1996: Jon F. Hanson was elected for a one-
year term expiring at the Annual Meeting of Shareholders in 1997,
and Ralph M. Baruch, Michael J. Del Giudice and Frederic V. Salerno
were elected for three-year terms expiring at the Annual Meeting of
Shareholders in 1999. The following Directors have continued in
office after the meeting: J. Fletcher Creamer, James F. O'Grady,
Jr., Kenneth D. McPherson, D. Louis Peoples, Linda C. Taliaferro and
H. Kent Vanderhoef.
(c) The following matters were submitted to a vote of security holders
at the Company's Annual Meeting of Shareholders held on April 10,
1996:
<TABLE>
<S> <S>
1. The Company's nominees for election as Directors were elected by
the following vote:
Shares Shares Broker
For Withheld Non-Votes
Jon F. Hanson 11,291,978 225,261 N/A
Ralph M. Baruch 11,212,931 304,308 N/A
Michael J. Del Giudice 11,253,140 264,099 N/A
Frederic V. Salerno 11,267,311 249,928 N/A
<PAGE>
2. A proposal to appoint the firm of Arthur Andersen LLP, independent
public accountants, to audit the books, records and accounts of
the Company and its subsidiaries for the year 1996 was approved by
the following vote:
Shares Shares Shares Broker
For Against Abstaining Non-Votes
11,100,422 143,461 273,356 N/A
3. A proposal to amend Article Second of the Company's Certificate of
Incorporation to increase the number of shares of authorized
Common Stock of the Company to 50,000,000 shares was approved by
the following vote:
Shares Shares Shares Broker
For Against Abstaining Non-Votes
9,238,288 1,887,662 390,606 683
</TABLE>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
3.3 Certificate of Amendment of the Certificate of
Incorporation dated April 11, 1996.
3.4 Restated Certificate of Incorporation dated May 7, 1996.
(b) Reports on Form 8-K
None.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ORANGE AND ROCKLAND UTILITIES, INC.
(Registrant)
Date: May 13, 1996 By ROBERT J. MCBENNETT
Robert J. McBennett
Treasurer
Date: May 13, 1996 By EDWARD M. MCKENNA
Edward M. McKenna
Controller
CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION
OF
ORANGE AND ROCKLAND UTILITIES, INC.
Under Section 805 of the Business Corporation Law
We, the undersigned G. D. CALIENDO and CARLA MEYER LOIS,
being respectively a Vice President and the Assistant Secretary
of Orange and Rockland Utilities, Inc. (the "Company"), to effect
the amendment of the Certificate of Incorporation of the Company,
do hereby certify:
1. The name of the Company is Orange and Rockland
Utilities, Inc. It was originally incorporated under
the name of Rockland Light and Power Company.
2. The Certificate of Incorporation of the Company (being
the Certificate of Consolidation dated February 8,
1926, pursuant to which it was organized) was filed in
the office of the Secretary of State of the State of
New York on May 21, 1926. A Restated Certificate of
Incorporation of the Company was filed in the office of
the Secretary of State of the State of New York on
February 16, 1961 (hereinafter referred to as the
"Certificate of Incorporation").
3. (a) The Certificate of Incorporation is amended to
increase the authorized Common Stock of the Company
from 15,000,000 shares of Common Stock, par value $5.00
per share, to 50,000,000 shares of Common Stock, par
value $5.00 per share.
(b) To effect the foregoing, Article Second of the
Company's Certificate of Incorporation relating to the
amount of the capital stock of the Company is amended
to read as follows:
"SECOND. The amount of the capital stock of the
Company, the number and par value of the shares of
which it is to consist, the number of shares to be
classified, the number of shares to be included in
each class, and all of the designations,
preferences, privileges and voting powers of the
shares of each class, and the restrictions or
qualifications thereof are as follows:
The aggregate number of shares which the
Company shall have authority to issue is
52,500,000, of which 1,000,000 shares shall be
Cumulative Preferred Stock, issuable in series, of
the par value of $100.00 each; 1,500,000 shares
shall be Cumulative Preference Stock, issuable in
series, without par value; and 50,000,000 shares
shall be Common Stock of the par value of $5.00
each."
4. This Amendment of the Certificate of Incorporation of
the Company was authorized by the unanimous vote of the
Board of Directors, followed by an affirmative vote of
the holders of a majority of all outstanding shares
entitled to vote.
IN WITNESS WHEREOF, we hereunto sign our names and affirm
that the statements contained herein are true under penalties of
perjury this 11th day of April, 1996.
G. D. CALIENDO
Vice President and Secretary
CARLA MEYER LOIS
Assistant Secretary
0134.hhc
RESTATED CERTIFICATE OF INCORPORATION
OF
ORANGE AND ROCKLAND UTILITIES, INC.
Under Section 807 of the Business Corporation Law
We, the undersigned G. D. CALIENDO and CARLA MEYER LOIS,
being respectively a Senior Vice President and the Assistant
Secretary of Orange and Rockland Utilities, Inc. (the "Company"),
to effect the restatement of the Certificate of Incorporation of
the Company, do hereby certify:
1. The name of the Company is Orange and Rockland Utilities,
Inc. It was originally incorporated under the name of
Rockland Light and Power Company.
2. The Certificate of Incorporation of the Company (being the
Certificate of Consolidation dated February 8, 1926,
pursuant to which it was organized) was filed in the office
of the Secretary of State of the State of New York on May
21, 1926. A Restated Certificate of Incorporation of the
Company was filed in the office of the Secretary of State of
the State of New York on February 16, 1961 (hereinafter
referred to as the "Certificate of Incorporation").
3. This Restatement of the Certificate of Incorporation of the
Company was authorized at a meeting duly held of the Board
of Directors of the Company.
4. The entire Certificate of Incorporation of the Company as
amended and supplemented and as now in full force and effect
is hereby restated, without amendment or change, to read as
set forth below.
"Certificate of Incorporation
of
Orange and Rockland Utilities, Inc.
Pursuant to Section 3 of the Transportation Corporations Law.
FIRST: The name of the Company is Orange and Rockland
Utilities, Inc. It was originally incorporated under the name of
Rockland Light and Power Company. The Company shall be a gas and
electric corporation within the meaning of Article 2 of the
Transportation Corporations Law and shall have and may exercise
all the powers of such a corporation, including all the rights,
franchises and privileges of each of the corporations
consolidated upon its organization.
SECOND: The amount of the capital stock of the Company,
the number and par value of the shares of which it is to consist,
the number of shares to be classified, the number of shares to be
included in each class, and all of the designations, preferences,
privileges and voting powers of the shares of each class, and the
restrictions or qualifications thereof are as follows:
The aggregate number of shares which the Company shall have
authority to issue is 52,500,000, of which 1,000,000 shares shall
be Cumulative Preferred Stock, issuable in series, of the par
value of $100.00 each; 1,500,000 shares shall be Cumulative
Preference Stock, issuable in series, without par value; and
50,000,000 shares shall be Common Stock of the par value of $5.00
each.
COMMON STOCK
1. Each share of the Common Stock shall be equal in all
respects to every other share of the Common Stock. Every holder
of the Common Stock shall have one vote for each share of such
stock held by him for the election of directors and upon all
other matters, except as otherwise provided in section 6 hereof.
No holder of the Common Stock of the Company shall have any
preemptive right to purchase or subscribe for any part of the
unissued stock of the Company or of any stock of the Company to
be issued by reason of any increase of the authorized capital
stock of the Company, or to purchase or subscribe for any bonds,
certificates of indebtedness, debentures or other securities
convertible into or carrying options or warrants to purchase
stock or other securities of the Company, or to purchase or
subscribe for any stock of the Company purchased by the Company
or by its nominee or nominees, or to have any other preemptive
rights as now or hereafter defined by the laws of the State of
New York.
CUMULATIVE PREFERRED STOCK
Subject to the provisions of section 1 above and the
following sections 2 to 8 hereof, the Board of Directors is
hereby expressly authorized from time to time, by resolution
(hereinafter called an "issue resolution"), to fix before
issuance the designations, preferences, privileges and voting
powers of the shares of each series of the Cumulative Preferred
Stock, and the restrictions or qualifications thereof.
2. Each series shall be designated so as to distinguish
the shares thereof from the shares of all other series. All
shares of the Cumulative Preferred Stock of all series, whether
created hereby or hereafter created, shall be of equal rank, and
all shares of any particular series of the Cumulative Preferred
Stock shall be identical. The shares of the Cumulative Preferred
Stock of different series may vary as to:
(a) The annual dividend rate (within such limits as
shall be permitted by law) for the particular
series, the dividend payment dates and the date
from which dividends shall cumulate;
(b) The redemption price or prices for the particular
series and the manner of effecting a redemption;
(c) The amount or amounts per share for the particular
series payable to the holders thereof upon
liquidation, dissolution or winding up of the
Company;
(d) The terms and amount of any sinking fund provided
for the purchase or redemption of shares of the
particular series; and
(e) The conversion, participating or other special
privileges, if any, and the restrictions or
qualifications thereof, of the particular series.
3. The holders of each series of the Cumulative Preferred
Stock at the time outstanding shall be entitled to receive, but
only when and as declared by the Board of Directors, out of funds
legally available for the payment of dividends, cumulative
preferential dividends, at the annual dividend rate for the
particular series fixed therefor as herein provided, payable
quarter-yearly on such dates and cumulative from such dates as
shall be determined by the issue resolution for the particular
shares.
Dividends in full shall not be declared and set apart for
payment or paid on the Cumulative Preferred Stock of any series
for any particular dividend period unless dividends in full have
been paid or are contemporaneously declared and set apart for
payment on the Cumulative Preferred Stock of all series then
outstanding, for all the dividend periods terminating at or
before the end of the particular dividend period. When the
stated dividends are not paid in full, the shares of all series
of the Cumulative Preferred Stock shall share ratably in the
payment of dividends including accumulations, if any, in
accordance with the sums which would be payable on said shares if
all dividends were declared and paid in full.
In the case of all shares of each particular series, the
dividends on shares of such series shall be cumulative so that,
unless dividends on all outstanding shares of each series of the
Cumulative Preferred Stock, at the annual dividend rate and from
the dates for accumulation thereof, shall have been paid for all
past quarter-yearly dividend periods, but without interest on any
dividend in arrears, no dividends shall be paid or declared and
no other distribution shall be made on the Common Stock, and no
Common Stock shall be purchased or otherwise acquired for value
by the Company.
The holders of the Cumulative Preferred Stock of any series
shall not be entitled to receive any dividends thereon other than
the dividends above provided for; and whenever such dividends for
all past and current quarter-yearly periods shall have been paid
or declared and set apart for payment, then dividends (payable in
cash, stock or otherwise) may be declared and paid on the Common
Stock.
4. The Company may, by action of its Board of Directors
and in the manner hereinafter provided (except as further or
different requirements may by issue resolution be made applicable
to a particular series of the Cumulative Preferred Stock), redeem
the whole or any part of any series of the Cumulative Preferred
Stock, at any time or from time to time, by paying in cash the
redemption price of the shares of the particular series fixed
therefor as herein provided, together with a sum in the case of
each share of each series so to be redeemed, computed at the
annual dividend rate for the series of which the particular share
is a part, from the date from which dividends on such share
became cumulative to the date fixed for such redemption, less the
aggregate of the dividends theretofore or on such redemption date
paid thereon. No Cumulative Preferred Stock shall be called for
redemption while any dividend for a past dividend period shall be
in arrears on any share of any series of said stock.
Notice of every such redemption shall, at least thirty and
not more than ninety days before the redemption date designated
in such notice, be mailed to the holders of record of the shares
of the Cumulative Preferred Stock so to be redeemed, at their
respective addresses as the same shall appear on the books of the
Company. In case of the redemption of a part only of any series
of the Cumulative Preferred Stock at the time outstanding, the
Company shall select the shares to be redeemed by lot or pro rata
(subject to adjustment with respect to holdings not susceptible
of partial redemption in the exact proportion which the total
number of shares being redeemed bears to all the outstanding
shares of the series) in such manner as the Board of Directors
may determine. The Board of Directors shall have full power and
authority, subject to the limitations and provisions contained
herein and in the applicable issue resolutions, to prescribe the
manner in which, and the terms and conditions upon which, the
shares of the Cumulative Preferred Stock shall be redeemed from
time to time. The Company shall, after giving notice of any such
redemption as hereinbefore provided or after giving to the bank
or trust company hereinafter referred to irrevocable
authorization to mail such notice, at any time prior to the
redemption date specified in such notice, deposit in trust, for
the account of the holders of the shares to be redeemed, funds
necessary for such redemption with a bank or trust company in
good standing, having its principal office in The City of New
York, New York, and having capital, surplus and undivided profits
aggregating at least $2,000,000, designated in such notice of
redemption, and, upon such deposit in trust, all shares with
respect to which such deposit shall have been made shall no
longer be deemed to be outstanding, and all rights with respect
to such shares shall forthwith terminate, except only the right
of the holders thereof to receive, out of the funds so deposited
in trust, from and after the date of such deposit, the amount
payable upon the redemption thereof, without interest.
Any funds held in trust for shares called for redemption
shall, at the end of six years from the redemption date of such
shares, revert to the Company, which thereafter shall be solely
liable to the holder or holders of such shares for the amounts
due thereon without interest.
Nothing herein contained shall limit the right of the
Company, so far as permitted by law, to purchase or acquire any
shares of the Cumulative Preferred Stock otherwise than by
redemption thereof, or to re-sell any shares acquired by
redemption or otherwise.
5. Before any amount shall be paid to, or any assets
distributed among, the holders of the Common Stock upon any
liquidation, dissolution or winding up of the Company, and after
paying or providing for the payment of all creditors of the
Company, the holders of each series of the Cumulative Preferred
Stock at the time outstanding shall be entitled to be paid in
cash the amount for the particular series fixed therefore as
herein provided, together with a sum in the case of each such
share of each series, computed at the annual dividend rate for
the series of which the particular share is a part, from the date
from which dividends on such share became cumulative to the date
fixed for the payment of such distributive amount, less the
aggregate of the dividends theretofore or on such date paid
thereon. No payments on account of such distributive amounts
shall be made to the holders of any series of the Cumulative
Preferred Stock unless there shall likewise be paid at the same
time to the holders of each other series of the Cumulative
Preferred Stock at the time outstanding like proportionate
distributive amounts, ratably, in proportion to the full
distributive amounts to which they are respectively entitled as
herein provided.
