1
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, 1994.
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
-------------- -------------
Commission file number 0-1284-1
UNITED CITIES GAS COMPANY
------------------------------------------------------
(Exact name of registrant as specified in its charter)
ILLINOIS AND VIRGINIA 36-1801540
--------------------------------------------------------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
5300 MARYLAND WAY, BRENTWOOD, TN 37027
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(Address of principal (Zip Code)
executive offices)
(615) 373-5310
-------------------------------------------------------------------
Registrant's telephone number, including area code
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceeding 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.
/X/ YES
/ / NO
At April 30, 1994, 10,364,915 shares of the common stock of the
Registrant were outstanding.
2
UNITED CITIES GAS COMPANY AND SUBSIDIARIES
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 1994
TABLE OF CONTENTS
ITEM PAGE
NUMBER PART I -- FINANCIAL INFORMATION NUMBER
------
1 Financial Statements:
Consolidated Statements of Income (Unaudited) for the Three and
Twelve Months Ended March 31, 1994 and March 31, 1993. 3
Consolidated Statements of Cash Flows (Unaudited) for the Three
and Twelve Months Ended March 31, 1994 and March 31, 1993. 4
Consolidated Balance Sheets at March 31, 1994 (Unaudited)
and December 31, 1993. 5
Consolidated Statements of Capitalization at March 31, 1994
(Unaudited) and December 31, 1993. 6
Notes to Consolidated Financial Statements. 7
2 Management's Discussion and Analysis of Financial Condition
and Results of Operations. 8
PART II -- OTHER INFORMATION
1 Legal Proceedings. 11
4 Submission of Matters to a Vote of Security Holders. 11
6 Exhibits and Reports on Form 8-K. 11
List of Exhibits. 12
11.01 Computation of Common Stock Earnings Per Share. 13
SIGNATURE 14
2
3
UNITED CITIES GAS COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED TWELVE MONTHS ENDED
MARCH 31, MARCH 31,
------------------- --------------------
(Unaudited, in thousands, except per share amounts) 1994 1993 1994 1993
---- ---- ---- ----
OPERATING REVENUES.................................. $124,191 $116,470 $295,228 $284,451
Natural gas cost................................. 80,002 73,539 187,456 179,347
-------- -------- -------- --------
OPERATING MARGIN.................................... 44,189 42,931 107,772 105,104
-------- -------- -------- --------
OTHER OPERATING EXPENSES:
Operations and maintenance....................... 14,890 14,649 57,179 57,594
Depreciation and amortization.................... 3,428 3,146 13,386 11,678
Federal and state income taxes................... 7,240 7,322 3,393 4,644
Other taxes...................................... 3,059 2,983 10,361 10,363
-------- -------- -------- --------
Total other operating expenses................. 28,617 28,100 84,319 84,279
-------- -------- -------- --------
OPERATING INCOME.................................... 15,572 14,831 23,453 20,825
-------- -------- -------- --------
OTHER INCOME:
Operations of UCG Energy Corporation-
Revenues...................................... 13,742 10,927 41,725 34,610
Operating expenses............................ 9,361 7,392 30,754 24,238
Interest expense.............................. 185 210 1,023 834
Depreciation and amortization................. 879 881 3,464 3,443
Federal and state income taxes................ 1,259 525 2,569 1,832
-------- -------- -------- --------
2,058 1,919 3,915 4,263
-------- -------- -------- --------
Operations of United Cities Gas Storage Company.. 100 98 470 508
-------- -------- -------- --------
Other income, net................................ (76) (48) 214 243
-------- -------- -------- --------
INCOME BEFORE INTEREST EXPENSE...................... 17,654 16,800 28,052 25,839
INTEREST EXPENSE.................................... 3,418 3,459 15,008 12,954
-------- -------- -------- --------
NET INCOME.......................................... 14,236 13,341 13,044 12,885
PREFERRED AND PREFERENCE STOCK DIVIDENDS............ - 18 12 99
-------- -------- -------- --------
COMMON STOCK EARNINGS............................... $ 14,236 $ 13,323 $ 13,032 $ 12,786
======== ======== ======== ========
COMMON STOCK EARNINGS PER SHARE:
Primary.......................................... $ 1.38 $ 1.32 $ 1.27 $ 1.30
======== ======== ======== ========
Fully diluted.................................... $ 1.38 $ 1.31 $ 1.27 $ 1.29
======== ======== ======== ========
AVERAGE NUMBER OF COMMON SHARES OUTSTANDING......... 10,331 10,090 10,257 9,848
======== ======== ======== ========
COMMON STOCK DIVIDENDS PER SHARE.................... $ .25 $ .245 $ .99 $ .97
======== ======== ======== ========
3
4
UNITED CITIES GAS COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED TWELVE MONTHS ENDED
MARCH 31, MARCH 31,
------------------------ -------------------
(Unaudited, in thousands) 1994 1993 1994 1993
---- ---- ---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income.................................................. $14,236 $13,341 $13,044 $12,885
------- ------- ------- -------
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization............................. 4,406 4,167 17,369 15,546
Deferred taxes............................................ (72) (18) 557 1,994
Investment tax credits, net............................... (92) (93) (373) (388)
Loss (gain) on sale of assets............................. 1 (21) 44 (7)
Changes in current assets and current liabilities:
Accounts receivable.................................... 3,529 5,221 (2,140) (9,260)
Materials and supplies................................. 72 (128) 957 261
Gas in storage......................................... 15,657 1,443 (4,427) (507)
Gas costs to be billed in the future................... (1,072) 1,148 (4,391) 8,491
Prepayments............................................ 72 (1,435) 963 (1,562)
Accounts payable....................................... (8,602) (2,213) 3,517 (1,844)
Customer deposits and advance payments................. (3,927) (3,478) 1,091 (1,554)
Accrued interest....................................... 1,387 2,408 (87) 793
Supplier refunds due customers......................... 5,587 6,367 (4,939) 2,841
Accrued taxes.......................................... 8,258 1,041 (204) (995)
Other - net............................................ 1,344 5,781 (1,938) 8,364
------- ------- ------- -------
Total adjustments................................... 26,548 20,190 5,999 22,173
------- ------- ------- -------
Net cash provided by operating activities.......... 40,784 33,531 19,043 35,058
------- ------- ------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property - utility............................. (7,334) (5,986) (28,378) (24,361)
Additions to property - non-utility......................... (595) (473) (4,059) (5,226)
------- ------- ------- -------
Net cash used in investing activities.............. (7,929) (6,459) (32,437) (29,587)
------- ------- ------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Short-term borrowings - net................................. (22,863) - - (19,393)
Proceeds from issuance of long-term debt.................... - 150 - 43,900
Proceeds from issuance of common stock...................... 352 642 1,659 18,754
Long-term debt retirements.................................. (4,551) (3,060) (6,069) (12,456)
Dividends paid.............................................. (2,280) (2,219) (9,007) (8,694)
Redemption of preferred and preference stock................ - - (106) (608)
------- ------- ------- -------
Net cash provided by (used in) financing activities (29,342) (4,487) (13,523) 21,503
------- ------- ------- -------
NET INCREASE (DECREASE) IN CASH AND TEMPORARY INVESTMENTS....... 3,513 22,585 (26,917) 26,974
CASH AND TEMPORARY INVESTMENTS AT BEGINNING OF PERIOD........... 798 8,643 31,228 4,254
------- ------- ------- --------
CASH AND TEMPORARY INVESTMENTS AT END OF PERIOD................. $ 4,311 $31,228 $ 4,311 $ 31,228
======= ======= ======= ========
CASH PAID DURING THE PERIOD FOR:
Interest, net of amounts capitalized........................ $ 2,467 $ 2,144 $16,450 $ 14,458
======= ======= ======= ========
Income taxes................................................ $ 363 $ 3,686 $ 8,635 $ 6,377
======= ======= ======= ========
NONCASH INVESTING AND FINANCING ACTIVITIES:
Dividends reinvested........................................ $ 303 $ 272 $ 1,161 $ 1,114
======= ======= ======= ========
4
5
UNITED CITIES GAS COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
MARCH 31, DECEMBER 31,
(In thousands) 1994 1993
---------- ------------
ASSETS (UNAUDITED)
UTILITY PLANT:
Plant in service, at cost................................ $381,129 $374,205
Less-accumulated depreciation.......................... 131,069 127,856
-------- --------
250,060 246,349
-------- --------
NON-UTILITY PROPERTY:
Property, plant, and equipment........................... 68,125 68,082
Less-accumulated depreciation.......................... 20,353 19,843
-------- --------
47,772 48,239
-------- --------
CURRENT ASSETS:
Cash and temporary investments........................... 4,311 798
Receivables, less allowance for uncollectible accounts
of $1,646 in 1994 and $1,150 in 1993................... 46,833 50,362
Materials and supplies................................... 5,301 5,373
Gas in storage........................................... 10,326 25,983
Gas costs to be billed in the future..................... 9,118 8,046
Prepayments and other.................................... 2,981 3,053
-------- --------
78,870 93,615
-------- --------
DEFERRED CHARGES:
Unamortized debt discount and expense, net............... 2,736 2,788
Non-compete agreements, net.............................. 3,979 3,952
Deferred system improvement costs, net................... 1,883 2,036
Other deferred charges................................... 3,427 4,541
-------- --------
12,025 13,317
-------- --------
$388,727 $401,520
======== ========
CAPITALIZATION AND LIABILITIES
CAPITALIZATION:
Common stock equity...................................... $124,196 $111,888
Long-term debt........................................... 146,701 151,843
-------- --------
270,897 263,731
-------- --------
CURRENT LIABILITIES:
Current portion of long-term obligations................. 6,993 6,402
Notes payable............................................ - 22,863
Accounts payable for gas costs........................... 27,440 33,271
Other accounts payable................................... 1,568 4,339
Accrued taxes............................................ 12,144 3,886
Customer deposits and advance payments................... 8,056 11,983
Accrued interest......................................... 5,844 4,457
Supplier refunds due customers........................... 9,801 4,214
Other.................................................... 7,529 7,630
-------- --------
79,375 99,045
-------- --------
DEFERRED CREDITS:
Accumulated deferred income tax.......................... 23,134 23,142
Deferred investment tax credits.......................... 4,923 5,015
Income taxes due customers............................... 6,545 6,617
Other.................................................... 3,853 3,970
-------- --------
38,455 38,744
-------- --------
$388,727 $401,520
======== ========
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6
UNITED CITIES GAS COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CAPITALIZATION
March 31, December 31,
(In thousands, except share amounts) 1994 1993
---------------- ---------------
COMMON STOCK EQUITY: (Unaudited)
Common stock without par value, authorized
20,000,000 shares, outstanding 10,353,473 in
1994 and 10,314,026 in 1993....................... $ 67,761 $ 67,106
Capital surplus..................................... 22,462 22,462
Retained earnings................................... 33,973 22,320
-------- --------
Total common stock equity......................... 124,196 45.8% 111,888 42.4%
-------- ----- -------- -----
LONG-TERM DEBT:
First mortgage bonds ............................... 129,955 133,955
Senior secured storage term notes due in
installments through 2007........................ 10,784 10,895
Rental property adjustable rate term notes due in
installments through 1999........................ 8,768 9,043
Other long-term obligations due in installments
through 2013 4,187 4,352
-------- --------
153,694 158,245
Less-current requirements....................... 6,993 6,402
-------- --------
Total long-term debt, excluding amounts due
within one year 146,701 54.2% 151,843 57.6%
-------- ----- -------- -----
TOTAL CAPITALIZATION.................................... $270,897 100.0% $263,731 100.0%
======== ===== ======== =====
6
7
UNITED CITIES GAS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The accompanying unaudited financial statements reflect all adjustments
(which are of a normal recurring nature) that are, in the opinion of management,
necessary for a fair statement of the results for the interim periods
presented. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to SEC rules and
regulations. The statements should be read in conjunction with the Summary of
Significant Accounting Policies and Notes to Consolidated Financial Statements
included in the Company's annual report for the year ended December 31, 1993.
The Company's business is seasonal in nature resulting in greater
earnings during the winter months. The results of operations for the three
month period ended March 31, 1994 are not necessarily indicative of the results
to be expected for the full year.
Effective March 1, 1994, the Company purchased the natural gas system in
Palmyra, Missouri from Western Resources, Inc. for approximately $665,000. The
Company also obtained a ten year non-compete agreement. Consideration for the
agreement will be contingent upon volumes sold to a certain industrial customer
with payments made over a three year period, not to exceed $720,000. The system
serves approximately 1,400 natural gas customers.
Effective April 14, 1994, United Cities Propane Gas of Tennessee, Inc.,
a subsidiary of the Company, purchased all of the assets of Hurley's Propane Gas
for approximately $938,000. In addition, the subsidiary entered into ten year
non-compete agreements with the prior owners for $100,000. This acquisition
added approximately 700 propane customers in the Morristown, Tennessee area.
The Company has been named, along with 17 other defendants, in a class
action, anti-trust case filed March 5, 1993 in the United States District Court
for the Eastern District of Tennessee, Knoxville Division. This action involves
alleged price-fixing in the 1980's in eastern Tennessee by Holston Oil Co., Inc.
(Holston), which at the time of the alleged events was a wholly-owned subsidiary
of Tennessee-Virginia Energy Corporation (TVEC). Subsequent to the alleged
events and prior to TVEC's merger with the Company in 1986, TVEC sold the common
stock of Holston to an unrelated party. The Company has filed a Motion for
Summary Judgment with regard to the entire matter and is awaiting the Court's
ruling. The case is at the early stages of discovery and management cannot
predict the outcome. The Company intends to vigorously defend this matter.
In November, 1992, the Financial Accounting Standards Board issued
Statement No. 112 (SFAS 112), "Employers' Accounting for Postemployment
Benefits." This statement, which the Company adopted on January 1, 1994,
requires the Company to accrue any obligations which may exist to provide
benefits to former or inactive employees after employment but before
retirement. Due to the limited nature of the postemployment benefits provided
by the Company, most of which were already being accrued, the implementation of
SFAS 112 did not have a material effect on the Company's results of operations
or financial condition.
Certain reclassifications were made conforming prior year's financial
statements with 1994 financial statement presentation.
7
8
UNITED CITIES GAS COMPANY AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
OVERVIEW
The Company's 1994 first quarter common stock earnings were
$14,236,000 compared to first quarter 1993 earnings of $13,323,000.
The earnings per common share in the first quarter of 1994 was $1.38
on an additional 241,000 average number of common shares outstanding,
compared to $1.32 for the first quarter in 1993. Common stock
earnings for the twelve month period ended March 31, 1994 were
$13,032,000 compared to $12,786,000 for the twelve month period
ended March 31, 1993. Common stock earnings per share decreased
from $1.30 in the twelve month period in 1993 to $1.27 in the twelve
month period in 1994. Average shares outstanding increased by
409,000 for the twelve month period ended March 31, 1994.
