File No. 30 - 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM U5S
ANNUAL REPORT
For the Year Ended December 31, 2002
Filed Pursuant to the Public Utility Holding Company Act of 1935
by
UNITIL CORPORATION
6 Liberty Lane West, Hampton, New Hampshire 03842-1720
TABLE OF CONTENTS
ITEMS PAGE
- ----- ----
Item 1 SYSTEM COMPANIES AND INVESTMENTS THEREIN 1
Item 2 ACQUISITIONS OR SALES OF UTILITY ASSETS 2
Item 3 ISSUE, SALE, PLEDGE, GUARANTEE, OR ASSUMPTION OF SYSTEM
SECURITIES 2
Item 4 ACQUISITION, REDEMPTION OR RETIREMENT OF SYSTEM SECURITIES 3
Item 5 INVESTMENTS IN SECURITIES OF NONSYSTEM COMPANIES 4
Item 6 Part I OFFICERS AND DIRECTORS OF UNITIL CORPORATION AND
SUBSIDIARIES 4
Part II Officer and directors with a financial connection 6
Part III (a) COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS 7
(b) OWNERSHIP OF SECURITIES 16
(c) TRANSACTIONS WITH SYSTEM COMPANIES 17
(d) INDEBTEDNESS TO SYSTEM COMPANIES 17
(e) OTHER BENEFITS 17
(f) RIGHTS TO INDEMNITY 17
Item 7 Part I CONTRIBUTIONS AND PUBLIC RELATIONS - to any political
party 19
Part II CONTRIBUTIONS AND PUBLIC RELATIONS - to any citizens
group 19
Item 8 Part I SERVICE, SALES AND CONSTRUCTION CONTRACTS - between
system companies 19
Part II SERVICE, SALES AND CONSTRUCTION CONTRACTS - between
any System company and any affiliate company 19
Part III SERVICE, SALES AND CONSTRUCTION CONTRACTS - other 19
Item 9 Part I-III WHOLESALE GENERATORS AND FOREIGN UTILITY COMPANIES 19
Item 10 Financial Statements 20
Exhibits 31
Report of Independent Certified Public Accountants 41
Signatures 42
ITEM 1.
SYSTEM COMPANIES AND INVESTMENTS THEREIN AS OF DECEMBER 31, 2002
Number of
Common % of Issuer Owner's
Shares Voting Book Value Book Value
Name of Company / Type of Business Owned Power ($000's) ($000's)
- -------------------------------------------------------- ------------ ------------ --------------- ---------------
Unitil Corporation (UTL)
Unitil Energy Systems, Inc. (UES) - Electric Utility(1) 131,746 100% 29,331 29,331
Fitchburg Gas and Electric Light Company (FG&E) -
Electric Utility and Gas Utility 1,244,629 100% 35,056 35,056
Unitil Power Corp. (UPC) - Wholesale Electric Power
Company 100 100% 169 169
Unitil Realty Corp. (URC) - Real Estate Management 100 100% 2,433 2,433
Unitil Service Corp. (USC) - Service Company 100 100% 3 3
Unitil Resources, Inc. (URI) (Consolidated) - Energy
Brokering and Advisory Services(2) 100 100% 565 565
NOTES:
(1) In December 2002, Exeter & Hampton Electric Company (E&H), a wholly- owned
subsidiary of Unitil, was merged with and into Concord Electric Company
(CECo), also a wholly-owned subsidiary of Unitil. CECo changed its name to
UES immediately following the merger.
(2) Unitil Resources, Inc. (Consolidated) is the parent of Usource, Inc. (a
wholly-owned subsidiary) (see details below):
Unitil Resource, Inc. 100 100% 3,450 3,450
Usource, Inc. (Consolidated) 1 100% 576 576
Elimination (3,461) (3,461)
---------- ----------
Net Book Value of Unitil Resource, Inc.
(Consolidated) 565 565
========== ==========
Usource, Inc. (Consolidated) is the sole member of Usource L.L.C.
(see details below):
Usource, Inc. 1 100% 4,901 4,901
Usource L.L.C. N/A 100% (2,714) (2,714)
Elimination (1,611) (1,611)
---------- ----------
Net Book Value of Usource, Inc.
(Consolidated)
576 576
--------- ----------
Usource, Inc. and Usource L.L.C. are Exempt Telecommunication Companies
(ETCs) under Section 34 of the Act.
ITEM 2.
ACQUISITIONS OR SALES OF UTILITY ASSETS
Information concerning acquisitions or sales of utility assets by System
companies not reported in a certificate filed pursuant to Rule 24.
NONE
ITEM 3.
ISSUE, SALE, PLEDGE, GUARANTEE, OR ASSUMPTION OF SYSTEM SECURITIES
Name of Company
Issuing, Selling,
Pledging,
Name of Issuer and Guaranteeing or Authorization
Title of Issue Assuming Brief Description of Transaction Consideration or Exemption
- ------------------------- ------------------- ------------------------------------------- --------------- ----------------
Short-term Bank UTL, UES, FG&E, Bank Borrowings Made on Various Dates and (A) HCAR No.
Borrowings USC, URC, UPC, URI Such Funds Lent to Affiliates Under the 35-26328
Unitil Cash Pool
(A) Maximum borrowing authority is $45,000,000. Borrowings outstanding at
December 31, 2002 were $35,990,000.
2
ITEM 4.
ACQUISITION, REDEMPTION OR RETIREMENT OF SYSTEM SECURITIES
Extinguished (EXT)
Name Of Company Distributed (D) or Authorization
Name of Issuer and Acquiring, Redeeming, Held (H) For or
Title of Issue or Retiring Securities Consideration Further Disposition Exemption
- ------------------------------------- ------------------------- ------------------- ---------------------- -----------------
(In Whole
Dollars)
Unitil Corporation (UTL)
HCAR No.
Common Stock, No Par Value Unitil Service Corp. D & H (1) 35-25951
Exeter & Hampton Electric
Company (E&H)
Redeemable Preferred Stock
$100 Par Value
5.00 % Series E&H $7,000 EXT Rule 42
5.00 % Series E&H $85,680 EXT (2) HCAR No.
27609
6.00 % Series E&H $173,040 EXT (2) HCAR No.
27609
Fitchburg Gas and Electric
Light Company (FG&E)
Redeemable Preferred Stock
$100 Par Value
5.125% Series FG&E $13,200 EXT Rule 42
8.00% Series FG&E $14,300 EXT Rule 42
NOTES:
(1) Common Stock Purchased on the Open-Market related to Board of Director
Retainer Fees and Employee Length of Service Awards.
(2) In December 2002, Exeter & Hampton Electric Company (E&H), a wholly-owned
subsidiary of Unitil, was merged with and into Concord Electric Company
(CECo), also a wholly-owned subsidiary of Unitil. CECo changed its name to
Unitil Energy Systems, Inc. (UES) immediately following the merger. In
conjunction with the merger, the 5.00% and 6.00% Series of E&H's Preferred
Stock were fully redeemed.
3
ITEM 5.
INVESTMENTS IN SECURITIES OF NONSYSTEM COMPANIES AS OF DECEMBER 31, 2002
1. Aggregate amount of Investments in persons operating in the retail service
area.
Nature of Owner's Book
Name of Issuer's Description of Number of Percent of Value
Company Name of Issuer Business Securities Shares Voting Power (In Dollars)
- -------------- ----------------------------- ---------------- ------------------ ----------- --------------- -----------------
UES Concord Regional Economic Common Stock 120 None $3,000
Development Corp. Development
UES Collins & Aikman Group Retail 12% S. F. None $500
Debenture
Collins & Aikman Group Inc. Retail Capital Stock 3 None $6
FG&E Ames Department Store Retail Cum. Preferred 32 None $170
Stk.
Massachusetts Business Economic Common Stock 350 None $3,500
Development Corp. Development
Boundary Gas, Inc. Gas Common Stock 0.57 None $57
Distribution
2. Securities owned not included in 1 above.
None.
ITEM 6.
OFFICERS AND DIRECTORS OF UNITIL CORPORATION AND SUBSIDIARIES
Part I. As of December 31, 2002:
LEGEND OF ABBREVIATIONS
CB Chairman of the Board
D Director
CEO Chief Executive Officer
P President
COO Chief Operating Officer
CFO Chief Financial Officer
SEVP Senior Executive Vice President
EVP Executive Vice President
SVP Senior Vice President
VP Vice President
T Treasurer
AT Assistant Treasurer
S Secretary/Clerk
C Controller
4
- --------------------------------- ---------- --------- ---------- ---------- ---------- ---------- --------- ---------
Name and Business Address Unitil UES FG&E USC URC UPC URI Usource
- --------------------------------- ---------- --------- ---------- ---------- ---------- ---------- --------- ---------
Robert G. Schoenberger D, CB, D D D D D D,P D,P
6 Liberty Lane West CEO
Hampton, NH 03842
- --------------------------------- ---------- --------- ---------- ---------- ---------- ---------- --------- ---------
Michael J. Dalton D, P, COO D, P D, P D, SEVP D
6 Liberty Lane West
Hampton, NH 03842
- --------------------------------- ---------- --------- ---------- ---------- ---------- ---------- --------- ---------
Anthony J. Baratta, Jr. SVP, CFO D, P D,P D
Liberty Lane West
Hampton, NH 03842
- --------------------------------- ---------- --------- ---------- ---------- ---------- ---------- --------- ---------
William E. Aubuchon, III D D D
95 Aubuchon Drive
Westminster, MA 01473
- --------------------------------- ---------- --------- ---------- ---------- ---------- ---------- --------- ---------
David P. Brownell D D D
4 Evergreen Way
Stratham, NH 03885
- --------------------------------- ---------- --------- ---------- ---------- ---------- ---------- --------- ---------
Albert H. Elfner, III D D D
53 Chestnut Street
Boston, MA 02108
- --------------------------------- ---------- --------- ---------- ---------- ---------- ---------- --------- ---------
Ross B. George D D D
12 Treehaven Lane
Austin, TX 78738
- --------------------------------- ---------- --------- ---------- ---------- ---------- ---------- --------- ---------
Michael B. Green D D D
250 Pleasant Street
Concord, NH 03301
- --------------------------------- ---------- --------- ---------- ---------- ---------- ---------- --------- ---------
Eben S. Moulton D D D
128 Brattle Street
Cambridge, MA 02138
- --------------------------------- ---------- --------- ---------- ---------- ---------- ---------- --------- ---------
M. Brian O'Shaughnessy D D D
One Revere Park
Rome, NY 13440
- --------------------------------- ---------- --------- ---------- ---------- ---------- ---------- --------- ---------
Charles H. Tenney III D D D
P.O. Box 428
Sherborn, MA 01770
- --------------------------------- ---------- --------- ---------- ---------- ---------- ---------- --------- ---------
Edward F. Godfrey D D D
1354 Dublin Drive
Richmond Hill, GA 31324
- --------------------------------- ---------- --------- ---------- ---------- ---------- ---------- --------- ---------
George R. Gantz SVP, D D D
6 Liberty Lane West
Hampton, NH 03842
- --------------------------------- ---------- --------- ---------- ---------- ---------- ---------- --------- ---------
David K. Foote SVP VP D, P
6 Liberty Lane West
Hampton, NH 03842
- --------------------------------- ---------- --------- ---------- ---------- ---------- ---------- --------- ---------
Raymond J. Morrissey VP
6 Liberty Lane West
Hampton, NH 03842
- --------------------------------- ---------- --------- ---------- ---------- ---------- ---------- --------- ---------
Mark H. Collin T, S T T D, VP, D, VP, T D, T VP, T
6 Liberty Lane West T,
Hampton, NH 03842
- --------------------------------- ---------- --------- ---------- ---------- ---------- ---------- --------- ---------
Richard Heath VP
One McGuire Street
Concord, NH 03302
- --------------------------------- ---------- --------- ---------- ---------- ---------- ---------- --------- ---------
5
- --------------------------------- ---------- --------- ---------- ---------- ---------- ---------- --------- ---------
ITEM 6. (continued)
- --------------------------------- ---------- --------- ---------- ---------- ---------- ---------- --------- ---------
Name and Business Address Unitil UES FG&E USC URC UPC URI Usource
- --------------------------------- ---------- --------- ---------- ---------- ---------- ---------- --------- ---------
Antonio D. Aguiar VP D
6 Liberty Lane West
Hampton, NH 03842
- --------------------------------- ---------- --------- ---------- ---------- ---------- ---------- --------- ---------
Glenn D. Appleton VP
6 Liberty Lane West
Hampton, NH 03842
- --------------------------------- ---------- --------- ---------- ---------- ---------- ---------- --------- ---------
Todd R. Black VP VP D, VP, S
6 Liberty Lane West
Hampton, NH 03842
- --------------------------------- ---------- --------- ---------- ---------- ---------- ---------- --------- ---------
Frederick J. Stewart VP
6 Liberty Lane West
Hampton, NH 03842
- --------------------------------- ---------- --------- ---------- ---------- ---------- ---------- --------- ---------
Thomas E. Smith VP
6 Liberty Lane West
Hampton, NH 03842
- --------------------------------- ---------- --------- ---------- ---------- ---------- ---------- --------- ---------
Laurence M. Brock C C VP, C C C C D, VP, T
6 Liberty Lane West
Hampton, NH 03842
- --------------------------------- ---------- --------- ---------- ---------- ---------- ---------- --------- ---------
Charles J. Kershaw, Jr. AT AT AT AT AT AT
6 Liberty Lane West
Hampton, NH 03842
- --------------------------------- ---------- --------- ---------- ---------- ---------- ---------- --------- ---------
Sandra L. Whitney S S S S S S
6 Liberty Lane West
Hampton, NH 03842
- --------------------------------- ---------- --------- ---------- ---------- ---------- ---------- --------- ---------
Part II. Each officer and director with a financial connection within the
provisions of Section 17(c) of the Act are as follows:
Name of Officer or Director Name and Location of Financial Position Held in Applicable Exemption
Institution Financial Institution Rule
- ------------------------------ --------------------------------------- ------------------------------- ------------------------
Eben S. Moulton Seacoast Capital Corporation President 70(c)
Danvers, MA
Michael B. Green Merrimac County Savings Bank Director 70(c)
Concord, NH
6
Part III. The disclosures made in the System companies' most recent proxy
statement and annual report on Form 10-K with respect to items (a) through (f)
follow:
(a) COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
DIRECTORS' COMPENSATION
In 2002, members of the Board of Directors who are not officers of Unitil or any
of its subsidiaries received an annual retainer fee of $7,000 in cash and $5,500
in Unitil Common Stock, as well as $500 for each Board Meeting attended. Members
of the Executive Committee who are not officers of Unitil or any of its
subsidiaries received an annual retainer fee of $3,000 and $400 for each meeting
attended. The Chairman of the Executive Committee received an annual retainer
fee of $15,000, and $400 for each meeting attended. Members of the Audit
Committee and Compensation Committee received an annual retainer fee of $1,000
and $400 for each meeting attended. The Chairman of the Audit Committee and the
Chairman of the Compensation Committee received an annual retainer fee of
$2,000, respectively, and $400 for each meeting attended. Those Directors of
Unitil who also serve as Directors of FG&E and Unitil Energy Systems, Inc. and
who are not officers of Unitil or any of its subsidiaries received a meeting fee
of $100 per subsidiary meeting attended and no annual retainer fee from FG&E or
Unitil Energy Systems, Inc. All Directors are entitled to reimbursement of
expenses incurred in connection with attendance at meetings of the Board of
Directors and any Committee on which they serve.