The holders of the Cumulative Preferred Stock of any series
shall not be entitled to receive any amounts with respect thereto
upon any liquidation, dissolution or winding up of the Company
other than the amounts above provided for; but after the Company
either pays to the holders of shares of all series of the
Cumulative Preferred Stock the full distributive amounts to which
they are respectively entitled as aforesaid or provides for such
payment, the remaining assets may be divided among and paid to
the holders of the Common Stock according to their respective
rights and interests.
Neither the consolidation or merger of the Company with or
into any other corporation or corporations, nor the sale or
transfer by the Company of all or any part of its assets, shall
be deemed to be a liquidation, dissolution or winding up of the
Company.
6.1. Except as otherwise required by law or by this
certificate or by issue resolutions relating to shares of
particular series of Cumulative Preferred Stock, the holders of
the Cumulative Preferred Stock shall not be entitled to vote at
any meeting of stockholders or election or otherwise to
participate in any action taken by the Company or by the
stockholders thereof. Without limiting the generality of the
foregoing, all holders of shares of Cumulative Preferred Stock
are hereby specifically excluded from the right to vote in a
proceeding:
(a) For mortgaging the property and franchises of the
Company, pursuant to section sixteen of the Stock
Corporation Law of the State of New York;
(b) For authorizing any guaranty pursuant to section
nineteen of said Law;
(c) For sale of the franchises and property pursuant
to section twenty of said Law;
(d) For consolidation pursuant to section eighty-six
of said Law;
(e) For voluntary dissolution pursuant to section one
hundred five of said Law; or
(f) For change of name pursuant to the General
Corporation Law of the State of New York or
pursuant to section thirty-five of the Stock
Corporation Law.
6.2. So long as any shares of the Cumulative Preferred Stock
of any series are outstanding, the Company shall not without the
authorizing vote, at a meeting called for the purpose, of the
holders of at least two-thirds of the shares of the Cumulative
Preferred Stock then outstanding:
(a) Create or authorize any series of stock (other
than a series of the Cumulative Preferred Stock)
ranking prior to the Cumulative Preferred Stock as
to dividends or in liquidation, or create or
authorize any obligation or security convertible
into shares of stock of any such series; or
(b) Amend, alter, change or repeal any of the terms of
the Cumulative Preferred Stock or of any series of
the Cumulative Preferred Stock then outstanding so
as to affect the holders of such shares adversely;
provided, however, that if any such amendment,
alteration, change or repeal would affect
adversely the holders of one or more, but not all,
of the series of the Cumulative Preferred Stock at
the time outstanding, only such consent of the
holders of two-thirds of the total number of
shares of all series so affected shall be
required.
6.3. So long as any shares of the Cumulative Preferred Stock
of any series are outstanding, the Company shall not without an
authorizing vote, at a meeting called for that purpose, of the
holders of a majority of the shares of the Cumulative Preferred
Stock of all series then outstanding:
(a) Increase the total authorized amount of the
Cumulative Preferred Stock or create any class of
stock (hereinafter called "Parity Stock") ranking
on a parity with the Cumulative Preferred Stock as
to dividends or in liquidation;
(b) Merge or consolidate with or into any other
corporation, unless such merger or consolidation,
or the issuance and assumption of all securities
to be issued or assumed in connection with any
such merger or consolidation, shall have been
ordered, approved, or permitted by a regulatory
authority of the State of New York having
jurisdiction in the premises; provided that the
provisions of this clause (b) shall not apply to a
purchase or other acquisition by the Company of
franchises or assets of another corporation in any
manner which does not involve a merger or
consolidation; or
(c) Issue any shares of the Cumulative Preferred Stock
or of any Parity Stock unless for a twelve-month
period ending not more than four months prior to
the issue, the Company's net income as certified
by its Treasurer or byindependent public
accountants has been at least twice the annual
dividend requirements on the Cumulative Preferred
Stock (and any Parity Stock and stock having
priority over the Cumulative Preferred Stock as to
dividends or in liquidation) to be outstanding
immediately after such issue is effected, and such
net income increased by the interest on funded
debt deducted in computing such net income was at
least one and one-half times the amount of the
annual interest and annual dividend requirements
on the funded debt and Cumulative Preferred Stock
(and any Parity Stock and stock having priority
over the Cumulative Preferred Stock as to
dividends or in liquidation) to be outstanding
immediately after such issue is effected. The net
income referred to above shall be computed in
accordance with the system of accounting
prescribed by the New York Public Service
Commission or in the absence thereof in accordance
with generally accepted accounting practice.
6.4. If and when dividends on any shares of the Cumulative
Preferred Stock shall be in arrears in an amount equivalent to
four quarterly dividends on such shares and until all dividends
in arrears on all shares of the Cumulative Preferred Stock shall
have been paid or declared and set aside for payment, the holders
of all series of the Cumulative Preferred Stock, voting as one
class, shall be entitled to elect a majority of the full Board of
Directors, and the holders of the Common Stock voting as a
separate class shall be entitled to elect the remaining directors
of the Company.
Whenever the right to elect directors shall accrue to the
Cumulative Preferred Stock as herein provided, (a) a meeting of
stockholders for the election of a new Board of Directors shall
be held and, if not otherwise called, shall be promptly called by
the Secretary of the Company upon written request of, or may be
called by, the holders of record of at least 2% of the out-
standing Cumulative Preferred Stock, and (b) upon the election at
such meeting the terms of office of the existing directors shall
end, provided that if the holders of the Cumulative Preferred
Stock or the holders of the Common Stock shall for any reason
fail to elect the number of directors they are entitled to elect
at such meeting, then the terms of office of existing directors
shall end only to the extent necessary to make places for the new
directors thus elected and, if resignations necessary to make
places for such new directors are not forthcoming, the Chairman
of the Board, or the President if the Chairman does not act,
shall have power to designate those directors whose terms shall
end.
At the first election of directors by the holders of the
Common Stock as aforesaid, the terms of office of such directors
shall, as far as possible, be arranged so that the terms of one
third of such directors shall expire each year and, when such
terms expire, the successors of such directors shall be elected
for three-year terms. The expiration dates of the terms of
office of directors elected by the Cumulative Preferred Stock
shall, so far as possible, be arranged to expire at the same time
and in the same proportion as the terms of office of the
directors elected by the Common Stock. Adjustments of such terms
within the principles of the foregoing, when it is not possible
to have the same proportion of such terms expire each year, shall
be made as voted by the holders of the Common Stock.
Whenever all dividends in arrears on the Cumulative
Preferred Stock shall be paid or declared and set apart for
payment, the Cumulative Preferred Stock shall thereupon be
divested of its special right with respect to the election of a
majority of the full Board of Directors as above provided, and
the voting power of the Cumulative Preferred Stock and the Common
Stock shall revert to the status existing before the occurrence
of such default, but always subject to the same provisions for
vesting such special rights in the Cumulative Preferred Stock in
case of further like default or defaults in dividends thereon.
Whenever the voting rights of the Cumulative Preferred Stock
shall terminate as herein provided, (a) a meeting of the common
stockholders for the election of a new Board of Directors shall
be held and, if not otherwise called, shall be promptly called by
the Secretary of the Company, upon written request of, or may be
called by, the holders of record of at least 2% of the
outstanding Common Stock, and (b) upon the election at such
meeting the term of office of the existing directors shall end,
provided that any existing director may be re-elected by the
common stockholders, and (c) the terms for which new directors
shall be elected at such meeting shall be the same as those for
which their respective predecessors were elected.
6.5. In case of any vacancy in the Board of Directors
occurring among the directors elected by the holders of the
Cumulative Preferred Stock as a class, then the holders of the
Cumulative Preferred Stock or a majority of the remaining
directors so elected by them may elect a successor to hold office
for the unexpired term of the director whose place shall be
vacant. In case of a vacancy in the Board of Directors occurring
among the other directors, the holders of the Common Stock as a
class or a majority of the remaining directors elected by the
Common Stock may elect a successor to hold office for the
unexpired term of such director whose place shall be vacant.
At all meetings of stockholders held for the purpose of
electing directors during such times as the holders of the
Cumulative Preferred Stock shall have the special right, voting
as a class, to elect part of the directors as above provided, the
presence in person or by proxy of the holders of a majority of
the outstanding shares of the Cumulative Preferred Stock shall be
required to constitute a quorum of such class for the election of
directors by such holders, and the presence in person or by proxy
of the holders of a majority of the outstanding shares of Common
Stock shall be required to constitute a quorum of such class for
the election of directors to be elected by such holders.
In case a class of preferred stock other than the Cumulative
Preferred Stock, ranking prior to or on a parity with the
Cumulative Preferred Stock as to dividends or in liquidation,
shall be created and issued, nothing herein contained shall
prevent any such other class from being given the right, in case
dividends thereon shall be in arrears, to vote as part of the
same class as and equally with the Cumulative Preferred Stock and
to have and exercise pari passu with the shares of Cumulative
Preferred Stock entitled to vote on any matters any and all the
voting rights and powers hereinbefore set forth with respect to
the Cumulative Preferred Stock, provided, however, that any
holder of stock of any class other than the Cumulative Preferred
Stock shall be entitled to not more than one vote for each $100
(apart from dividends) which such stock would be entitled to
receive upon any involuntary liquidation, and provided, further,
that nothing herein contained shall prevent the giving of
additional voting power not inconsistent with that granted in
this paragraph to any class of preferred stock other than the
Cumulative Preferred Stock.
6.6. Except when some mandatory provision of law shall be
controlling, and except as otherwise provided above or by an
applicable issue resolution, whenever shares of two or more
series of the Cumulative Preferred Stock are outstanding, no
particular series of the Cumulative Preferred Stock shall be
entitled to vote as a separate series on any matter and all
shares of the Cumulative Preferred Stock of all series shall be
deemed to constitute one class for any purpose for which a vote
or consent of the stockholders of the Company by classes may now
or hereafter be required. On all matters on which the holders of
shares of any series of the Cumulative Preferred Stock are
entitled to vote, they shall have one vote for each share held by
them.
7. The Company may, at any time and from time to time,
issue and dispose of any of the authorized and unissued shares of
the Cumulative Preferred Stock and Common Stock for such
consideration as may be fixed by the Board of Directors, subject
to any provisions of law then applicable, and subject to the
provisions of any resolutions of the stockholders of the Company
relating to the issue and disposition of such shares.
8. No holder of shares of any series of the Cumulative
Preferred Stock shall be entitled, as such, as a matter of right,
to subscribe for or purchase any part of any new or additional
issue of stock or of any securities convertible into stock, of
any class whatsoever, whether now or hereafter authorized, and
whether issued for cash, property, services, by way of dividends,
or otherwise.
CUMULATIVE PREFERRED STOCK, SERIES A 4.65%
9. The designations, preferences, privileges and voting
powers of the shares of the Cumulative Preferred Stock, Series A
4.65%, and the restrictions or qualifications thereof as fixed by
the Board of Directors before the issuance thereof (in so far as
they differ from or supplement the provisions which are
applicable to all shares of the Cumulative Preferred Stock
irrespective of series) are as follows:
A. Of the 1,000,000 authorized shares of the Cumulative
Preferred Stock of the Company, 50,000 shares thereof shall be
issued in a series designated as "Cumulative Preferred Stock,
Series A 4.65%";
B. The dividend rate for the Cumulative Preferred Stock,
Series A 4.65%, shall be 4.65% per annum, payable quarterly on
the first days of February, May, August and November, and the
date from which dividends thereon shall accumulate shall be May
1, 1950;
C. The Cumulative Preferred Stock, Series A 4.65%, shall
be redeemable at a price per share of $106.25 if redeemed prior
to May 1,1955; at a price per share of $105.25 if redeemed on or
after May 1, 1955 and prior to May 1, 1960; and at a price per
share of $104.25 if redeemed on or after May 1, 1960, together,
in each case, with an amount equal to all dividends accumulated
and unpaid to the date fixed for redemption;
D. The amount payable to the holders of Cumulative
Preferred Stock, Series A 4.65% upon the voluntary liquidation,
dissolution or winding up of the Company shall be the redemption
price per share in effect at the time of such voluntary
liquidation, dissolution or winding up, and upon the involuntary
liquidation, dissolution or winding up of the Company shall be
$100 per share, together with a sum, in each case, equal to all
dividends accumulated and unpaid to the date fixed for the
payment of such distributive amounts;
E. There shall be no sinking fund with respect to the
shares of the Cumulative Preferred Stock, Series A 4.65%; and
F. The shares of the Cumulative Preferred Stock, Series A
4.65% shall not be convertible into or exchangeable for other
securities of the Company.
CUMULATIVE PREFERRED STOCK, SERIES B 4.75%
10. The designations, preferences, privileges and voting
powers of the shares of the Cumulative Preferred Stock, Series B
4.75%, and the restrictions or qualifications thereof as fixed by
the Board of Directors before the issuance thereof (in so far as
they differ from or supplement the provisions which are
applicable to all shares of the Cumulative Preferred Stock
irrespective of series) are as follows:
A. Of the 1,000,000 authorized shares of the Cumulative
Preferred Stock of the Company, 40,000 shares thereof shall be
issued in a series designated as "Cumulative Preferred Stock,
Series B 4.75%";
B. The dividend rate for the Cumulative Preferred Stock,
Series B 4.75%, shall be 4.75% per annum, payable quarterly on
the first days of October, January, April and July, and the date
from which dividends thereon shall accumulate shall be July 1,
1954;
C. The Cumulative Preferred Stock, Series B 4.75%, shall
be redeemable at a price per share of $105.00 if redeemed prior
to July 1, 1959; at a price per share of $103.75 if redeemed on
or after July 1, 1959 and prior to July 1, 1966; and at a price
per share of $102.75 if redeemed on or after July 1, 1966 and
prior to July 1, 1973 and at a price per share of $102.00 if
redeemed on or after July 1, 1973, together, in each case, with
an amount equal to all dividends accumulated and unpaid to the
date fixed for redemption;
D. The amount payable to the holders of Cumulative
Preferred Stock, Series B 4.75% upon the voluntary liquidation,
dissolution or winding up of the Company shall be the redemption
price per share in effect at the time of such voluntary
liquidation, dissolution or winding up, and upon the involuntary
liquidation, dissolution or winding up of the Company shall be
$100.00 per share together with a sum, in each case, equal to all
dividends accumulated and unpaid to the date fixed for the
payment of such distributive amounts;
E. There shall be no sinking fund with respect to the
shares of the Cumulative Preferred Stock, Series B 4.75%; and
F. The shares of the Cumulative Preferred Stock, Series B
4.75% shall not be convertible into or exchangeable for other
securities of the Company.