The following table summarizes certain information regarding the
operation of each segment of the Company's business for the periods
ended March 31:
THREE MONTHS ENDED TWELVE MONTHS ENDED
-------------------- --------------------
(UNAUDITED, IN THOUSANDS) 1994 1993 1994 1993
---- ---- ---- ----
OPERATING REVENUES:
Utility.................................. $124,191 $116,470 $295,228 $284,451
-------- -------- -------- --------
Subsidiaries:
UCG Energy Corporation-
Propane Division..................... 9,431 6,951 20,683 18,167
Rental Division...................... 1,644 1,701 6,576 6,571
Utility Services Division............ 2,667 2,275 14,466 9,872
-------- -------- -------- --------
Total UCG Energy Corporation....... 13,742 10,927 41,725 34,610
United Cities Gas Storage Company...... 3,016 2,910 8,943 8,170
-------- -------- -------- --------
Total Subsidiaries................. 16,758 13,837 50,668 42,780
-------- -------- -------- --------
Total Revenues........................... $140,949 $130,307 $345,896 $327,231
======== ======== ======== ========
COMMON STOCK EARNINGS:
Utility.................................. $ 12,078 $ 11,306 $ 8,647 $ 8,015
-------- -------- -------- --------
Subsidiaries:
UCG Energy Corporation-
Propane Division..................... 1,393 888 1,515 1,151
Rental Division...................... 515 905 1,780 2,522
Utility Services Division............ 150 126 620 590
-------- -------- -------- --------
Total UCG Energy Corporation....... 2,058 1,919 3,915 4,263
United Cities Gas Storage Company...... 100 98 470 508
-------- -------- -------- --------
Total Subsidiaries................. 2,158 2,017 4,385 4,771
-------- -------- -------- --------
Total Common Stock Earnings.............. $ 14,236 $ 13,323 $ 13,032 $ 12,786
======== ======== ======== ========
OPERATING RESULTS-UTILITY
The utility income increased by $772,000 and $632,000,
respectively, for the three and twelve month periods in 1994 from
the comparable 1993 periods due predominantly to the factors
mentioned below:
The operating margin for the first quarter increased from
$42,931,000 in 1993 to $44,189,000 in 1994. The operating margin
for the twelve month period ended March 31, 1994 was $107,772,000
compared to $105,104,000 for the twelve month period ended March 31,
1993. The increase in the first quarter was primarily due to
volumes sold to an increased number of residential and commercial
natural gas customers and additional revenues from certain
interruptible customers who did not go off the Company's system
when curtailed during the extremely cold weather in the first part
of the quarter. The increase in the twelve month period operating
margin was primarily a result of rate increases in certain
jurisdictions and an increase in the number of natural gas customers.
8
9
ITEM 2. CONTINUED
Operations and maintenance expenses other than natural gas cost
increased $241,000 for the first quarter and decreased $415,000 for
the twelve month period ended March 31, 1994. The increase in the
first quarter from the prior year is primarily a result of normal
increases in operating expenses, primarily in payroll related
expenses. Operations and maintenance expenses for the twelve month
period ended March 31, 1993 reflect the December, 1992 adjustment to
expense the difference in the approved amount of system improvement
costs in Kansas and the amount previously deferred. The effect of
this adjustment was slightly offset by increased payroll related
expenses in the twelve month period ended March 31, 1994.
Depreciation and amortization expense increased in the quarter
and twelve month periods primarily due to depreciation expense on
additional plant in service. Interest expense decreased slightly
for the quarter but increased $2,054,000 for the twelve month period
primarily as a result of interest assessed on additional income
taxes related to the 1993 settlement of the Internal Revenue Service
audit.
The table below reflects operating revenues, gas sales volumes
and weather data for the periods ended March 31:
OPERATING STATISTICS-UTILITY
THREE MONTHS ENDED TWELVE MONTHS ENDED
(UNAUDITED, IN THOUSANDS) 1994 1993 1994 1993
OPERATING REVENUES:
Residential............................ $64,684 $60,082 $139,458 $131,180
Commercial............................. 35,055 32,074 77,342 75,222
Industrial............................. 21,705 20,750 68,910 65,819
Transportation......................... 1,652 2,013 6,563 7,720
Other Revenues......................... 1,095 1,551 2,955 4,510
-------- -------- -------- --------
Total Operating Revenues............ $124,191 $116,470 $295,228 $284,451
======== ======== ======== ========
GAS SALES (MCF):
Residential............................ 10,968 10,719 23,304 22,393
Commercial............................. 6,440 6,143 14,732 14,257
Industrial-
Firm................................. 2,675 2,429 7,754 7,541
Interruptible........................ 2,857 3,271 11,247 10,725
-------- -------- -------- --------
22,940 22,562 57,037 54,916
======== ======== ======== ========
Transported Volumes (Mcf)................ 2,667 3,273 11,277 11,522
======== ======== ======== ========
WEATHER DATA-COLDER (WARMER)
THAN NORMAL............................ (4.0%) (1.6%) 1.6% .9%
======== ======== ======== ========
OPERATING RESULTS-SUBSIDIARIES
Revenues of UCG Energy Corporation (UCG Energy) increased from
$10,927,000 in the first quarter of 1993 to $13,742,000 in the first
quarter of 1994. Revenues increased from $34,610,000 for the twelve
months ended March 31, 1993 to $41,725,000 for the twelve months
ended March 31, 1994. The propane division's revenues increased in
the first quarter and twelve-month periods primarily due to
additional volumes sold as a result of colder than normal weather
and secondarily, the addition of the Boone, North Carolina propane
operation. The utility services division's revenues increased from
1993 for the first quarter and twelve-month periods as a result of
increased brokerage sales to certain industrial customers, local
distribution companies and others.
Expenses of UCG Energy, including cost of sales, increased from
$7,392,000 in the first quarter of 1993 to $9,361,000 in the first
quarter of 1994 and from $24,238,000 in the twelve-month period ended
March 31, 1993 to $30,754,000 in the twelve-month period ended March
31, 1994. Expenses increased in both periods in the propane division
primarily as a result of the cost of additional volumes sold and
related increases in operating expenses as well as the addition of
the Boone, North Carolina propane operation. Expenses of the utility
services division increased in both periods as a result of additional
cost of sales from brokerage activities.
9
10
ITEM 2. CONTINUED
UCG Energy's net income increased from $1,919,000 in the first
quarter of 1993 to $2,058,000 in the first quarter of 1994, but
decreased from $4,263,000 in the twelve-month period ended March 31,
1993 to $3,915,000 in the twelve-month period ended March 31, 1994.
The increase for the quarter is the result of increased sales in the
propane division. The decrease in the twelve-month period can largely
be attributed to the cumulative effect of a change in accounting
principle that resulted from the adoption in 1993 of Statement No. 109
"Accounting for Income Taxes" issued by the Financial Accounting
Standards Board.
United Cities Gas Storage Company had net income for the three
and twelve-month periods of $100,000 and $470,000, respectively, as
compared to $98,000 and $508,000 for the same periods in 1993. The
revenues of this subsidiary were primarily derived from natural gas
storage services and natural gas provided to United Cities Gas
Company.
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
Total cash provided by operations for the three and
twelve-month periods ended March 31, 1994 was $40,784,000 and
$19,043,000, respectively. The financing activities of the three and
twelve-month periods reflect the retirement of long-term debt and
dividend payments. In addition, the financing activities of the first
quarter reflect the payment of short-term debt outstanding at December
31, 1993.
The Company has authorized as of March 31, 1994, specific
purchases and construction projects amounting to $9,267,000 of its
1994 utility capital budget of $28,200,000 and $2,579,000 of its
non-utility capital budget of $3,400,000. The Company anticipates
incurring capital expenditures of approximately $32,000,000 for each
of 1995, 1996, and 1997. In addition, the Company is constructing a
twenty-eight mile main which will connect two of its distribution
systems in Middle Tennessee. The project has an estimated cost of
approximately $8,200,000 and is scheduled to be completed by the fall
heating season of 1995. As of March 31, 1994, capital expenditures of
$5,170,000 had been authorized related to this project.
The Company believes its short-term lines of credit are
sufficient to meet anticipated short-term requirements. At March 31,
1994, the Company had $80,000,000 in short-term lines of credit,
including master and banker's acceptance notes, bearing interest
primarily at the lesser of prime or a negotiated rate during the term
of each borrowing. No amounts were outstanding under these
arrangements at March 31, 1994.
10
11
UNITED CITIES GAS COMPANY AND SUBSIDIARIES
PART II. OTHER INFORMATION
FOR THE THREE MONTHS ENDED MARCH 31, 1994
ITEM 1. LEGAL PROCEEDINGS.
See December 31, 1993 Form 10-K
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
The annual meeting of Shareholders was held April 29, 1994. The
meeting did involve the election of directors. The matters voted
upon were as follows:
Proposal 1. The shareholders approved the nomination of Thomas J.
Garland, Gene C. Koonce, and George C. Woodruff, Jr.
to serve the Company as directors for a three year
term. Directors of the Company who are continuing
their term are Dwight C. Baum, Dennis L. Newberry, II,
Timothy W. Triplett, Vincent J. Lewis and Stirton
Oman, Jr.
James L. Bomar, Jr., whose term expired in 1994, did
not stand for re-election. In addition, according to
terms set forth in the By-Laws of the Company, J. M.
(Ray) McRae retired effective with the date of this
meeting. (See Amended By-Laws of the Company filed
with this report as Exhibit 3.02.)
Proposal 2. The shareholders approved an amendment to the
Company's Articles of Incorporation to increase the
number of shares of Common Stock, without par value,
which the Company is authorized to issue from
20,000,000 to 40,000,000. (See Amended Articles of
Incorporation of the Company filed with this report as
Exhibit 3.01.)
Proposal 3. The shareholders approved an amendment to the Company's
Employee Stock Purchase Plan to increase by 200,000 the
number of shares available thereunder.
The results of the voting for each proposal were as follows:
FOR AGAINST WITHHELD NON-VOTE
--- ------- -------- --------
Proposal 1. Garland 8,022,861 - 232,359 -
Koonce 8,054,265 - 200,955 -
Woodruff 8,053,381 - 201,839 -
Proposal 2. 7,594,748 524,125 136,347 -
Proposal 3. 7,933,718 179,781 141,720 1
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits-See list of Exhibits on page 12 hereof.
(b) Reports on Form 8-K.
None
11
12
UNITED CITIES GAS COMPANY AND SUBSIDIARIES
LIST OF EXHIBITS
3.01 Amended Articles of Incorporation of Company as amended April 29,
1994. (Pages 15 through 44)
3.02 Amended By-Laws of Company as amended April 29, 1994.
(Pages 45 through 69)
11.01 Computation of Common Stock Earnings Per Share. (Page 13).
12
13
Exhibit 11.01
UNITED CITIES GAS COMPANY AND SUBSIDIARIES
COMPUTATION OF COMMON STOCK EARNINGS PER SHARE
THREE MONTHS ENDED TWELVE MONTHS ENDED
MARCH 31, MARCH 31,
---------------------- ---------------------
(Unaudited, in thousands, except per share amounts) 1994 1993 1994 1993
---- ---- ---- ----
Common Stock Earnings............................... $14,236 $13,323 $13,032 $12,786
Add: Preference Stock Dividends.................... - 18 12 80
------- ------- ------- -------
Common Stock Earnings after Conversion.............. $14,236 $13,341 $13,044 $12,866
======= ======= ======= =======
Average Number of Common Shares Outstanding
During the Period................................ 10,331 10,090 10,257 9,848
Add: Conversion of 11 1/2% Preference Stock........ - 88 - 88
------- ------- ------- -------
Average Number of Common Shares Outstanding
after Conversion................................. 10,331 10,178 10,257 9,936
======= ======= ======= =======
Common Stock Earnings per Share:
Primary.......................................... $ 1.38 $ 1.32 $ 1.27 $ 1.30
======= ======= ======= =======
Fully Diluted.................................... $ 1.38 $ 1.31 $ 1.27 $ 1.29
======= ======= ======= =======
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UNITED CITIES GAS COMPANY AND SUBSIDIARIES
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
UNITED CITIES GAS COMPANY
/s/ JAMES B. FORD
--------------
JAMES B. FORD
Senior Vice President and Treasurer
and Chief Financial Officer
On behalf of the Registrant
Date: May 10, 1994
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EXHIBIT 3.01
As Amended Through
April 29, 1994
UNITED CITIES GAS COMPANY
AMENDED ARTICLES OF INCORPORATION
(A Public Service Company Incorporated
under the Laws of Illinois and Virginia)
ARTICLE ONE
The name of the corporation is: United Cities Gas Company.
ARTICLE TWO
The address of its present registered office in the State of Illinois is
33 North LaSalle Street, in the City of Chicago 60602, County of Cook, and the
name of its Registered Agent at said address is: United States Corporation
Company. The address of its present registered office in the Commonwealth of
Virginia is 707 E. Main Street, Richmond, Virginia 23212, and the name of its
Registered Agent is Richard D. Gary, who is a resident of Virginia, whose
business address is the same as the address of the registered office, and who is
a member of the Virginia State Bar.
ARTICLE THREE
The duration of the corporation is perpetual.
ARTICLE FOUR
The purpose or purposes for which the corporation is organized are, as a
public service company, to manufacture, buy, distribute and sell natural and/or
artificial gas for light, heat, power, refrigeration and other purposes for
which the same may now or at any time hereafter be used, and also to sell the
by-products and residual products therefrom, and to construct or in any manner
acquire and to maintain, operate, mortgage, sell and in any manner dispose of
works, equipment, appliances and facilities therefor or for use in connection
therewith; to construct, lay, purchase or in any manner acquire and to maintain
and operate, and to sell, encumber or in any manner dispose of pipe lines and
gas mains for the sale, distribution and transportation of natural and/or
artificial gas for the purposes
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aforesaid in, over, through or under any streets, alleys, roads, highways, or
other public places, and in, over, through or under any private or public
property.
ARTICLE FIVE
Paragraph 1: The aggregate number of shares which the
corporation is authorized to issue is 40,258,000, divided into three classes
consisting of 200,000 shares designated as Cumulative Preferred Stock, issuable
in series as hereinafter provided, having a par value of $100.00 per share,
58,000 shares designated as 11-1/2% Cumulative Convertible Preference Stock
having a par value of $100.00 per share, and 40,000,000 shares designated as
Common Stock, having no par value.