As part of the Company's overall support for charitable institutions, the
Company has a program that provides a perpetual gift of $1,000 annually to the
Greater Seacoast United Way ("United Way") on behalf of each Director who
retires from the Board. The Director(s) receive no financial benefit from this
program as the charitable deductions accrue solely to the Company. No Directors
retired from the Board in 2002.
In 1999, the Board of Directors approved the Unitil Corporation Directors'
Deferred Compensation Plan ("Deferred Plan") for the purpose of allowing
non-employee members of the Board to defer payment of all or a specified part of
compensation for services performed as a Director. The Deferred Plan is
administered by the Compensation Committee and stipulates that eligible
Directors may elect to defer all or a portion of their cash retainer and meeting
fees. Separate accounts are maintained for each Director participant, which are
an unfunded liability of the Company. Additionally, accounts are credited
monthly with interest based on the current rate of 60-month Treasury bills.
Funds contributed and interest credited is tax deferred until withdrawn from the
Deferred Plan. Director participants may elect to withdraw funds from the
Deferred Plan after a fixed amount of time, upon resignation or retirement from
the Board, upon death or disability, or upon a Change in Control. Withdrawals
may be taken in cash, either in one lump sum or in a series of installments.
During 2002, no Directors participated in the Deferred Plan.
7
EXECUTIVE COMPENSATION
The tabulation below shows the compensation Unitil Corporation, or any of its
subsidiaries, has paid to its Chief Executive Officer and its most highly
compensated officers whose total annual salary and bonus were in excess of
$100,000 during the year 2002.
Long-Term Compensation
------------------------------------
Annual Compensation Awards Payouts
Other Restricted All Other
Name and Salary Bonus Annual Stock LTIP Compensation
Principal Position (1) Year ($) ($)(2) Comp ($) Awards ($) Options (#) Payouts ($)
- -------------------------------------------------------------------------------------------------------------------------------
Robert G. Schoenberger (3) 2002 304,000 129,200 - - 0 (4) - 7,518 (7)
Chairman of the Board & 2001 292,000 116,800 - - 20,000 (5) -
Chief Executive Officer 2000 278,004 110,924 - - 20,000 (6) -
- -------------------------------------------------------------------------------------------------------------------------------
Michael J. Dalton (3) 2002 222,258 75,568 - - 0 (4) - 9,128 (8)
President & Chief 2001 213,710 68,387 - - 10,000 (5) -
Operating Officer 2000 206,484 65,910 - - 10,000 (6) -
- -------------------------------------------------------------------------------------------------------------------------------
Anthony J. Baratta, Jr. (9) 2002 185,000 55,038 - - 0 (4) - 7,201 (10)
Senior Vice President & Chief 2001 176,132 49,317 - - 5,000 (5) -
Financial Officer 2000 167,098 46,631 - - 5,000 (6) -
- -------------------------------------------------------------------------------------------------------------------------------
George R. Gantz 2002 151,109 38,533 - - 0 (4) - 5,231 (11)
Senior VP, 2001 144,602 34,704 - - 2,500 (5) -
Unitil Service 2000 138,372 33,126 - - 2,500 (6) -
- -------------------------------------------------------------------------------------------------------------------------------
Mark H. Collin 2002 126,000 26,775 - - 0 (4) - 4,724 (12)
Treasurer & Secretary 2001 117,000 23,400 - - 2,000 (5) -
2000 107,000 21,347 - - 1,500 (6) -
- -------------------------------------------------------------------------------------------------------------------------------
NOTES:
(1) Officers of the Company also hold various positions with subsidiary
companies. Compensation for those positions is included in the above table.
(2) Bonus amounts reflected are comprised of the Unitil Management Incentive
Plan ("Incentive Plan") cash awards paid in February, 2003, for 2002
results. The terms of the Incentive Plan provide a cash incentive
opportunity if the Company meets certain pre-established performance
targets (see "Other Compensation Arrangements").
(3) On December 19, 2002, Mr. Dalton announced his intention to retire from his
position of President and Chief Operating Officer of the Company effective
April 1, 2003. On April 1, 2003, Mr. Schoenberger will assume the role of
President of the Company, and his title will change to Chairman of the
Board, Chief Executive Officer and President. Mr. Dalton will continue to
serve as a member of the Board of Directors of the Company.
(4) No options were granted in 2002 under the Stock Option Plan ("Option Plan")
to any Option Plan participant.
(5) Options were granted in January, 2001, under the Option Plan. Options will
vest at a rate of 25% in year one, 25% in year two, and 50% in year three,
following the date of the grant. As of February, 2003, 50% of options
granted are vested and exercisable.
(6) Options were granted in January, 2000, under the Option Plan. Options will
vest at a rate of 25% in year one, 25% in year two, and 50% in year three,
following the date of the grant. As of February, 2003, 100% of options
granted are vested and exercisable.
(7) All Other Compensation for Mr. Schoenberger for the year 2002 includes
401(K) company contribution, and Group Term Life Insurance payment valued
at $6,000 and $1,518, respectively.
(8) All Other Compensation for Mr. Dalton for the year 2002 includes 401(K)
company contribution, and Group Term Life Insurance payment valued at
$6,000 and $3,128, respectively.
(9) On December 30, 2002, Mr. Baratta announced his intention to retire from
the Company on April 1, 2003. Mr. Baratta also announced his intention to
step down from his position of Senior Vice President and Chief Financial
Officer of the Company effective February 1, 2003. As of February 1, 2003,
Mark H. Collin assumed the title of Senior Vice President, Chief Financial
Officer and Treasurer of the Company. Mr. Baratta will continue to serve as
an officer of several of the Company's subsidiaries until his retirement
date of April 1, 2003.
8
NOTES, continued:
(10) All Other Compensation for Mr. Baratta for the year 2002 includes, 401(K)
Company contribution and Group Term Life Insurance payment, valued at
$5,550 and $1,651, respectively.
(11) All Other Compensation for Mr. Gantz for the year 2002 includes, 401(K)
Company contribution and Group Term Life Insurance payment, and valued at
$4,533 and $698, respectively.
(12) All Other Compensation for Mr. Collin for the year 2002 includes 401(K)
Company contribution and Group Term Life Insurance payment, valued at
$4,482 and $242, respectively.
Other Compensation Arrangements
The table below provides information with respect to the value of unexercised
options granted in prior years under the Key Employee Stock Option Plan
("KESOP") and the value of unexercised options granted in prior years under the
1998 Stock Option Plan ("Option Plan"), respectively, to the named executive
officers in the Summary Compensation Table and held by them as of December 31,
2002.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR (FY)
AND FY-END OPTION VALUES (1)(2)
Name and Principal Position Shares Value Number of Unexercised Value of Unexercised
Acquired on Realized Options at In-the-Money Options at
Exercise (#) ($) FY-End (#) FY-End ($)
Exercisable /
Unexercisable Exercisable / Unexercisable
- ---------------------------------------------------------------------------------------------------------------------
Robert G. Schoenberger exercisable 75,000 Exercisable 143,500(3)
Chairman of the Board & - - unexercisable 10,000 Unexercisable ---
Chief Executive Officer
- ---------------------------------------------------------------------------------------------------------------------
Michael J. Dalton exercisable 25,000 Exercisable ---
President & - - unexercisable 5,000 Unexercisable ---
Chief Operating Officer
- ---------------------------------------------------------------------------------------------------------------------
Anthony J. Baratta, Jr. exercisable 17,500 Exercisable ---
Senior Vice President & - - unexercisable 2,500 Unexercisable ---
Chief Financial Officer
- ---------------------------------------------------------------------------------------------------------------------
George R. Gantz exercisable 6,250 Exercisable ---
Senior VP, - - unexercisable 1,250 Unexercisable ---
Unitil Service
- ---------------------------------------------------------------------------------------------------------------------
Mark H. Collin exercisable 4,000 Exercisable ---
Treasurer & Secretary - - unexercisable 1,000 Unexercisable ---
- ---------------------------------------------------------------------------------------------------------------------
NOTES:
(1) All options associated with the KESOP, with the exception of Mr.
Schoenberger's options (see also Note 3), were exercised as of March 7,
1999.
(2) Under the 1998 Option Plan, the options reported were granted in March,
1999, January, 2000, and January, 2001.
(3) Mr. Schoenberger's 25,000 exercisable KESOP options listed in the table
above do not include non-preferential dividend equivalents earned under the
provisions of the KESOP and associated with options outstanding.
9
EQUITY COMPENSATION PLAN BENEFIT INFORMATION
(a) (b) (c)
Number of securities Weighted-average Number of securities remaining
to be issued upon exercise price of available for future issuance under
exercise of outstanding equity compensation plans
outstanding options, options, warrants (excluding securities reflected in
Plan Category warrants and rights and rights column (a))
- -------------------------------- ------------------------ ------------------- -------------------------------------
Equity compensation plans 25,000 $13.91 29,101
approved by security holders(1)
Equity compensation plans not 172,500 $26.99 177,500
------- -------
approved by security holders(2)
Total 197,500 $25.33 206,601
======= =======
NOTES:
(1) The KESOP was approved by shareholders in July, 1989. Options were granted
between January, 1989 and November, 1997.
(2) The 1998 Option Plan was adopted by the Board of Directors of the Company
in December 1998. Options were granted in March, 1999, January, 2000, and
January, 2001.
Key Employee Stock Option Plan (KESOP)
The KESOP was adopted by the Board of Directors on January 17, 1989, and
approved by the Company's shareholders on July 11, 1989. The KESOP authorized
the Compensation Committee to provide in the award agreements that the
participant's right to exercise the options provided for therein will be
accelerated upon the occurrence of a "Change in Control" of Unitil. The term
"Change in Control" is defined in substantially the same manner as in the
Severance Agreements, as described on page 18. Award agreements entered into
with participants in the KESOP contain such a "Change in Control" provision.
Award agreements also provide that, upon the exercise of an option on or after a
Change in Control, Unitil shall pay to the optionee, within five business days,
a lump sum cash amount equal to the economic benefit of the optionee's
outstanding options and associated dividend equivalents that the optionee would
have received had the option remained unexercised until the day preceding the
expiration of the grant.
Upon the exercise of any option by an employee and upon payment of the option
price for shares of Unitil Common Stock as to which the option was granted (the
"Primary Shares"), Unitil will cause to be delivered to such employee (i) the
Primary Shares and (ii) the number of shares of Unitil Common Stock (the
"Dividend Equivalent Shares") equal to the dollar amount of dividends which
would have been paid on the Primary Shares (and previously accrued Dividend
Equivalent Shares) had they been outstanding, divided by the fair market value
of Unitil Common Stock determined as of the record date for each dividend. All
options granted under the KESOP, excluding Mr. Schoenberger's options, described
below, were granted in 1989 with an expiration date of 1999. All such options
were exercised prior to March 7, 1999.
In accordance with the terms of Mr. Schoenberger's 1997 employment agreement, on
November 3, 1997, 25,000 options to purchase shares of Company stock were
granted to Mr. Schoenberger under the KESOP. The options granted to Mr.
Schoenberger became exercisable on November 3, 1998. In 1998, the Compensation
Committee extended the expiration date of Mr. Schoenberger's options until
November 3, 2007. As of December 31, 2002, Mr. Schoenberger's 25,000 options
were the only options outstanding under the KESOP and Mr. Schoenberger is the
only participant in the KESOP.
10
The Unitil Corporation 1998 Stock Option Plan (Option Plan)
In December, 1998, the Board of Directors adopted the Unitil Corporation 1998
Stock Option Plan ("Option Plan"). The purpose of the Option Plan was to provide
an incentive to key employees and directors of Unitil and its affiliates who are
in a position to contribute materially to the long-term success of Unitil and/or
its affiliates, to increase their interest in the welfare of Unitil and its
affiliates, and to attract and retain employees and directors of outstanding
ability. The Company had originally intended to grant stock options under the
Option Plan each year through March 1, 2004, to certain employees and directors,
for the purchase of up to 350,000 shares of Unitil Common Stock.
On January 16, 2003, the Board of Directors terminated the Option Plan upon the
recommendation of the Compensation Committee. The Compensation Committee also
recommended that the Company adopt a Restricted Stock Plan to replace the Option
Plan. (See below as to the approval of a "Restricted Stock Plan".) The Option
Plan will remain in effect solely for the purposes of the continued
administration of all options currently outstanding under the Option Plan. No
further grants of options will be made thereunder.
Stock options granted under the Option Plan entitle the holders of those options
to purchase up to the number of shares of common stock specified in the grant at
a price established by the Committee. All grants were issued at 100% of market
value at the time of the grant. Each option grant has a vesting period of three
years and each grant expires ten years after the date of grant.
The Compensation Committee is charged with the administration of the Option
Plan. The Option Plan authorizes the Compensation Committee to provide in the
award agreements that the participant's right to exercise the options provided
for therein will be accelerated upon the occurrence of a Change in Control of
Unitil. The term "Change in Control" is defined in substantially the same manner
as in the Severance Agreements, as described on page 18. All of the award
agreements entered into with participants in the Option Plan to date contain
such a "Change in Control" provision.
To date, grants were made to certain management employees in March, 1999,
January, 2000, and January 2001. No grants were made to any Option Plan
participants in 2002.
Non-Equity Compensation Plan Benefit Information
The Company has in place, since December, 1998, a Management Incentive Plan and
an Employee Incentive Plan to provide cash incentive payments that are tied
directly to achievement of the Company's strategic goals. Annual goals are
established each year by the Board of Directors and payment of awards is made in
February of the year following achievement of the goals. Target incentive
payments have been established that vary based upon the grade level of each
position. Actual awards can be less than or greater than the target payout
depending upon actual results achieved.