CUMULATIVE PREFERRED STOCK, SERIES D 4%
11. The designations, preferences, privileges and voting
powers of the shares of the Cumulative Preferred Stock, Series D
4%, and the restrictions or qualifications thereof as fixed by
the Board of Directors before issuance of such series (in so far
as they differ from or supplement the provisions which are
applicable to all shares of the Cumulative Preferred Stock
irrespective of series) are as follows:
A. Of the 1,000,000 authorized shares of the Cumulative
Preferred Stock of the Company, 3,443 shares thereof shall be
issued in a series designated as "Cumulative Preferred Stock,
Series D 4%";
B. The dividend rate for the Cumulative Preferred Stock,
Series D 4%, shall be 4% per annum, payable quarterly on the
first days of January, April, July and October, and the date from
which dividends thereon shall accumulate shall be January 1,
1958;
C. The Cumulative Preferred Stock, Series D 4%, shall be
redeemable at a price per share of $100.00 together with an
amount equal to all dividends accumulated and unpaid to the date
fixed for redemption;
D. The amount payable to the holders of Cumulative
Preferred Stock, Series D 4%, upon the voluntary liquidation,
dissolution or winding up of the Company and upon the involuntary
liquidation, dissolution or winding up of the Company shall be
$100.00 per share together with a sum, in each case, equal to all
dividends accumulated and unpaid to the date fixed for the
payment of such distributive amounts;
E. There shall be no sinking fund with respect to the
shares of the Cumulative Preferred Stock, Series D 4%; and
F. The shares of Cumulative Preferred Stock, Series D 4%,
shall not be convertible into or exchangeable for other
securities of the Company.
CONVERTIBLE CUMULATIVE PREFERRED STOCK, SERIES E 5%
12. The designations, preferences, privileges and voting
powers of the shares of the Convertible Cumulative Preferred
Stock, Series E 5%, and the restrictions or qualifications
thereof as fixed by the Board of Directors before issuance of
such series (in so far as they differ from or supplement the
provisions which are applicable to all shares of the Cumulative
Preferred Stock irrespective of series) are as follows:
A. Of the 1,000,000 authorized shares of the Cumulative
Preferred Stock of the Company, 39,165 shares thereof shall be
issued in a series designated as "Convertible Cumulative Pre-
ferred Stock, Series E 5%";
B. The dividend rate for the Convertible Cumulative
Preferred Stock, Series E 5%, shall be 5% per annum, payable
quarterly on the second days of February, May, August and No-
vember, and the date from which dividends thereon shall
accumulate shall be May 2, 1960;
C. The Convertible Cumulative Preferred Stock, Series E
5%, shall be redeemable at a price per share of $105 if redeemed
prior to May 2, 1965; at a price per share of $104 if redeemed on
or after May 2, 1965 and prior to May 2, 1970; at a price per
share of $103 if redeemed on or after May 2, 1970 and prior to
May 2, 1975; at a price per share of $102 if redeemed on or after
May 2, 1975 and prior to May 2, 1980; at a price per share of
$101 if redeemed on or after May 2, 1980 and prior to May 2, 1985
and at a price per share of $100 if redeemed on or after May 2,
1985, together, in each case, with an amount equal to all divi-
dends accumulated and unpaid to the date fixed for redemption;
D. The amount payable to the holders of Convertible
Cumulative Preferred Stock, Series E 5% upon the voluntary
liquidation, dissolution or winding up of the Company shall be
the redemption price per share in effect at the time of such
voluntary liquidation, dissolution or winding up, and upon the
involuntary liquidation, dissolution or winding up of the Company
shall be $100.00 per share together with a sum, in each case,
equal to all dividends accumulated and unpaid to the date fixed
for the payment of such distributive amounts;
E. There shall be no sinking fund with respect to the
shares of the Convertible Cumulative Preferred Stock, Series E
5%; and
F. The holders of shares of Convertible Cumulative
Preferred Stock, Series E 5%, shall have the right, at their
option, to convert such shares into shares of Common Stock of the
Company at any time on and subject to the following terms and
conditions:
(1) The shares of this Series shall be convertible at the
office of the Company, and at such other office or
offices, if any, as the Board of Directors may
designate, into full paid and non-assessable shares
(calculated as to each conversion to the nearest
1/100th of a share) of Common Stock of the Company, at
the conversion price, determined as hereinafter
provided, in effect at the time of conversion, each
share of this Series being taken at $100.00 for the
purpose of such conversion. The price at which shares
of Common Stock shall be delivered upon conversion
(herein called the "conversion price") shall be
initially $33 1/3 per share of Common Stock. The
conversion price shall be reduced in certain instances
as provided in paragraphs (3), (9) and (10) below, and
shall be increased in certain instances as provided in
paragraph (10) below. No payment or adjustment shall
be made upon any conversion on account of any dividends
accrued on the shares of this Series surrendered for
conversion or on account of any dividends on the Common
Stock issued upon such conversion.
(2) In order to convert shares of this Series into Common
Stock the holder thereof shall surrender at any office
hereinabove mentioned the certificate or certificates
therefor, duly endorsed to the Company or in blank, and
give written notice to the Company at said office that
he elects to convert such shares. Shares of this
Series shall be deemed to have been converted
immediately prior to the close of business on the day
of the surrender of such shares for conversion as
provided above, and the person or persons entitled to
receive the Common Stock issuable upon such conversion
shall be treated for all purposes as the record holder
or holders of such Common Stock at such time. As
promptly as practicable on or after the conversion
date, the Company shall issue and shall deliver at said
office a certificate or certificates for the number of
full shares of Common Stock issuable upon such
conversion, together with a scrip certificate for, or
cash in lieu of, any fraction of a share, as
hereinafter provided, to the person or persons entitled
to receive the same. In case shares of this Series are
called for redemption, the right to convert such shares
shall cease and terminate at the close of business on
the date fixed for redemption, unless default shall be
made in payment of the redemption price.
(3) In case the conversion price in effect immediately
prior to the close of business on any day shall exceed
by twenty-five cents or more the amount determined at
the close of business on such day by dividing:
(i) a sum equal to (a) 1,958,259 multiplied by $33 1/3
(being the initial conversion price) plus (b) the
aggregate of the amounts of all consideration
received by the Company upon the issuance of
Additional Shares of Common Stock (as hereinafter
defined), minus (c) the aggregate of the amounts
of all dividends and other distributions which
have been paid or made after May 2, 1960 on Common
Stock of the Company, other than in cash out of
its earned surplus or in Common Stock of the
Company, by
(ii) the sum of (a) 1,958,259 and (b) the number of
Additional Shares of Common Stock which shall have
been issued,
the conversion price shall be reduced, effective
immediately prior to the opening of business on the
next succeeding day, by an amount equal to the amount
by which such conversion price shall exceed the amount
so determined. The foregoing amount of twenty-five
cents (or such amount as theretofore adjusted) shall be
subject to adjustment as provided in paragraphs (9) and
(10) below, and such amount (or such amount as there-
tofore adjusted) is referred to in such paragraphs as
the "Differential Amount".
(4) The term "Additional Shares of Common Stock" as used
herein shall mean all shares of Common Stock issued by
the Company after May 2, 1960 (including shares deemed
to be "Additional Shares of Common Stock" pursuant to
paragraph (10) below), whether or not subsequently
reacquired or retired by the Company, other than:
(i) shares issued upon conversion of shares of this
Series; and
(ii) shares issued by way of dividend or other
distribution on shares of Common Stock excluded
from the definition of Additional Shares of Common
Stock by the foregoing clause (i) or this clause
(ii) or on shares of Common Stock resulting from
any subdivision or combination of shares of Common
Stock so excluded.
The sale or other disposition of any shares of Common
Stock or other securities held in the treasury of the
Company shall not be deemed an issuance thereof.
(5) In case of the issuance of Additional Shares of Common
Stock for consideration, part or all of which shall be
cash, the amount of the cash consideration therefor
shall be deemed to be the amount of cash received by
the Company for such shares (or, if such Additional
Shares of Common Stock are offered by the Company for
subscription, the subscription price, or, if such
Additional Shares of Common Stock are sold to under-
writers or dealers for public offering without a
subscription offering, the initial public offering
price), without deducting therefrom any compensation or
discount in the sale, underwriting or purchase thereof
by underwriters or dealers or others performing similar
services or for any expenses incurred in connection
therewith.
(6) In case of the issuance (otherwise than as a dividend
or other distribution on any stock of the Company or
upon conversion or exchange of other securities of the
Company) of Additional Shares of Common Stock for a
consideration part or all of which shall be other than
cash, the amount of the consideration therefor other
than cash shall be deemed to be either (i) the value of
such consideration as determined by the Board of
Directors, or, if the Board of Directors so elects,
(ii) the market value as determined by the Board of
Directors of the Additional Shares of Common Stock so
issued less the amount of any cash consideration
received therefor, in either case, irrespective of the
accounting treatment thereof. The reclassification of
securities other than Common Stock into securities
including Common Stock shall be deemed to involve the
issuance for a consideration other than cash of such
Common Stock immediately prior to the close of business
on the date fixed for the determination of stockholders
entitled to receive such Common Stock.
(7) Additional Shares of Common Stock issuable by way of
dividend or other distribution on any class of capital
stock of the Company shall be deemed to have been
issued without consideration, and shall be deemed to
have been issued immediately prior to the close of
business on the date fixed for the determination of
stockholders entitled to receive such dividend or other
distribution, except that, if the total number of
shares constituting such dividend or other distribution
exceeds five per cent of the total number of shares of
Common Stock outstanding at the close of business on
the date fixed for the determination of stockholders
entitled to receive such dividend or other
distribution, such Additional Shares of Common Stock
shall be deemed to have been issued immediately after
the opening of business on the day following the date
fixed for the determination of stockholders entitled to
receive such dividend or other distribution.
A dividend or other distribution in cash or in property
(including any dividend or other distribution in
securities other than Common Stock) shall be deemed to
have been paid or made immediately prior to the close
of business on the date fixed for the determination of
stockholders entitled to receive such dividend or other
distribution and the amount of such dividend or other
distribution in property shall be deemed to be the
value of such property as of the date of the adoption
of the resolution declaring such dividend or other
distribution, as determined by the Board of Directors
at or as of that date. In the case of any such
dividend or other distribution on Common Stock which
consists of securities which are convertible into or
exchangeable for shares of Common Stock, such
securities shall be deemed to have been issued for a
consideration equal to the value thereof as so
determined.
If, upon the payment of any dividend or other
distribution in cash or in property (excluding Common
Stock but including all other securities), outstanding
shares of Common Stock are cancelled or required to be
surrendered for cancellation, on a pro rata basis, the
excess of the number of shares of Common Stock
outstanding immediately prior thereto over the number
to be outstanding immediately thereafter (less that
portion of such excess attributable to the cancellation
of shares excluded from the definition of Additional
Shares of Common Stock by clauses (i) or (ii) of
paragraph (4) above), shall be deducted from the sum
computed pursuant to clause (ii) of paragraph (3) above
for the purposes of all determinations under such
paragraph (3) made immediately prior to the close of
business on the date fixed for the determination of
stockholders entitled to receive such dividend or other
distribution and at any time thereafter.
The reclassification (including any reclassi-fication
upon a consolidation or merger in which the Company is
the continuing corporation) of Common Stock into
securities including other than Common Stock shall be
deemed to involve (a) a distribution on Common Stock of
such securities other than Common Stock made
immediately prior to the close of business on the
effective date of the reclassification and (b) a
combination or subdivision, as the case may be, of the
number of shares of Common Stock outstanding
immediately prior to such reclassification into the
number of shares of Common Stock outstanding
immediately thereafter.
(8) In case of the issuance of Additional Shares of Common
Stock upon conversion or exchange of other securities
of the Company, the amount of the consideration
received by the Company for such Additional Shares of
Common Stock shall be deemed to be the total of (a) the
amount of the consideration, if any, received by the
Company upon the issuance of such other securities,
plus (b) the amount of the consideration, if any, other
than such other securities, received by the Company
(except in adjustment of interest or dividends) upon
such conversion or exchange. In determining the amount
of the consideration received by the Company upon the
issuance of such other securities (i) the amount of the
consideration in cash and other than cash shall be
determined pursuant to paragraphs (5), (6) and (7)
above, and (ii) if securities of the same class or
series of a class as such other securities were issued
for different amounts of consideration, or if some were
issued for no consideration, then the amount of the
consideration received by the Company upon the issuance
of each of the securities of such class or series, as
the case may be, shall be deemed to be the average
amount of the consideration received by the Company
upon the issuance of all the securities of such class
or series, as the case may be.
(9) In case Additional Shares of Common Stock are issued as
a dividend or other distribution on any class of
capital stock of the Company, the total number of
shares constituting which dividend or other
distribution exceeds five percent of the total number
of shares of Common Stock outstanding at the close of
business on the date fixed for the determination of
stockholders entitled to receive such dividend or other
distribution, the conversion price and the Differential
Amount in effect at the opening of business on the day
following the date fixed for such determination shall
be reduced by multiplying each of them by a fraction of
which the numerator shall be the number of shares of
Common Stock outstanding at the close of business on
the date fixed for such determination and the
denominator shall be the sum of such number of shares
and the total number of shares constituting such
dividend or other distribution, such reductions to
become effective immediately after the opening of
business on the day following the date fixed for such
determination. For the purposes of this paragraph (9),
the number of shares of Common Stock at any time
outstanding shall not include shares held in the
treasury of the Company but shall include shares
issuable in respect of scrip certificates issued in
lieu of fractions of shares of Common Stock (other than
shares of Common Stock which, upon issuance, would not
constitute Additional Shares of Common Stock). The
Company will not pay any dividend or make any
distribution on shares of Common Stock held in the
treasury of the Company.