Paragraph 2: The preferences, qualifications, limitations,
restrictions, and the special or relative rights in respect of the shares of
each class hereinabove designated shall be as follows:
SECTION 1. Issuance in Series. The Cumulative Preferred
Stock may be divided into and issued from time to time as shares of one or more
series, each series to be appropriately designated by a distinguishing number,
letter, or title prior to the issue of any shares thereof. The Cumulative
Preferred Stock of all series shall be of the same class and of equal rank and
shall be identical except as to the terms that may be fixed by the Board of
Directors as hereinafter in this Section 1 provided. All shares of each series
shall be alike in every particular. Before any shares of Cumulative Preferred
Stock of any series (other than the 5-3/4%, 1962 Series, the 7.10%, 1968
Series, the 10-1/2%, 1971 Series, and the 6%, 1982 Series, the relative rights
and preferences of which series are hereinafter set forth) shall be issued, the
Board of Directors shall fix and is hereby expressly empowered to fix, in the
manner provided by law, the following relative rights and preferences, in
respect of any or all of which there may be variations between different
series:
(i) The designation of such series and the number of shares
which shall constitute such series, which number may, unless the
authorized number of shares of such series shall be limited, be
increased or decreased (but not below the number of shares thereof, if
any, then outstanding) from time to time by like action of the Board
of Directors;
(ii) The rate of dividend;
(iii) The price at and the terms and conditions on which shares
may be redeemed;
(iv) The amount payable on shares of such series in the event
of any voluntary liquidation, dissolution or winding up of the affairs
of the corporation;
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(v) Sinking fund provisions for the redemption or purchase of
shares; provided, however, that the Board of Directors shall not
create a sinking fund in respect of any series unless provision for a
sinking fund at least as beneficial to all issued and outstanding
shares of Cumulative Preferred Stock of other series shall either then
exist or be at the same time created;
(vi) The terms and conditions on which shares may be converted,
if the shares of any series are issued with the privilege of
conversion;
so far as not inconsistent with the provisions of this Article Five applicable
to all series of Cumulative Preferred Stock. Shares of Cumulative Preferred
Stock shall be issued only as full-paid and nonassessable shares.
SECTION 2. Dividends. Out of any source lawfully available
for the payment of dividends, as and when declared by the Board of Directors,
the holders of Cumulative Preferred Stock of each series shall be entitled to
receive dividends at, but not exceeding, the maximum dividend rate fixed for
such series and expressed in the certificates therefor, payable quarterly on
March 15, June 15, September 15 and December 15, and accruing from the date of
original issue of each share of such stock, before any dividends shall be
declared or paid or set apart for payment on 11-1/2% Cumulative Convertible
Preference Stock or the Common Stock and before any sum shall be paid or set
apart for the purchase or redemption of Cumulative Preferred Stock or 11-1/2%
Convertible Preference stock; and such dividends on the Cumulative Preferred
Stock shall be cumulative so that if any dividend period or periods full
dividends upon the outstanding Cumulative Preferred Stock of each series at the
maximum rate fixed therefor shall not have been paid, the deficiency shall be
declared and paid or set apart for payment before any dividends shall be
declared or paid or set apart for payment on 11-1/2% Cumulative Convertible
Preference Stock or the Common Stock and before any sum shall be paid or set
apart for the purchase or redemption of any Cumulative Preferred Stock or
11-1/2% Cumulative Preference Stock. If at any time there shall be outstanding
Cumulative Preferred Stock of more than one series, no full dividend for any
quarter yearly period may be declared or paid upon any series unless the full
dividend for such period shall be concurrently declared or paid on all other
series and any dividends paid upon the Cumulative Preferred Stock in an amount
less than the full cumulative dividends accrued or in arrears on all the
Cumulative Preferred Stock outstanding shall be divided between the outstanding
Cumulative Preferred Stock of each series in proportion to the aggregate
amounts which would be distributable to the holders of the Cumulative Preferred
Stock of each series if full cumulative dividends were declared and paid
thereon.
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After full dividends on Cumulative Preferred Stock for all
past quarter yearly dividend periods and for the then current quarter yearly
dividend period shall have been declared and paid, or set apart for payment,
then, and not otherwise, out of any remaining source lawfully available for the
payment of dividends, as and when declared by the Board of Directors, the
holders of 11-1/2% Cumulative Convertible Preference Stock shall be entitled to
receive dividends at, but not exceeding, 11-1/2% per annum, payable quarterly
on March 15, June 15, September 15 and December 15, and accruing from the date
of original issue of each share of such stock, before any dividends shall be
declared or paid or set apart for payment on the Common Stock and before any
sum shall be paid or set apart for the purchase or redemption of 11-1/2%
Cumulative Convertible Preference Stock; and such dividends on 11-1/2%
Cumulative Convertible Preference Stock shall be cumulative so that if in any
dividend period or periods full dividends upon the outstanding 11-1/2%
Cumulative Convertible Preference Stock at the rate of 11-1/2% per annum shall
not have been paid, the deficiency shall be declared and paid or set apart for
payment before any dividends shall be declared or paid or set apart for payment
on the Common Stock and before any sum shall be paid or set apart for the
purchase or redemption of any 11-1/2% Cumulative Convertible Preference Stock.
After full dividends on Cumulative Preferred Stock and 11-1/2%
Cumulative Convertible Preference Stock for all past quarter yearly dividend
periods and for the then current quarter yearly dividend period shall have been
declared and paid, or set apart for payment, then, and not otherwise, dividends
may be declared and paid out of any remaining source lawfully available for the
payment thereof upon the Common Stock, share and share alike, subject to the
restrictions hereinafter provided, to the exclusion of the holders of
Cumulative Preferred Stock and 11-1/2% Cumulative Convertible Preference Stock.
SECTION 3. Redemption of Cumulative Preferred Stock. Subject
to the terms and conditions on which the shares of a particular series of
Cumulative Stock may be redeemed, at the option of the Board of Directors of
the corporation, the corporation may at any time redeem any series of
Cumulative Preferred Stock which has been made redeemable at such time, either
as a whole or in part, at the redemption price determined for such series;
provided, however, that not less than 30 nor more than 60 days prior to the
date fixed for redemption a notice of the time and place thereof shall be
mailed to the holders of record of the Cumulative Preferred Stock so to be
redeemed. Notice of redemption having been so given, dividends shall cease to
accrue on the shares therein designated for redemption after the date fixed for
redemption (unless default be made in payment or deposit of the redemption
price). In every case of redemption of less than all of the outstanding shares
of any one series of Cumulative Preferred Stock, then at the option of the
Board of Directors such redemption shall be made pro rata or the shares of such
series to be redeemed shall be chosen by lot in such manner
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as may be prescribed by resolution of the Board of Directors; provided,
however, that such selection shall be made as set forth in the following
paragraph in respect of any holder of record of the Cumulative Preferred Stock
of the series from which the selection is to be made having 5% or more of such
series of Cumulative Preferred Stock registered in his name.
If at the time when any selection by lot is to be made, 5% or
more of the aggregate number of shares of the Cumulative Preferred Stock of the
series from which such selection is to be made are registered in the name of
one holder, then before making the selection by lot as aforesaid the
corporation shall allocate to each holder of record holding 5% or more of the
aggregate number of shares of such series a proportion of the shares to be
redeemed equal, as nearly as practicable (and so as to avoid redemption of
fractional shares), to the proportion that the shares of such series then
outstanding, registered in the name of such holder bears to all shares of such
series then outstanding. In such case, the selection by lot of the number of
shares to be redeemed not so allocated shall be made from the holders of record
holding less than 5% of the aggregate number of shares of such series.
At any time after notice of redemption has been mailed as
aforesaid to the holders of stock so to be redeemed, the corporation may
deposit in trust for the account of the respective holders of shares of
Cumulative Preferred Stock to be redeemed, the aggregate redemption price,
including accrued and unpaid dividends, to the date fixed for redemption, with
a bank or trust company, named in such notice as the place of redemption,
having its principal office in the City of Chicago, Illinois, and having,
according to its last published statement, capital, surplus and undivided
profits aggregating at least $5,000,000, such redemption price to be payable on
the date fixed for redemption as aforesaid, or on the date of deposit, as
hereinafter provided, and in the amounts aforesaid to the respective order of
the holders of the shares so to be redeemed upon endorsement to the corporation
or otherwise, as may be required, and upon surrender of the certificates for
such shares. From and after the earlier of (i) the date fixed for redemption
(provided that the corporation shall not have failed to make payment of the
redemption price as set forth in such notice) or (ii) the date of the deposit
of said money as aforesaid in advance of the date fixed for redemption
(provided in such case that such moneys shall be made available for immediate
payment to the holders of the shares to be redeemed on and after such date of
deposit and that the aforesaid notice or redemption shall have included a
statement that such moneys are to be so available), such holders shall cease to
be stockholders with respect to said shares, and said shares shall not be
deemed to be outstanding and such holders shall have no interest in, or claim
against, the corporation with respect to said shares, but shall be entitled
only to receive said moneys as aforesaid from said bank or trust company, or
from the corporation, as the case may be, without
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interest thereon, upon endorsement to the corporation, or otherwise, as
may be required, and upon surrender of the certificates for such shares, as
aforesaid.
All or any shares of any series of Cumulative Preferred Stock
at any time redeemed, purchased or acquired by the corporation shall be
cancelled in accordance with law and shall not be reissued as shares of the
same series but shall become authorized and unissued shares of Cumulative
Preferred Stock undesignated as to series.
SECTION 4. Redemption of 11-1/2% Cumulative Convertible
Preference Stock, Sinking Fund and Conversion. At the option of the Board of
Directors of the corporation, the corporation may at any time or times after
the tenth year following the issuance of shares of 11-1/2% Cumulative
Convertible Preference Stock redeem any shares of 11-1/2% Cumulative
Convertible Preference Stock at such time, either as a whole or in part, at the
redemption price of $100.00 per share plus in each case an amount equal to
accrued and unpaid dividends on the shares to be redeemed; provided, however,
that not less than 30 nor more than 60 days prior to the date fixed for
redemption a notice of the time and place thereof shall be mailed to the
holders of record of 11-1/2% Cumulative Convertible Preference Stock so to be
redeemed. Notice of redemption having been so given, dividends shall cease to
accrue on the shares therein designated for redemption after the date fixed for
redemption (unless default be made in payment or deposit of the redemption
price). In every case of redemption of less than all of the outstanding shares
of 11-1/2% Cumulative Convertible Preference Stock, then at the option of the
Board of Directors such redemption shall be made pro rata or the shares to be
redeemed shall be chosen by lot in such manner as may be prescribed by
resolution of the Board of Directors.
At any time after notice of redemption has been mailed as
aforesaid to the holders of stock so to be redeemed, the corporation may
deposit in trust for the account of the respective holders of shares of 11-1/2%
Cumulative Convertible Preference Stock to be redeemed, the aggregate
redemption price, including accrued and unpaid dividends, to the date fixed for
redemption, with a bank or trust company, named in such notice as the place of
redemption, having its principal office in the City of Chicago, Illinois, and
having, according to its last published statement, capital, surplus and
undivided profits aggregating at least $5,000,000 such redemption price to be
payable on the date fixed for redemption as aforesaid, or on the date of
deposit, as hereinafter provided, and in the amounts aforesaid to the
respective orders of the holders of the shares so to be redeemed upon
endorsement to the corporation or otherwise, as may be required, and upon
surrender of the certificates for such shares. From and after the earlier of
(i) the date fixed for redemption (provided that the corporation shall not have
failed to make payment of the redemption price as set forth in such notice) or
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(ii) the date of the deposit of said money as aforesaid in advance of the date
fixed for redemption (provided in such case that such moneys shall be made
available for immediate payment to the holders of the shares to be redeemed on
and after such date of deposit and that the aforesaid notice or redemption
shall have included a statement that such moneys are to be so available), such
holders shall cease to be stockholders with respect to said shares, and said
shares shall not be deemed to be outstanding and such holders shall have no
interest in, or claim against, the corporation with respect to said shares, but
shall be entitled only to receive said moneys as aforesaid from said bank or
trust company, or from the corporation, as the case may be, without interest
thereon, upon endorsement to the corporation, or otherwise, as may be required,
and upon surrender of the certificates for such shares, as aforesaid.
As for a sinking fund for the benefit of 11-1/2% Cumulative
Convertible Preference Stock, the corporation will call for redemption and
redeem, at a redemption price of $100 per share plus accrued and unpaid
dividends, on June 15, 1993 and on June 15 of each year thereafter to and
including June 15, 1997 a number of shares of 11-1/2% Cumulative Convertible
Preference Stock equal to 20% in each such year of the largest number of shares
of such 11-1/2% Cumulative Convertible Preference Stock theretofore issued.
Such redemption shall be made in the manner, on the notice and
with the effect provided in Section 4 provided, however, that such notice shall
state that redemption is being made to satisfy the sinking fund requirement for
shares of 11-1/2% Cumulative Convertible Preference Stock.
The sinking fund requirement for 11-1/2% Cumulative
Convertible Preference Stock shall be cumulative so that if in any year the
corporation shall not satisfy the sinking fund requirement for such year the
amount of the deficiency shall be added to the sinking fund requirement for the
next succeeding year. Unless and until all such deficiencies shall have been
made good, no dividend shall be paid or declared and no other distribution
shall be made on any Common Stock and no Common Stock shall be purchased or
otherwise acquired for value by the corporation.
Any holder of 11-1/2% Cumulative Convertible Preference Stock
may at any time, unless the shares held by him shall have theretofore been
called for redemption as aforesaid in which case at any time not less than 3
business days prior to the date fixed for redemption of such shares, convert
shares of such 11-1/2% Cumulative Convertible Preference Stock at the
conversion price per share of Common Stock of $14.00 (the "Conversion Price")
into the number of fully paid, nonassessable shares of Common Stock determined
by dividing the par value of 11-1/2% Cumulative Convertible Preference Stock so
converted by the Conversion Price, and on presentation and surrender to the
corporation, or
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at any place or places where the corporation shall maintain a Transfer Agency,
of the certificates for shares of 11-1/2% Cumulative Convertible Preference
Stock so to be converted, the holder of such stock if he so elects, shall be
entitled to receive in exchange therefore certificates for shares of the fully
paid and nonassessable Common Stock of the corporation at the rate aforesaid,
with a cash adjustment of accrued dividends, all under suitable regulations to
be prescribed by the Board of Directors of the corporation. The number of
shares of Common Stock into which each share of 11-1/2% Cumulative Convertible
Preference Stock is convertible, shall be subject to adjustment from time to
time in the event the corporation shall (i) pay a dividend on its Common Stock
in shares of the corporation; (ii) subdivide its outstanding Common Stock;
(iii) combine its outstanding Common Stock into a smaller number of shares; or
(iv) issue by reclassification of its Common Stock (whether pursuant to a
merger or consolidation or otherwise) any shares of the corporation. Upon the
happening of any of the events described above, the holder of each share of
11-1/2% Cumulative Convertible Preference Stock shall be entitled to receive
upon the conversion of such share, the number of shares of the corporation
which he would have owned or have been entitled to receive after the happening
of any of the events described above had such share been converted immediately
prior to the happening of such event. An adjustment made pursuant to this
provision shall become effective retroactively with respect to conversions made
subsequent to the record date in the case of a dividend, and shall become
effective on the effective date in the case of a subdivision, combination or
reclassification. No fractional shares or scrip representing fractional shares
of Common Stock shall be issued upon any conversion of 11-1/2% Cumulative
Convertible Preference Stock. If upon the conversion of any share of 11-1/2%
Cumulative Convertible Preference Stock the holder would, but for the
provisions hereof, be entitled to receive a fraction of a share of Common
Stock, an amount equal to such fraction multiplied by the Conversion Price
shall be paid to such holder in cash by the corporation.