Unitil maintains a tax-qualified defined benefit pension plan and related trust
agreement (the "Retirement Plan") that provides retirement annuities for
eligible employees of Unitil and its subsidiaries. Since the Retirement Plan is
a defined benefit plan, no amounts were contributed or accrued specifically for
the benefit of any officer of Unitil under the Retirement Plan. Directors of
Unitil who are not and have not been officers of Unitil or any of its
subsidiaries are not eligible to participate in the Retirement Plan.
The table below sets forth the estimated annual benefits (exclusive of Social
Security payments) payable to participants in the specified compensation and
years of service classifications, assuming continued active service until
retirement. The average annual earnings used to compute the annual benefits are
subject to a $200,000 limit.
11
PENSION PLAN TABLE
ANNUAL PENSION
----------------------------------------------------------------------------------------------
Average Annual Earnings 15 Years of 20 Years of 25 Years of 30 Years of 35 Years of 40 Years of
Used for Computing Pension Service Service Service Service Service Service
- ---------------------------------------------------------------------------------------------------------------------------
100,000 30,000 40,000 45,000 50,000 52,250 55,000
125,000 37,500 50,000 56,250 62,500 65,625 68,750
150,000 45,000 60,000 67,500 75,000 78,750 82,500
170,000 60,000 80,000 90,000 100,000 105,000 110,000
The present formula for determining annual benefits under the Retirement Plan's
life annuity option is (i) 2% of average annual salary (average annual salary
during the five consecutive years out of the last twenty years of employment
that give the highest average salary) for each of the first twenty years of
benefit service, plus (ii) 1% of average annual salary for each of the next ten
years of benefit service and (iii) 1/2% of average annual salary for each year
of benefit service in excess of thirty, minus (iv) 50% of age 65 annual Social
Security benefit (as defined in the Retirement Plan), and (v) any benefit under
another Unitil retirement plan of a former employer for which credit for service
is given under the Retirement Plan. A participant is eligible for early
retirement at an actuarially reduced pension upon the attainment of age 55 with
at least 15 years of service with Unitil or one of its subsidiaries. A
participant is 100% vested in his benefit under the Retirement Plan after five
years of service with Unitil or one of its subsidiaries. As of January 1, 2003,
Messrs. Schoenberger, Dalton, Baratta, Gantz and Collin had 5, 35, 5, 19 and 14
credited years of service, respectively, under the Retirement Plan.
Unitil also maintains a Supplemental Executive Retirement Plan ("SERP"), a
non-qualified defined benefit plan. SERP provides for supplemental retirement
benefits to executives selected by the Board of Directors. At the present time,
Messrs. Schoenberger and Dalton are eligible for SERP benefits upon attaining
normal or early retirement eligibility. Annual benefits are based on a
participant's final average earnings less the participant's benefits payable
under the Retirement Plan, less other retirement income payable to such
participant by Unitil or any previous employer and less income that a
participant receives as a primary Social Security benefit. Early retirement
benefits are available to a participant, with the Unitil Board's approval, if
the participant has attained age 55 and completed 15 years of service. Should a
participant elect to begin receiving early retirement benefits under SERP prior
to attaining age 60, the benefits are reduced by 5% for each year that
commencement of benefits precedes attainment of age 60. If a participant
terminates employment for any reason prior to retirement, the participant will
not be entitled to any benefits. Under the SERP, Mr. Schoenberger would be
entitled to receive an annual benefit of $51,700, assuming normal retirement at
age 65 and that his projected final average earnings are equal to the average of
his respective three consecutive years of highest compensation prior to
retirement. On Mr. Dalton's retirement date of April 1, 2003, at age 62, his
annual SERP benefit will be $41,341.
Restricted Stock Plan
At its January, 2003, meeting, the Board of Directors approved the
recommendation of the Compensation Committee to adopt a Restricted Stock Plan
(the "Plan") to replace the Unitil Corporation 1998 Stock Option Plan, which was
terminated by the Board at the same January, 2003, meeting. The Compensation
Committee made the recommendation in part in the belief that the Plan would
better tie executive officer compensation to the long-term success of the
Company through stock ownership in the Company. Participants in the Plan are
selected by the Compensation Committee from the eligible Participants to receive
an annual award of restricted shares of Company Common Stock. The size of the
award is dependent upon the Company meeting certain strategic objectives set by
the Board of Directors.
The Plan was approved by the Board, and ratified by the shareholders of the
Company at the 2003 Annual Meeting of Shareholders held on April 17, 2003.
12
The objectives of the Plan are to optimize the profitability and growth of the
Company through incentives that are consistent with the Company's goals and that
link the personal interests of Participants to those of the Company's
shareholders, to attract and retain employees and directors of outstanding
ability, and to promote teamwork among participants. The Plan shall remain in
effect, subject to the right of the Board to amend or terminate the Plan at any
time, until all shares subject to it shall have been purchased or acquired
according to the Plan's provisions.
Administration of the Plan
The Plan is administered by the Compensation Committee. Except as limited by law
or by the Articles of Incorporation or the By-laws of the Company, and subject
to the provisions of the Plan, the Compensation Committee shall have full power
to select the persons who shall participate in the Plan; determine the sizes of
awards; determine the terms and conditions of awards in a manner consistent with
the Plan; construe and interpret the Plan and any agreement or instrument
entered into under the Plan as they apply to participants; establish, amend, or
waive rules and regulations for the Plan's administration as they apply to
participants; and, subject to the provisions of the Plan, amend the terms and
conditions of any outstanding award to the extent such terms and conditions are
within the discretion of the Compensation Committee as provided in the Plan.
Types of Awards Under the Plan
Awards under the Plan will be granted in the form of restricted shares of the
Company's Common Stock. Awards shall be evidenced by an Award Agreement, entered
into by the participant and the Company, setting forth the terms and provisions
applicable to the award. The Company anticipates granting awards under the Plan
on an annual basis.
Criteria Used to Determine Awards
Awards under the Plan will vary each year based on the achievement of annual
performance objectives that directly correlate with the annual performance
objectives as defined by the Unitil Management Incentive Plan ("Incentive
Plan"). The Incentive Plan is described more fully in Item 6, Part III, section
(a) above (see "Other Compensation Arrangements"). Whereas the Incentive Plan
provides cash incentive payments that are tied directly to achievement of the
Company's strategic goals, the Plan will provide awards of restricted shares of
Company Common Stock that are tied directly to achievement of the Company's
strategic goals. Annual performance objectives are established each year by the
Board of Directors. The percentage of the target award that a Plan participant
receives is also based upon subjective evaluations by the Compensation
Committee, such as management's performance in capitalizing on unplanned
opportunities and responding to unforeseen problems. Target grant awards have
been established that vary based upon the grade level of each participant's
position in the Company. Actual awards can be less than or greater than the
target grant depending upon actual results achieved.
Key Components of the Plan
Awards will fully vest over a period of four (4) years (the "Period of
Restriction") at a rate of 25% each year. During the Period of Restriction, the
restricted shares may not be sold, transferred, pledged, assigned or otherwise
alienated or hypothecated. Prior to the end of the Period of Restriction, the
restricted shares shall be subject to forfeiture if the participant ceases to be
employed by the Company other than due to the participant's death. Subject to
restrictions under applicable law or as may be imposed by the Company,
restricted shares underlying each Award made under the Plan shall become freely
transferable by the Participant after the last day of the applicable Period of
Restriction.
The Company shall retain the certificates representing the restricted shares in
the Company's possession until such time as all conditions and/or applicable
restrictions have been satisfied.
During the Period of Restriction, participants holding restricted shares granted
under the Plan shall have all the rights of a shareholder of the Company,
including the right to vote the restricted shares during the Period of
Restriction. Any cash dividends paid on the Restricted Shares during the Period
of Restriction may be credited to the participant's account, and may be subject
to such restrictions as the Compensation Committee may determine to be
appropriate and as are set forth in the particular Award Agreement. In the event
any non-cash dividends or other distributions, whether in property, or in stock
of another company, are paid on any restricted shares during the Period of
Restriction, such non-cash dividends or other distributions shall be retained by
the Company until such time as the Period of Restriction has lapsed. In the
event of forfeiture of the restricted shares, such non-cash dividend or other
distributions shall be retained by the Company.
13
Awards may be grossed-up to offset the participant's tax obligation in
connection with the award. This gross-up feature is intended to prevent a
participant from having to sell a portion of the shares granted in the award or
previous awards in order to pay the taxes on the award, which would be a direct
contradiction to one of the stated objectives of the Plan, which is to encourage
stock ownership in the Company. The Compensation Committee will take into
account the value of the gross-up feature and reduce the size of the awards
accordingly.
Upon the occurrence of a Change in Control, unless otherwise specifically
prohibited under applicable laws, or by the rules and regulations of any
governing governmental agencies or national securities exchanges, any
restrictions and transfer limitations imposed on Restricted Shares shall
immediately lapse. The term "Change in Control" is defined in substantially the
same manner as in the Severance Agreements, as described on page 18.
The Compensation Committee shall have the authority to impose additional
conditions and/or restrictions on any shares of restricted stock granted
pursuant to the Plan as it may deem advisable.
Number of Shares Subject to Awards
The maximum number of shares of Restricted Stock available for awards to
participants under the Plan is 177,500. The maximum aggregate number of shares
of Restricted Stock that may be awarded in any one calendar year to any one
participant is 20,000. In the event of any change in capitalization of the
Company, the Compensation Committee is authorized to make proportionate
adjustments to prevent dilution or enlargement of rights, including, without
limitation, an adjustment in the maximum number and kinds of shares available
for awards and in the annual award limit.
Persons Eligible to Participate and Basis For Participation in the Plan
Persons eligible to participate in the Plan include all employees, directors and
consultants of the Company, its subsidiaries and its affiliates. The Company
currently has 316 employees, nine independent non-employee Directors, and
several consultants. The basis for participation in the Plan is discretionary on
the part of the Compensation Committee.
Amendment or Termination of the Plan
The Board may at any time amend or terminate the Plan or any award granted under
the Plan in whole or in part, that no amendment that requires shareholder
approval in order for the Plan to continue to comply with any applicable tax or
securities laws or regulations, or the rules of any securities exchange on which
the securities of the Company are listed, shall be effective unless such
amendment shall be approved by the requisite vote of shareholders of the Company
and that no such amendment or termination shall adversely affect any award
previously granted under the Plan without the consent of the participant.
The table below provides information with respect to the projected value of
awards which may be granted annually to the indicated individuals and groups
under the Plan.
- --------------------------------------------------------------------------------------------------------------------------
RESTRICTED STOCK PLAN
Name and Position(1) Dollar Value(2)(3) Assumed Number of Shares(4)
- --------------------------------------------------------------------------------------------------------------------------
Robert G. Schoenberger $154,510 4,000
Chairman of the Board and Chief Executive Officer
- --------------------------------------------------------------------------------------------------------------------------
George R. Gantz $30,902 800
Senior Vice President, Unitil Service
- --------------------------------------------------------------------------------------------------------------------------
Mark H. Collin $30,902 800
Treasurer & Secretary
- --------------------------------------------------------------------------------------------------------------------------
Executive Group $328,333 8,500
- --------------------------------------------------------------------------------------------------------------------------
Non-Executive Director Group $ 0 0
- --------------------------------------------------------------------------------------------------------------------------
Non-Executive Officer Employee Group $92,706 2,400
- --------------------------------------------------------------------------------------------------------------------------
14
NOTES:
(1) Mr. Dalton and Mr. Baratta are not included in the table since awards under
the Plan will only be made subsequent to the retirement dates of Mr. Dalton
and Mr. Baratta.
(2) For illustrative purposes in the table, the per share market value is
calculated using the average of the daily averages of the high and low
sales prices of the Company's Common Stock for the last five trading days
on which the Company's Common Stock was traded prior to and including the
record date, February 20, 2003, for a value of $25.243 per share. Actual
market value for each award granted under the Plan will be the closing
price of Unitil Common Stock on the day the award becomes vested.
(3) To account for the tax gross-up feature of the Plan, the dollar value for
each participant is calculated by dividing the market value of the Award by
0.6535.
(4) The number of shares shown in the table is the number of shares which the
Compensation Committee has tentatively decided to grant to the named
individuals and groups if shareholders approve the Plan.
15
(b) OWNERSHIP OF SECURITIES
- ----------------------------- ------------------------------------------------------------------- --------------------------
NAME DIRECTOR OF SHARES OF UNITIL COMMON
STOCK BENEFICIALLY OWNED
on
February 20, 2003 (1)
- ----------------------------- ------------------------------------------------------------------- --------------------------
Robert G. Schoenberger UTL, UES, USC, UPC, URI, FG&E, URC, Usource 103,694 (2)(3)(4)
- ----------------------------- ------------------------------------------------------------------- ------------ -------------
Michael J. Dalton UTL, UES, USC, UPC, FG&E, URC 71,275 (2)(7)(8)(9)
- ----------------------------- ------------------------------------------------------------------- ------------ -------------
Albert H. Elfner, III UTL, UES, FG&E 5,708
- ----------------------------- ------------------------------------------------------------------- ------------ -------------
Ross B. George UTL, UES, FG&E 3,708
- ----------------------------- ------------------------------------------------------------------- ------------ -------------
Charles H. Tenney III UTL, UES, FG&E 3,538 (5)
- ----------------------------- ------------------------------------------------------------------- ------------ -------------
M. Brian O'Shaughnessy UTL, UES, FG&E 2,218
- ----------------------------- ------------------------------------------------------------------- ------------ -------------
Edward F. Godfrey UTL, UES, FG&E 1,217 (10)
- ----------------------------- ------------------------------------------------------------------- ------------ -------------
Eben S. Moulton UTL, UES, FG&E 653
- ----------------------------- ------------------------------------------------------------------- ------------ -------------
Dr. Sarah P. Voll UTL, UES, FG&E 0 (6)
- ----------------------------- ------------------------------------------------------------------- ------------ -------------
David P. Brownell UTL, UES, FG&E 646
- ----------------------------- ------------------------------------------------------------------- ------------ -------------
Michael B. Green UTL, UES, FG&E 496
- ----------------------------- ------------------------------------------------------------------- ------------ -------------
NOTES:
(1) Based on information furnished to Unitil by the nominees and continuing
Directors. No Director standing for election, no Director whose term is
continuing, and no officer owns more than one percent of the total
outstanding shares.
(2) Included are 2,776 and 5,182 shares that are held in trust for Messrs.