(10) In case outstanding shares of Common Stock shall be
subdivided into a greater number of shares of Common
Stock, the conversion price and the Differential Amount
in effect at the opening of business on the day
following the day upon which such subdivision becomes
effective shall each be proportionately reduced, and,
conversely, in case outstanding shares of Common Stock
shall each be combined into a smaller number of shares
of Common Stock, the conversion price and the
Differential Amount in effect at the opening of
business on the day following the day upon which such
combination becomes effective shall each be
proportionately increased, such reductions or increases
as the case may be, to become effective immediately
after the opening of business on the day following the
day upon which such subdivision or combination becomes
effective. In the event of any such subdivision, the
number of shares of Common Stock outstanding
immediately thereafter, to the extent of the excess
thereof over the number outstanding immediately prior
thereto (less that portion of such excess attributable
to the subdivision of shares excluded from the
definition of Additional Shares of Common Stock by
clauses (i) or (ii) of paragraph (4) above), shall be
deemed to be "Additional Shares of Common Stock" and to
have been issued immediately after the opening of
business on the day following the day upon which such
subdivision shall have become effective and without
consideration. In the event of any such combination,
the excess of the number of shares of Common Stock
outstanding immediately prior thereto over the number
outstanding immediately thereafter (less that portion
of such excess attributable to the combination of
shares excluded from the definition of Additional
Shares of Common Stock by clauses (i) or (ii) of para-
graph (4) above), shall be deducted from the sum
computed pursuant to clause (ii) of paragraph (3) above
for the purposes of all determinations under such
paragraph (3) made on any day after the day upon which
such combination becomes effective. Shares of Common
Stock held in the treasury of the Company and shares
issuable in respect of scrip certificates issued in
lieu of fractions of shares of Common Stock (other than
shares of Common Stock which, upon issuance, would not
constitute Additional Shares of Common Stock) shall be
considered outstanding for the purposes of this
paragraph (10).
(11) Whenever the conversion price is adjusted as herein
provided:
(a) the Company shall compute the adjusted conversion
price in accordance with this Section F and shall
prepare a certificate signed by the Treasurer of
the Company setting forth the adjusted conversion
price and showing in reasonable detail the facts
upon which such adjustment is based, including a
statement of the consideration received or to be
received by the Company for, and the amount of any
Additional Shares of Common Stock issued since the
last such adjustment, and such certificate shall
forthwith be kept on file by the Company and filed
with any other Transfer Agent or Agents for this
Series; and
(b) a notice stating that the conversion price has
been adjusted and setting forth the adjusted
conversion price shall forthwith be required, and
as soon as practicable after it is required, such
notice shall be published at least once in a daily
newspaper in The City of New York, N. Y., and
shall be mailed to the holders of record of the
outstanding shares of this Series; provided,
however, that if within ten days after the
completion of mailing of such a notice, an
additional notice is required, such additional
notice shall be deemed to be required pursuant to
this clause (b) as of the opening of business on
the tenth day after such completion of mailing and
shall set forth the conversion price as adjusted
at such opening of business, and upon the
publication and mailing of such additional notice
no other notice need be given of any adjustment in
the conversion price occurring at or prior to such
opening of business and after the time that the
next preceding notice given by publication and
mail became required.
(12) In case:
(a) the Company shall declare a dividend (or any other
distribution) on its Common Stock payable
otherwise than in cash out of its earned surplus;
or
(b) the Company shall authorize the granting to the
holders of its Common Stock of rights to subscribe
for or purchase any shares of capital stock of any
class or of any other rights; or
(c) of any reclassification of the capital stock of
the Company (other than a subdivision or
combination of its outstanding shares of Common
Stock), or of any consolidation or merger to which
the Company is a party and for which approval of
any stockholders of the Company is required, or of
the sale or transfer of all or substantially all
of the assets of the Company; or
(d) of the voluntary or involuntary dissolution,
liquidation or winding up of the Company;
then the Company shall cause to be mailed to any
Transfer Agent or Agents, other than the Company, for
this Series and to the holders of record of the
outstanding shares of this Series, at least twenty days
(or ten days in any case specified in clause (a) or (b)
above) prior to the applicable record date hereinafter
specified, a notice stating (x) the date on which a
record is to be taken for the purpose of such dividend,
distribution or rights, or, if a record is not to be
taken, the date as of which the holders of Common Stock
of record to be entitled to such dividend, distribution
or rights are to be determined, or (y) the date on
which such reclassification, consolidation, merger,
sale, transfer, dissolution, liquidation or winding up
is expected to become effective, and the date as of
which it is expected that holders of Common Stock of
record shall be entitled to exchange their shares of
Common Stock for securities or other property
deliverable upon such reclassification, consolidation,
merger, sale, transfer, dissolution, liquidation or
winding up.
(13) The Company shall at all times reserve and keep
available, free from preemptive rights, out of its
authorized but unissued Common Stock, for the purpose
of effecting the conversion of the shares of this
Series, the full number of shares of Common Stock then
deliverable upon the conversion of all shares of this
Series then outstanding.
(14) No fractional shares of Common Stock shall be issued
upon conversion, but, instead of any fraction of a
share which would otherwise be issuable, the Company
shall, at its option, either
(a) issue non-dividend bearing and non-voting scrip
certificates for such fraction, such certificates
to be in such form and to contain such terms and
conditions as the Board of Directors shall at any
time or from time to time in its discretion fix
and determine, provided that the certificates
shall be exchangeable, within such period (which
shall end not less than two years following the
date of issue thereof) as the Board of Directors
shall determine, together with other scrip
certificates issued upon conversion of shares of
this Series, for stock certificates representing a
full share or shares, and upon the expiration of
such period shall be exchangeable for cash, as
provided in the scrip certificates, within such
further period (which shall end not less than six
years following the date of issue of such
certificates) as the Board of Directors shall
determine; or
(b) pay a cash adjustment in respect of such fraction
in an amount equal to the same fraction of the
market price per share of Common Stock (as
determined by the Board of Directors) at the close
of business on the day of conversion.
(15) The Company will pay any and all taxes that may be
payable in respect of the issue or delivery of shares
of Common Stock on conversion of shares of this Series
pursuant hereto. The Company shall not, however, be
required to pay any tax which may be payable in respect
of any transfer involved in the issue and delivery of
shares of Common Stock in a name other than that in
which the shares of this Series so converted were
registered, and no such issue or delivery shall be made
unless and until the person requesting such issue has
paid to the Company the amount of any such tax, or has
established, to the satisfaction of the Company, that
such tax has been paid.
(16) For the purpose of this Section F, the term "Common
Stock" shall include any stock of any class of the
Company which has no preference in respect of dividends
or of amounts payable in the event of any voluntary or
involuntary liquidation, dissolution or winding up of
the Company, and which is not subject to redemption by
the Company. However, shares issuable on conversion of
shares of this Series shall include only shares of the
class designated as Common Stock of the Company as of
May 2, 1960, or shares of any class or classes
resulting from any reclassification or reclassifica-
tions thereof and which have no preference in respect
of dividends or of amounts payable in the event of any
voluntary or involuntary liquidation, dissolution or
winding up of the Company and which are not subject to
redemption by the Company; provided that if at any time
there shall be more than one such resulting class, the
shares of each such class then so issuable shall be
substantially in the proportion which the total number
of shares of such class resulting from all such
reclassifications bears to the total number of shares
of all such classes resulting from all such
reclassifications.
CUMULATIVE PREFERRED STOCK, SERIES F 4.68%
13. The designations, privileges and voting powers of the
shares of Cumulative Preferred Stock, Series F 4.68% and the
restrictions or qualifications thereof as fixed by the Board of
Directors before issuance of such series (insofar as they differ
from or supplement the provisions which are applicable to all
shares of the Cumulative Preferred Stock irrespective of series)
are as follows:
A. Of the 1,000,000 authorized shares of the Cumulative
Preferred Stock of the Company, 75,000 shares thereof shall be
issued in a series designated as "Cumulative Preferred Stock,
Series F 4.68%";
B. The dividend rate for the Cumulative Preferred Stock,
Series F 4.68%, shall be 4.68% per annum, payable quarterly on
the first days of January, April, July and October, and the date
from which dividends thereon shall accumulate shall be the date
of the original issue thereof;
C. The Cumulative Preferred Stock, Series F 4.68%, shall
be redeemable at a price per share of $105.00 if redeemed prior
to October 1, 1969; at a price per share of $104.00 if redeemed
on or after October 1, 1969 and prior to October 1, 1974; at a
price per share of $103.00 if redeemed on or after October 1,
1974 and prior to October 1, 1979; at a price per share of
$102.00 if redeemed on or after October 1, 1979; together in each
case, with an amount equal to all dividends accumulated and
unpaid to the date fixed for redemption; provided, however, that
the Cumulative Preferred Stock, Series F 4.68% shall not be
refunded directly or indirectly prior to October 1, 1969 out of
the proceeds or anticipated proceeds of the sale of other
preferred stock of the Company ranking prior to or on a parity
with the Cumulative Preferred Stock, Series F 4.68% if such other
preferred stock is issued at an effective dividend rate of less
than the dividend rate of the Cumulative Preferred Stock, Series
F 4.68%;
D. The amount payable to the holders of Cumulative
Preferred Stock, Series F 4.68% upon the voluntary liquidation,
dissolution or winding up of the Company shall be the redemption
price per share in effect at the time of such voluntary
liquidation, dissolution or winding up, and upon the involuntary
liquidation, dissolution or winding up of the Company shall be
$100.00 per share together with a sum, in each case, equal to all
dividends accumulated and unpaid to the date fixed for the
payment of such distributive amounts;
E. There shall be no sinking fund with respect to the
shares of the Cumulative Preferred Stock, Series F 4.68%; and
F. The shares of the Cumulative Preferred Stock, Series F
4.68% shall not be convertible into or exchangeable for other
securities of the Company.
CUMULATIVE PREFERRED STOCK, SERIES G 7.10%
14. The designations, preferences, privileges and voting
powers of the shares of Cumulative Preferred Stock, Series G
7.10% and the restrictions or qualifications thereof as fixed by
the Board of Directors before issuance of such series (in so far
as they differ from or supplement the provisions which are
applicable to all shares of the Cumulative Preferred Stock
irrespective of series) are as follows:
A. Of the 1,000,000 authorized shares of the Cumulative
Preferred Stock of the Company, 110,000 shares thereof shall be
issued in a series designated as "Cumulative Preferred Stock,
Series G 7.10%";
B. The dividend rate for the Cumulative Preferred Stock,
Series G 7.10%, shall be 7.10% per annum, payable quarterly on
the first days of January, April, July and October, and the date
from which dividends thereon shall accumulate shall be the date
of the original issue thereof;
C. The Cumulative Preferred Stock, Series G 7.10%, shall
be redeemable at a price per share of $107.10 if redeemed prior
to January 1, 1976; at a price per share of $105.00 if redeemed
on or after January 1, 1976 and prior to January 1, 1979; at a
price per share of $103.00 if redeemed on or after January 1,
1979 and prior to January 1, 1982; and at a price per share of
$101.00 if redeemed on or after January 1, 1982; together in each
case, with an amount equal to all dividends accumulated and
unpaid to the date fixed for redemption; provided, however, that
the Cumulative Preferred Stock, Series G 7.10% shall not be
refunded directly or indirectly prior to January 1, 1976 out of
the proceeds or anticipated proceeds of the sale of other
preferred stock of the Company ranking prior to or on a parity
with the Cumulative Preferred Stock, Series G 7.10% if such other
preferred stock is issued at an effective dividend rate of less
than the dividend rate of the Cumulative Preferred Stock, Series
G 7.10%;
D. The amount payable to the holders of Cumulative
Preferred Stock, Series G 7.10% upon the voluntary liquidation,
dissolution or winding up of the Company shall be the redemption
price per share in effect at the time of such voluntary
liquidation, dissolution or winding up, and upon the involuntary
liquidation, dissolution or winding up of the Company shall be
$100.00 per share together with a sum, in each case, equal to all
dividends accumulated and unpaid to the date fixed for the
payment of such distributive amounts;
E. There shall be no sinking fund with respect to the
shares of the Cumulative Preferred Stock, Series G 7.10%; and
F. The shares of the Cumulative Preferred Stock, Series G
7.10% shall not be convertible into or exchangeable for other
securities of the Company.
CUMULATIVE PREFERRED STOCK, SERIES H 8.08%
15. The designations, privileges and voting powers of the
shares of Cumulative Preferred Stock, Series H 8.08% and the
restrictions or qualifications thereof as fixed by the Board of
Directors before issuance of such series (in so far as they
differ from or supplement the provisions which are applicable to
all shares of the Cumulative Preferred Stock irrespective of
series) are as follows:
A. Of the 1,000,000 authorized shares of the Cumulative
Preferred Stock of the Company, 150,000 shares thereof shall be
issued in a series designated as "Cumulative Preferred Stock,
Series H 8.08%";
B. The dividend rate for the Cumulative Preferred Stock,
Series H 8.08%, shall be 8.08% per annum, payable quarterly on
the first days of October, January, April and July and the date
from which dividends thereon shall accumulate shall be the date
of the original issue thereof;
C. The Cumulative Preferred Stock, Series H 8.08%, shall
be redeemable at a price per share of $109.71 if the date of
redemption is on or prior to October 1, 1977; at a price per
share of $107.69 if the date of redemption is after October 1,
1977 and on or prior to October 1, 1982; at a price per share of
$105.67 if the date of redemption is after October 1, 1982 and on
or prior to October 1, 1987; at a price per share of $103.65 if
the date of redemption is after October 1, 1987 and on or prior
to October 1, 1992; and at a price per share of $102.43 if the
date of redemption is after October 1, 1992, to which shall be
added in each case accumulated and unpaid dividends to the date
of redemption; provided, however, that no share of the Cumulative
Preferred Stock, Series H 8.08%, shall be redeemed prior to
October 1, 1977, directly or indirectly, from or in anticipation
of proceeds of indebtedness or preferred stock or any class of
stock with equal or prior rank to the Cumulative Preferred Stock,
Series H 8.08% having a lower cost of money than the Cumulative
Preferred Stock, Series H 8.08%;
D. The amount payable to the holders of Cumulative
Preferred Stock, Series H 8.08% upon the voluntary liquidation,
dissolution or winding up of the Company shall be the redemption
price per share in effect at the time of such voluntary
liquidation, dissolution or winding up, and upon the involuntary
liquidation, dissolution or winding up of the Company shall be
$100.00 per share together with a sum, in each case, equal to all
dividends accumulated and unpaid to the date fixed for the
payment of such distributive amounts;
E. There shall be no sinking fund with respect to the
shares of the Cumulative Preferred Stock, Series H 8.08%; and
F. The shares of the Cumulative Preferred Stock, Series H
8.08% shall not be convertible into or exchangeable for other
securities of the Company.