All or any shares of 11-1/2% Cumulative Convertible Preference
Stock at any time redeemed, purchased or acquired by the corporation shall be
cancelled and not reissued.
SECTION 5. Liquidation, Dissolution or Winding Up. In the
event of any voluntary liquidation, dissolution or winding up of the affairs of
the corporation, the holders of the Cumulative Preferred Stock of each series
shall be entitled to receive in cash for each share thereof the amount fixed
for the respective series as herein provided, and, in the event of any
involuntary liquidation, dissolution or winding up of the affairs of the
corporation, the holders of the Cumulative Preferred Stock of each series shall
be entitled to receive $100.00 per share together, in each case, with an amount
equal to any accrued and unpaid dividends thereon to the date fixed for such
payment, before any distribution of the assets shall be made to the
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holders of 11-1/2% Cumulative Convertible Preference Stock or Common Stock.
After such payment shall have been made in full to the holders of the
outstanding Cumulative Preferred Stock or funds necessary for such payment
shall have been set aside by the corporation in trust for the account of the
holders of the outstanding Cumulative Preferred Stock so as to be and continue
available therefor, the holders of the outstanding Cumulative Preferred Stock
shall be entitled to no further participation in such distribution of the
assets of the corporation and the holders of 11-1/2% Cumulative Convertible
Preference Stock shall then be entitled to receive $100.00 per share together,
in each case, with an amount equal to any accrued and unpaid dividends thereon
to the date fixed for such payment, before any distribution of the assets shall
be made to the holders of Common Stock. After such payment shall have been
made in full to the holders of the outstanding 11-1/2% Cumulative Convertible
Preference Stock or funds necessary for such payment shall have been set aside
by the corporation in trust for the account of the holders of the outstanding
11-1/2% Cumulative Convertible Preference Stock so as to be and continue
available therefor, the holders of the outstanding 11-1/2% Cumulative
Convertible Preference Stock shall be entitled to no further participation in
such distribution of the assets of the corporation, and the remaining assets of
the corporation shall be divided and distributed among the holders of the
Common Stock ratably, share and share alike. If, upon such liquidation,
dissolution or winding-up, the assets of the corporation distributable as
aforesaid among the holders of the Cumulative Preferred Stock shall be
insufficient to permit the payment to them of said amount, the entire assets
shall be distributed ratably according to their respective interest among the
holders of the Cumulative Preferred Stock. If, upon such liquidation,
dissolution or winding-up, the remaining assets of the corporation
distributable as aforesaid among the holders of the 11-1/2% Cumulative
Convertible Preference Stock shall be insufficient to permit the payment to
them of said amount, the entire remaining assets shall be distributed ratably
according to their respective interest among the holders of the 11-1/2%
Cumulative Convertible Preference Stock. A consolidation or merger of the
corporation or any purchase or redemption of stock of the corporation of any
class shall not be regarded as a liquidation, dissolution or winding up of the
affairs of the corporation within the meaning of this Section 5.
SECTION 6. Certain Restrictions on Corporate Action. So long
as any shares of Cumulative Preferred Stock shall remain outstanding the
corporation shall not:
A. Issue any shares of any additional series of Cumulative
Preferred Stock (other than the 5-3/4% 1962 Series) or any shares of
any Parity Stock, unless
(1) Immediately after giving effect to the issuance of
such shares the Consolidated Common Equity
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of the corporation and its subsidiaries shall be at least 25%
of the Total Consolidated Capitalization of the corporation
and its subsidiaries; and
(2) The Net Income Available for Interest of the
corporation for a period of twelve consecutive calendar months
out of the eighteen calendar months immediately preceding the
date of issuance of any such shares was equal to at least one
and one-half times the sum of (i) the aggregate annual
interest requirements on Funded Debt to be outstanding
immediately after issuance of such shares plus (ii) the
aggregate annual dividend requirements on all shares of
Cumulative Preferred Stock and any Parity Stock to be
outstanding immediately after issuance of such shares.
B. Issue, incur, assume or guarantee nor permit any
subsidiary to issue, incur, assume or guarantee any Funded Debt if
after giving effect thereto the Consolidated Funded Debt then to be
outstanding would exceed 66-2/3% of the Total Consolidated
Capitalization of the corporation and its subsidiaries.
Any one purchasing or acquiring Funded Indebtedness of
the corporation or a subsidiary or shares of any series of Cumulative Preferred
Stock or Parity Stock, as the case may be, may conclusively rely upon a
certificate of the President or Vice President and the Controller or Treasurer
of the corporation to the effect that such Funded Indebtedness or stock, as the
case may be, was issued in compliance with the applicable foregoing provisions
and such certificate shall be conclusive evidence of compliance therewith
insofar as any one purchasing or acquiring Funded Indebtedness or such stock,
as the case may be, is concerned.
C. Declare or pay any dividends on shares of its Common Stock
(except dividends payable in shares of Common Stock), or directly or
indirectly purchase, redeem or otherwise acquire any shares of Common
Stock (except out of the proceeds derived from the issuance of other
shares of Common Stock), or make any other distribution on shares of
Common Stock (such non-excepted declarations, payments, purchases,
redemptions or other acquisitions and distributions being hereinafter
called "Restricted Payments"), unless after giving effect thereto the
aggregate of all such Restricted Payments made during the period from
December 31, 1961 to and including the date of the making of the
Restricted Payment in question does not exceed the sum of $200,000
plus (or minus in case of a deficit) the amount of Consolidated Net
Income Available for Common Stock Dividends for such period (computed
on a cumulative basis for said entire period).
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SECTION 7. Corporate Action Requiring Approval of Holders of
Cumulative Preferred Stock. So long as any shares of Cumulative Preferred
Stock remain outstanding no amendment to the Articles of Incorporation of the
corporation shall be made without the affirmative vote of the holders of more
than two-thirds of the aggregate number of shares of Cumulative Preferred Stock
then outstanding voting as a class (except as hereinafter provided), if such
amendment would:
(a) Increase or decrease the aggregate number of
authorized shares of Cumulative Preferred Stock;
(b) Increase or decrease the par value of the shares
of Cumulative Preferred Stock;
(c) Effect an exchange, reclassification or
cancellation of all or part of the shares of Cumulative
Preferred Stock;
(d) Change the designations, preferences,
qualifications, limitations, restrictions or special or
relative rights of the shares of Cumulative Preferred Stock;
(e) Change the shares of Cumulative Preferred Stock
into the same or a different number of shares of Cumulative
Preferred Stock or of another class or classes of stock
either with or without par value;
(f) Create a right of exchange of all or any part of
the shares of another class into the shares of Cumulative
Preferred Stock;
(g) Create a new class of shares having rights and
preferences prior and superior to the shares of Cumulative
Preferred Stock or increase the rights and preferences of
any class hereafter authorized having rights and preferences
prior or superior to the shares of Cumulative Preferred
Stock;
(h) Cancel or otherwise affect dividends on shares of
Cumulative Preferred Stock which have accrued but have not
been declared.
The holders of the outstanding shares of Cumulative Preferred
Stock shall not be entitled to vote as a class upon any such proposed amendment
if there shall be more than one series outstanding and the proposed amendment
would change the designations, preferences, qualifications, restrictions or
special or relative rights of one or more but not all of the outstanding series
of Cumulative Preferred Stock, but in such event the holders of the outstanding
shares of any such series of Cumulative Preferred Stock to be changed by the
proposed amendment shall be entitled to vote as a class thereon.
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SECTION 8. Merger or Consolidation. In the event any plan of
merger or plan of consolidation of the corporation shall be submitted to a vote
at a meeting of shareholders, the approval of the holders of more than
two-thirds of the outstanding shares of Cumulative Preferred Stock voting as a
class shall be required if such plan of merger or consolidation, as the case
may be, contains any provision which, if contained in a proposed amendment to
the Articles of Incorporation would entitle the holders of Cumulative Preferred
Stock to vote as a class as provided in Section 7 hereof.
SECTION 9. 5-3/4% 1962 Series. There is hereby created an
initial series of Cumulative Preferred Stock which shall be designated
"Cumulative Preferred Stock, 5-3/4% 1962 Series" (herein called the "5-3/4%
1962 Series") and shall consist of 12,000 shares, which number of shares of the
5-3/4% 1962 Series shall not be increased but may be reduced by action of the
Board of Directors as provided in Section 1. The relative rights and
preferences of shares of such series in the respects in which shares of such
series may vary from shares of other series of Cumulative Preferred Stock shall
be as follows:
A. Dividends. The annual dividend rate for shares of the
5-3/4% 1962 Series shall be 5-3/4% per annum.
B. Redemption. Shares of the 5-3/4% 1962 Series shall not be
redeemable at the option of the corporation prior to June 15, 1969 if such
redemption is part of, or a result of, or in anticipation of, any refunding
through the application, directly or indirectly, of funds derived from any
borrowing by the corporation at a net interest cost to the corporation of less
than 5-3/4% per annum, or funds derived from the issuance of any stock of the
corporation bearing a fixed dividend rate of less than 5-3/4% per annum.
Subject to the foregoing restriction, shares of the 5-3/4% 1962 Series shall be
redeemable by the corporation at its option, expressed by a resolution of its
Board of Directors, either as a whole or in part at any time or times, at a
redemption price per share of $105.75 prior to June 15, 1969, which redemption
price shall be reduced by $0.25 per share for each twelve months' period
expiring from June 15, 1968 to the date fixed for redemption plus in each case
an amount equal to accrued and unpaid dividends on the shares to be redeemed.
Redemption of shares of the 5-3/4% 1962 Series at the option of the corporation
shall be made in the manner, on the notice and with the effect provided in
Section 3 of this Article Five. Shares of such series shall also be redeemable
for the sinking fund established for such series as hereinafter provided.
C. Voluntary Liquidation. The amount payable upon shares of
the 5-3/4% 1962 Series in the event of any voluntary liquidation, dissolution
or winding up of the affairs of the corporation shall be the redemption price
which holders of such shares would have been entitled to receive as of the date
of initial payments of any amounts due pursuant to such liquidation,
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dissolution or winding up upon redemption of shares of such series at the
option of the corporation pursuant to the foregoing paragraph B.
D. Sinking Fund. As and for a sinking fund for the benefit
of the 5-3/4% 1962 Series the corporation will call for redemption and redeem
(unless such redemption be waived as hereinafter provided), at a redemption
price of $100 per share plus accrued and unpaid dividends, on December 15, 1963
and on December 15 of each year thereafter to and including December 15, 1968 a
number of shares of the 5-3/4% 1962 Series equal to 2% in each such year of the
largest number of shares of such series theretofore issued, and on December 15,
1969 and on December 15 in each year thereafter to and including December 15,
1976 a number of shares of 5-3/4% 1962 Series equal to 3% in each such year of
the largest number of shares of such series theretofore issued; and on December
15 in each year thereafter a number of shares of 5-3/4% 1962 Series equal to 4%
in each such year of the largest number of shares of such series theretofore
issued (or such lesser number of shares of such series as may then be
outstanding).
Such redemption shall be made in the manner, on the notice and
with the effect provided in Section 3 of this Article Five, provided, however,
that such notice shall state that redemption is being made to satisfy the
sinking fund requirement for shares of the 5-3/4% 1962 Series and that such
redemption may be waived by the holder of the shares so called for redemption
by written notice to the corporation given ten days prior to the redemption
date. By written notice mailed to the corporation at least ten days prior to
any sinking fund redemption date the holder of record of the shares so called
for redemption shall have the right to waive the corporation's obligation in
respect of redemption of such shares on such sinking fund redemption date, and
in such case shares held by such holder shall not be redeemed or retired, but
no such waiver shall affect the corporation's obligation to redeem shares of
such series on any other sinking fund redemption date.
The sinking fund requirement for the 5-3/4% 1962 Series shall
be cumulative so that if in any year the corporation shall not satisfy the
sinking fund requirement for such year (excluding from such requirement shares
whose holders have waived redemption) the amount of the deficiency shall be
added to the sinking fund requirement for the next succeeding year. Unless and
until all such deficiencies shall have been made good, no dividend shall be
paid or declared and no other distribution shall be made on any Common Stock or
11-1/2% Cumulative Convertible Preference Stock and no Common Stock or 11-1/2%
Cumulative Convertible Preference Stock shall be purchased or otherwise
acquired for value by the corporation.
E. Conversion. Shares of the 5-3/4% 1962 Series shall not be
convertible into any other securities of the corporation.
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SECTION 10. 7.10% 1968 Series. By resolution of the Board of
Directors of the corporation pursuant to the authority contained in this
Article Five there has been created a series of Cumulative Preferred Stock
which shall be designated "Cumulative Preferred Stock, 7.10% 1968 Series"
(herein called the "1968 Series") and consisting of 10,000 shares, which number
of shares of the 1968 Series shall not be increased but may be reduced by
action of the Board of Directors as provided in Section 1 of this Article Five.
The relative rights and preferences of shares of such series in the respects in
which shares of such series may vary from shares of other series of Cumulative
Preferred Stock shall be as follows:
A. Dividends. The annual dividend rate for shares of the
1968 Series shall be 7.10% per annum.
B. Redemption. Shares of the 1968 Series shall not be
redeemable at the option of the corporation prior to March 15, 1973 if such
redemption is part of, or a result of, or in anticipation of, any refunding
through the application, directly or indirectly, of funds derived from any
borrowing by the corporation at a net interest cost to the corporation
(computed in accordance with accepted financial practice) of less than 7.10%
per annum, or funds derived from the issuance of any stock of the corporation
bearing a fixed dividend rate of less than 7.10% per annum. Subject to the
foregoing restriction, shares of the 1968 Series shall be redeemable by the
corporation at its option, expressed by a resolution of its Board of Directors,
either as a whole or in part at any time or times, at the following per share
redemption prices: (x) for redemptions on or before March 15, 1989, $107.10,
less $1.00 per share for each period of 36 consecutive months expiring from
March 15, 1968 to the date fixed for redemption and (y) for redemptions after
March 15, 1989, $100; plus in each case an amount equal to accrued and unpaid
dividends on the shares to be redeemed; provided, however, that if during the
period from March 16, 1973 to and including March 15, 1978, shares of the 1968
series are redeemed as a part of or as a result of or in anticipation of, any
refunding through the application, directly or indirectly, of funds derived
from any borrowing by the corporation at a net interest cost to the corporation
(computed in accordance with accepted financial practice) of less than 7.10%
per annum, or funds derived from the issuance of the stock in the corporation
bearing a fixed dividend rate of less than 7.10% per annum, then the redemption
price of the shares of the 1968 Series so to be redeemed shall be the then
applicable redemption price set forth above, plus an additional amount equal to
$6 per share. Redemption of shares of the 1968 Series at the option of the
corporation shall be made in the manner, on the notice and with the effect
provided in Section 3 of this Article Five. Shares of such series shall also
be redeemable for the sinking fund established for such series as hereinafter
provided.