Schoenberger and Dalton, respectively, under the terms of the Unitil Tax
Deferred Savings and Investment Plan ("401(k)"). Messrs. Schoenberger and
Dalton have voting power only with respect to the shares credited to their
accounts. For further information regarding 401(k), see "Other Compensation
Arrangements - Tax-Qualified Savings and Investment Plan" below.
(3) Included are 33,071 options that Mr. Schoenberger has the right to purchase
pursuant to the exercise of those options under the terms of the 1989 Key
Employee Stock Option Plan ("KESOP"). For further information regarding the
KESOP, see "Other Compensation Arrangements" below.
(4) Included are 60,000 options that Mr. Schoenberger has the right to purchase
upon the exercise of those options under the terms of the 1998 Stock Option
Plan ("Option Plan"). See "Other Compensation Arrangements." Mr.
Schoenberger was granted 20,000 options in March, 1999, 20,000 options in
January, 2000, and 20,000 options in January, 2001, all of which will vest
at a rate of 25% in year one, 25% in year two, and 50% in year three,
following the dates of the respective grants.
(5) Mr. Tenney is the son of Charles H. Tenney II, former Chairman and CEO of
the Company, and currently, 5.70% shareholder of the Company.
(6) Dr. Voll was elected by the Board in January, 2003, to fill the position
vacated by William E. Aubuchon, III. Article II of Unitil's By-Laws
provides that a Director elected by the Board to fill a vacancy, whether
due to the death, resignation, or other inability to serve of any Director
previously elected, shall be elected for the unexpired term of his or her
predecessor in office. Mr. Aubuchon, who resigned from the Board in
January, 2003, was elected in April, 2000, for a term of three years.
(7) On December 19, 2002, Mr. Dalton announced his intention to retire as
President and Chief Operating Officer of the Company on April 1, 2003. Mr.
Dalton will continue to serve as a member of the Board of Directors.
(8) Included are 30,000 options that Mr. Dalton has the right to purchase upon
the exercise of those options under the terms of the 1998 Stock Option Plan
("Option Plan"). See "Other Compensation Arrangements." Mr. Dalton was
granted 10,000 options in March, 1999, 10,000 options in January, 2000, and
10,000 options in January, 2001, all of which will vest at a rate of 25% in
year one, 25% in year two, and 50% in year three, following the dates of
the respective grants.
(9) Included are 8,911 shares held by a member of Mr. Dalton's family. He has
no voting rights or investment power with respect to, and no beneficial
interest in, such shares.
(10) Mr. Godfrey was elected by the Board in January, 2002, to fill the position
vacated by Bruce W. Keough. Article II of Unitil's By-Laws provides that a
Director elected by the Board to fill a vacancy, whether due to the death,
resignation, or other inability to serve of any Director previously
elected, shall be elected for the unexpired term of his or her predecessor
in office. Mr. Keough, who resigned from the Board in June, 2001, was
elected in April, 2001, for a term of three years. Mr. Godfrey will stand
for election by shareholders of the Company in 2004.
16
(c) TRANSACTIONS WITH SYSTEM COMPANIES - None
(d) INDEBTEDNESS TO SYSTEM COMPANIES - None
(e) OTHER BENEFITS
Unitil and certain subsidiaries maintain severance agreements (the "Severance
Agreements") with certain management employees, including Executive Officers.
The Severance Agreements are intended to help assure continuity in the
management and operation of Unitil and its subsidiaries in the event of a
proposed "Change in Control". Each Severance Agreement only becomes effective
upon the occurrence of a Change in Control of Unitil as defined in the Severance
Agreements. If an employee's stipulated compensation and benefits, position,
responsibilities and other conditions of employment are reduced during the
thirty-six month period following a Change in Control, the employee is entitled
to a severance benefit.
The severance benefit is a lump sum cash amount equal to (i) the present value
of three years' base salary and bonus; (ii) the present value of the additional
amount the employee would have received under the Retirement Plan if the
employee had continued to be employed for such thirty-six month period; (iii)
the present value of contributions that would have been made by Unitil or its
subsidiaries under the 401(k) if the employee had been employed for such
thirty-six month period; and (iv) the economic benefit on any outstanding Unitil
stock options and associated dividend equivalents, if applicable, assuming such
options remained unexercised until the day preceding the expiration of the
grant, including the spread on any stock options that would have been granted
under the Option Plan if the employee had been employed for such thirty-six
month period. Each Severance Agreement also provides for the continuation of all
employee benefits for a period of thirty-six months, commencing with the month
in which the termination occurred. In addition, pursuant to each Severance
Agreement, Unitil is required to make an additional payment to the employee
sufficient on an after-tax basis to satisfy any additional individual tax
liability incurred under Section 280G of the Internal Revenue Code of 1986, as
amended, with respect to such payments.
The Company entered into an initial employment agreement with Mr. Schoenberger
on November 1, 1997. Upon the expiration of the 1997 Agreement, the Company
entered into a second employment agreement ("the 2000 Agreement") with Mr.
Schoenberger on November 1, 2000. The term of the 2000 Agreement is for three
years with an expiration date of October 31, 2003. Under the terms of the 2000
Agreement, Mr. Schoenberger will receive an annual base salary of $292,000,
which is subject to annual review by the Board for discretionary periodic
increases in accordance with the Company's compensation policies. In 2002, Mr.
Schoenberger's base salary was $304,000. Mr. Schoenberger is entitled to
continued participation in the Company's SERP, Executive Supplemental Life
Insurance Program and all other employee benefit plans made available by the
Company. The 2000 Agreement provides that Mr. Schoenberger shall participate in
the Management Incentive Plan, above (see Item 6, Part III, section (a) "Other
Compensation Arrangements"), and also in and the Option Plan, above (see Item 6,
Part III, section (a) "The Unitil Corporation 1998 Stock Option Plan"), or any
stock option or similar plan of the Company. The agreement also provides that
the Severance Agreement, entered into on February 6, 1998, by and between Mr.
Schoenberger and the Company, remain in effect. The Severance Agreement is more
fully described above (see Item 6, Part III, section (e) "Other Benefits"). The
2000 Agreement also provides that the Company, by action of the Board, may
terminate Mr. Schoenberger's employment for any reason. If Mr. Schoenberger's
employment is terminated by the Company during the term of the 2000 Agreement
for any reason other than cause, death or disability, or if Mr. Schoenberger
terminates his employment because of a constructive termination, the Company
shall pay Mr. Schoenberger a combination of (i) base pay at the rate in effect
on the date of employment termination, (ii) an annual amount equal to the
average of the annual bonus amounts received by Mr. Schoenberger in the two
calendar years preceding the year in which termination occurs, and (iii)
benefits, in each case for a period of two years following the date of
termination. If during such two-year period Mr. Schoenberger shall secure
full-time employment, the Company's obligation to provide benefits shall cease.
All such payments described above will be made in accordance with the Company's
regular payroll policies.
(f) RIGHTS TO INDEMNITY
Unitil Corporation (the Corporation) shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal,
17
administrative or investigative, by reason of the person's having served as, or
by reason of the person's alleged acts or omissions while serving as a director,
officer, employee or agent of the Corporation, or while serving at the request
of the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses, including attorney's fees, judgments, fines and amounts paid in
settlement or otherwise actually and reasonably incurred by him in connection
with the action, suit or proceeding, if the person acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests of
the Corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful, said indemnification to be
to the full extent permitted by law under the circumstances, including, without
limitation, by all applicable provisions of the New Hampshire Business
Corporation Act ("the Act").
Any indemnification under this Article shall be made by the Corporation with
respect to Directors or other persons after a determination that the person to
be indemnified has met the standards of conduct set forth in the Act, such
determination to be made by the Board of Directors, by majority vote of a
quorum, or by other persons authorized to make such a determination under the
Act.
The right of indemnification arising under this Article is adopted for the
purpose of inducing persons to serve and to continue to serve the Corporation
without concern that their service may expose them to personal financial harm.
It shall be broadly construed, applied and implemented in light of this purpose.
It shall not be exclusive of any other right to which any such person is
entitled under any agreement, vote of the stockholders or the Board of
Directors, statute, or as a matter of law, or otherwise, nor shall it be
construed to limit or confine in any respect the power of the Board of Directors
to grant indemnity pursuant to any applicable statutes or laws of The State of
New Hampshire. The provisions of this Article are separable, and, if any
provision or portion hereof shall for any reason be held inapplicable, illegal
or ineffective, this shall not affect any other right of indemnification
existing under this Article or otherwise. As used herein, the term "person"
includes heirs, executors, administrators or other legal representatives. As
used herein, the terms "Director" and "officer" include persons elected or
appointed as officers by the Board of Directors, persons elected as Directors by
the stockholders or by the Board of Directors, and persons who serve by vote or
at the request of the Corporation as directors, officers or trustees of another
organization in which the Corporation has any direct or indirect interest as a
shareholder, creditor or otherwise.
The Corporation may purchase and maintain insurance on behalf of any person who
was or is a Director, officer or employee of the Corporation or any of its
subsidiaries, or who was or is serving at the request of the Corporation as a
fiduciary of any employee benefit plan of the Corporation or any subsidiary,
against any liability asserted against, and incurred by, such person in any such
capacity, or arising out of such person's status as such, whether or not the
Corporation would have the power to indemnify such person against such liability
under the provisions of the Act. The obligation to indemnify and reimburse such
person under this Article, if applicable, shall be reduced by the amount of any
such insurance proceeds paid to such person, or the representatives or
successors of such person.
Unitil maintains a tax-qualified defined benefit pension plan and related trust
agreement (the "Retirement Plan"), which provides retirement annuities for
eligible employees of Unitil and its subsidiaries. Since the Retirement Plan is
a defined benefit plan, no amounts were contributed or accrued specifically for
the benefit of any officer of Unitil under the Retirement Plan. Directors of
Unitil who are not and have not been officers of Unitil or any of its
subsidiaries are not eligible to participate in the Retirement Plan.
18
ITEM 7.
CONTRIBUTIONS AND PUBLIC RELATIONS
Part I. Payments to any political party, candidate for public office or holder
of such office, or any committee or agent thereof. - None
Part II. Payments to any citizens group or public relations counsel.
Vendor Purpose of Payment UES
- ---------------------------------------------------------------------------
The Public Affairs Group, LLC Legislative Services $12,000
ITEM 8.
SERVICE, SALES AND CONSTRUCTION CONTRACTS
Part I. Contracts for services, including engineering or construction services,
or goods supplied or sold between System companies.
There are a number of areas in which Unitil Energy Systems, Inc. (UES) and
Fitchburg Gas and Electric Light Company (FG&E) work closely together and
cooperate on a regular basis. The areas of cooperation include the following:
o During emergencies and other occasional situations, FG&E and UES share line
crews at cost.
o FG&E and UES occasionally exchange materials and supplies, a practice,
which assists substantially in the companies' maintenance of cost-effective
inventory and stock levels.
o FG&E and UES, with the support and coordination provided by Unitil Service
Corp., participate in joint purchasing and sharing of computer software,
hardware and supplies, a practice which benefits all of the companies.
Part II. Contracts to purchase services or goods between any System company and
(1) any affiliate company (other than a System company) or (2) any other company
in which any officer or director of the System company, receiving service under
the contract, is a partner or owns 5 percent or more of any class of equity
securities. - None
Part III. The Company does not employ any other person or persons for the
performance of management, supervisory or financial advisory services.
ITEM 9.
WHOLESALE GENERATORS AND FOREIGN UTILITY COMPANIES
Part I. None
Part II. None
Part III. None
19
ITEM 10.
FINANCIAL STATEMENTS AND EXHIBITS
FINANCIAL STATEMENTS Page No.
--------
Consolidating Income Statement....................... 21-22
Consolidating Balance Sheet..........................
Assets....................................... 23-24
Capitalization and Liabilities............... 25-26
Consolidating Statement of Cash Flows................ 27-28
Consolidating Statement of Retained Earnings......... 29-30
EXHIBITS
Exhibit A............................................ 31
Exhibit B............................................ 31
Exhibit C............................................ 33
Exhibit D............................................ 34
Exhibit E............................................ 40
Exhibit F............................................ 40
Exhibit G............................................ 40
Exhibit H............................................ 40
Exhibit I............................................ 40
20
UNITIL CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATING INCOME STATEMENT
YEAR ENDED DECEMBER 31, 2002
($000's, except common shares and per share data)
Unitil
Energy FG&E Unitil
Consolidated Elimination Systems, Inc. Consolidated Service Corp.
-------------- --------------- -------------- --------------- --------------
Operating Revenues:
Electric 167,317 (88,781) 113,361 53,313 ---
Gas 20,283 --- --- 20,283 ---
Other 786 (21,966) --- --- 20,470
-------------- --------------- -------------- --------------- --------------
Total Operating Revenues 188,386 (110,747) 113,361 73,596 20,470
-------------- --------------- -------------- --------------- --------------
Operating Expenses:
Fuel and Purchased Power 114,598 (88,555) 88,555 32,119 ---
Gas Purchased For Resale 11,143 --- --- 11,143 ---
Operation and Maintenance 25,667 (22,125) 9,360 13,243 16,144
Restructuring Charge 1,598 --- --- --- 1,598
Depreciation and Amortization 14,911 --- 4,684 8,107 1,667
Provisions for Taxes:
Local Property and Other 4,731 --- 2,253 1,561 761
Federal and State Income 2,490 (31) 1,574 1,444 52
-------------- --------------- -------------- --------------- --------------
Total Operating Expenses 175,138 (110,711) 106,426 67,617 20,222
-------------- --------------- -------------- --------------- --------------
Operating Income 13,248 (36) 6,935 5,979 248
Non-Operating Expenses:
(Gain) Loss on Non-Utility Investments, net of tax (82) --- --- --- ---
Other Non-Operating Expenses 185 --- 52 43 59
-------------- --------------- -------------- --------------- --------------
Income Before Interest Expense 13,145 (36) 6,883 5,936 189
Interest Expense, net 7,057 6,550 3,955 2,638 189
-------------- --------------- -------------- --------------- --------------
Net Income (Loss) 6,088 (6,586) 2,928 3,298 ---
Less: Dividends on Preferred Stock 253 --- 107 146 ---
-------------- --------------- -------------- --------------- --------------
Net Income (Loss) Applicable to Common Stock
5,835 (6,586) 2,821 3,152 ---
-------------- --------------- -------------- --------------- --------------
Average Common Shares Outstanding - Basic 4,743,696
Average Common Shares Outstanding - Diluted 4,762,166
Basic and Diluted Earnings per Common Share
- -----------------------------------------------------------------------------------------------------------------------------------
Earnings per Common Share 1.23
21
UNITIL CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATING INCOME STATEMENT
YEAR ENDED DECEMBER 31, 2002
($000's, except common shares and per share data)
Unitil
Unitil Power Unitil Resources Unitil
Corp. Realty Corp. Inc. Corporation
--------------- -------------- -------------- ---------------
Operating Revenues:
Electric 89,424 --- --- ---
Gas --- --- --- ---
Other --- 1,526 756 ---
--------------- -------------- -------------- ---------------
Total Operating Revenues 89,424 1,526 756 ---
--------------- -------------- -------------- ---------------
Operating Expenses:
Fuel and Purchased Power 82,484 --- (5) ---
Gas Purchased For Resale --- --- --- ---
Operation and Maintenance 7,026 154 1,713 152
Restructuring Charge --- --- --- ---
Depreciation and Amortization --- 255 198 ---
Provisions for Taxes: ---
Local Property and Other --- 131 2 23
Federal and State Income 44 180 (526) (247)
--------------- -------------- -------------- ---------------
Total Operating Expenses 89,554 720 1,382 (72)
--------------- -------------- -------------- ---------------
Operating Income (130) 806 (626) 72
Non-Operating Expenses:
(Gain) Loss on Non-Utility Investments, net of tax --- --- --- (82)
Other Non-Operating Expenses 10 --- 20 1
--------------- -------------- -------------- ---------------
Income Before Interest Expense (140) 806 (646) 153
Interest Expense, net (208) 525 18 (6,610)
--------------- -------------- -------------- ---------------
Net Income (Loss) 68 281 (664) 6,763
Less: Dividends on Preferred Stock --- --- --- ---
--------------- -------------- -------------- ---------------
Net Income (Loss) Applicable to Common Stock 68 281 (664) 6,763
--------------- -------------- -------------- ---------------
22
UNITIL CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATING BALANCE SHEET
DECEMBER 31, 2002
($000's)
Unitil
Energy FG&E Unitil
ASSETS: Consolidated Elimination Systems, Inc. Consolidated Service Corp.