CUMULATIVE PREFERRED STOCK, SERIES I 8 1/8%
16. The designations, preferences, privileges and voting
powers of the shares of the Cumulative Preferred Stock, Series I
8 1/8%, and the restrictions or qualifications thereof as fixed
by the Board of Directors before issuance of such series (in so
far as they differ from or supplement the provisions which are
applicable to all shares of the Cumulative Preferred Stock
irrespective of series) are as follows:
A. Of the 1,000,000 authorized shares of the Cumulative
Preferred Stock of the Company, 180,000 shares thereof shall be
issued in a series designated as "Cumulative Preferred Stock,
Series I 8 1/8%";
B. The dividend rate of the Cumulative Preferred Stock,
Series I 8 1/8%, shall be 8 1/8% per annum, payable quarterly on
the first days of April, July, October and January, commencing on
the first day of April, 1978, and the date from which dividends
thereon shall accumulate shall be the date of the original issue
thereof;
C. The Cumulative Preferred Stock, Series I 8 1/8%, shall
be redeemable at a price per share of $112.00 if the date of
redemption is on or prior to January 1, 1988; at a price per
share of $104.06 if the date of redemption is after January 1,
1988 and on or prior to January 1, 1991; at a price per share of
$102.03 if the date of redemption is after January 1, 1991 and on
or prior to January 1, 1994; at a price per share of $101.00 if
the date of redemption is after January 1, 1994 and on or prior
to January 1, 1997; and at a price per share of $100.00 if the
date of redemption is after January 1, 1997, to which shall be
added in each case accumulated and unpaid dividends to the date
of redemption; provided, however, that no share of the Cumulative
Preferred Stock, Series I 8 1/8%, shall be redeemed prior to
January 1, 1988, directly or indirectly, from or in anticipation
of proceeds of indebtedness or preferred stock or any class of
stock with equal or prior rank to the Cumulative Preferred Stock,
Series I 8 1/8% having a lower cost of money than the Cumulative
Preferred Stock, Series I 8 1/8%;
D. The amount payable to the holders of Cumulative
Preferred Stock, Series I 8 1/8% upon the voluntary liquidation,
dissolution or winding up of the Company shall be the redemption
price per share in effect at the time of such voluntary
liquidation, dissolution or winding up, and upon the involuntary
liquidation, dissolution or winding up of the Company shall be
$100.00 per share together with a sum, in each case, equal to all
dividends accumulated and unpaid to the date fixed for the
payment of such distributive amounts;
E. As a sinking fund with respect to the shares of the
Cumulative Preferred Stock, Series I 8 1/8%, the Company will
call for redemption and retire on December 31, 1985 and on each
December 31 thereafter (so long as any shares of the Cumulative
Preferred Stock, Series I 8 1/8% are outstanding), a number of
shares of Cumulative Preferred Stock, Series I 8 1/8% equal to
7.69% of the maximum number of shares of Cumulative Preferred
Stock, Series I 8 1/8%, at any time outstanding; provided,
however, that on December 31, 1977 the Company will call for
redemption and retire the remaining shares of Cumulative
Preferred Stock, Series I 8 1/8% outstanding, in each case at a
redemption price of $100 per share, to which shall be added in
each case accumulated and unpaid dividends to the date of
redemption. No redemption of shares of the Cumulative Preferred
Stock, Series I 8 1/8% pursuant to subdivision (C) above, shall
constitute a retirement of such shares in lieu of or as a credit
against any sinking fund retirement required by this subdivision
(E). Whenever on any such December 31 funds legally available
therefor are insufficient to permit the Company to redeem the
full number of shares so required to be redeemed on such date,
the Company shall apply to such redemption the proportion of such
legally available funds which bears the same ratio to the amount
required for the redemption of the full number of shares as the
total amount of such legally available funds bears to the total
amount required for the purchase or redemption of shares of all
series of Cumulative Preferred Stock and of other classes of
stock of the Company ranking on a parity with the Cumulative
Preferred Stock with respect to the payment of dividends and
distribution of assets which the Company is then obligated to
redeem or purchase. In the event that the Company shall at any
time be in default in the performance of its obligations under
the foregoing provisions of this subdivision (E), no dividends
(other than dividends payable in the Company's Common Stock)
shall be paid or any other distribution of assets made, by
purchase of shares or otherwise, on Common Stock or on any other
stock of the Company over which the Cumulative Preferred Stock
has preference as to the payment of dividends or as to assets.
In the event that the Company purchases or redeems shares of any
other class of stock of the Company ranking on a parity ("parity
stock") with the Cumulative Preferred Stock, Series I 8 1/8% at
any time that the Company is in default in the performance of its
obligations under the provisions of the first sentence of this
subdivision (E), the Company shall simultaneously redeem the
number of shares of Cumulative Preferred Stock, Series I 8 1/8%
which bears the same ratio to the total number of such shares as
the number of shares of such class of parity stock being
purchased or redeemed bears to the total number of shares of such
class of parity stock immediately preceding such purchase; but in
no event shall the Company be required to redeem more shares than
required by the first sentence of this subdivision (E);
F. The shares of the Cumulative Preferred Stock, Series I
8 1/8% shall not be convertible into or exchangeable for other
securities of the Company;
G. The increase in the Company's authorized Cumulative
Preferred Stock provided for in the Certificate of Amendment
filed April 18, 1972 was authorized by votes of the holders of
not less than two thirds of the outstanding shares of the
Company's Cumulative Preference Stock; and
H. No dividend shall be paid or declared and no other
distribution shall be made on any Common Stock or Cumulative
Preference Stock, and no Common Stock or Cumulative Preference
Stock shall be purchased or otherwise acquired for value by the
Company, when the stated dividends on the Cumulative Preferred
Stock are not paid in full.
<PAGE>
CUMULATIVE PREFERENCE STOCK
17. The shares of the Cumulative Preference Stock may be
issued from time to time in series. The Board of Directors is
authorized to fix from time to time before issuance the
designations, relative rights, preferences and limitations of the
shares of each series of the Cumulative Preference Stock,
respectively, except for such provisions as are applicable to all
shares of the Cumulative Preference Stock irrespective of series,
and except that until the Cumulative Preferred Stock shall have
been redeemed in accordance with its terms, the designations,
relative rights, preferences and limitations granted to or
imposed upon any series of the Cumulative Preference Stock shall
have no effect whatever on the Cumulative Preferred Stock, which
shall retain its present rights and shall be and remain superior
in all respects to the Cumulative Preference Stock.
Subject to the limitations hereinafter stated, the shares of
the Cumulative Preference Stock may be issued in any such one or
more series as may be fixed from time to time by the Board of
Directors, each of such series to be distinctively designated.
All shares of any one series of Cumulative Preference Stock shall
be alike in every particular, and the shares of all series shall
rank equally and be identical in all respects, except in respect
to the matters set forth in the following paragraphs numbered (1)
to (8), inclusive:
(1) The designation of series;
(2) The dividend rate;
(3) The date from which dividends shall be cumulative and
the dates on which dividends, if declared, shall be
payable;
(4) The sum payable per share upon the voluntary
dissolution, liquidation or winding up of the Company
and the sum payable per share upon the involuntary
dissolution, liquidation or winding up of the Company,
which sums, in each and every case, shall be a stated
amount with respect to dissolution, liquidation or
winding up during any specified period or periods, plus
an amount equal to the dividends accrued and unpaid
thereon, whether or not earned or declared, and payable
out of the net assets of the Company, whether capital
or surplus;
(5) Whether or not the shares shall be redeemable, and if
made redeemable, the redemption price or prices per
share, which prices, in each and every case, shall be a
stated amount with respect to redemption during any
specified period or periods, plus an amount equal to
the dividends accrued and unpaid thereon to the date
fixed for redemption, whether or not earned or
declared;
(6) Whether or not the shares of each series shall be made
convertible into or exchangeable for other securities
of the Company, and if made convertible or
exchangeable, the price or prices or the rate or rates
of conversion or exchange, and the adjustments, if any,
at which such conversion or exchange may be made;
(7) Whether or not there shall be a sinking fund, or other
fund analogous thereto, with respect to the shares of
each series and the terms and provisions of such fund,
if any; and
(8) Any other relative, participating, optional or other
rights, preferences or limitations of the shares of
each series, not inconsistent with the provisions
applicable to all shares of the Cumulative Preference
Stock irrespective of series.
Provisions Applicable to All Series
of Cumulative Preference Stock
The following provisions shall apply to all shares of the
Cumulative Preference Stock irrespective of series:
(1) The holders of the Cumulative Preference Stock of each
series shall be entitled to receive, but only when and as
declared by the Board of Directors, dividends at the rate fixed
for such series and no more. Such dividends shall be payable on
such dividend dates as may be fixed for said series and shall be
cumulative from such date as may be fixed. All dividends accrued
on the Cumulative Preference Stock shall be fully paid, or
declared and set apart for payment, before any dividends on the
Common Stock shall be paid or set apart for payment, so that if,
for all prior dividend periods and the then current dividend
period, dividends on all outstanding shares of Cumulative
Preference Stock at the rates fixed for the respective series
shall not have been paid, or declared and set apart for payment,
the deficiency shall be fully paid, or declared and set apart for
payment, before any dividends shall be paid or set apart for
payment on the Common Stock. Accruals of dividends shall not
bear interest. If the stated dividends on the Cumulative
Preference Stock are not paid in full, the shares of all series
of the Cumulative Preference Stock shall share ratably in the
payment of dividends including accumulations, if any, in
accordance with the sums which would be payable on such shares if
all dividends were declared and paid in full.
(2) Upon any dissolution, liquidation or winding up of the
Company, whether voluntary or involuntary, the holders of the
Cumulative Preference Stock of each and every series then
outstanding shall be entitled to receive out of the net assets of
the Company, whether capital or surplus, the sums per share fixed
for the shares of the respective series and payable upon such
dissolution, liquidation or winding up, plus, in the case of each
share, an amount equal to the dividends accrued and unpaid
thereon, whether or not earned or declared, before any
distribution of the assets of the Company shall be made to the
holders of the Common Stock.
If the assets distributable on such dissolution, liquidation
or winding up shall be insufficient to permit the payment to the
holders of the Cumulative Preference Stock of the full amounts to
which they respectively are entitled as aforesaid, then said
assets shall be distributed ratably among the holders of the
respective series of Cumulative Preference Stock in proportion to
the amounts which would be payable on such dissolution,
liquidation or winding up, if all such amounts were paid in full
in preference and priority over the shares of the Common Stock.
After payment to the holders of the Cumulative Preference
Stock of the full amounts to which they respectively are entitled
as aforesaid, the holders of the Cumulative Preference Stock, as
such, shall have no right or claim to any of the remaining assets
of the Company.
The sale, conveyance, exchange or transfer of all or
substantially all of the property of the Company, or the merger
or consolidation into or with any other corporation, shall not be
deemed a dissolution, liquidation or winding up for the purposes
hereof.
(3) At the option of the Board of Directors of the Company,
the Company may redeem any series of Cumulative Preference Stock
which has been made redeemable, either as a whole or in part, at
the redemption price determined for such series; provided,
however, that not less than thirty nor more than sixty days
previous to the date fixed for redemption a notice of the time
and place thereof shall be given to the holders of record of the
Cumulative Preference Stock so to be redeemed, by mail or
publication, in such manner as may be prescribed by resolution of
the Board of Directors; provided, further, that in every case of
redemption of less than all of the outstanding shares of any one
series of Cumulative Preference Stock, such redemption shall be
made pro rata, or the shares of such series to be redeemed shall
be chosen by lot in such manner as may be prescribed by
resolution of the Board of Directors; and, provided, further that
no Cumulative Preference Stock shall be called for redemption
while any dividend for a past dividend period shall be in arrears
on any share of any series of said stock. At any time after
notice of redemption has been given as aforesaid to the holders
of stock so to be redeemed, or after giving to the bank or trust
company hereinafter referred to irrevocable authorization to give
such notice, the Company may deposit the aggregate redemption
price with a bank or trust company having its principal office in
The City of New York, State of New York, in trust for the benefit
of the holders of the shares to be redeemed, payable on the date
fixed for redemption as aforesaid and in the amounts aforesaid to
the respective orders of the holders of the shares to be
redeemed, upon endorsement to the Company or otherwise, as may be
required, and upon surrender of the certificates for such shares.
Upon deposit of said money as aforesaid, or, if no such deposit
is made, upon the date fixed for redemption (unless the Company
defaults in making payment of the redemption price as set forth
in such notice), such holders shall cease to be stockholders with
respect to said shares, and from and after the making of said
deposit, or, if no such deposit is made, from and after the date
fixed for redemption (the Company not having defaulted in making
payment of the redemption price as set forth in such notice),
said shares shall not be deemed to be outstanding and such
holders shall have no interest in or claim against the Company
with respect to said shares, but shall be entitled only to
receive said moneys on the date fixed for redemption as aforesaid
from said bank or trust company, or from the Company, as the case
may be, without interest thereon, upon endorsement to the Company
or otherwise, as may be required, and upon surrender of the
certificates for such shares, as aforesaid.