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C. Voluntary Liquidation. The amount payable upon shares of
the 1968 Series in the event of any voluntary liquidation, dissolution or
winding up of the affairs of the corporation shall be the redemption price
which holders of such shares would have been entitled to receive as of the date
of initial payments of any amounts due pursuant to such liquidation,
dissolution or winding up upon redemption of shares of such series at the
option of the corporation pursuant to the foregoing paragraph B.
D. Sinking Fund. As and for a sinking fund for the benefit
of the 1968 Series the corporation will call for redemption and redeem, at a
redemption price of $100 per share plus accrued and unpaid dividends, on March
15, 1969 and on March 15 of each year thereafter to and including March 15,
1974 a number of shares of the 1968 Series equal to 2% in each such year of the
largest number of shares of such series theretofore issued, and on March 15,
1975 and on March 15 in each year thereafter to and including March 15, 1982 a
number of shares of the 1968 Series equal to 3% in each such year of the
largest number of shares of such series theretofore issued; and on March 15 in
each year thereafter a number of shares of the 1968 Series equal to 4% in each
such year of the largest number of shares of such series theretofore issued (or
such lesser number of shares of such series as may then be outstanding).
Such redemption shall be made in the manner, on the notice and
with the effect provided in Section 3 of this Article Five provided, however,
that such notice shall state that redemption is being made to satisfy the
sinking fund requirement for shares of the 1968 Series.
The sinking fund requirement for the 1968 Series shall be
cumulative so that if in any year the corporation shall not satisfy the sinking
fund requirement for such year the amount of the deficiency shall be added to
the sinking fund requirement for the next succeeding year. Unless and until
all such deficiencies shall have been made good, no dividend shall be paid or
declared and no other distribution shall be made on any Common Stock or 11-1/2%
Cumulative Convertible Preference Stock and no Common Stock or 11-1/2%
Cumulative Convertible Preference Stock shall be purchased or otherwise
acquired for value by the corporation.
E. Conversion. Shares of the 1968 Series shall not be
convertible into any other securities of the corporation.
F. Definitions. All terms (including without limitation the
terms "accrued and unpaid dividends"; and "Common Stock") used in this Section
10 which are defined in Section 16 of this Article Five, shall have the meaning
specified therefor in said Section 16.
SECTION 11. 10-1/2% 1971 Series. By resolution of the Board
of Directors of the corporation pursuant to the authority
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contained in this Article Five, there has been created a series of Cumulative
Preferred Stock designated "Cumulative Preferred Stock, 10-1/2% 1971 Series"
(herein called the "1971 Series") and consisting of 10,000 shares, which number
of shares of the 1971 Series shall not be increased but may be reduced by
action of the Board of Directors as provided in Section 1 of this Article Five.
The relative rights and preferences of shares of such series in the respects in
which shares of such series may vary from shares of other series of Cumulative
Preferred Stock shall be as follows:
A. Dividends. The annual dividend rate for shares of the
1971 Series shall be 10-1/2% per annum, payable quarterly on March 15, June 15,
September 15 and December 15 in each year beginning June 15, 1971.
B. Redemption. Shares of the 1971 Series shall not be
redeemable at the option of the corporation on or before March 15, 1976 if such
redemption is part of, or a result of, or in anticipation of, any refunding
through the application, directly or indirectly, of funds derived from any
borrowing by the corporation at a net interest cost to the corporation
(computed in accordance with accepted financial practice) of less than 10-1/2%
per annum, or funds derived from the issuance of any stock of the corporation
having an effective dividend rate of less than 10-1/2% per annum. Subject to
the foregoing restriction, shares of the 1971 Series shall be redeemable by the
corporation at its option, expressed by a resolution of its Board of Directors,
either as a whole or in part at any time or times, at the following per share
redemption prices: (x) for redemptions on or before March 15, 1981, $110.50,
and (y) for redemptions after March 15, 1981, to and including March 15, 1990,
$106.00 less $0.67 per share for each period of twelve consecutive months
expiring from March 15, 1981 to the date fixed for redemption, and (z) for
redemption after March 15, 1990, $100.00; plus in each case an amount equal to
accrued and unpaid dividends on the shares to be redeemed; provided, however,
that if during the period from March 16, 1976 to and including March 15, 1981,
shares of the 1971 Series are redeemed as a part of or as a result of or in
anticipation of, any refunding through the application, directly or indirectly,
of funds derived from any borrowing by the corporation at a net interest cost
to the corporation (computed in accordance with accepted financial practice) of
less than 10-1/2% per annum, or funds derived from the issuance of stock in the
corporation having an effective dividend rate of less than 10-1/2% per annum,
then the redemption price of the shares of the 1971 Series so to be redeemed
shall be the then applicable redemption price set forth above, plus an
additional amount equal to $6.50 per share. Redemption of shares of the 1971
Series at the option of the corporation shall be made in the manner, on the
notice and with the effect provided in Section 3 of this Article Five. Shares
of such series shall also be redeemable for the sinking fund established for
such series as hereinafter provided.
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C. Voluntary Liquidation. The amount payable upon shares of
the 1971 Series in the event of any voluntary liquidation, dissolution or
winding up of the affairs of the corporation shall be the redemption price
which holders of such shares would have been entitled to receive as of the date
of initial payments of any amounts due pursuant to such liquidation,
dissolution or winding up upon redemption of shares of such series at the
option of the corporation pursuant to the foregoing paragraph B.
D. Sinking Fund. As and for a sinking fund for the benefit
of the 1971 Series the corporation will call for redemption and redeem, at a
redemption price of $100 per share plus accrued and unpaid dividends, on March
15, 1972 and on March 15 of each year thereafter to and including March 15,
1981 a number of shares of the 1971 Series equal to 3% in each such year of the
largest number of shares of such series theretofore issued, and on March 15,
1982 and on March 15 in each year thereafter, a number of shares of the 1971
Series equal to 7% in each such year of the largest number of shares of such
series theretofore issued; (or such lesser number of shares of such series as
may then be outstanding). Provided, however, that a holder of shares of the
1971 Series may, at its option, waive the sinking fund redemption requirement
insofar as it may affect such holder for any or all of the redemption dates
commencing March 15, 1972, to and including March 15, 1981 by mailing written
notice of such waiver to the corporation not less than 15 days prior to the
date of the sinking fund redemption to which the waiver relates. Provided
further, that the corporation may, at its option, call for redemption and
redeem on any or all of the sinking fund redemption dates commencing March 15,
1982, a number of shares of the 1971 Series, in addition to the number of
shares thereof required to be redeemed on such dates, up to but not in excess
of 7% of the largest number of shares of such series theretofore issued (or
such lesser number of shares of such series as may then be outstanding).
Such redemption shall be made in the manner, on the notice and
with the effect provided in Section 3 of this Article Five provided, however,
that such notice shall state that redemption is being made to satisfy the
sinking fund requirement for shares of the 1971 Series and that the holder has
the right to waive by not less than 15 days prior written notice any or all of
the sinking fund redemptions commencing March 15, 1972 to and including March
15, 1981.
The sinking fund requirement for the 1971 Series shall be
cumulative, except insofar as the requirement may be waived as aforesaid, so
that if in any year the corporation shall not satisfy the sinking fund
requirement for such year the amount of the deficiency shall be added to the
sinking fund requirement for the next succeeding year. Unless and until all
such deficiencies shall have been made good, no dividend shall be paid or
declared
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and no other distribution shall be made on any Common Stock or 11-1/2%
Cumulative Convertible Preference Stock and no Common Stock or 11-1/2%
Cumulative Convertible Preference Stock shall be purchased or otherwise
acquired for value by the corporation.
E. Conversion. Shares of the 1971 Series shall not be
convertible into any other securities of the corporation.
F. Definitions. All terms (including without limitation the
terms "accrued and unpaid dividends"; and "Common Stock") used in this Section
11 which are defined in Section 16 of this Article Five, shall have the meaning
specified therefor in said Section 16.
SECTION 12. 6% 1982 Series. There is hereby created a series
of Cumulative Preferred Stock which shall be designated "Cumulative Preferred
Stock 6% 1982 Series" (such series being hereinafter called the "6% 1982
Series"), and shall consist of 8,750 shares, which number of shares of the 6%
1982 Series shall not be increased but may be reduced by action of the Board of
Directors as provided in Section 1. The relative preferences and rights, in
the respects in which shares of the 6% 1982 Series may vary from shares of
other series of Cumulative Preferred Stock shall be as follows:
A. Dividends. The annual dividend rate for shares of the 6%
1982 Series shall be 6% per annum payable quarterly on March 15, June 15,
September 15 and December 15 in each year.
B. Redemption. Shares of the 6% 1982 Series shall be
redeemable at the option of the corporation expressed by a resolution of its
Board of Directors either as a whole or in part at any time or times, at a
redemption price per share of $110.00 plus in each case an amount equal to
accrued and unpaid dividends on the shares to be redeemed. Redemption of
shares of the 6% 1982 Series at the option of the corporation shall be made in
the manner, on the notice and with the effect provided in Section 3 of this
Article Five.
C. Voluntary Liquidation. The amount payable upon event of
any voluntary liquidation, dissolution or winding up of the affairs of the
corporation shall be the sum of $100.00, plus the amount, if any, by which 6%
per annum from the date after which dividends on said shares become cumulative
to the date of such liquidation, dissolution or winding up exceeds the
dividends actually paid thereon or declared and set apart for payment thereon.
D. Sinking Fund. There shall be no sinking fund for the
benefit of the 6% 1982 Series.
E. Conversion. Shares of the 6% 1982 Series shall not be
convertible into any other securities of the corporation.
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F. Definitions. All terms (including without limitation the
terms "accrued and unpaid dividends"; and "Common Stock") used in this Section
12 which are defined in Section 16 of this Article Five, shall have the meaning
specified therefor in said Section 16.
SECTION 13. Common Stock. Subject to the foregoing
provisions of this Article Five, such dividends (payable in cash, stock or
otherwise) as may be determined by the Board of Directors may be declared and
paid out of funds legally available therefor upon the Common Stock of the
corporation from time to time.
In the event of any liquidation, dissolution or winding up of
the affairs of the corporation, after payment to the holders of Cumulative
Preferred Stock and 11-1/2% Cumulative Convertible Preference Stock of the
amounts to which they are entitled as hereinbefore provided, the holders of the
Common Stock shall be entitled to share ratably in all assets then remaining
subject to distribution to the shareholders.
SECTION 14. Pre-Emptive Rights. No holder of any shares of
the capital stock of the corporation shall be entitled as of right to purchase
or subscribe for any unissued stock of any class or any additional shares of
any class to be issued by reason of any increase of the authorized capital
stock of this corporation of any class, or bonds, certificates of indebtedness,
debentures or other securities convertible into stock of this corporation or
carrying any right to purchase stock of any class, but any such unissued stock
or such additional authorized issue of any stock or of other securities
convertible into stock, or carrying any right to purchase stock, may be issued
and disposed of pursuant to resolution of the Board of Directors to such
persons, firms, corporations or associations and upon such terms as may be
deemed advisable by the Board of Directors in the exercise of its discretion.
SECTION 15. Voting Rights. Each outstanding share,
regardless of class, shall be entitled to one vote on each matter submitted to
a vote at a meeting of shareholders.
In all elections for directors every stockholder shall have
the right to vote, in person or by proxy, for the number of shares owned by
him, for as many persons as there are directors to be elected or to cumulate
said shares, and give one candidate as many votes as the number of directors
multiplied by the number of his shares shall equal, or to distribute them on
the same principle among as many candidates as he shall think fit.
SECTION 16. Definitions. As used in this Article Five:
(a) The term "accrued and unpaid dividends" with respect to
any share of Cumulative Preferred Stock or
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11-1/2% Cumulative Convertible Preference Stock shall mean an amount
equal to dividends at the rate per annum fixed for the series or, in
the case of 11-1/2% Cumulative Convertible Preference Stock for the
class, for the period from the date upon which dividends on such share
shall have commenced to accrue and be cumulative to the date as of
which accrued and unpaid dividends are being determined, less the
amount of all dividends theretofore paid thereon.
(b) The term "Common Stock" shall mean and include the
authorized Common Stock of the corporation, and for purposes of
Sections 2, 5, 6, 9, 10 and 11 of this Article Five, shall also mean
and include any hereafter authorized stock of the corporation ranking
junior to the Cumulative Preferred Stock with respect to dividends or
on liquidation, dissolution or winding up of the corporation except
that for the purpose of Sections 2, 5, 9, 10 and 11 of this Article
Five it shall not include the 11-1/2% Cumulative Convertible
Preference Stock.
(c) The term "Consolidated Common Equity" shall mean the sum
of the par or stated value of all outstanding Common Stock and any
other stock ranking junior to the Cumulative Preferred Stock with
respect to dividends or on dissolution, liquidation or winding up of
the corporation, plus all paid- in surplus, capital surplus (or less
capital deficit), earned surplus (or less earned surplus deficit),
plus premium on capital stock determined on a consolidated basis for
the corporation and its subsidiaries in accordance with generally
accepted principles of accounting, provided that there shall not be
included any surplus resulting from revaluation of capital assets.
(d) The term "Total Consolidated Capitalization" shall mean
the sum of the total par or stated value of all outstanding capital
stock, plus paid-in surplus, capital surplus (or less capital
deficit), earned surplus (or less earned surplus deficit), premium on
capital stock and the aggregate principal amount of Funded Debt
outstanding determined on a consolidated basis for the corporation and
its subsidiaries in accordance with generally accepted principles of
accounting, provided there shall not be included any surplus resulting
from revaluation of capital assets.
(e) The term "Funded Debt" shall mean all indebtedness
maturing by its terms or renewable at the option of the obligor, more
than one year from the date of creation or issuance thereof or payable
on demand. The term "Consolidated Funded Debt" shall mean the
aggregate amount of Funded Debt of the Company and its subsidiaries,
eliminating intercompany items.