--------------- --------------- -------------- -------------- ---------------
Utility Plant:
Electric 193,152 --- 124,205 68,947 ---
Gas 44,796 --- --- 44,796 ---
Common 27,573 --- --- 7,258 10,115
Construction Work in Process 5,658 --- 2,761 2,631 ---
--------------- --------------- -------------- -------------- ---------------
Utility Plant 271,179 --- 126,966 123,632 10,115
Less: Accumulated Depreciation 82,587 --- 42,825 32,842 5,131
--------------- --------------- -------------- -------------- ---------------
Net Utility Plant 188,592 --- 84,141 90,790 4,984
--------------- --------------- -------------- -------------- ---------------
Other Property and Investments 651 (51,376) 24 18 ---
--------------- --------------- -------------- -------------- ---------------
Current Assets:
Cash 7,160 (3,243) 1,738 971 2,013
Accounts Receivable, Less
Allowance for Doubtful Accounts 19,513 --- 8,922 10,023 196
Accounts Receivable -
Associated Companies --- (12,656) 3 --- 2,972
Taxes Refundable (Payable) 4,851 (3) 229 411 15
Materials and Supplies 2,323 --- 582 1,741 ---
Prepayments and Other 1,735 --- 625 747 226
Accrued Revenue 4,842 --- 5,261 2,312 ---
--------------- --------------- -------------- -------------- ---------------
Total Current Assets 40,424 (15,902) 17,360 16,205 5,422
--------------- --------------- -------------- -------------- ---------------
Noncurrent Assets:
Regulatory Assets 244,011 --- 117,888 128,084 (1,961)
Debt Issuance Costs 1,755 --- 986 656 ---
Other Noncurrent Assets 5,350 --- 802 4,036 236
--------------- --------------- -------------- -------------- ---------------
Total Noncurrent Assets 251,116 --- 119,676 132,776 (1,725)
--------------- --------------- -------------- -------------- ---------------
TOTAL 480,783 (67,278) 221,201 239,789 8,681
--------------- --------------- -------------- -------------- ---------------
23
UNITIL CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATING BALANCE SHEET
DECEMBER 31, 2002
($000's)
ASSETS: Unitil Power Unitil Unitil Unitil
Corp. Realty Corp. Resources Inc. Corporation
---------------- -------------- --------------- --------------
Utility Plant:
Electric --- --- --- ---
Gas --- --- --- ---
Common --- 10,162 38 ---
Construction Work in Process --- --- 266 ---
---------------- -------------- --------------- --------------
Utility Plant --- 10,162 304 ---
Less: Accumulated Depreciation --- 1,789 --- ---
---------------- -------------- --------------- --------------
Net Utility Plant --- 8,373 304 ---
---------------- -------------- --------------- --------------
Other Property and Investments --- --- 609 51,376
---------------- -------------- --------------- --------------
Current Assets:
Cash 3,418 472 326 1,465
Accounts Receivable, Less
Allowance for Doubtful Accounts --- --- 319 53
Accounts Receivable -
Associated Companies 8,037 --- 12 1,632
Taxes Refundable (Payable) 435 67 197 3,500
Materials and Supplies --- --- --- ---
Prepayments and Other 73 4 54 6
Accrued Revenue (2,731) --- --- ---
---------------- -------------- --------------- --------------
Total Current Assets 9,232 543 908 6,656
---------------- -------------- --------------- --------------
Noncurrent Assets:
Regulatory Assets --- --- --- ---
Debt Issuance Costs --- 113 --- ---
Other Noncurrent Assets 5 --- 137 134
---------------- -------------- --------------- --------------
Total Noncurrent Assets 5 113 137 134
---------------- -------------- --------------- --------------
TOTAL 9,237 9,029 1,958 58,166
---------------- -------------- --------------- --------------
24
UNITIL CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATING BALANCE SHEET
DECEMBER 31, 2002
($000's)
Consolidated Elimination Unitil FG&E Unitil
Energy
Systems, Inc. Consolidated Service Corp.
--------------- --------------- -------------- --------------- --------------
Capitalization:
Common Stock Equity 74,350 (51,346) 29,331 35,056 3
Preferred Stock, Non-Redeemable, Non-Cumulative 225 --- 225 --- ---
Preferred Stock, Redeemable, Cumulative 3,097 --- 933 2,164 ---
Long-Term Debt, Less Current Portion 104,226 --- 50,000 48,000 ---
--------------- --------------- -------------- --------------- --------------
Total Capitalization 181,898 (51,346) 80,489 85,220 3
--------------- --------------- -------------- --------------- --------------
Current Liabilities:
Long-Term Debt, Current Portion 3,243 --- --- 3,000 ---
Capitalized Leases, Current Portion 800 --- --- 49 751
Accounts Payable 14,221 --- 277 4,893 479
Short-Term Debt 35,990 (3,243) 8,237 24,559 5,303
A/P - Associated Companies --- (11,026) 10,019 1,146 (742)
Dividends Declared and Payable 77 (1,630) 583 1,107 ---
Customer Deposits 1,336 --- 1,067 269 ---
Interest Accrued 1,311 --- 581 730 ---
Other Current Liabilities 9,062 (119) 566 4,137 3,683
--------------- --------------- -------------- --------------- --------------
Total Current Liabilities 66,040 (16,018) 21,330 39,890 9,474
--------------- --------------- -------------- --------------- --------------
Deferred Income Taxes 47,332 --- 21,118 27,828 (1,108)
Noncurrent Liabilities:
Power Supply Contract Obligations 175,657 --- 94,540 81,117 ---
Capitalized Leases, Less Current Portion 2,534 --- --- 1,653 881
Other Noncurrent Liabilities 7,322 86 3,724 4,081 (569)
--------------- --------------- -------------- --------------- --------------
Total Noncurrent Liabilities 185,513 86 98,264 86,851 312
--------------- --------------- -------------- --------------- --------------
TOTAL 480,783 (67,278) 221,201 239,789 8,681
--------------- --------------- -------------- --------------- --------------
25
UNITIL CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATING BALANCE SHEET
DECEMBER 31, 2002
($000's)
Unitil
Unitil Power Unitil Resources Unitil
Corp. Corp. Inc. Corporation
---------------- -------------- -------------- ---------------
Capitalization:
Common Stock Equity 169 2,433 565 58,139
Preferred Stock, Non Redeemable, Non-Cumulative --- --- --- ---
Preferred Stock, Redeemable, Cumulative ---- --- --- ---
Long-Term Debt, Less Current Portion --- 6,226 --- ---
---------------- -------------- -------------- ---------------
Total Capitalization 169 8,659 565 58,139
---------------- -------------- -------------- ---------------
Current Liabilities:
Long-Term Debt, Current Portion --- 243 --- ---
Capitalized Leases, Current Portion --- --- --- ---
Accounts Payable 8,437 --- 135 ---
Short-Term Debt --- --- 1,134 ---
A/P - Associated Companies 318 2 273 10
Dividends Declared and Payable --- --- --- 17
Customer Deposits --- --- --- ---
Interest Accrued --- --- --- ---
Other Current Liabilities 763 3 29 ---
---------------- -------------- -------------- ---------------
Total Current Liabilities 9,518 248 1,571 27
---------------- -------------- -------------- ---------------
Deferred Income Taxes (450) 122 (178) ---
Noncurrent Liabilities:
Power Supply Contract Obligations --- --- --- ---
Capitalized Leases, Less Current Portion --- --- --- ---
Other Noncurrent Liabilities --- --- --- ---
---------------- -------------- -------------- ---------------
Total Noncurrent Liabilities --- --- --- ---
---------------- -------------- -------------- ---------------
TOTAL 9,237 9,029 1,958 58,166
---------------- -------------- -------------- ---------------
26
UNITIL CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATING STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 2002
($000's)
Consolidated Elimination Unitil Energy FG&E Unitil
Systems, Inc. Consolidated Service Corp.
Cash Flows from Operating Activities:
Net Income (Loss) 6,088 (6,586) 2,928 3,298 ---
Adjustments to Reconcile Net Income (Loss) to
Cash Provided by (Used In) Operating Activities:
Depreciation and Amortization 14,911 --- 4,684 8,107 1,667
Deferred Tax Provision (Benefit) 856 --- 2,538 (1,342) (180)
Noncash Stock Option Compensation Expenses 321 --- 2 5 314
(Gain) Loss on Non-Utility Investments, net (82) --- --- --- ---
Changes in Current Assets and Liabilities:
Accounts Receivable (2,380) --- (572) (1,867) (31)
Prepayments and other Current Assets (960) 792 1,132 1,260 (33)
Due from Affiliates, net --- (7) 1,618 408 (1,715)
Accrued Revenue (3,512) 100 (5,007) 512 ---
Accounts Payable (5,863) --- 83 (4,686) 73
Interest Payable and other 2,670 2,790 (74) (46) ---
Other, Net (2,481) (3,646) (1,304) 1,862 1,632
---------------- -------------- --------------- -------------- --------------
Cash Provided by (Used in) Operating
Activities 9,568 (6,557) 6,028 7,511 1,727
Cash Flows from Investing Activities:
Acquisition of Property, Plant & Equipment (20,825) --- (10,357) (10,178) 14
Proceeds on Investments, net 1,535 --- --- --- ---
---------------- -------------- --------------- -------------- --------------
--
Cash Provided by (Used in) Investing
Activities (19,290) --- (10,357) (10,178) 14
Cash Flows from Financing Activities:
Proceeds from (Repayment of) Short-Term Debt, net 22,190 5,758 7,010 9,333 (1,045)
Repayment of Long-Term Debt (3,225) --- --- (3,000) ---
Dividends Paid (6,831) 6,557 (2,149) (4,665) ---
Retirement of Preferred Stock (293) --- (265) (28) ---
Repayment of Capital Lease Obligations (1,035) --- --- (248) (787)
---------------- -------------- --------------- -------------- --------------
Cash Provided by (Used in) Financing
Activities 10,806 12,315 4,596 1,392 (1,832)
Net Increase (Decrease) in Cash 1,084 5,758 267 (1,275) (91)
Cash at Beginning of Year 6,076 (9,001) 1,471 2,246 2,104
---------------- -------------- --------------- -------------- --------------
Cash at End of Year 7,160 (3,243) 1,738 971 2,013
---------------- -------------- --------------- -------------- --------------
27
UNITIL CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATING STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 2002
($000's)
Unitil Power Unitil Unitil Unitil
Corp. Realty Corp. Resources Inc. Corporation
---------------- -------------- --------------- --------------
Cash Flows from Operating Activities:
Net Income 68 281 (664) 6,763
Adjustments to Reconcile Net Income to
Cash Provided by Operating Activities:
Depreciation and Amortization --- 255 198 ---
Deferred Tax Provision (Benefit) (117) (5) (38) ---
Noncash Stock Option Compensation Expenses --- --- --- ---
(Gain) Loss on Non-Utility Investments, net --- --- --- (82)
Changes in Current Assets and Liabilities:
Accounts Receivable 181 --- (91) ---
Prepayments and other Current Assets (574) (97) (529) (2,911)
Due from Affiliates, net (543) (30) 266 3
Accrued Revenue 883 --- --- ---
Accounts Payable (1,420) --- 87 ---
Interest Payable and other --- --- --- ---
Other, Net (2,597) 16 (57) 1,613
---------------- -------------- --------------- --------------
Cash Provided by (Used in) Operating (4,119) 420 (828) 5,386
Activities
Cash Flows from Investing Activities:
Acquisition of Property, Plant & Equipment --- --- (304) ---
Proceeds on Investments, net --- --- --- 1,535
---------------- -------------- --------------- --------------
Cash (Used in) Provided by Investing --- --- (304) 1,535
Activities
Cash Flows from Financing Activities:
Proceeds from (Repayment of) Short-Term Debt, net --- --- 1,134 ---
Repayment of Long-Term Debt --- (225) --- ---
Dividends Paid --- --- --- (6,574)
Retirement of Preferred Stock --- --- --- ---
Repayment of Capital Lease Obligations --- --- --- ---
---------------- -------------- --------------- --------------
Cash Provided by (Used in) Financing --- (225) 1,134 (6,574)
Activities
Net Increase (Decrease) in Cash (4,119) 195 2 347
Cash at Beginning of Year 7,537 277 324 1,118
---------------- -------------- --------------- --------------
Cash at End of Year 3,418 472 326 1,465
---------------- -------------- --------------- --------------
28
UNITIL CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATING STATEMENT OF RETAINED EARNINGS (ACCUMULATED DEFICIT)
YEAR ENDED DECEMBER 31, 2002
($000's)
Unitil
Energy FG&E Unitil
Consolidated Elimination Systems, Inc. Consolidated Service Corp.