In case the holder of any such Cumulative Preference Stock
which shall have been called for redemption shall not, within six
years after said deposit, claim the amount deposited as above
stated for the redemption thereof, such bank or trust company
shall upon demand pay over to the Company such unclaimed amount
and such bank or trust company shall thereupon be relieved from
all responsibility to such holder, and such holder shall look
only to the Company for the payment thereof.
Nothing herein contained shall limit any legal right of the
Company to purchase or otherwise acquire any shares of the
Cumulative Preference Stock.
(4) So long as any shares of the Cumulative Preference
Stock of any series are outstanding, the Company shall not
without the authorizing vote, at a meeting called for the
purpose, of the holders of at least two-thirds of the shares of
the Cumulative Preference Stock then outstanding:
(a) Create or authorize any stock ranking prior to the
Cumulative Preference Stock as to dividends or in
liquidation, or create or authorize any obligation
or security convertible into shares of any such
stock; provided, however, that the Company may
authorize an increase in the authorized shares of
Cumulative Preferred Stock to a total not
exceeding 400,000 shares of the par value of $100
per share, including the presently authorized
shares of Cumulative
Preferred Stock, by the authorizing vote of the
holders of at least a majority of the shares of
the Cumulative Preference Stock then outstanding;
or
(b) Amend, alter, change or repeal any of the terms of
the Cumulative Preference Stock then outstanding
so as to affect the holders of such shares
adversely; provided, however, that if any such
amendment, alteration, change or repeal would
affect adversely the holders of one or more, but
not all, of the series of the Cumulative
Preference Stock at the time outstanding, only
such consent of the holders of two-thirds of the
total number of shares of all series so affected
shall be required.
(5) So long as any shares of the Cumulative Preference
Stock of any series are outstanding, the Company shall not
without an authorizing vote, at a meeting called for that
purpose, of the holders of a majority of the shares of the
Cumulative Preference Stock of all series then outstanding:
(a) Increase the total authorized amount of the
Cumulative Preference Stock or create any class of
stock ranking on a parity with the Cumulative
Preference Stock as to dividends or in
liquidation; or
(b) Issue any shares of Cumulative Preference Stock
entitled to payment of an amount per share upon
involuntary dissolution, liquidation, or winding
up of the Company in excess of $100 plus an amount
equal to the dividends accrued and unpaid thereon,
whether or not earned or declared; or
(c) Merge or consolidate with or into any other
corporation, unless such merger or consolidation,
or the issuance and assumption of all securities
to be issued or assumed in connection therewith,
shall have been ordered, approved, or permitted by
a regulatory authority of the State of New York
having jurisdiction in the premises; provided that
the provisions of this clause (c) shall not apply
to a purchase or other acquisition by the Company
of franchises or assets of another corporation in
any manner which does not involve a merger or
consolidation.
(6) No holder of the Cumulative Preference Stock of the
Company shall have any preemptive right to purchase or subscribe
for any part of the unissued stock of the Company or of any stock
of the Company to be issued by reason of any increase of the
authorized capital stock of the Company, or to purchase or
subscribe for any bonds, certificates of indebtedness, debentures
or other securities convertible into or carrying options or
warrants to purchase stock or other securities of the Company or
to purchase or subscribe for any stock of the Company purchased
by the Company or by its nominee or nominees, or to have any
other preemptive rights as now or hereafter defined by the laws
of the State of New York.
(7) Except as and to the extent otherwise provided by this
Certificate and the laws of the State of New York, the Cumulative
Preference Stock shall not entitle any holder thereof to vote at
any meeting of stockholders or election of the Company, or
otherwise to participate in any action taken by the Company or
the stockholders thereof.
Whenever dividends payable on the Cumulative Preference
Stock shall be in default in an aggregate amount equivalent to
six full quarterly dividends on all shares of such Cumulative
Preference Stock then outstanding, the holders of shares of the
Cumulative Preference Stock, voting separately as a class and
regardless of series, shall be entitled to elect two members of
the Board of Directors, as then constituted, and the holders of
the Common Stock (and the holders of the Cumulative Preferred
Stock if they are then entitled to elect directors) shall be
entitled to elect the remainder of the Board of Directors as then
constituted. The right of the holders of the Cumulative
Preference Stock, voting separately as a class, to elect members
of the Board of Directors as aforesaid shall continue until such
time as all dividends accumulated on the Cumulative Preference
Stock shall have been paid in full, or declared and set apart for
payment (and such dividends shall be paid, or declared and set
apart for payment, out of assets available therefor as soon as is
reasonably practicable), at which time such right of the holders
of shares of the Cumulative Preference Stock to elect members of
the Board of Directors as aforesaid shall terminate, subject to
revesting in the event of each and every subsequent default of
the character above named. Upon termination of the right of the
holders of shares of the Cumulative Preference Stock to elect
members of the Board of Directors, the terms of office of all
persons who may have been elected directors of the Company by
vote of the holders of the Cumulative Preference Stock shall
forthwith terminate.
Whenever the right to elect directors shall accrue to the
Cumulative Preference Stock as herein provided, (a) a meeting of
stockholders for the election of a new Board of Directors shall
be held and, if not otherwise called, shall be promptly called by
the Secretary of the Company upon written request of, or may be
called by, the holders of record of at least 2% of the
outstanding Cumulative Preference Stock, and (b) upon the
election at such meeting the terms of office of those existing
directors elected by the holders of Common Stock of the two
classes of directors whose terms of office next expire shall
terminate.
At any meeting held for the purpose of electing directors
when the holders of the Cumulative Preference Stock shall be
entitled to elect members of the Board of Directors as aforesaid,
the presence in person or by proxy of the holders of a majority
of the total number of outstanding shares of Common Stock of the
Company shall be required to constitute a quorum of such class
for the election of directors by such class, and the presence in
person or by proxy of the holders of a majority of the total
number of outstanding shares of the Cumulative Preference Stock
shall be required to constitute a quorum of such class for the
election of directors by such class; provided, however, that a
majority of those holders of the stock of either such classes who
are present in person or by proxy shall have power to adjourn
such meeting for the election of directors by such class from
time to time without notice other than announcement at the
meeting. At such meeting the Cumulative Preference Stock shall
be entitled to elect one director in each of the classes in which
the terms of office of the existing directors elected by the
holders of Common Stock have terminated, and the holders of
Common Stock shall be entitled to elect the remaining directors
in such classes, provided, however, that any persons occupying
positions in such classes who were elected by the holders of
Cumulative Preferred Stock shall not thereby be affected. The
terms of office of the directors so elected by the holders of
Cumulative Preference Stock and by the holders of Common Stock
shall expire at the time the terms of office of directors of such
classes would normally expire, and upon any such normal
expiration of such terms of office, if the holders of Cumulative
Preference Stock continue to be entitled to elect directors, they
shall be entitled to elect a successor director; subject,
however, to termination of the office of any director elected by
holders of Cumulative Preference Stock as provided in the second
preceding paragraph hereof.
In case of any vacancy in the office of a director occurring
among the directors elected by the holders of the Cumulative
Preference Stock as aforesaid, or of a successor to any such
director, the remaining director so elected may elect a successor
to hold office for the unexpired term of the director whose place
shall be vacant, and such successor shall be deemed to have been
elected by the holders of the Cumulative Preference Stock as
aforesaid. Likewise, in case of any vacancy in the office of a
director occurring (at a time when the holders of the Cumulative
Preference Stock shall be entitled to elect members of the Board
of Directors as aforesaid) among the directors elected by the
holders of the Common Stock of the Company, or of a successor to
any such director, the remaining directors so elected may elect,
by affirmative vote of a majority thereof, or by the affirmative
vote of the remaining director so elected if there be but one, a
successor or successors to hold office for the unexpired term of
the director or directors whose place or places shall be vacant,
and such successor or successors shall be deemed to have been
elected by the holders of the Common Stock of the Company.
Nothing herein pertaining to the rights of the holders of
Cumulative Preference Stock to elect directors shall be deemed to
affect the rights of the holders of Cumulative Preferred Stock to
elect directors upon default in the payment of dividends on that
stock.
Except as herein otherwise expressly provided and except
when some mandatory provision of law shall be controlling and, as
regards the special rights of any series of the Cumulative
Preference Stock, as provided in the resolutions creating such
series, whenever shares of two or more series of the Cumulative
Preference Stock are outstanding, no particular series of the
Cumulative Preference Stock shall be entitled to vote as a
separate series on any matter and all shares of the Cumulative
Preference Stock of all series shall be deemed to constitute but
one class for any purpose for which a vote of the stockholders of
the Company by classes may now or hereafter be required.
$1.52 CUMULATIVE PREFERENCE STOCK, SERIES A (NO PAR VALUE)
18. The designations, privileges and voting powers of the
shares of $1.52 Cumulative Preference Stock, Series A (no par
value) and the restrictions or qualifications thereof as fixed by
the Board of Directors before issuance of such series (except for
such provisions as are applicable to all shares of the Cumulative
Preference Stock irrespective of series, and except that until
the Cumulative Preferred Stock shall have been redeemed in
accordance with its terms, the designations, relative rights,
preferences and limitations granted to or imposed upon any series
of the Cumulative Preference Stock shall have no effect whatever
on the Cumulative Preferred Stock, which shall retain its present
rights and shall be and remain superior in all respects to the
Cumulative Preference Stock) are as follows:
A. Of the 1,500,000 authorized shares of Cumulative
Preference Stock of the Company, 159,669 shares shall be issued
in a series designated as $1.52 Convertible Cumulative Preference
Stock, Series A (no par value);
B. The dividend rate on the shares of the $1.52
Convertible Cumulative Preference Stock, Series A (no par value),
shall be $1.52 per share per annum, such dividends shall be fully
cumulative from May 2, 1966 and shall be payable quarterly on the
second day of February, May, August and November in each year
commencing August 2, 1966;
C. The $1.52 Convertible Cumulative Preference Stock,
Series A (no par value), shall be redeemable on and after May 2,
1966 and on or before May 1, 1967 at a redemption price of $34.02
per share; at $33.64 per share if redeemed thereafter and on or
before May 1, 1968; at $33.26 per share if redeemed thereafter
and on or before May 1, 1969; at $32.88 per share if redeemed
thereafter and on or before May 1, 1970; and at $32.50 per share
thereafter; together, in each case, with an amount equal to all
dividends accrued and unpaid thereon, whether or not earned or
declared, to the date fixed for redemption;
D. The liquidation price of the shares of the $1.52
Convertible Cumulative Preference Stock, Series A (no par value),
in case of voluntary liquidation, dissolution or winding up,
shall be an amount equal to the redemption price per share
applicable on the date of such voluntary liquidation, dissolution
or winding up and, in the case of involuntary liquidation,
dissolution or winding up, shall be $32.50 per share plus, in the
case of each share (whether on voluntary or involuntary
liquidation, dissolution or winding up), an amount equal to the
dividends accrued and unpaid thereon, whether or not earned or
declared;
E. There shall be no sinking fund with respect to the
shares of $1.52 Convertible Cumulative Preference Stock, Series A
(no par value); and
F. The holders of shares of $1.52 Convertible Cumulative
Preference Stock, Series A (no par value), shall have the right,
at their option, to convert such shares into shares of Common
Stock of the Company at any time on and subject to the following
terms and conditions:
(1) The shares of this Series shall be convertible at
the office of the Company, and at such other office or offices,
if any, as the Board of Directors may designate, into full paid
and non-assessable shares (calculated as to each conversion to
the nearest 1/100th of a share) of Common Stock of the Company,
at the conversion price, determined as hereinafter provided, in
effect at the time of conversion, each share of this Series being
taken at $32.50 for the purpose of such conversion. The price at
which shares of Common Stock shall be delivered upon conversion
(herein called the "conversion price") shall be initially $32.50
per share of Common Stock. The conversion price shall be reduced
in certain instances as provided in paragraphs (3), (9) and (10)
below and shall be increased in certain instances as provided in
paragraph (10) below. No payment or adjustment shall be made
upon any conversion on account of any dividends accrued on the
shares of this Series surrendered for conversion or on account of
any dividends on the Common Stock issued upon such conversion.
(2) In order to convert shares of this Series into
Common Stock the holder thereof shall surrender at any office
hereinabove mentioned the certificate or certificates therefor,
duly endorsed to the Company or in blank, and give written notice
to the Company at said office that he elects to convert such
shares. Shares of this Series shall be deemed to have been
converted immediately prior to the close of business on the day
of the surrender of such shares for conversion as provided above,
and the person or persons entitled to receive the Common Stock
issuable upon such conversion shall be treated for all purposes
as the record holder or holders of such Common Stock at such
time. As promptly as practicable on or after the conversion
date, the Company shall issue and shall deliver at said office a
certificate or certificates for the number of full shares of
Common Stock issuable upon such conversion, together with a scrip
certificate for, or cash in lieu of, any fraction of a share, as
hereinafter provided, to the person or persons entitled to
receive the same. In case shares of this Series are called for
redemption, the right to convert such shares shall cease and
terminate at the close of business on the date fixed for
redemption, unless default shall be made in payment of the
redemption price.
(3) In case the conversion price in effect immediately
prior to the close of business on any day shall exceed by 25 cents or
more the amount determined at the close of business on such day
by dividing:
(i) a sum equal to (a) 4,151,376 multiplied by $32.50
(being the initial conversion price) plus (b) the
aggregate of the amounts of all consideration
received by the Company upon the issuance of
Additional Shares of Common Stock (as hereinafter
defined), minus (c) the aggregate of the amounts
of all dividends and other distributions which
have been paid or made after April 15, 1966 on
Common Stock of the Company, other than in cash
out of its earned surplus or in Common Stock of
the Company, by
(ii) the sum of (a) 4,151,376 and (b) the number of
Additional Shares of Common Stock which shall have
been issued,
the conversion price shall be reduced, effective immediately
prior to the opening of business on the next succeeding day, by
an amount equal to the amount by which such conversion price
shall exceed the amount so determined. The foregoing amount of
25 cents (or such amount as theretofore adjusted) shall be subject to
adjustment as provided in paragraphs (9) and (10) below, and such
amount (or such amount as theretofore adjusted) is referred to in
such paragraphs as the "Differential Amount."