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(f) The term "Net Income Available for Interest" shall mean
the net income of the corporation determined in accordance with
generally accepted principles of accounting after all taxes and all
income deductions but before deducting therefrom interest charges and
amortization of debt discount an expense; provided, however, (i) there
shall be excluded profits or losses realized upon the sale or other
disposition of capital assets, and (ii) there may be included the net
income (determined in the manner aforesaid) during the applicable
period from any property acquired as an entirety, or substantially so,
during such period, or to be acquired concurrently with the issuance
of additional Cumulative Preferred Stock or Parity Stock, and (iii)
there shall be deducted the net income determined in the manner
aforesaid from any property disposed of during the applicable period
(estimated, if necessary) for the whole of the period in question.
(g) The term "Parity Stock" shall mean any stock of the
corporation hereafter authorized ranking on a parity with the
Cumulative Preferred Stock with respect to dividends or upon
dissolution, liquidation or winding up of the corporation.
(h) The term "Consolidated Net Income Available for Common
Stock Dividends" shall mean the net income of the corporation and its
subsidiaries for the applicable period available for dividends on
stock after deducting therefrom dividends paid and accrued on
preferred stock determined on a consolidated basis in accordance with
generally accepted principles of accounting; provided, however, that
no effect shall be given to any gains or losses or other additions or
deductions arising by reason of the issue, purchase, sale, conversion
or retirement by the corporation or any subsidiary of any of its or
their securities, or arising by reason of any purchases, sales,
write-ups, write-downs, increase or decrease in book value, or other
transactions or changes in respect of capital assets, tangible or
intangible and the deduction for income taxes shall be adjusted by
giving effect to any change in the amount thereof resulting from the
elimination of any of the capital transactions or changes referred to
above.
ARTICLE SIX
The total number of Directors which constitutes the Board of
Directors shall be fixed by the by-laws. The Board of Directors shall be
divided into three classes: Class I, Class II and Class III, which shall be as
nearly equal in number as possible. Each Director shall serve for a term
ending on the date of the third annual meeting of shareholders following the
annual meeting at which such Director was elected; provided, however, that each
initial Director in Class I shall hold office
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until the annual meeting of shareholders in 1986; each initial Director in
Class II shall hold office until the annual meeting of shareholders in 1987;
and each initial Director in Class III shall hold office until the annual
meeting of shareholders in 1988. At least three Directors shall be elected in
each year. In the event of any increase or decrease in the authorized number
of Directors, (1) each Director then serving as such shall nevertheless
continue as a Director of the class of which he is a member until the
expiration of his current term, or his earlier resignation, removal from office
or death, and (2) the newly created or eliminated directorships resulting from
such increase or decrease shall be apportioned by the Board of Directors among
the three classes of Directors so as to maintain such classes as nearly equal
as possible. At all meetings of the Board of Directors a majority of Directors
shall be necessary and sufficient to constitute a quorum for the transaction of
business, and the act of a majority of the Directors present at any meeting at
which there is a quorum shall be the act of the Board of Directors, except as
may be otherwise specifically provided by statute or by these Articles of
Incorporation and except that any sale, lease, exchange, transfer or other
disposition (in one transaction or a series of transactions occurring within a
twelve-month period) of any assets of the corporation or any subsidiary of the
corporation having an aggregate book value greater than ten percent (10%) of
the book value of all the assets of the corporation shall require the
affirmative vote of at least 66-2/3% of the number of the entire Board of
Directors as designated in the by-laws.
ARTICLE SEVEN
Section 1. Vote Required for Certain Business Combinations.
A. Higher Vote for Certain Business Combinations. In
addition to any affirmative vote required by law or these
Articles of Incorporation, and except as otherwise expressly
provided in Section 2 of this Article Seven:
(i) any merger or consolidation of the
corporation or any Subsidiary (as hereinafter defined)
with (a) any Interested Shareholder (as hereinafter
defined) or (b) any other corporation (whether or not
itself an Interested Shareholder) which is, or after
such merger or consolidation would be, an Affiliate (as
hereinafter defined) of an Interested Shareholder; or
(ii) 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 a major part of the assets of the
corporation or any Subsidiary; or
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(iii) the issuance or transfer by the corporation
or any Subsidiary of any securities of the corporation
or any Subsidiary to any Interested Shareholder or any
Affiliate of any Interested Shareholder in exchange for
cash, securities or other property; or
(iv) the adoption of any plan or proposal for the
liquidation or dissolution of the corporation proposed
by or on behalf of an Interested Shareholder or any
Affiliate of any Interested Shareholder; or
(v) any reclassification of securities (including
any reverse stock split), or recapitalization of the
corporation, or any merger or consolidation of the
corporation with any of its Subsidiaries or any other
transaction (whether or not with or into or otherwise
involving an Interested Shareholder) which has the
effect, directly or indirectly, of increasing the
proportionate share of the outstanding shares of any
class of equity or convertible securities of the
corporation or any Subsidiary which is directly or
indirectly owned by any Interested Shareholder or any
Affiliate of any Interested Shareholder;
shall require the affirmative vote of the holders of at least 80% of
the voting power of the then outstanding shares of capital stock of
the corporation entitled to vote generally in the election of
directors (the "Voting Stock"), voting together as a single class.
Such affirmative vote shall be required notwithstanding the fact that
no vote may be required, or that a lesser percentage may be specified,
by law or in any agreement with any national securities exchange or
otherwise.
B. Definition of "Business Combination." The term "Business
Combination" as used in this Article Seven shall mean any transaction
which is referred to in any one or more of clauses (i) through (v) of
paragraph A of this Section 1.
Section 2. When Higher Vote is Not Required. The provisions
of Section 1 of this Article Seven shall not be applicable to any particular
Business Combination, and such Business Combination shall require only such
affirmative vote as is required by law and any other provision of these
Articles of Incorporation, if all of the conditions specified in either of the
following paragraphs A and B are met:
A. Approval by Disinterested Directors. The Business
Combination shall have been approved by all of the Disinterested
Directors (as hereinafter defined).
B. Price and Procedure Requirements. All of the following
conditions shall have been met:
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(i) The aggregate amount of the cash and the Fair Market
Value (as hereinafter defined) as of the date of the consummation of
the Business Combination of 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 higher of the following:
(a) (if applicable) the highest per share price
(including any brokerage commissions, transfer taxes and soliciting
dealers' fees) paid by the Interested Shareholder for any shares of
common stock acquired by it (1) within the two-year period immediately
prior to the first public announcement of the proposal of the Business
Combination (the "Announcement Date") or (2) in the transaction in
which it became an Interested Shareholder, whichever is higher;
(b) the Fair Market Value per share of common stock
on the Announcement Date or on the date on which the Interested
Shareholder became an Interested Shareholder (such latter date is
referred to in this Article Seven as the "Determination Date"),
whichever is higher; and
(c) (if applicable) the price per share equal to the
Fair Market Value per share of common stock determined pursuant to the
immediately preceding clause (b), multiplied by the ratio of (x) the
highest per share price (including any brokerage commissions, transfer
taxes and soliciting dealers' fees) paid by or on behalf of the
Interested Shareholder for any shares acquired by it within the
two-year period immediately prior to the Announcement Date to (y) the
Fair Market Value per share of common stock on the first day in such
two-year period on which the Interested Shareholder acquired
beneficial ownership of any share of common stock.
(ii) The aggregate amount of the cash and the Fair Market
Value as of the date of the consummation of the Business Combination
of consideration other than cash to be received per share by holders
of shares of any other class of outstanding Voting Stock shall be at
least equal to the highest of the following (it being intended that
the requirements of this paragraph B(ii) shall be required to be
met with respect to every class of outstanding Voting Stock, whether
or not the Interested Shareholder has previously acquired any shares
of a particular class of Voting Stock):
(a) (if applicable) the highest per share price
(including any brokerage commissions, transfer
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taxes and soliciting dealers' fees) paid by the Interested
Shareholder for any shares of such class of Voting Stock
acquired by it (1) within the two-year period immediately
prior to the Announcement Date or (2) in the transaction in
which it became an Interested Shareholder, whichever is
higher;
(b) (if applicable) the highest preferential
amount per share to which the holders of shares of such class
of Voting Stock are entitled in the event of any voluntary or
involuntary liquidation, dissolution or winding up of the
corporation; and
(c) the Fair Market Value per share of such
class of Voting Stock on the Announcement Date or on the
Determination Date, whichever is higher.
(iii) The consideration to be received by holders of a
particular class of outstanding Voting Stock (including Common
Stock) shall be in cash or in the same form as the Interested
Shareholder has previously paid for shares of such class of
Voting Stock. If the Interested Shareholder has paid for
shares of any class of Voting Stock with varying forms of
consideration, the form of consideration for such class of
Voting Stock shall be either cash or the form used to acquire
the largest number of shares of such class of Voting Stock
previously acquired by it. The price determined in accordance
with paragraphs B(i) and B(ii) of this Section 2 shall be
subject to appropriate adjustment in the event of any stock
dividend, stock split, combination of shares or similar event.
(iv) After such Interested Shareholder has become an
Interested Shareholder and prior to the consummation of such
Business Combination: (a) except as approved by all of the
Disinterested Directors, there shall have been no failure to
declare and pay at the regular date therefor any full
quarterly dividends (whether or not cumulative) on the
outstanding preferred stock; (b) there shall have been (1) no
reduction in the annual rate of dividends paid on the common
stock (except as necessary to reflect any subdivision of the
common stock), except as approved by all of the Disinterested
Directors, and (2) an increase in such annual rate of
dividends as necessary to reflect any reclassification
(including any reverse stock split), recapitalization,
reorganization 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 is
approved by all of the Disinterested Directors; and (c) such
Interested Shareholder shall have not become the beneficial
owner of any additional shares of Voting Stock except as part
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of the transaction which results in such Interested
Shareholder becoming an Interested Shareholder.
(v) After such Interested Shareholder has become an
Interested Shareholder, 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 any tax
credits or other tax advantages provided by the corporation,
whether in anticipation of or in connection with such Business
Combination or otherwise.
(vi) 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 or regulations) shall be mailed to
shareholders of the corporation at least 30 days prior to the
consummation of such Business Combination (whether or not such
proxy or information statement is required to be mailed
pursuant to such Act or subsequent provisions).
Section 3. Certain Definitions. For the purposes of this
Article Seven:
A. A "person" shall mean any individual, firm,
corporation or other entity.
B. "Interested Shareholder" shall mean any person
(other than the corporation or any Subsidiary) who or which:
(i) is the beneficial owner, directly or indirectly,
of more than 10% of the voting power of the outstanding Voting Stock;
or
(ii) is an Affiliate of the corporation and at any time
within the two-year period immediately prior to the date in question
was the beneficial owner, directly or indirectly, of 10% or more of
the voting power of the then outstanding Voting Stock; or
(iii) is an assignee of or has otherwise succeeded to any
shares of Voting Stock which were at any time within the two-year
period immediately prior to the date in question beneficially owned by
any 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:
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(i) which such person or any of its Affiliates or
Associates (as hereinafter defined) beneficially owns,
directly or indirectly; or
(ii) which such person or any of its Affiliates or
Associates has (a) the right to acquire (whether such
right is exercisable immediately or only after the
passage of time), pursuant to any agreement,
arrangement or understanding or upon the exercise of
conversion rights, exchange rights, warrants or
options, or otherwise, or (b) the right to vote
pursuant to any agreement, arrangement or
understanding; or
(iii) 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 B of this
Section 3, the number of shares of Voting Stock deemed to be
outstanding shall include shares deemed owned through
application of paragraph B of this Section 3 but shall not
include any other shares of Voting Stock which may be
issuable pursuant to any agreement, arrangement or
understanding, or upon exercise of conversion rights,
warrants or options, or otherwise.
E. "Affiliate" or "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, 1985.
F. "Subsidiary" means any corporation of which a
majority of any class of equity security is owned, directly
or indirectly, by the corporation; provided, however, that
for the purposes of the definition of Interested Shareholder
set forth in paragraph B of this Section 3, the term
"Subsidiary" shall mean only a corporation of which a
majority of each class of equity security is owned, directly
or indirectly, by the corporation.
G. "Disinterested Director" means any member of the
Board of Directors who is unaffiliated with the Interested
Shareholder and was a member of the Board of Directors prior
to the time that the Interested Shareholder became an
Interested Shareholder, and any successor of a Disinterested
Director who is unaffiliated with the Interested Shareholder
and is recommended to succeed a Disinterested Director by
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all of the Disinterested Directors then on the Board of Directors.
H. "Fair Market Value" means: (i) in the case of
stock, the highest closing sale price during the 30-day
period immediately preceding the date in question of a share
of such stock on the Composite Tape for New York Stock
Exchange-Listed Stocks, or, if such stock is not quoted on
the Composite Tape, on the New York Stock Exchange, or, if
such stock is not listed on such Exchange, on the principal
United States securities exchange registered under the
Securities Exchange Act of 1934 on which such stock is
listed, or, if such stock is not listed on any such
exchange, the highest closing bid quotation with respect to
a share of such stock during the 30-day period 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 the Board of Directors in good faith;
and (ii) 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 the Board of Directors in good
faith.
I. In the event of any Business Combination in which
the corporation survives, the phrase "other consideration to
be received" as used in paragraphs B(i) and (ii) of Section
2 of this Article Seven shall include the shares of common
stock and/or the shares of any other class of outstanding
Voting Stock retained by the holders of such shares.
Section 4. Powers of the Board of Directors, No Effect on
Board of Directors Discretion, Etc. A majority of the Directors shall have the
power and duty to determine for the purposes of this Article Seven, on the
basis of information known to them after reasonable inquiry, (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, (D) whether the assets which are the subject of any
Business Combination constitute a major part of the assets of the corporation
or any Subsidiary. A majority of the Directors shall have the further power to
interpret all of the terms and provisions of this Article Seven. The fact that
any Business Combination complies with the provisions of paragraph B of Section
2 of this Article Seven shall not be construed to impose any fiduiciary duty,
obligation or responsibility on the Board of Directors, or any member thereof,
to approve such Business Combination or recommend its adoption or approval to
the shareholders of the corporation, nor shall such compliance limit, prohibit
or otherwise restrict in any manner the Board of Directors, or any member
thereof, with respect to evaluations of or actions and responses taken with
respect to such Business Combination.
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Section 5. No Effect on Fiduciary Obligations of Interested
Shareholders. Nothing contained in this Article Seven shall be construed to
relieve any Interested Shareholder from any fiduciary obligation imposed by
law.
Section 6. Amendment, Repeal, Etc. Notwithstanding any other
provisions of these Articles of Incorporation or the by-laws (and
notwithstanding the fact that a lesser percentage may be specified by law,
these Articles of Incorporation or the by-laws) the affirmative vote of the
holders of 80% or more of the outstanding Voting Stock, voting together as a
single class, shall be required to amend or repeal, or adopt any provisions
inconsistent with this Article Seven.