--------------- -------------- -------------- --------------- --------------
Retained Earnings (Accumulated
Deficit), Beginning of Year 32,857 (17,640) 22,262 15,275 2
Additions:
Net Income (Loss), Excluding Dividends Received 6,088 (36) 2,928 3,298 ---
Dividends Received From Subsidiaries --- (6,550) --- --- ---
--------------- -------------- -------------- --------------- --------------
Total Additions 6,088 (6,586) 2,928 3,298 ---
--------------- -------------- -------------- --------------- --------------
Deductions:
Dividends Declared:
Preferred Stock of Subsidiaries 253 --- 107 146 ---
Common Stock of Subsidiaries --- (6,550) 2,094 4,456 ---
Common Stock of Registrant 6,546 --- --- --- ---
Adjustments to Retained Earnings 6 (531) 9 --- ---
--------------- -------------- -------------- --------------- --------------
Total Deductions 6,805 (7,081) 2,210 4,602 ---
--------------- -------------- -------------- --------------- --------------
Retained Earnings (Accumulated
Deficit), End of Year 32,140 (17,145) 22,980 13,971 2
--------------- -------------- -------------- --------------- --------------
29
UNITIL CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATING STATEMENT OF RETAINED EARNINGS (ACCUMULATED DEFICIT)
YEAR ENDED DECEMBER 31, 2002
($000's)
Unitil Unitil Unitil Unitil
Power Corp. Realty Corp. Resources Inc. Corporation
------------- -------------- --------------- --------------
Retained Earnings (Accumulated Deficit),
Beginning of Year 528 1,827 (3,421) 14,024
Additions:
Net Income (Loss), Excluding Dividends Received 68 281 (664) 213
Dividends Received From Subsidiaries --- --- --- 6,550
------------- -------------- --------------- --------------
Total Additions 68 281 (664) 6,763
------------- -------------- --------------- --------------
Deductions:
Dividends Declared:
Preferred Stock of Subsidiaries --- --- --- ---
Common Stock of Subsidiaries --- --- --- ---
Common Stock of Registrant --- --- --- 6,546
Adjustments to Retained Earnings 528 --- --- ---
------------- -------------- --------------- --------------
Total Deductions 528 --- --- 6,546
------------- -------------- --------------- --------------
Retained Earnings (Accumulated Deficit),
End of Year 68 2,108 (4,085) 14,241
------------- -------------- --------------- --------------
30
EXHIBITS
Exhibit A. A copy of Unitil Corporation's Annual Report and Form 10-K for the
year ended December 31, 2002 (Incorporated herein by reference to File No.
1-8858 and File No. 1-7536, respectively).
Exhibit B.
Exhibit No. Description of Exhibit Reference
B-1 Unitil Corporation
B-1(a) Certificate of Incorporation Exhibit B-1(a)
Form U5B
File No. 30 - 1
B-1(b) Amendment to Certificate of Incorporation Exhibit B-1(b)
Form U5B
File No. 30 - 1
B-1(c) Articles of Incorporation Exhibit B-1(c)
Form U5B
File No. 30 - 1
B-1(d) Articles of Amendment to Articles of Exhibit B-1(d)
Incorporation Form U5B
File No. 30 - 1
B-1(e) By - Laws Exhibit B-1(e)
Form U5B
File No. 30 - 1
B-2 Unitil Energy Systems, Inc.
B-2(a) Charter (Articles of Association) and Filed herewith
Amendments thereto
B-2(b) By - Laws Filed herewith
B-3 Fitchburg Gas and Electric Light Company
B-3(a) Articles of Incorporation and Amendments Exhibit B-3(a)
Thereto Form U5B
File No. 30 - 1
B-3(b) By - Laws Exhibit B-3(b)
Form U5B
File No. 30 - 1
B-4 Fitchburg Energy Development Company
B-4(a) Certificate of Incorporation
Exhibit B-4(a)
Form U5B
File No. 30 - 1
31
B-4(b) By - Laws Exhibit B-4(b)
Form U5B
File No. 30 - 1
B-5 Unitil Power Corp.
B-5(a) Certificate of Incorporation Exhibit B-5(a)
Form U5B
File No. 30 - 1
B-5(b) Articles of Incorporation Exhibit B-5(b)
Form U5B
File No. 1-
B-5(c) Statement of Change of Registered Office Exhibit B-5(c)
Form U5B
File No. 30 - 1
B-5(d) By - Laws Exhibit B-5(d)
Form U5B
File No. 30 - 1
B-6 Unitil Realty Corp.
B-6(a) Certificate of Incorporation Exhibit B-6(a)
Form U5B
File No. 30 - 1
B-6(b) Articles of Incorporation Exhibit B-6(b)
Form U5B
File No. 30 - 1
B-6(c) By - Laws Exhibit B-6(c)
Form U5B
File No. 30 - 1
B-7 Unitil Service Corp.
B-7(a) Certificate of Incorporation Exhibit B-7(a)
Form U5B
File No. 30 - 1
B-7(b) Articles of Incorporation Exhibit B-7(b)
Form U5B
File No. 30 - 1
B-7(c) By - Laws Exhibit B-7(c)
Form U5B
File No. 30 - 1
B-8 Unitil Resources, Inc.
B-8(a) Certificate of Incorporation Exhibit B-8(a)
1993 Form U5S
File No. 30 - 1
32
B-8(b) Articles of Incorporation and Exhibit B-8(b)
Addendum to Articles of Incorporation 1993 Form U5S
File No. 30 - 1
B-8(c) By - Laws Exhibit B-8(c)
1993 Form U5S
File No. 30 - 1
Exhibit C.
(a) INDENTURES
Exhibit No. Description of Exhibit Reference
C-1 Twelfth Supplemental Indenture of Unitil Energy Systems, Exhibit 4.1 2002
Inc., successor to Concord Electric Company, dated Form 10-K
as of December 2, 2002, amending and restating the File No. 1-8858
Concord Electric Company Indenture of Mortgage and
Deed of Trust dated as of July 15, 1958.
C-2 FG&E Purchase Agreement dated March 20, 1992 for the 8.55% Exhibit C-2
Senior Note due March 31, 2004. Form U5B
File No. 30 - 1
C-3 FG&E Note Agreement dated November 30, 1993 for the 6.75% Exhibit 4.18 1993
Notes due November 30, 2023. Form 10-K
File No. 1-8858
C-4 FG&E Note Agreement dated January 26, 1999 for the 7.37% Exhibit 4.25 to
Notes due January 15, 2028. Form 10-K for
1999
C-5 FG&E Note Agreement dated June 1, 2001 for the 7.98% Notes Exhibit 4.6 to
due June 1, 2031. Form 10-Q for
June 30, 2001
C-6 Unitil Realty Corp. Note Purchase Agreement dated Exhibit 4.22 to
July 1, 1997 for the 8.0% Senior Secured Notes due Form 10-K for
August 1, 2017. 1997
33
Exhibit D. Tax Allocation Agreement
AGREEMENT made as of September 10, 1985, among Concord Electric Company, a New
Hampshire corporation, Exeter & Hampton Electric Company, a New Hampshire
corporation, UNITIL Service Corp., a New Hampshire corporation, and UNITIL Power
Corp., a New Hampshire corporation, and UNITIL Corporation ('UNITIL"), a New
Hampshire corporation, ("AFFILIATE" companies or collectively, the
"AFFILIATES"). Whenever it is intended to include UNITIL in the context of the
affiliated group, the term "CONSOLIDATED AFFILIATE" or "CONSOLIDATED AFFILIATES"
may be used, and when reference is to the affiliated group as a collective tax
paying unit the term "Group" may be used.
WHEREAS, UNITIL owns at least 80 percent of the issued and outstanding shares of
each class of voting common stock of each of the AFFILIATES: each of the
CONSOLIDATED AFFILIATES is a member of the affiliated group within the meaning
of section 1504 of the Internal Revenue Code of 1954, as amended (the "Code"),
of which UNITIL is the common parent corporation; and UNITIL proposes to include
each of the AFFILIATES in filing a consolidated income tax return for the
calendar year 1985;
NOW, THEREFORE, UNITIL and the AFFILIATES agree as follows:
1. Consolidated Return Election. If at any time and from time to time UNITIL so
elects, each of the AFFILIATES will join in the filing of a consolidated Federal
income tax return for the calendar year 1985 and for any subsequent period for
which the Group is required to file such a return. UNITIL and its affiliates
agree to file such consents, elections and other documents and to take such
other action as may be necessary or appropriate to carry out the purposes of
this Section 1. Any period for which any of the AFFILIATES is included in a
consolidated Federal income tax return filed by UNITIL is referred to in the
Agreement as a "Consolidated Return Year".
2. AFFILIATES' Liability to UNITIL for Consolidated Return Year. Prior to the
filing of each consolidated return by UNITIL, each of the AFFILIATES included
therein shall pay to UNITIL the amount, if any, on the Federal income tax for
which the AFFILIATES would have been liable for that year, computed in
accordance with Treasury Regulations, section 1.1552-1(a)(2)(ii) as though that
AFFILIATE had filed a separate return for such year, giving the effect to any
net operating loss carryovers, capital loss carryovers, investment tax credit
carryovers, foreign tax carryovers or other similar items, incurred by that
AFFILIATE for any period ending on or before the date of this Agreement.
The foregoing allocation of Federal income tax liability is being made in
accordance with Treasury Regulations, sections 1.1552-1(a)(2) and
1.1502-33(d)(2)(ii), and no amount shall be allocated to any CONSOLIDATED
AFFILIATE in excess of the amount permitted under Treasury Regulations, section
1.1502-33(d)(2)(ii). Accordingly, after taking into account the allocable
portion of the Group's Federal income tax liability, no amount shall be
allocated to any CONSOLIDATED AFFILIATE in excess of the amount permitted in
accordance with Treasury Regulations, section 1.1502-33(d)(2)(ii).
3. UNITIL Liability to Each Affiliate for Consolidated Return Year. If for any
Consolidated Return Year, any AFFILIATE included in the consolidated return
filed by UNITIL for such year has available a net operating loss, capital loss,
foreign tax credit, investment tax credit or similar items (computed by taking
into account carryovers of such items from periods ending on or before the date
of this Agreement) that reduces the consolidated tax liability of the Group
below the amount that would have been payable if that AFFILIATE did not have
such item available, UNITIL shall pay the amount of the reduction attributable
to such AFFILIATE PRIOR TO THE FILING of the consolidated return for such year.
The amount of the reduction shall be equal to a portion of the excess of (i) the
total of the separate return tax liabilities of each of the CONSOLIDATED
AFFILIATES computed in accordance with Section 2 of this Agreement, over (ii)
the Federal income tax liability of the Group for the year. The portion of such
reduction attributable to an AFFILIATE shall be computed by multiplying the
total reduction by a fraction, the numerator of which is the value of the tax
benefits contributed by the AFFILIATE to the Group and the denominator of which
is the value of the total value of such benefits contributed by all CONSOLIDATED
AFFILIATES during the year.
34
For purposes of the foregoing paragraph a deduction of credit generated by a
CONSOLIDATED AFFILIATE which is in excess of the amount required to eliminate
its separate tax return liability but which is utilized in the computation of
the Federal income tax liability of the Group shall be deemed to be a tax
benefit contributed by the CONSOLIDATED AFFILIATE to the Group. The value of a
deduction which constitutes such a benefit shall be determined by applying the
current corporate income tax rate, presently 46 percent, to the amount for the
deduction. The value of a credit that constitutes such a benefit shall be the
tax savings, currently 100 percent thereof. The value of capital losses used to
offset capital gains shall be computed at the then current rate applicable to
capital gains for corporations.
4. Payment of Estimated Taxes. Prior to the paying and filing of estimated
consolidated tax declaration by UNITIL, each of the AFFILIATES included in such
estimated tax declaration shall pay to UNITIL the amount, if any, of the
estimated Federal income tax for which the AFFILIATE would have been liable for
that year, computed as though that AFFILIATE had filed a separate estimated tax
declaration for such year.
5. Tax Adjustments. In the event of any adjustments to the consolidated tax
return as filed (by reason of an amended return, a claim for refund of an audit
by the Internal Revenue Service), the liability, if any, of each of the
AFFILIATES under Sections 2, 3, and 4 shall be redetermined to give effect to
any such adjustment as if it had been made as part of the original computation
of tax liability, and payments between UNITIL and the appropriate AFFILIATES
shall be made within 120 days after any such payments are made or refunds are
received, or, in the case of contested proceedings, within 120 days after a
final determination of the contest.
Interest and penalties, if any, attributable to such an adjustment shall be paid
by each AFFILIATE to UNITIL in proportion to the increase in such AFFILIATE'S
separate return tax liability that is required to be paid to UNITIL, as computed
under Section 2.
6. Subsidiaries of Affiliates. If at any time, any of the AFFILIATES acquire or
creates one or more subsidiary corporations that are includable corporations of
the Group, they shall be subject to this Agreement and all references to the
AFFILIATES herein shall be interpreted to include such subsidiaries as a group.
7. Successors. This Agreement shall be binding on and inure to the benefit of
any successor, by merger, acquisition of assets or otherwise, to any of the
parties hereto (including but not limited to any successor of UNITIL or any of
the AFFILIATES succeeding to the tax attributes of such corporation under
Section 381 of the Code) to the same extent as if such successor had been an
original party to this Agreement.
8. Affiliates' Liability for Separate Return Years. If any of the AFFILIATES
leaves the Group and files separate Federal income tax returns, within 120 days
of the end of each of the first fifteen taxable years for which it files such
returns, it shall pay to UNITIL the excess, if any, of (A) Federal income tax
that such AFFILIATE would have paid for such year (on a separate return basis
giving the effect to its net operating loss carryovers) if it never had been a
member of the Group, over (B) the amount of Federal income tax such AFFILIATE
has actually paid or will actually pay for such years.
9. Examples of Calculations. Attached hereto and made part hereof , as "Appendix
A to Tax Sharing Agreement By and Between UNITIL Corporation and Its Affiliated
Companies", are illustrated examples of the matters contained herein.
In witness whereof, the duly authorized representatives of the parties hereto
have set their hands this tenth day of September, 1985.
UNITIL CORPORATION
By /s/ Michael J. Dalton
-------------------------------------------------
its President
35
EXETER & HAMPTON ELECTRIC COMPANY
By /s/ Michael J. Dalton
-------------------------------------------------
its President
CONCORD ELECTRIC COMPANY
By /s/ Douglas K. Macdonald
-------------------------------------------------
its President
UNITIL POWER CORP.