(4) The term "Additional Shares of Common Stock" as
used herein shall mean all shares of Common Stock issued by the
Company after April 15, 1966 (including shares deemed to be
"Additional Shares of Common Stock" pursuant to paragraph (10)
below), whether or not subsequently reacquired or retired by the
Company, other than:
(i) shares issued upon conversion of shares of this
Series; and
(ii) shares issued by way of dividend or other
distribution on shares of Common Stock excluded
from the definition of Additional Shares of Common
Stock by the foregoing clause (i) or this clause
(ii) or on shares of Common Stock resulting from
any subdivision or combination of shares of Common
Stock so excluded.
The sale or other disposition of any shares of
Common Stock or other securities held in the treasury of the
Company shall not be deemed an issuance thereof.
(5) In case of the issuance of Additional Shares of
Common Stock for a consideration, part or all of which shall be
cash, the amount of the cash consideration therefor shall be
deemed to be the amount of cash received by the Company for such
shares (or, if such Additional Shares of Common Stock are offered
by the Company for subscription, the subscription price, or, if
such Additional Shares of Common Stock are sold to underwriters
or dealers for public offering without a subscription offering,
the initial public offering price), without deducting therefrom
any compensation or discount in the sale, underwriting or
purchase thereof by underwriters or dealers or others performing
similar services or for any expenses incurred in connection
therewith.
(6) In case of the issuance (otherwise than as a
dividend or other distribution on any stock of the Company or
upon conversion or exchange of other securities of the Company)
of Additional Shares of Common Stock for a consideration part or
all of which shall be other than cash, the amount of the
consideration therefor other than cash shall be deemed to be the
value of such consideration as determined by the Board of
Directors, irrespective of the accounting treatment thereof. The
reclassification of securities other than Common Stock into
securities including Common Stock shall be deemed to involve the
issuance for a consideration other than cash of such Common Stock
immediately prior to the close of business on the date fixed for
the determination of stockholders entitled to receive such Common
Stock.
(7) Additional Shares of Common Stock issuable by way
of dividend or other distribution on any class of capital stock
of the Company shall be deemed to have been issued without
consideration, and shall be deemed to have been issued
immediately prior to the close of business on the date fixed for
the determination of stockholders entitled to receive such
dividend or other distribution, except that if the total number
of shares constituting such dividend or other distribution
exceeds five per cent of the total number of shares of Common
Stock outstanding at the close of business on the date fixed for
the determination of stockholders entitled to receive such
dividend or other distribution such Additional Shares of Common
Stock shall be deemed to have been issued immediately after the
opening of business on the day following the date fixed for the
determination of stockholders entitled to receive such dividend
or other distribution.
A dividend or other distribution in cash or in
property (including any dividend or other distribution in
securities other than Common Stock) shall be deemed to have been
paid or made immediately prior to the close of business on the
date fixed for the determination of stockholders entitled to
receive such dividend or other distribution and the amount of
such dividend or other distribution in property shall be deemed
to be the value of such property as of the date of the adoption
of the resolution declaring such dividend or other distribution,
as determined by the Board of Directors at or as of that date.
In the case of any such dividend or other distribution on Common
Stock which consists of securities which are convertible into or
exchangeable for shares of Common Stock, such securities shall be
deemed to have been issued for a consideration equal to the value
thereof as so determined.
If, upon the payment of any dividend or other
distribution in cash or in property (excluding Common Stock but
including all other securities), outstanding shares of Common
Stock are cancelled or required to be surrendered for
cancellation, on a pro rata basis, the excess of the number of
shares of Common Stock outstanding immediately prior thereto over
the number to be outstanding immediately thereafter (less that
portion of such excess attributable to the cancellation of shares
excluded from the definition of Additional Shares of Common Stock
by clauses (i) or (ii) of paragraph (4) above), shall be deducted
from the sum computed pursuant to clause (ii) of paragraph (3)
above for the purposes of all determinations under such paragraph
(3) made immediately prior to the close of business on the date
fixed for the determination of stockholders entitled to receive
such dividend or other distribution and at any time thereafter.
The reclassification (including any
reclassification upon a consolidation or merger in which the
Company is the continuing corporation) of Common Stock into
securities including other than Common Stock shall be deemed to
involve (a) a distribution on Common Stock of such securities
other than Common Stock made immediately prior to the close of
business on the effective date of the reclassification and (b) a
combination or subdivision, as the case may be, of the number of
shares of Common Stock outstanding immediately prior to such
reclassification into the number of shares of Common Stock
outstanding immediately thereafter.
The issuance by the Company of rights or warrants
to subscribe for or purchase securities of the Company shall not
be deemed to be a dividend or distribution of any kind.
(8) In case of the issuance of Additional Shares of
Common Stock upon conversion or exchange of other securities of
the Company, the amount of the consideration received by the
Company for such Additional Shares of Common Stock shall be
deemed to be the total of (a) the amount of the consideration, if
any, received by the Company upon the issuance of such other
securities, plus (b) the amount of the consideration, if any,
other than such other securities, received by the Company (except
in adjustment of interest or dividends) upon such conversion or
exchange. In determining the amount of the consideration
received by the Company upon the issuance of such other
securities (i) the amount of the consideration in cash and other
than cash shall be determined pursuant to paragraphs (5), (6) and
(7) above, and (ii) if securities of the same class or series of
a class as such other securities were issued for different
amounts of consideration, or if some were issued for no
consideration, then the amount of the consideration received by
the Company upon the issuance of each of the securities of such
class or series, as the case may be, shall be deemed to be the
average amount of the consideration received by the Company upon
the issuance of all the securities of such class or series, as
the case may be.
(9) In case Additional Shares of Common Stock are
issued as a dividend or other distribution on any class of
capital stock of the Company, the total number of shares
constituting which dividend or other distribution exceeds five
percent of the total number of shares of Common Stock outstanding
at the close of business on the date fixed for the determination
of stockholders entitled to receive such dividend or other
distribution, the conversion price and the Differential Amount in
effect at the opening of business on the day following the date
fixed for such determination shall be reduced by multiplying each
of them by a fraction of which the numerator shall be the number
of shares of Common Stock outstanding at the close of business on
the date fixed for such determination and the denominator shall
be the sum of such number of shares and the total number of
shares constituting such dividend or other distribution, such
reductions to become effective immediately after the opening of
business on the day following the date fixed for such
determination. For the purposes of this paragraph (9), the
number of shares of Common Stock at any time outstanding shall
not include shares held in the Treasury of the Company but shall
include shares issuable in respect of scrip certificates issued
in lieu of fractions of shares of Common Stock (other than shares
of Common Stock which, upon issuance, would not constitute
Additional Shares of Common Stock). The Company will not pay any
dividend or make any distribution on shares of Common Stock held
in the Treasury of the Company.
(10) In case outstanding shares of Common Stock shall
be subdivided into a greater number of shares of Common Stock,
the conversion price and the Differential Amount in effect at the
opening of business on the day following the day upon which such
subdivision becomes effective shall each be proportionately
reduced, and, conversely, in case outstanding shares of Common
Stock shall each be combined into a small number of shares of
Common Stock, the conversion price and the Differential Amount in
effect at the opening of business on the day following the day
upon which such combination becomes effective shall each be
proportionately increased, such reductions or increases, as the
case may be, to become effective immediately after the opening of
business on the day following the day upon which such subdivision
or combination becomes effective. In the event of any such
subdivision, the number of shares of Common Stock outstanding
immediately thereafter, to the extent of the excess thereof over
the number outstanding immediately prior thereto (less that
portion of such excess attributable to the subdivision of shares
excluded from the definition of Additional Shares of Common Stock
by clauses (i) or (ii) of paragraph (4) above), shall be deemed
to be "Additional Shares of Common Stock" and to have been issued
immediately after the opening of business on the day following
the day upon which such subdivision shall have become effective
and without consideration. In the event of any such combination,
the excess of the number of shares of Common Stock outstanding
immediately prior thereto over the number outstanding immediately
thereafter (less that portion of such excess attributable to the
combination of shares excluded from the definition of Additional
Shares of Common Stock by clauses (i) or (ii) of paragraph (4)
above), shall be deducted from the sum computed pursuant to
clause (ii) of paragraph (3) above for the purposes of all
determinations under such paragraph (3) made on any day after the
day upon which such combination becomes effective. Shares of
Common Stock held in the treasury of the Company and shares
issuable in respect of scrip certificates issued in lieu of
fractions of shares of Common Stock (other than shares of Common
Stock which, upon issuance, would not constitute Additional
Shares of Common Stock) shall be considered outstanding for the
purposes of this paragraph (10).
(11) Whenever the conversion price is adjusted as
herein provided:
(a) The Company shall compute the adjusted
conversion price in accordance with this
section F and shall prepare a certificate
signed by the Treasurer of the Company
setting forth the adjusted conversion price
and showing in reasonable detail the facts
upon which such adjustment is based,
including a statement of the consideration
received or to be received by the Company
for, and the amount of, any Additional Shares
of Common Stock issued since the last such
adjustment, and such certificate shall
forthwith be kept on file by the Company and
filed with any other Transfer Agent or Agents
for this Series; and
(b) a notice stating that the conversion price
has been adjusted and setting forth the
adjusted conversion price shall forthwith be
required and as soon as practicable after it
is required, such notice shall be published
at least once in a daily newspaper in The
City of New York, New York, and shall be
mailed to the holders of record of the
outstanding shares of this Series; provided,
however, that if within ten days after the
completion of mailing of such a notice, an
additional notice is required, such
additional notice shall be deemed to be
required pursuant to this clause (b) as of
the opening of business on the tenth day
after such completion of mailing and shall
set forth the conversion price as adjusted at
such opening of business, and upon the
publication and mailing of such additional
notice no other notice need be given of any
adjustment in the conversion price occurring
at or prior to such opening of business and
after the time that the next preceding notice
given by publication and mail became
required.
(12) In case:
(a) the Company shall declare a dividend (or any
other distribution) on its Common Stock
payable otherwise than in cash out of its
earned surplus; or
(b) the Company shall authorize the granting to
the holders of its Common Stock of rights to
subscribe for or purchase any shares of
capital stock of any class or of any other
rights; or
(c) of any reclassification of the capital stock
of the Company (other than a subdivision or
combination of its outstanding shares of
Common Stock), or of any consolidation or
merger to which the Company is a party and
for which approval of any stockholders of the
Company is required, or of the sale or
transfer of all or substantially all of the
assets of the Company; or
(d) of the voluntary or involuntary dissolution,
liquidation or winding up of the Company;
then the Company shall cause to be mailed to any
Transfer Agent or Agents for this Series and to the
holders of record of the outstanding shares of this
Series, at least twenty days (or ten days in any case
specified in clause (a) or (b) above) prior to the
applicable record date hereinafter specified, a notice
stating (x) the date on which a record is to be taken
for the purpose of such dividend, distribution or
rights, or, if a record is not to be taken, the date as
of which the holders of Common Stock or record to be
entitled to such dividend, distribution or rights are
to be determined, or (y) the date on which such
reclassification, consolidation, merger, sale,
transfer, dissolution, liquidation or winding up is
expected to become effective, and the date as of which
it is expected that holders of Common Stock of record
shall be entitled to exchange their shares of Common
Stock for securities or other property deliverable upon
such reclassification, consolidation, merger, sale,
transfer, dissolution, liquidation or winding up.
(13) The Company shall at all times reserve and keep
available, free from preemptive rights, out of its authorized but
unissued Common Stock, for the purpose of effecting the
conversion of the shares of this Series, the full number of
shares of Common Stock then deliverable upon the conversion of
all shares of this Series then outstanding.
(14) No fractional shares of Common Stock shall be
issued upon conversion, but, instead of any fraction of a share
which would otherwise be issuable, the Company shall, at its
option, either
(a) issue non-dividend bearing and non-voting
scrip certificates for such fraction, such
certificates to be in such form and to
contain such terms and conditions as the
Board of Directors shall at any time or from
time to time in its discretion fix and
determine, provided that the certificates
shall be exchangeable, within such period
(which shall end not less than two years
following the date of issue thereof) as the
Board of Directors shall determine, together
with other scrip certificates issued upon
conversion of shares of this Series, for
stock certificates representing a full share
or shares, and upon the expiration of such
period shall be exchangeable for cash, as
provided in the scrip certificates, within
such further period (which shall end not less
than six years following the date of issue of
such certificates) as the Board of Directors
shall determine; or
(b) pay a cash adjustment in respect of such
fraction in an amount equal to the same
fraction of the market price per share of
Common Stock (as determined by the Board of
Directors) at the close of business on the
day of conversion.
(15) The Company will pay any and all taxes that may be
payable in respect of the issue or delivery of shares of Common
Stock on conversion of shares of this Series pursuant hereto.
The Company shall not, however, be required to pay any tax which
may be payable in respect of any transfer involved in the issue
and delivery of shares of Common Stock in a name other than that
in which the shares of this Series so converted were registered,
and no such issue or delivery shall be made unless and until the
person requesting such issue has paid to the Company the amount
of any such tax, or has established, to the satisfaction of the
Company, that such tax has been paid.
(16) For the purpose of this section F, the term
"Common Stock" shall include any stock of any class of the
Company which has no preference in respect of dividends or of
amounts payable in the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Company, and which
is not subject to redemption by the Company. However, shares
issuable on conversion of shares of this Series shall include
only shares of the class designated as Common Stock of the
Company as of April 15, 1966, or shares of any class or classes
resulting from any reclassification or reclassifications thereof
and which have no preference in respect of dividends or of
amounts payable in the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Company and which
are not subject to redemption by the Company; provided that if at
any time there shall be more than one such resulting class, the
shares of each such class then so issuable shall be substantially
in the proportion which the total number of shares of such class
resulting from all such reclassifications bears to the total
number of shares of all such classes resulting from all such
reclassifications.
THIRD: The duration of the Company shall be perpetual.
FOURTH: The principal business office of the Company is to
be located in the Hamlet of Pearl River, in the Town of
Orangetown, in the County of Rockland, and State of New York.
The Secretary of State shall mail a copy of process against the
Company served upon him to One Blue Hill Plaza, Pearl River, New
York 10965.