ARTICLE EIGHT
The by-laws of the corporation may be made, altered, amended
or repealed only by the affirmative vote of the holders of at least 66-2/3% of
the voting power of the then outstanding capital stock of the corporation
entitled to vote generally in the election of directors voting together as a
single class or by the affirmative vote of 66-2/3% of the number of the entire
Board of Directors as designated in the by-laws of the corporation in effect at
that time.
Special meetings of the shareholders may be called only by the
chairman, by the president, by the secretary, by the board of directors, in the
manner prescribed in the by-laws by the holders of not less than 20% of all the
outstanding shares entitled to vote on the matter for which the meeting is
called or by such other officers or persons as may be provided in the by-laws.
The holders of at least 70% of the voting power of the then
outstanding shares of capital stock of the corporation entitled to vote
generally in the election of directors shall be required to constitute a quorum
for any meeting of the shareholders at which a vote upon the removal of one or
more directors is to occur.
Any action required by law to be taken at any annual of
special meeting of the shareholders, or any other action which may be taken at
a meeting of the shareholders, may be taken without a meeting and without a
vote, only if a consent in writing, setting forth the action so taken, shall be
signed by all of the shareholders entitled to vote with respect to the subject
matter thereof.
ARTICLE NINE
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Except where a higher approval and vote is expressly required
in Article Five, Seven or Eight of these Articles of Incorporation, and except
where a higher approval and vote is expressly required by any provision of
applicable law which may not be superceded by a provision of the articles of
incorporation, any provision of applicable law which (a) unless otherwise
provided in the articles of incorporation requires the approval and affirmative
vote of the holders of two-thirds or more of the outstanding shares entitled to
vote on a corporate action or two-thirds or more of the outstanding shares of
any class or series of shares entitled to vote as a class on a corporate
action, including, but not limited to, the following corporate actions: (i)
amendment to the articles of incorporation, (ii) adoption of a plan of merger,
consolidation or share exchange, (iii) sale, lease, exchange or other
disposition of all, or substantially all, of the corporation's properties and
assets other than in the usual and regular course of the corporation's
business, and (iv) dissolution of the corporation, and (b) permits the articles
of incorporation to provide for a lesser approval and affirmative vote, shall
only require the approval and affirmative vote of the holders of a majority of
the outstanding shares entitled to vote on the corporate action, and a majority
of the outstanding shares of each class or series of shares entitled to vote as
a class on the corporate action.
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AS RESTATED EXHIBIT 3.02
APRIL 29, 1994
BY-LAWS OF
UNITED CITIES GAS COMPANY
OFFICES
1. The principal office shall be in the City of Brentwood, County of
Williamson, State of Tennessee.
2. The corporation may also have offices at such other places as the
board of directors may from time to time appoint or the business of the
corporation may require.
SEAL
3. The corporation seal shall have inscribed thereon the name of the
corporation, the year of its organization and the words "Corporate Seal,
Illinois." Said seal may be used by causing it or a facsimile thereof to be
impressed or affixed or in any other manner reproduced.
4. Except as otherwise provided herein, meetings of the shareholders may
be held at such place, either within or without the State of Illinois, as may
be designated by the board of directors and stated in the notice of the
meeting.
5. The Annual Meeting of shareholders shall be held on the last Friday
of April in each year if not a legal holiday, and, if a legal holiday, then on
the next secular day following, at ten-thirty o'clock a.m., when they shall
elect, by a plurality vote, by ballot, a board of directors, and transact such
other business as may properly be brought before the meeting.
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6. The holders of a majority of the shares issued and outstanding, and
entitled to vote thereat, present in person, or represented by proxy, shall be
requisite and shall constitute a quorum at all meetings of the shareholders for
the transaction of business except as otherwise provided by law, by the
Articles of Incorporation by these by-laws. If, however, such majority shall
not be present or represented at any meeting of the shareholders, a majority of
the shareholders entitled to vote thereat, present in person or by proxy, shall
have the power to adjourn the meeting from time to time, without notice other
than announcement at the meeting, until the requisite amount of voting shares
shall be present. At such adjourned meeting at which the requisite amount of
voting shares shall be represented any business may be transacted which might
have been transacted at the meeting as originally notified.
7. At each meeting of the shareholders every shareholder having the
right to vote shall be entitled to vote in person or by proxy appointed by an
instrument in writing subscribed by such shareholder. No proxy shall be valid
after eleven months from the date of its execution unless otherwise provided in
the proxy. Each outstanding share, regardless of class, shall be entitled to
one vote on each matter submitted to a vote at a meeting of shareholders. In
all elections for directors every shareholder shall have the right to vote in
person or by proxy for the number of shares owned by him for as many persons as
there are directors to be elected, or to cumulate said shares and give one
candidate as many votes as the number of directors multiplied by the number
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of his shares shall equal, or to distribute them on the same principle among as
many candidates as he shall think fit. Except where the books maintained by
the Transfer Agent for the transfer of shares of the corporation shall have
been closed or a date shall have been fixed as a record date for the
determination of its shareholders entitled to vote, no shares shall be voted at
any election for directors which shall have been transferred on the books
maintained by said Transfer Agent within twenty days next preceding such
election of directors.
8. Written notice of the annual meeting shall be mailed at least ten, or
in case a merger or consolidation is to be acted upon at least twenty, but not
more than forty days prior to the date thereof to each shareholder entitled to
vote thereat at such address as appears on the books maintained by the Transfer
Agent for the transfer of shares of the corporation.
9. The Transfer Agent of the corporation shall make, at least ten days
before each meeting of shareholders, a complete list of the shareholders
entitled to vote at such meeting, arranged in alphabetical order, with the
address of and the number of shares held by each, which list, for a period of
ten days prior to such meeting, shall be kept on file at the registered office
of the corporation and shall be subject to inspection by any shareholder at any
time during usual business hours. Such list shall also be produced and kept
open at the time and place of the meeting and shall be subject to the
inspection of any shareholder during the whole time of the meeting.
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10. Special meetings of the shareholders may be called only by the
chairman, by the president, by the secretary, by the board of directors, or in
the manner hereafter prescribed by the holders of not less than one-fifth of
all the outstanding shares entitled to vote on the matter for which the meeting
is called. At any time, upon written request of shareholders holding in the
aggregate one-fifth of all the outstanding shares entitled to vote on the
matter for which a meeting is called, it shall be the duty of the secretary to
call a special meeting of shareholders to be held at the registered office at
such time as the secretary may fix, not less than ten nor more than forty days
after the receipt of said request, and if the secretary shall neglect or refuse
to issue such call, shareholders making the request may do so upon no less than
forty days' written notice. Such request shall state the purpose or purposes
of the proposed meeting.
11. Persons authorized to call shareholders' meetings shall cause
written notice of the time, place and purpose of the meeting to be given all
shareholders entitled to vote at such meeting, at least ten, or in case a
merger or consolidation is to be acted upon at the meeting, at least twenty but
not more than forty days prior to the day named for the meeting, provided that
written notice given by shareholders calling a meeting in accordance with
paragraph 10 above shall be given forty days prior to the date named for the
meeting. If such written notice is placed in the United States mail, postage
prepaid, and addressed to a shareholder at his last known post office address,
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notice shall be deemed to have been given him. Notice of any shareholders'
meeting may be waived by any shareholder at any time.
12. Business transacted at all special meetings shall be confined to the
object stated in the call.
DIRECTORS
13. The property and business of the corporation shall be managed by its
board of directors, which shall be eight in number and divided into three
classes, which shall be as nearly equal in number as possible, as provided in
the Articles of Incorporation. The number of directors may be increased or
decreased by amendment to these by-laws, provided the number of directors shall
not be less than three. In case of any increase in the number of directors,
the additional directors may be elected by the shareholders at any meeting,
annual or special, duly called for that purpose, or by the board of directors.
Except as otherwise herein provided, the directors shall be elected at the
annual meeting of shareholders. Each director shall be elected to serve until
his successors shall be elected and shall qualify; provided, however, that in
no event shall any director who is first elected on or after February 16, 1976,
be permitted to serve on or after his date of retirement, which retirement date
shall be deemed to be the date of the Annual Meeting of Shareholders of the
Company next following the date on which a director has attained age 70.
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Nominations for the election of directors may be made by the board of
directors or by any shareholder entitled to vote for the election of directors.
Nominations by the board of directors may be made at any time. Nominations by
shareholders shall be made by notice in writing, delivered or mailed by first
class United States mail, postage prepaid, to the secretary of the corporation
not less than 30 days nor more than 40 days prior to any meeting of the
shareholders called for the election of directors; provided, however, that if
less than 30 days' notice of the meeting is given to shareholders, such written
notice shall be delivered or mailed, as prescribed, to the secretary of the
corporation not later than the close of the seventh day following the day on
which notice of the meeting was mailed to shareholders. Each notice of
nomination by a shareholder shall set forth (i) the name, age, business address
and, if known, residence address of each nominee proposed in such notice, (ii)
the principal occupation or employment of each such nominee and (iii) the
number of share of stock of the corporation which are beneficially owned by
each nominee. The chairman of the meeting may, if the facts warrant, determine
and declare to the meeting that a nomination was not made in accordance with
the foregoing procedure, and if he should so determine, he shall so declare to
the meeting and the defective nomination shall be disregarded.
14. The directors may hold their meetings and have one or more offices,
and keep the books of the corporation in the City of Brentwood, Tennessee, or
at such other places as they may from time to time determine.
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15. The entire board of directors or any individual director may, at any
special meeting of the shareholders called for that purpose in the manner
provided by Paragraph 10 and 11 hereof, be removed from office by a vote of
shareholders holding a majority of the outstanding shares entitled to a vote at
an election of directors. In case the board or any one or more directors be so
removed, new directors may be elected at the same meeting. Unless the entire
board be removed, no individual director shall be removed in case the votes of
a sufficient number of shares are cast against the resolution for his removal,
which, if cumulatively voted at an election of the whole board, would be
sufficient to elect one or more directors.
16. If the office of a any director or directors becomes vacant by
reason of death, resignation, retirement, disqualification, removal from
office, or otherwise, such vacancy or vacancies may be filled by the
affirmative vote of a majority of the remaining directors. A director thus
elected to fill any vacancy shall hold office until the next annual election
and until a successor or successors have been duly elected, unless sooner
displaced.
17. In addition to the powers and authorities by these by-laws expressly
conferred upon it, the board of directors may exercise all such powers of the
corporation and do all such lawful acts and things as are not by statute or by
the Articles of Incorporation or by these by-laws directed or required to be
exercised or done by the shareholders.
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EXECUTIVE COMMITTEE
18. The board of directors shall by resolution or upon recommendation of
the Chairman and approval of the majority of the entire Board, establish an
Audit Committee and a Compensation Committee and may by resolution or
resolutions, passed by a majority of the whole Board, designate one or more
additional committees, each committee to consist of two or more directors, who
shall serve at the pleasure of the Board. Such committees shall have any may
exercise such powers permitted by law as may be directed or delegated by the
board of directors from time to time. Vacancies in the membership of the
committees shall be filed by the board of directors at a regular or a special
meeting called for that purpose.
COMPENSATION OF DIRECTORS
19. Directors who are not employees of the Company shall be paid a
stated salary for their service plus a fixed sum and expenses of attendance at
each regular and special meeting of the board; PROVIDED, that nothing herein
contained shall be construed to preclude any director from serving the
Corporation in any other capacity and receiving compensation therefor or
preclude the Chairman of the Board from receiving any stated salary for his
services as such. Members of special or standing committees will be allowed
like compensation for attending committee meetings. The board of directors
shall have the authority to fix the compensation of directors unless otherwise
provided by the Articles of Incorporation.
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MEETINGS OF THE BOARD
20. Each newly elected board shall hold its annual meeting immediately
following the annual meeting of shareholders at the place where such annual
meeting of shareholders was held, and no notice of such annual meeting to the
new elected directors shall be necessary in order legally to constitute the
annual meeting, provided a quorum shall be present.
21. Regular meetings of the board of directors may be held at such place
as a majority of the directors may from time to time appoint. Notice of such
regular meeting shall be given at least five days before the meeting by mail or
telegram by the chairman of the board or in his absence, by the president.
Such notice need not specify the business to be transacted at such regular
meeting, but shall state that the meeting to be held is a regular meeting of
the board.
22. Special meetings of the board may be called by the chairman of the
board, or in his absence, by the president on five (5) days' notice to each
director, by mail or telegram, or notice may be waived by the directors.
Special meetings shall be called by the chairman of the board or by the
president or the secretary in like manner and on like notice on the written
request of two directors.
23. At all meetings of the board a majority of directors shall be
necessary and sufficient to constitute a quorum for the transaction of
business, and the act of a majority of the directors present at any meeting at
which there is a quorum shall
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be the act of the board of directors, except as may be otherwise specifically
provided by statute or by the Articles of Incorporation or by these By-laws.
24. No business shall be transacted at any special meeting of the board
which shall not have been stated in the notice thereof, except upon written
approval of all the directors of the corporation.
OFFICERS
25. The officers of the corporation shall be elected by the directors
and shall be a chairman of the board, a president, one or more vice presidents,
a secretary and a treasurer. The board of directors may also appoint one or
more assistant secretaries and assistant treasurers. Any two of the offices of
the corporation may be held by one person except the offices of president and
secretary. The board of directors may appoint one or more assistant
secretaries and assistant treasurers to perform their respective duties and to
have such powers of the secretary and treasurer as shall from time to time be
assigned to them by the board of directors.
26. The chairman of the board and the president shall be a member of the
board of directors. No other officers of the corporation need be a member of
the board. No vice president who is not a director may succeed to or fill the
office of the president.
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27. The board may appoint such other officers and agents as it shall
deem necessary, who shall hold their offices for such terms and shall exercise
such powers and perform such duties as shall be determined from time to time by
the board.
28. The salaries of all elected officers of the corporation shall be
fixed by the board of directors.
29. The officers of the corporation shall hold office until their
successors are chosen and qualify in their stead. Any officer, manager or
agent elected or appointed by the board of directors may be removed at any time
by the affirmative vote of a majority of the whole board of directors, whenever
in their judgment the best interest of the corporation will be served thereby,
such removal, however, to be without prejudice to the contract rights of the
person so removed.
If the office of any officer or officers becomes vacant for any reason,
the vacancy shall be filled by the affirmative vote of a majority of the whole
board of directors.
30. The chairman of the board shall preside at all meetings of the
shareholders and the board of directors.
PRESIDENT
31. The president shall be the chief executive officer of the
corporation and shall have active supervision and general charge of the
property, business and employees of the corporation, subject, however, to the
control of the board of directors; he shall see that all resolutions and orders
of the board of directors are carried into effect; he shall exercise
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such other powers and perform such other duties as shall be incident to the
office of president or as may be required by the board of directors. In the
absence or inability to act of the chairman of the board of directors, the
president shall preside at all meetings of the shareholders and the board of
directors and shall during such absence exercise all the powers of the chairman
of the board.