By /s/ Michael J. Dalton
-------------------------------------------------
its President
UNITIL SERVICE CORP.
By /s/ Peter J. Stulgis
-------------------------------------------------
its President
36
APPENDIX A TO TAX SHARING AGREEMENT
BY AND BETWEEN UNITIL CORPORATION AND ITS
AFFILIATED COMPANIES
The allocation agreement follows the Internal Revenue Service Regulations for
"basic" and "supplemental" allocation of consolidated return liability and
benefits.
The "basic" method used to allocate UNITIL'S liability shown on the consolidated
return is provided by Internal Revenue Code Section 1552(a) and provides for
allocation based on the amount of tax liability calculated on a separate return
basis.
The "supplemental" method provides that the tax savings of credits and
deductions in excess of the amount of the individual company can use, but which
can be used in consolidations, is allocated among the members supplying the
savings and the benefiting members reimburse them.
For example, assume that a three-member group has consolidated tax liability of
$200,000 and $100,000 respectively. The individual members, A, B, and C have
separate return taxable income (loss) of $150,000, $100,000, and $(50,000) and
the individual members have separate return liabilities of $75,000, $50,000, and
none, respectively. (Loss members are deemed to have a zero tax liability.)
Under the proposed method, the Individual tax liability and benefit is allocated
as follows:
Member A B C
------
------------------ ------------------ ---------------
Taxable Income (Loss) $150,000 $100,000 $(50,000)
Separate Tax Liability 75,000 50,000 none
Percent of Total ($125,000) 60% 40% 0%
Consolidated Tax Allocation 60,000 40,000 none
Separate Tax Liability 75,000 50,000 0
Less Consolidated Tax 60,000 40,000 0
------------------ ------------------ ---------------
15,000 10,000 0
100% 100%
------------------ ------------------ ---------------
Supplemental Allocation 15,000 10,000 0
Benefits paid to C ($15,000) ($10,000) ($25,000)
------------------ ------------------ ---------------
Regulation 1.1502-33(d) provides the "supplemental" method of allocating tax
liability in order to permit members to receive reimbursement for contributing
tax deductions or credits to the group. The method adopted by the Company and
outlined at Regulation 1.1502-33(2)(ii) provides for immediate reimbursement for
the tax year involved. The steps are as follows:
(1) Tax liability is allocated to the members by the basic method outlined
above.
(2) Each member with a separate company tax will be allocated 100% of the excess
of its separate return liability over its share of the consolidated liability
under step (1). (3) The amounts allocated to benefiting members under Step 2 are
credited to the members supplying the capital losses, deductions, credits or
other items to which the savings are attributable. For this purpose an amount
generated by a member which is in its own separate return tax liability and
which is utilized in the computation of the Federal income tax liability of the
group shall be deemed to be a tax benefit contributed by the member to the
group.
In some years the Step 2 savings to be credited may be less than the total tax
savings items available for use. In such a case, the savings shall be attributed
to tax savings items in the order that they are used on the consolidated return
and in an amount equal to the savings actually realized.
Under this method, capital losses would normally be used first to the extent
there are capital gains, since these items are netted in order to reach income,
and are used before any deductions or credits are taken into account. The value
of the capital loss would be the current rate of tax for capital gain income of
the loss. The next item to be used would be deductions resulting in a current
year operating loss, and these would be valued at the marginal rate of tax on
the income they offset. This is normally 46 percent under current law, but would
be less
37
for income under $100,000, which falls in to the graduated tax brackets under
Reg.1.1502-33 (d)(2), the amount of each graduated rate bracket is apportioned
equally by dividing that amount by the number of corporations that where members
of the group. Additionally, an alternative is to allocate the amount of each
graduated rate bracket based on an election made be each of the companies' and
including with that year's tax return. Operating loss carryovers would be used
next, and finally credits would be used. Credits will be valued at 100 percent,
since they result in dollar for dollar savings. Where the total amount of an
item is not used, the savings will be allocated to each member in proportion to
his share of the total of that benefit available from all members of the
consolidated group.
(4) Benefiting members will reimburse the other members prior to the filing of
the consolidated tax return.
A more complicated situation is presented when there are several loss companies.
Assume that the facts are the same as above except that there are three loss
companies: C, D, and E with the following tax savings items:
C D E
-------- -------- --------
Capital Loss 0 5,000 0
Current Operating Loss 5,000 0 3,000
Operating Loss Carryover 0 10,000 0
Credits 4,000 8,000 4,000
Allocation of the $25,000 benefit from Step 2 would proceed as follows:
Remaining
C D E Benefit
-------- -------- -------- ----------
Capital Gains @ 28% 0 1,400 0 23,600
Current Operating Loss Offsetting 46% Income 2,300 0 1,380 19,920
Operating Loss Carryover Offsetting 46% Income 4,600 15,320
Credits @ 100% (proportionate) 3,830 7,600 3,830 0
Total Allocated 6,130 13,660 5,210 0
Thus companies A and B would reimburse C, D and E for the above amounts. There
will be credit carryovers for C, D, and E of $170, $340, and $170, respectively.
Separate Return Liability
The allocations and reimbursements outlined above use the concept of a "separate
return tax liability" as a starting point for allocations. This liability is the
amount which a member of the affiliated group would pay of it filed a separate
return. It is calculated in three basic steps.
(1) The rules for consolidated return deferred accounting, inventory
adjustments, basis determination, basis adjustments, excess losses, earnings and
profits, and obligations of members must be applied.
(2) Intercompany dividends are eliminated and no dividend received or paid
deduction is allowed on intercompany dividends.
(3) Adjustments are made for specific items used in the consolidated return
which must be divided by some equitable method among the members.
The third step is the subject of this part of the Appendix. Two different
approaches may be taken for the apportionment of the limits, deductions, and
exemptions used to reach tax liability.
38
It is recognized that each company is a part of an affiliated group, and that
all credits, deductions and limitations must be apportioned in some equitable
manner.
Specific Apportionments
(1) Carryovers. On a consolidated basis, items such as operating losses, capital
losses, and contributions will be used first from the current year and then
carried forward from the oldest year forward until exhausted. It is the
intention of the Tax Sharing Agreement, for allocation and reimbursement
purposes, that a member shall use its own carryovers first before it is required
to reimburse another member for use of its carryover in consolidation, without
regard for the fact that the tax regulations for consolidated returns may
require a different order.
(2) Contribution Deduction. The amount of the contribution deduction is limited
to 10% of consolidated taxable income. Thus the amount allowable may exceed the
actual contributions. In order to avoid having a consolidated contribution
carryover which is not owned by a member, each member agrees that its deduction
be limited to its proportionate share on a separate return basis of the
consolidated contribution deduction in a given year, rather than 10% of its
separate return income, and that any contribution in excess of such amount be
treated as its own carryover.
If the consolidated deduction is greater than the separate deductions of the
profitable members (thus permitting a deduction for contributions of a loss
member) the excess allowable deduction will be allocated to the loss members in
proportion to the excess allowable over their available contributions.
Contribution Illustration
Example A A B C Consolidated
- -----------------------------------------------------------------------------------------------
Income before contributions 12,000 100 (5,600) 6,500
Contributions - current 400 25 100
- carryover 300 25
- available 700 50 100
10% Limit 650
Allowable on SR basis 1,200 10
Allowable by agreement 644 6
Carryover by agreement
- current 0 19 100
- prior 56 25
----------------------------------------------------
Taxable income 11,356 94 (5,600) 5,850
Example B A B C Consolidated
- -----------------------------------------------------------------------------------------------
Income before contributions 12,000 (100) (5,400) 6,500
Contributions - current only 200 50 200
10% Limit 650
Available on SR basis 200 200
Excess deduction allowable 250
Allocation by agreement 50 200
Carryover by agreement 50 200
----------------------------------------------------
Taxable income 11,800 (150) (5,600) 6,050
(3) Tax Brackets. The members agree that the brackets will first be applied
equally to the members with ordinary income. If the allocated amount exceeds
income, the excess can be reapplied equally to the other members with remaining
income.
(4) I.T.C. Limitation. The limitation on 100% utilization of investment tax
credit provided by Internal Revenue Code S46(a)(3), currently $25,000, will be
allocated equally among the members with tax liability and available credits,
with any excess to be allocated equally to those with remaining liability and
credits.
39
(5) I.T.C. Limit for Used Property. The limitations on used property cost deemed
eligible for investment credit, currently $215,000, will be allocated equally
among the companies that have used property acquisitions with a ten year
recovery life in any year. If a member is unable to utilize all of its allocated
amount the excess will be allocated proportionately to the members with used
property acquisitions in excess of their allocated share. If there are
insufficient ten year recovery life assets, the remainder will be allocated to
five year recovery life assets in a similar manner. Likewise, if there are not
enough ten and five year recovery life assets, the remainder of the $100,000
limitation will be allocated equally to members having three year recovery life
used property additions.
(6) Future Developments. Any credits, deductions, or other items established by
future legislation will be allocated in a manner consistent with the above
methods.
The foregoing examples are for illustrative purposes and are not intended to
cover all possible situations that may arise.
Exhibit E - Other Documents - None
Exhibit F - Supporting Schedules
Exhibit G - None
Exhibit H - Organizational Chart - Not Applicable
Exhibit I - Majority Owned Associate Company - Not Applicable
40
Report of Independent Certified Public Accountants
To the Shareholders of Unitil Corporation:
We have audited the consolidated balance sheet and consolidated statement of
capitalization of Unitil Corporation and subsidiaries as of December 31, 2002
and the related consolidated statement of earnings, cash flows and changes in
common stock equity for the year then ended, included in the 2002 annual report
on Form 10K and incorporated by reference in this Form U5S. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Unitil Corporation
and subsidiaries as of December 31, 2002, and the consolidated results of their
operations and their consolidated cash flows for the year then ended, in
conformity with accounting principles generally accepted in the United States of
America.
/s/ GRANT THORNTON LLP
Boston, Massachusetts
February 7, 2003
41
SIGNATURES
Each undersigned System company has duly caused this annual report to be signed
on its behalf by the undersigned, thereunto duly authorized pursuant to the
requirements of the Public Utility Holding Company Act of 1935.
UNITIL CORPORATION
By /s/ Robert G. Schoenberger
--------------------------
Robert G. Schoenberger
Chairman of the Board &
Chief Executive Officer
UNITIL RESOURCES, INC.,
USOURCE, INC.
By /s/ Robert G. Schoenberger
--------------------------
Robert G. Schoenberger
President
UNITIL SERVICE CORP.
By /s/ Mark H. Collin
------------------
Mark H. Collin
Treasurer
UNITIL REALTY CORP.
By /s/ Mark H. Collin
------------------
Mark H. Collin
Treasurer
UNITIL ENERGY SYSTEMS, INC.
FITCHBURG GAS AND ELECTRIC LIGHT COMPANY.
By /s/ Robert G. Schoenberger
--------------------------
Robert G. Schoenberger
President
UNITIL POWER CORP.
By /s/David K. Foote
------------------
David K. Foote
President
Date: April 30, 2003
42
Exhibit B-2(a)
STATE OF NEW HAMPSHIRE
Filing fee: $35.00 Form No. 16-A
Use black print or type RSA 293-A:10.07
Leave 1" margins both sides
RESTATED
ARTICLES OF INCORPORATION
INCLUDING DESIGNATED AMENDMENT(S)
PURSUANT TO THE PROVISIONS OF THE NEW HAMPSHIRE BUSINESS CORPORATION ACT, THE
UNDERSIGNED CORPORATION, PURSUANT TO A RESOLUTION DULY ADOPTED BY ITS BOARD OF
DIRECTORS, HEREBY ADOPTS THE FOLLOWING RESTATED ARTICLES OF INCORPORATION,
INCLUDING DESIGNATED AMENDMENT(S):
Name of corporation as presently recorded: Concord Electric Company
-------------------------------------
- --------------------------------------------------------------------------------
(Here insert the Restated Articles of Incorporation,
as amended including the Designated Amendments.)
See Attachment A
[Attach additional sheet(s) for more space.
Insert corporate name at top of each page.]
Page 1 of 3
RESTATED ARTICLES OF INCORPORATION Form No. 16-A
INCLUDING DESIGNATED AMENDENT(S) (Cont.)
OF Concord Electric Company
--------------------------------
If the amendment(s) provides for an exchange, reclassification, or cancellation
of issued shares, provision for implementing the amendment if not contained in
the amendment(s);
Except for the Designated Amendment (s) to Article (s) I, II, III, IV, V and VI
(Note 1) ------------------------
- --------------------------------------------------------------------------------
the Restated Articles of Incorporation correctly set forth without change the
corresponding provisions of the Articles of Incorporation as previously amended,
and the Restated Articles of Incorporation together with the Amendment (s)
designated herein supersede the original Articles of Incorporation and all
amendments to the Articles.
FIRST: (Check one)
------ The restated articles contain amendment (s) adopted by
the board of directors and did not require shareholder
approval.
x The restated articles contain amendment (s) which
------- required shareholder approval.
SECOND: The amendment (s) were adopted on (date) November 27, 2002
-----------------
THIRD: The amendment (s) were approved by the shareholders. (Note 2)
- ----------------------------------------------------------------------------------------------------------------------
Number of votes
Designation Number of indisputably
(class or series) Number of Votes entitled represented at
of voting group shares outstanding to be cast the meeting
--------------- ------------------ ---------- -----------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
Common and Non- 133,995 133,995
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
Cumulative Preferred
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
Stock, 6% Series
- ----------------------------------------------------------------------------------------------------------------------
Designation Total number of
(class or series) Total number of votes cast: OR undisputed
of voting group FOR AGAINST -- votes cast FOR
--------------- --- ------- ---------------
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Common and Non- 131,745 none
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Cumulative Preferred
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Stock, 6% Series
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Page 2 of 3
RESTATED ARTICLES OF INCORPORATION Form No. 16-A
INCLUDING DESIGNATED AMENDENT(S) (Cont.)
OF Concord Electric Company
-------------------------------
FOURTH: The number cast for the amendment(s) by each voting group was
sufficient for approval.
Dated November 27, 2002
-------------------------
Concord Electric Company (Note 3)
------------------------------------------------
By s/Mark H. Collin (Note 4)
----------------------------------------------
Signature of its Treasurer
-------------------------------
Mark H. Collin
------------------------------------------------
Print or type name
Notes: 1. Here insert Restated Article NUMBER(S) which are being amended
at this time.
2. All sections under "THIRD" must be completed. If any voting group
is entitled to vote separately, give respective information for
each voting group. (See RSA 293-A:1.40 for definition of voting
group.)