FIFTH: 1.(A) Except as otherwise fixed pursuant to
Article SECOND of this 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, the Board of Directors shall consist of not less
than 7 or more than 15 persons, the exact number (i) to be 12
persons upon adoption of this Article FIFTH, subject to change
exclusively by the Board of Directors as provided in this
paragraph 1.(A), and (ii) if to be changed from 12 persons to
some other number not less than 7 or more than 15 persons
subsequent to adoption of this Article FIFTH 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). At the
annual meeting of the shareholders of the Company at which this
Article FIFTH is adopted, 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
shareholders to be held in 1988, another class to hold office
initially for a term expiring at the annual meeting of
shareholders to be held in 1989, and another class to hold office
initially for a term expiring at the annual meeting of
shareholders to be held in 1990, with the members of each class
to hold office until their successors are elected and qualified.
At each annual meeting of the shareholders of the Company
following the annual meeting of shareholders of the Company at
which this Article FIFTH is adopted, the successors to the class
of directors whose term expires at that meeting shall be elected
to hold office for a term expiring at the annual meeting of
shareholders held in the third year following the year of their
election. The election of directors need not be by ballot.
(B) Except as otherwise fixed pursuant to the provisions of
Article SECOND of this 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 if less than a quorum of the Board of Directors. If
any applicable provision of New York law expressly confers power
on shareholders to fill such a directorship at a special meeting
of shareholders, such a directorship may be filled at such a
meeting only by the affirmative vote of at least 80 percent of
the combined voting power of the then-outstanding shares of
Voting Stock. Any director elected in accordance with the two
preceding sentences shall hold office until the next annual
meeting of shareholders at which the election of directors is in
the regular order of business and until his successor has 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.
(C) 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 FIFTH, each share of the Voting Stock shall have the
number of votes granted to it pursuant to Article SECOND of this
Certificate of Incorporation or any Preferred Stock Designation).
(D) The Board of Directors of the Company, when evaluating
any offer of another party to (i) purchase or exchange any
securities or property for any outstanding equity securities of
the Company or any subsidiary, (ii) merge or consolidate the
Company or any subsidiary with another Company or (iii) purchase
or otherwise acquire all or substantially all of the properties
and assets of the Company or any subsidiary, shall, in connection
with the exercise of its judgment in determining what is in the
best interests of the Company and its shareholders, give due
consideration not only to the price or other consideration being
offered but also to all other relevant factors, including without
limitation, (i) the financial and managerial resources and future
prospects of the offeror; (ii) the possible effects on the
business of the Company and its subsidiaries and on the
employees, ratepayers and other customers, suppliers and
creditors of the Company and its subsidiaries; and (iii) the
possible effects on the communities in which the facilities of
the Company and its subsidiaries are located. In evaluating any
such offer, the Board of Directors shall be deemed to be
performing its duly authorized duties and acting in good faith
and in the best interests of the Company.
2. Notwithstanding any other provision of this 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 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 (i)
alter, amend or repeal this Article FIFTH, or any provision
hereof, or (ii) alter, amend or repeal any provision of the By-
Laws which is to the same effect as Article FIFTH, or any
provision hereof.
3. For the purposes of this Article FIFTH:
(A) The term "Voting Stock" shall mean all outstanding
shares of capital stock of all classes and series of the Company
entitled to vote generally in the election of directors of the
Company, in each case voting together as a single class.
(B) The term "Preferred Stock Designation" shall mean any
designation of the rights, powers and preferences of any class or
series of the Preferred Stock or the Preference Stock of the
Company made pursuant to Article SECOND of the Certificate of
Incorporation of the Company.
SIXTH: The Secretary of State is designated as the agent
of the Company upon whom process in any action or proceeding
against it may be served.
SEVENTH: The territory in which the operations of the
Company are to be carried on are all the Counties in the State of
New York.
EIGHTH: The vote of the shareholders of the Company
required to approve any Business Combination shall be as set
forth in this Article EIGHTH. The term "Business Combination"
shall have the meaning ascribed to it in paragraph 1.(B) of this
Article EIGHTH. Each other capitalized term shall have the
meaning ascribed to it in paragraph 3 of this Article EIGHTH.
1.(A) In addition to any affirmative vote required by law or
this Certificate of Incorporation and except as otherwise
expressly provided in paragraph 2 of this Article EIGHTH:
(1) any merger or consolidation of the Company or any
Subsidiary with (i) any Interested Shareholder or
(ii) any other person (whether or not itself an
Interested Shareholder) which is, or after such
merger or consolidation would be, an Affiliate of
an Interested Shareholder; or
(2) any sale, lease, exchange, mortgage, pledge,
transfer or other disposition (in one transaction
or a series of transactions) to or with any
Interested Shareholder or any Affiliate of any
Interested Shareholder of assets of the Company or
any Subsidiary having an aggregate Fair Market
Value of $5,000,000 or more; or
(3) the issuance or transfer by the Company or any
Subsidiary (in one transaction or a series of
transactions) of any securities of the Company or
any Subsidiary to any Interested Shareholder or
any Affiliate of any Interested Shareholder
inexchange 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
Company or any Subsidiary which were not acquired
by such Interested Shareholder (or such Affiliate)
from the Company or a Subsidiary; or
(4) the adoption of any plan or proposal for the
liquidation or dissolution of the Company proposed
by or on behalf of an Interested Shareholder or
any Affiliate of any Interested Shareholder; or
(5) any transaction involving the Company or any
Subsidiary (whether or not with or into or
otherwise involving an Interested Shareholder),
and including, without limitation, any
reclassification of securities (including any
reverse stock split), or recapitalization or
reorganization of the Company, or any merger or
consolidation of the Company with any of its
Subsidiaries or any self tender offer for or
repurchase of securities of the Company by the
Company or any Subsidiary or any other transaction
(whether or not with or into or otherwise
involving an Interested Shareholder), 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 Company or any Subsidiary which
is directly or indirectly beneficially owned by
any Interested Shareholder or any Affiliate of any
Interested Shareholder;
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 EIGHTH each share of the Voting Stock shall have the
number of votes granted to it pursuant to Article SECOND of this
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 SECOND (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 shareholders other
than the Interested Shareholder. Such affirmative vote shall be
required notwithstanding any provision of law or any other
provision of this 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 Certificate of
Incorporation or any Preferred Stock Designation.
(B) the term "Business Combination" as used in this Article
EIGHTH shall mean any transaction that is referred to in any one
or more clauses (1) through (5) of paragraph 1.(A) of this
Article EIGHTH.
2. The provisions of paragraph 1.(A) of this Article
EIGHTH shall not be applicable to any particular Business
Combination, and such Business Combination shall require only
such affirmative vote as may be required by law, any other
provision of this Certificate of Incorporation, any Preferred
Stock Designation and 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
shareholders of the Company solely in their respective capacities
as shareholders of the Company, 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 Shareholder 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
Shareholder which were acquired beneficially
by such Interested Shareholder (x) within the
two-year period immediately prior to the
Announcement Date or (y) in the transaction
in which it became an Interested Shareholder,
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) the amount which bears the same 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 Shareholder; and
(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 the 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 Shareholder 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 Shareholder which
were acquired beneficially by such Interested
Shareholder (x) within the two-year period
immediately prior to the Announcement Date or
(y) in the transaction in which it became an
Interested Shareholder, whichever is higher,
or
(ii) if applicable, the highest preferential
amount per share to which the holders of
shares of such class of series of Voting
Stock are entitled in the event of any
voluntary or involuntary liquidation,
dissolution or winding up of the Company, or
(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) the amount which bears the same percentage to
the Fair Market Value of such class or series
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 Shareholder; 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 Shareholder and, if the
Interested Shareholder 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
Shareholder 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 Shareholder has become an
Interested Shareholder and prior to the
consummation of such Business Combination:
(i) such Interested Shareholder shall not have
become the beneficial owner of any additional
shares of Voting Stock of the Company, except
as part of the transaction in which it became
an Interested Shareholder or upon conversion
of convertible securities acquired by it
prior to becoming an Interested Shareholder
or as a result of a pro rata stock dividend
or stock split, and
(ii) such Interested Shareholder shall not have
received the benefit, directly or indirectly
(except proportionately as a shareholder), of
any loans, advances, guarantees, pledges or
other financial assistance or tax credits or
other tax advantages provided by the Company
or any Subsidiary, whether in anticipation of
or in connection with such Business
Combination or otherwise, and
(iii) such Interested Shareholder shall not have
caused any material change in the Company's
business or capital structure, including,
without limitation, the issuance of shares of
capital stock of the Company 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 Company
is then subject to such requirements, shall be
mailed by and at the expense of the Interested
Shareholder at least thirty days prior to the
Consummation Date of such Business Combination to
the public shareholders of the Company (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
shareholders of the Company (such investment
banking firm to be engaged solely on behalf of the
remaining public shareholders, to be paid a
reasonable fee for their services by the Company
upon receipt of such opinion, to be unaffiliated
with such Interested Shareholder, and, if there
are at the time any Disinterested Directors, to be
selected by a majority of the Disinterested
Directors).
<PAGE>
3. For purposes of this Article EIGHTH:
(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 January 1, 1987)
or other entity.
(B) "Interested Shareholder" shall mean any person (other
than the Company or any Subsidiary or any employee benefit plan
of the Company 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 Company 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 Shareholder,
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.
(D) For the purposes of determining whether a person is an
Interested Shareholder pursuant to paragraph 3.(B) of this
Article EIGHTH, the number of shares of Voting Stock deemed to be
outstanding shall include shares deemed owned by such Interested
Shareholder through application of paragraph 3.(C) of this
Article EIGHTH 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 January 1, 1987.
(F) "Subsidiary" shall mean any company 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 Company or by a Subsidiary or by the Company
and one or more Subsidiaries; provided, however, that for the
purposes of the definition of Interested Shareholder set forth in
paragraph 3.(B) of this Article EIGHTH, the term "Subsidiary"
shall mean only a company of which a majority of each class or
series of capital stock entitled to vote generally in the
election of directors of such company is owned, directly or
indirectly, by the Company.
(G) "Disinterested Director" shall mean any member of the
Board of Directors of the Company who is unaffiliated with, and
not a nominee of, the Interested Shareholder and was a member of
the Board prior to the time that the Interested Shareholder
became an Interested Shareholder, and any successor of a
Disinterested Director who is unaffiliated with, and not a
nominee of, the Interested Shareholder 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
sale 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 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.
(I) In the event of any Business Combination in which the
Company survives, the phrase "any consideration other than cash
to be received" as used in paragraph 2.(B)(1) and (2) of this
Article EIGHTH shall include the shares of Common Stock and/or
the shares of any other class or series 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 Shareholder became an Interested Shareholder.
(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 Company
entitled to vote generally in the election of directors of the
Company, in each case voting together as a single class.
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 EIGHTH including, without
limitation:
(A) whether a person is an Interested Shareholder;
(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 EIGHTH 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 Company 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 EIGHTH.
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 EIGHTH.
5. Nothing contained in this Article EIGHTH shall be
construed to relieve any Interested Shareholder from any
fiduciary obligation imposed by law.
6. Notwithstanding anything contained in this 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 EIGHTH or to
adopt any provisions inconsistent therewith; provided, however,
that if there is an Interested Shareholder on the record date for
the meeting at which such action is submitted to the shareholders
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
shareholders other than the Interested Shareholder.
7. Nothing contained in this Article EIGHTH is intended,
or shall be construed, to affect any of the relative rights,
preferences or limitations, within the meaning of such terms
under section 801(b)(12) of the New York Business Corporation Law
or any successor statute, of any shares of any authorized class
or series thereof of the Company, whether issued or unissued.
<PAGE>
NINTH: To the fullest extent now or hereafter provided
for or permitted by law, no director of the Company shall be
personally liable to the Company or its shareholders for damages
for any breach of duty in such capacity. Neither the amendment
or repeal of this Article NINTH, nor the adoption of any
provision of this Certificate of Incorporation inconsistent with
this Article NINTH, shall eliminate or reduce the protection
afforded by this Article NINTH to a director of the Company in
respect to any matter which occurred, or any cause of action,
suit or claim which but for this Article NINTH would have accrued
or arisen, prior to such amendment, repeal or adoption."
IN WITNESS WHEREOF, we hereunto sign our names and affirm
that the statements contained herein are true under the penalties
of perjury this day of May, 1996.
G. D. CALIENDO
Senior Vice President
CARLA MEYER LOIS
Assistant Secretary
0141.hhc
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ORANGE AND
ROCKLAND UTILITIES, INC. QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED
MARCH 31, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 871,212
<OTHER-PROPERTY-AND-INVEST> 16,872
<TOTAL-CURRENT-ASSETS> 220,580
<TOTAL-DEFERRED-CHARGES> 182,142
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 1,290,806
<COMMON> 68,269
<CAPITAL-SURPLUS-PAID-IN> 127,503
<RETAINED-EARNINGS> 188,972
<TOTAL-COMMON-STOCKHOLDERS-EQ> 384,744
1,390
43,249
<LONG-TERM-DEBT-NET> 359,638
<SHORT-TERM-NOTES> 5,886
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 52,593
<LONG-TERM-DEBT-CURRENT-PORT> 194
1,384
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 137
<OTHER-ITEMS-CAPITAL-AND-LIAB> 441,591
<TOT-CAPITALIZATION-AND-LIAB> 1,290,806
<GROSS-OPERATING-REVENUE> 285,672
<INCOME-TAX-EXPENSE> 7,636
<OTHER-OPERATING-EXPENSES> 256,510
<TOTAL-OPERATING-EXPENSES> 264,146
<OPERATING-INCOME-LOSS> 21,526
<OTHER-INCOME-NET> 840
<INCOME-BEFORE-INTEREST-EXPEN> 22,366
<TOTAL-INTEREST-EXPENSE> 7,811
<NET-INCOME> 14,555
756
<EARNINGS-AVAILABLE-FOR-COMM> 13,799
<COMMON-STOCK-DIVIDENDS> 8,807
<TOTAL-INTEREST-ON-BONDS> 6,236
<CASH-FLOW-OPERATIONS> 25,479
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