32. He shall execute bonds, mortgages, and other contracts requiring the
seal, under the seal of the corporation, but the authority to execute such
instruments may also be vested in others as provided in Paragraph 41 of these
by-laws.
33. He shall be EX OFFICIO a member of all standing committees, and
shall have the general powers and duties of supervision and management usually
vested in the office of president of a corporation.
VICE PRESIDENTS
34. Each vice president shall have such powers and perform such duties
as the board of directors may from time to time prescribe or as the chairman of
the board or the president may from time to time delegate to him. At the
request of the president, any vice president may, in the case of the absence or
inability to act of the president, temporarily act in his place. In the case
of the death of the president or in the case of his absence or inability to act
where no vice president has been
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designated to act temporarily in his place, the board of directors shall
designate one or more vice presidents to perform the duties of the president.
THE SECRETARY AND ASSISTANT SECRETARIES
35. The secretary shall attend all sessions of the board and all
meetings of the shareholders and record all votes and the minutes of all
proceedings in a book to be kept for that purpose. He shall give, or cause to
be given, notice of all meetings of the shareholders and special meetings of
the board of directors, and shall perform such other duties as may be
prescribed by the board of directors or president, under whose supervision he
shall be. He shall keep in safe custody the seal of the corporation, and when
authorized by the board, affix the same to any instrument requiring it, and
when so affixed, it shall be attested by his signature or by the signature of
the assistant secretary or an assistant secretary.
36. The assistant secretary, or assistant secretaries in the order of
their seniority, shall, in the absence or disability of the secretary, perform
the duties and exercise the powers of the secretary, and shall perform such
other duties as the board of directors shall prescribe.
THE TREASURER AND ASSISTANT TREASURERS
37. The treasurer shall have the custody of the corporate funds and
securities and shall keep full and accurate accounts or receipts and
disbursements in books belonging to the corporation
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and shall deposit all moneys, and other valuable effects in the name and to the
credit of the corporation in such depositaries as may be designated by the
board of directors.
38. He shall disburse the funds of the corporation as may be ordered by
the board, taking proper vouchers for such disbursements, and shall render to
the president and directors, at the regular meetings of the board, or whenever
they may require it, an account of all his transactions as treasurer and of the
financial condition of the corporation.
39. If required by the board of directors, he shall give the corporation
a bond in such sum, and with such surety or sureties as shall be satisfactory
to the board, for the faithful performance of the duties of his office, and for
the restoration to the corporation, in case of his death, resignation,
retirement or removal from office, of all books, papers, vouchers, money and
other property of whatever kind in his possession or under his control
belonging to the corporation.
40. The assistant treasurer, or assistant treasurers in the order of
their seniority, shall, in the absence or disability of the treasurer, perform
the duties and exercise the powers of the treasurer, and shall perform such
other duties as the board of directors shall prescribe.
DUTIES OF OFFICERS MAY BE DELEGATED
41. The board of directors, except as otherwise provided in these by-laws, may
authorize any officer or officers, or agent or agents, to enter into any bond,
mortgage or contract or execute
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and deliver any instrument in the name and on behalf of the corporation, and
such authority may be general or confined to specific instances; and, unless so
authorized by the board of directors or by the provisions of these by-laws, no
officer, agent or employee other than the chairman of the board of directors
and the president shall have any power or authority to bind the corporation by
any contract or engagement or to pledge its credit or to render it liable
pecuniarily for any purpose or to any allowance.
42. In case of the absence of any officer of the corporation or for any
other reason that the board may deem sufficient, the board may delegate, for
the time being, the powers or duties or any of them, of such officer to any
other officer, or to any director.
CONSIDERATION FOR SHARES
43. Without the consent of any holder of any share of the capital stock
of this corporation, the shares of stock of this corporation may be issued by
it from time to time in such number or amount of shares of said stock, and for
such consideration, not less than the par value thereof, in labor or services
actually performed, money or property, as from time to time may be fixed and
determined by the board of directors of this corporation at any annual meeting
or any special meeting called for said purpose, and the right, power and
authority of said board of directors from time to time so to authorize and
order the issuance by this corporation of the said shares of said
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stock, in such number or amount of share, and for such consideration in labor,
services actually performed, money or property, as from time to time said board
may fix and determine, is hereby absolutely reserved to said board of
directors.
Payment or delivery to, or receipt by this corporation of such
consideration as may be so fixed and determined by its board of directors for
the issuance of any share or shares of its said stock, as hereinbefore in this
Paragraph 43 provided, shall operate and be construed, deemed and held: (i) to
discharge, release and satisfy fully and absolutely, all liability to this
corporation and/or to its creditors now or at any time hereafter existing, of
any subscriber for, and/or holder or any such share or shares so authorized to
be issued in any way on account of, founded upon, or arising out of any
subscription for, and/or purchase of, and/or issuance of a certificate or
certificates representing such share or shares, and (ii) to constitute such
share or shares as full paid and non-assessable.
CERTIFICATES REPRESENTING SHARES
44. Certificates evidencing the ownership of shares of the corporation
shall bear such serial designation (which may be a combination of letters and
numbers) as shall be prescribed by the board of directors and the ownership
thereof shall be recorded in books maintained by the Transfer Agent for
recording the transfer of shares of the corporation as they are issued. They
shall state that the corporation is organized under the laws of the State of
Illinois, the name of the person of whom issued, the
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number and class of shares, and the designation of the series, if any, which
such certificate represents, the par value of each share represented by such
certificate, and such authorization number as may be prescribed by an Order or
Orders of the Illinois Commerce Commission. They shall be signed by the
president or a vice president, and the secretary or an assistant secretary, and
sealed with the seal or a facsimile seal of the corporation. In case the seal
of the corporation is changed after the certificate is sealed with the seal or
a facsimile of the seal of the corporation, but before it is issued, the
certificate may be issued by the corporation with the same effect as if the
seal had not been changed. Where such certificate is countersigned by a
transfer agent other than the corporation itself or an employee of the
corporation, or by a transfer clerk and registered by a registrar, the
signatures of the president or vice president and the secretary or assistant
secretary upon such certificate may be facsimiles, engraved or printed. In
case any officer who has signed or whose facsimile signature has been placed
upon such certificate shall have ceased to be such officer before such
certificate is issued, it may be issued by the corporation with the same effect
as if such officer had not ceased to be such at the date of its issue.
Every certificate representing shares issued by the corporation shall set
forth upon the face or back of the certificate a full or summary statement of
all the designations, preferences, qualifications, limitations, restrictions,
and special or relative rights of the shares of each class authorized
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to be issued, and if the corporation is authorized to issue any preferred or
special class in series, the variations in the relative rights and preferences
between the shares of each such series so far as the same have been fixed and
determined and the authority of the board of directors to fix and determine the
relative rights and preferences of subsequent series; provided that such
statement may be omitted from the certificate if it shall be set forth upon the
face or back of the certificate that such statement, in full, will be furnished
by the corporation to any shareholder upon request without charge.
TRANSFER OF SHARES
45. Transfers of shares shall be made on the books maintained by the
Transfer Agent for the transfer of shares of the corporation only upon
surrender of the certificate therefor, endorsed by the person named in the
certificate or by attorney lawfully constituted in writing.
CLOSING OF TRANSFER BOOKS
46. The board of directors shall have power to close the stock transfer
books of the corporation for a period not exceeding forty days preceding the
date of any meeting of shareholders or the date for payment of any dividend or
distribution, or the date for the allotment of rights, or, subject to contract
rights with respect thereto, the date when any change or conversion or exchange
of shares will be made or go into effect; provided, however, if the share
transfer books shall
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be closed for the purpose of determining shareholders entitled to notice of or
to vote at a meeting of shareholders, such books shall be closed for at least
10 days, or in the case of a merger or consolidation at least 20 days,
immediately preceding such meeting; and provided, further, that in lieu of
closing the stock transfer books as aforesaid, the board of directors may fix
in advance a date at least 10, or in the case of a merger or consolidation at
least 20, but not more than 40 days preceding the date of any meeting of
shareholders or the date for payment of any dividend or distribution, or the
date for the allotment of rights, or, subject to contract rights with respect
thereto, the date when any change or conversion of exchange of shares will be
made or go into effect, as a record date for the determination of the
shareholders entitled to notice of, and to vote at, any such meeting, or
entitled to receive payment of any dividend, or to any such allotment of
rights, or to exercise the rights in respect of any such change, conversion or
exchange of shares of capital stock, and in such case only such shareholders as
shall be shareholders of record on the date so fixed shall be entitled to such
notice of, and to vote at, such meeting, or to receive payment of such
dividend, or to receive such allotment or rights, or to exercise such rights,
as the case may be, notwithstanding any transfer of any stock on the books of
the corporation after any such record date fixed as aforesaid.
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REGISTERED SHAREHOLDERS
47. The corporation shall be entitled to treat the holder of record of
any share or shares of the corporation as the holder in fact thereof and,
accordingly, shall not be bound to recognize any equitable or other claim to or
interest in such share on the part of any other person, whether or not it shall
have express or other notice thereof, save as expressly provided by the laws of
Illinois.
LOST CERTIFICATES
48. Any person claiming a certificate of stock to be lost or destroyed,
shall make an affidavit or affirmation of that fact and advertise the same in
such manner as the board of directors may require. The owner of a lost or
destroyed certificate(s), or his legal representative will give the corporation
a bond, sufficient to indemnify the corporation against any claim that may be
made against it on account of the alleged loss of any such certificate. A new
certificate of the same tenor and for the same number of shares as the one
alleged to be lost or destroyed, may be issued without requiring any bond,
when, in the judgment of the directors it is proper so to do.
INSPECTION OF BOOKS
49. The directors shall determine from time to time whether and, if
allowed, when and under what conditions and regulations the accounts and books
for the corporation (except as may by statute be specifically open to
inspection) or any of them shall
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be open to the inspection of the shareholders, and the shareholders' rights in
this respect are and shall be restricted and limited accordingly.
CHECKS
50. All checks or demands for money and notes of the corporation shall
be signed by such officer or officers as the board of directors may from time
to time designate.
FISCAL YEAR
51. The fiscal year shall begin the first day of January in each year.
DIVIDENDS
52. Dividends upon shares of the corporation, subject to the provisions
of the Articles of Incorporation, may be declared by the board of directors at
any regular or special meeting, pursuant to law. Dividends may be paid in
cash, in property, or in shares of the corporation, and shall be paid only out
of the surplus of the aggregate of the assets of the corporation over the
aggregate of its liabilities, including in the latter the amount of its capital
shares.
Before payment of any dividend, there may be set aside out of any funds
of the corporation available for dividends such sum or sums as the directors
from time to time, in their absolute discretion, think proper as a reserve fund
to meet contingencies, or for equalizing dividends, or for repairing or
maintaining any
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property of the corporation, or for such other purpose as the directors shall
think conductive to the interests of the corporation.
DIRECTORS' ANNUAL STATEMENT
53. The board of directors shall present at each annual meeting and when
called for by vote of the shareholders at any special meeting of the
shareholders, a full and clear statement of the business and condition of the
corporation.
NOTICES
54. Whenever under the provisions of these by-laws notice is required to
be given to any director, officer or shareholder, it shall not be construed to
mean any requirement for personal notice, but such notice may be given in
writing, by mail, by depositing the same in the post office or letter box, in a
postpaid, sealed wrapper, addressed to such shareholder, officer or director at
such address as appears on the books of the corporation, or, in default of
other address, to such director, officer or shareholder at the General Post
Office in the City of Chicago, Illinois, and such notice shall be deemed to be
given at the time when same shall be thus mailed.
55. The notice provided for in these by-laws of any general or special
meeting of the shareholders, or general or special meeting of the directors,
may be waived in writing by the shareholders or directors, respectively.
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INDEMNIFICATION OF DIRECTORS AND OFFICERS
56. Each director or officer of the corporation, each former director or
officer, and any person who serves or has served at the request of the
corporation as a director or officer of another corporation in which the
corporation owned shares of the capital stock or of which it was a creditor,
shall be indemnified by the corporation against any costs and expenses which
may be imposed upon or actually and necessarily incurred by him (and for which
he is not otherwise reimbursed), including the amount of any judgments or
fines, in connection with the defense of any action, suit or proceeding,
whether criminal or civil, in which he may be named as a party by reason of his
being or having been such director or officer, or by reason of any action
alleged to have been taken or omitted by him in either such capacity; provided,
however, that the corporation shall not indemnify any such person against any
costs or expenses imposed upon or incurred by him in relation to matters as to
which he shall be finally adjudged to be liable for negligence or misconduct in
the performance of duty. In the event of a settlement of any such action, suit
or proceeding prior to final adjudication, or in the event of a settlement or
any claim made against any such person by reason of his being or having been
such director or officer, such person shall be indemnified against any costs
and expenses actually incurred by him, including any amount paid to effect such
settlement, if the corporation is advised by independent counsel selected or
approved by its board of directors that he acted without negligence or
misconduct in the performance of duty
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and that such costs and expenses are not unreasonable. In the event of a
criminal action, suit or proceeding, a conviction or judgment (whether based on
a plea of guilty or nolo contendere or its equivalent, or after trial) shall
not be deemed an adjudication that such person is liable for negligence or
misconduct in the performance of duty if he acted in good faith in what he
considered to be the best interests of the corporation or such other
corporation or such other corporation and with no reasonable cause to believe
that the action was illegal.
The right of indemnification in this Paragraph 56 provided shall insure
to each person referred to in the first paragraph of this Paragraph 56 whether
or not he is such director or officer at the time such costs or expenses are
imposed or incurred, and whether or not the claim asserted against him is based
on matters which antedate the adoption of these by-laws; and in the event of
his death or incapacity shall extend to his legal representatives. Each person
who shall act as a director or officer of the corporation, or if any such other
corporation at the request of the corporation, shall be deemed to be doing so
in reliance upon such right of indemnification; and such right shall not be
exclusive of any other right which he may have.
None of the provisions of this Paragraph 56 shall be construed as a
limitation upon the right of the corporation to exercise its general power to
enter into a contract or undertaking of indemnity with a director or officer in
any proper
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case not provided for herein. The provisions of Paragraph 56 shall be subject
to any limitations contained in applicable statutory laws.
VOTING SHARE IN OTHER CORPORATIONS
57. Unless otherwise ordered by the shareholders, the chairman of the
board, the president or a vice president shall have full power and authority in
behalf of the corporation to attend, and to act and to vote, at any meeting of
shareholders of any corporation in which this corporation may hold shares, and
in connection with such meeting shall possess and may exercise in behalf of the
corporation any and all rights and powers incident to the ownership of such
shares, including the power to appoint proxies therefor and to execute any and
all instruments for that purpose. The directors may, from time to time by
resolution, direct the manner in which shares may be voted or confer these
powers upon any other person or persons.
AMENDMENTS
58. These by-laws may be altered or amended only in the manner
prescribed by the Articles of Incorporation.
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