3. Exact corporate name of corporation adopting the restated
articles of incorporation.
4. Signature and title of person signing for the corporation. Must
be signed by the chairman of the board of directors, president or
another officer; or see RSA 293-A:1.20(f) for alternative
signatures.
Mail fee and ORIGINAL and ONE EXACT OR CONFORMED COPY to: Secretary of State,
State House, Room 204, 107 North Main Street, Concord, NH 03301-4989
Page 3 of 3
UNITIL ENERGY SYSTEMS, INC.
(formerly, CONCORD ELECTRIC COMPANY)
ATTACHMENT A
RESTATED ARTICLES OF INCORPORATION OF
UNITIL ENERGY SYSTEMS, INC.
(formerly, CONCORD ELECTRIC COMPANY)
ARTICLE I
The name of the Company shall be Unitil Energy Systems, Inc. and its
principal place of business shall be located in Hampton in the County of
Rockingham in the State of New Hampshire, but the Company may carry on any
portion of its business at other places, either within or without the State of
New Hampshire, subject, however, to the laws of said State.
ARTICLE II
The capital stock of the Company shall consist of Two Thousand Two Hundred
Fifty (2,250) shares of the presently outstanding Preferred Stock, 6%, $100 par
value, hereby designated as Non-Cumulative Preferred Stock; Fifteen Thousand
(15,000) shares of Cumulative Preferred Stock, $100 par value; and Two Hundred
Fifty Thousand (250,000) shares of Common Stock, without nominal or par value.
The particular character of the preferences of the Non-Cumulative Preferred
Stock, the Cumulative Preferred Stock and the respective rights, restrictions
and voting powers of the Non-Cumulative Preferred Stock, the Cumulative
Preferred Stock and the Common Stock shall be as follows:
1. The Non-Cumulative Preferred Stock is entitled to quarterly dividends at
the rate of 6% per annum as and when declared by the Board of Directors and no
dividends may be declared or paid on the Common Stock unless it shall have
received four successive quarterly dividends of 3% (or equivalent) next prior to
such dividend on Common Stock, the last of which having been paid not more than
sixty days previous thereto. The holders of the Non-Cumulative Preferred Stock
are entitled in any liquidation of the Company to receive One Hundred Dollars
($100) per share owned before any payment is made on account of the Cumulative
Preferred Stock and/or the Common Stock. The holders of the Non-Cumulative
Preferred Stock shall be entitled to one vote for each share owned, voting as a
single class with the holders of the Common Stock.
2. The Fifteen Thousand (15,000) shares of Cumulative Preferred Stock shall
be of the par value of $100 each and may be issued, as the Board of Directors
may determine, in one or more series designated "Cumulative Preferred Stock
______% Series" (inserting in each case the amount of the dividend rate as fixed
for each series and fixing other terms and conditions for each series not
inconsistent with the provisions of this Article II by an amendment of the
Articles
Page 1
UNITIL ENERGY SYSTEMS, INC.
(formerly, CONCORD ELECTRIC COMPANY)
of Incorporation adopted by vote of the holders of two-thirds (2/3) of
the outstanding shares of stock entitled to vote and which are present or
represented by proxy and voting at a meeting duly called for the purpose),
provided only that the total number of shares of all series thereof at any time
outstanding shall not exceed the then total authorized number of shares of the
Cumulative Preferred Stock. All shares of the Cumulative Preferred Stock,
irrespective of series, shall constitute one and the same class of stock, shall
be of equal rank and shall be identical in all respects except as to the rate of
dividends payable thereon, the redemption price thereof and any restriction on
the exercise by the Company of its right to redeem such series, provisions for
the repurchase and retirement of any shares of such series, the extent of their
interest in the assets in the event of voluntary liquidation, dissolution or
winding up of the Company, and the designation thereof. Each share of the
Cumulative Preferred Stock, irrespective of series, when entitled to vote, shall
be entitled to one (1) vote upon all questions and elections voted upon at
stockholders' meetings, provided, however, that except where otherwise required
by law, or as hereinafter specifically provided, the holders of the Cumulative
Preferred Stock shall not vote as a class separate and distinct from holders of
Common Stock, but holders of the Cumulative Preferred Stock and holders of the
Common Stock (entitled to vote as hereinafter provided) shall vote as a single
class. Whenever the holders of the Cumulative Preferred Stock are entitled to
vote, for any purpose, the shares voting, if of different series, shall be
counted irrespective of series and not by different series. All shares of the
same series shall be identical in all respects and each certificate representing
the Cumulative Preferred Stock shall state the designation of the series in
which the shares represented by such certificate are issued.
3. Holders of the Cumulative Preferred Stock at the time outstanding, shall
be entitled to receive, but only when and as declared by the Board of Directors
out of funds legally available for the declaration of dividends, dividends at
the annual dividend rate per share fixed for the particular series and no more,
payable quarterly on the fifteenth day of January, April, July and October in
each year to shareholders of record on the respective dates fixed in advance for
the purpose by the Board of Directors prior to the payment of each particular
dividend. Dividends on shares of the Cumulative Preferred Stock shall be
cumulative: (i) on shares of any series of the Cumulative Preferred Stock issued
prior to the record date for the first dividend on such series from the date of
issue of such shares; and (ii) otherwise from the quarter-yearly dividend
payment date next preceding the date of issue of such shares or from the date of
issue if that be a dividend payment date. No dividend shall be declared on any
series of the Cumulative Preferred Stock, in respect of any quarter-yearly
dividend period, unless there shall likewise be declared on all shares of all
series of the Cumulative Preferred Stock at the time outstanding, like
proportionate dividends, ratably, in proportion to the respective annual
dividend rates fixed therefor, in respect of the same quarter-yearly period, to
the extent that such shares are entitled to receive dividends for such
quarter-yearly dividend period. The dividends on shares of all series of the
Cumulative Preferred Stock shall be payable before any dividends shall be paid
or set apart for junior stock as defined herein. Whenever all dividends accrued
to the last preceding quarter-yearly dividend payment date of the Cumulative
Preferred Stock of all series shall have been paid or a sum sufficient for the
payment thereof shall have been set aside for such payment, the Board of
Directors may forthwith, without waiting for the expiration of the current year,
declare dividends on the junior stock payable then or thereafter out of any
remaining funds legally available for the payment of dividends. Accumulations of
dividends on any shares of stock of any class shall not bear interest.
Page 2
UNITIL ENERGY SYSTEMS, INC.
(formerly, CONCORD ELECTRIC COMPANY)
4. As used in these subdivisions 4 to 10, inclusive, (a) the expression
"preferred stocks" shall mean the Cumulative Preferred Stock of all series and
any other stock ranking on a parity with or having a preference as to dividends
or assets over the Cumulative Preferred Stock; (b) the expression "junior stock"
shall mean the Common Stock and any other stock ranking junior to the Cumulative
Preferred Stock as to dividends or assets; and (c) the expression "dividends
accrued" shall mean the sum of amounts with respect to all shares of preferred
stocks then outstanding, which as to each share shall be an amount computed at
the dividend rate per annum fixed for the particular share from the date from
which dividends on such share became cumulative to the date with reference to
which the expression is used irrespective of whether such amount or any part
thereof shall have been declared as dividends or shall exceed any assets
available for the payment thereof less the aggregate of all dividends paid on
such share.
5. The Company, on the sole authority of its Board of Directors and by vote
of at least three-quarters (3/4) of the members thereof, may redeem and retire
at any time or from time to time the whole or any part of any series of the
Cumulative Preferred Stock at the time outstanding by paying in cash, in respect
of each share redeemed, the par value thereof, together with all dividends
accrued thereon to the date fixed for redemption, and in addition thereto an
amount equal to the premium to which such share would be entitled on said date
as hereinafter provided in the event of the voluntary liquidation, dissolution
or winding up of the affairs of the Company, and by mailing, postage prepaid, at
least thirty (30) days and not more than ninety (90) days prior to the date
fixed for said redemption, a notice specifying said redemption date to the
holders of record of the Cumulative Preferred Stock to be redeemed, at their
respective addresses as the same shall appear on the books of the Company;
provided, however, that the exercise by the Company of its right to redeem
shares of any particular series may be subject to such restrictions as are
determined for said series. In case of the redemption of a part only of any
series of the Cumulative Preferred Stock at the time outstanding, the Company
shall select by lot, in such manner as the Board of Directors may determine, the
shares so to be redeemed. If such notice of redemption shall have been so
mailed, and if on or before the redemption date specified in such notice, all
funds necessary for such redemption shall have been set aside by the Company,
separate and apart from its other funds, in trust for account of the holders of
the shares so to be redeemed, so as to be and continue to be available therefor,
then, on and after said redemption date, notwithstanding that any certificate
for the shares of the Cumulative Preferred Stock so called for redemption shall
not have been surrendered for cancellation, the shares represented thereby shall
no longer be deemed outstanding, the right to receive dividends thereon shall
cease to accrue, and all rights with respect to such shares of the Cumulative
Preferred Stock so called for redemption shall forthwith cease and terminate,
except only the right of the holders thereof to receive out of the funds so set
aside in trust, the amount payable on redemption thereof, but without interest,
and thereupon such stock shall be deemed cancelled and retired, provided
however, that, if after mailing said notices as aforesaid and prior to the date
of redemption specified in such notice, said funds shall be set aside by deposit
in trust, for the account of the holders of the Cumulative Preferred Stock to be
redeemed, with a bank or trust company in good standing, organized under the
laws of the United States of America, of the State of New Hampshire or of the
Commonwealth of Massachusetts, thereupon all shares of the Cumulative Preferred
Stock with respect to which such deposit shall have been made shall no longer be
deemed to be outstanding, all rights with respect to such shares of the
Cumulative Preferred Stock shall forthwith upon such deposit in trust cease and
terminate, except only the right of the holders thereof to receive from such
deposit the amount payable upon the redemption, but without interest.
Page 3
UNITIL ENERGY SYSTEMS, INC.
(formerly, CONCORD ELECTRIC COMPANY)
6. In the event of the liquidation, dissolution or winding up of the
affairs of the Company, then, before any distribution shall be made to the
holders of junior stock, the holders of each series of the Cumulative Preferred
Stock at the time outstanding shall be paid in cash the par value thereof,
together in each case with dividends accrued thereon to the date fixed for
payment of such distributive amounts, and in addition thereto, if such
liquidation, dissolution or winding up be voluntary, such amount as shall be
fixed for each series by an amendment of the Articles of Incorporation adopted
by vote of the holders of two-thirds (2/3) of the stock entitled to vote and
which are present or represented by proxy and voting at a meeting duly called
for the purpose. No payments on account of such distributive amounts shall be
made to the holders of any series of the Cumulative Preferred Stock unless there
shall likewise be paid at the same time to the holders of each other series of
the Cumulative Preferred Stock at the time outstanding, like proportionate
distributive amounts, ratably, in proportion to the full distributive amounts to
which they are respectively entitled. After such payment in full to the holders
of the Cumulative Preferred Stock the remaining net assets of the Company shall
be paid or distributed to the holders of junior stock then outstanding according
to their respective rights. Consolidation or merger of the Company with or into
any other corporation or corporations shall not be deemed to be a liquidation,
dissolution or winding up of the affairs of the Company within the meaning of
this subdivision 6 if it does not effect any change in the preferences, rights
and limitations of the Cumulative Preferred Stock as set out in these
provisions.
7. Each share of Common Stock shall be entitled to one (1) vote upon all
questions voted upon at stockholders' meetings and, subject to the rights of the
Cumulative Preferred Stock under paragraph (a) of this subdivision 7, at any
election held at stockholders' meetings:
(a) If the dividends accrued on the outstanding Cumulative Preferred Stock
shall at any time and from time to time equal or exceed an amount equivalent to
six (6) full quarterly dividends on all shares of all series of the Cumulative
Preferred Stock at the time outstanding, then until all dividends in default on
the Cumulative Preferred Stock shall have been paid, the holders of the
Cumulative Preferred Stock, voting separately as one class, by plurality vote of
a quorum of the shares outstanding, shall be entitled to elect the smallest
number of directors necessary to constitute a majority of the full Board of
Directors as then last fixed by the stockholders, or as provided in the By-Laws,
and the holders of all classes of stock entitled to vote at stockholders'
meetings as hereinbefore provided shall be entitled to elect the remaining
members of the Board of Directors. If and when all dividends then in default on
the Cumulative Preferred Stock shall thereafter be paid (and such dividends
shall be declared and paid out of any funds legally available therefor as soon
as reasonably practicable), the Cumulative Preferred stock shall thereupon be
divested of such special right to elect any member of the Board of Directors,
but subject always to the same provisions for the vesting of such special right
in the Cumulative Preferred Stock, in case of further like default or defaults.
Nothing in this paragraph (a) shall prevent holders of any additional class of
preferred stocks hereafter authorized from being given a right similar to that
given to holders of the Cumulative Preferred Stock by this paragraph (a), in
which case holders of all classes of preferred stocks (exclusive of the
Non-Cumulative Preferred Stock) then having such rights shall vote as one class
for the purposes of this paragraph (a), provided that no holder of any such
additional class of preferred stocks shall be entitled to more than (1) vote for
each one hundred dollars ($100) which such stock would be entitled to receive
upon any involuntary liquidation;
Page 4
UNITIL ENERGY SYSTEMS, INC.
(formerly, CONCORD ELECTRIC COMPANY)
(b) Whenever under the provisions of paragraph (a) hereof, the holders of
preferred stocks as a class (exclusive of the Non-Cumulative Preferred Stock)
become entitled to elect a majority of the Board of Directors, the Board of
Directors shall, within ten (10) days from the delivery to the Company at its
principal office of a request therefor signed by any holder of any of the
preferred stocks entitled to vote (exclusive of the Non-Cumulative Preferred
Stock), call a special meeting of the stockholders to be held, within thirty
(30) days from the delivery of such request, for the purpose of electing
directors;
(c) At all meetings of stockholders held for the purpose of electing
directors during such times as the holders of shares of the preferred stocks
(exclusive of the Non-Cumulative Preferred Stock) shall have the right to elect
a majority of the directors, the presence in person or by proxy of the majority
of the outstanding shares of all stock regularly entitled to vote at
stockholders' meetings shall be required to constitute a quorum of all such
stockholders voting as a class for the election of directors and the presence in
person or by proxy of the holders of a majority of the outstanding shares of the
preferred stocks entitled to vote (exclusive of the Non-Cumulative Preferred
Stock) shall be required to constitute a quorum of such class for the election
of directors; provided that, in either case, if such quorum shall not have been
obtained at such meeting or any adjournment thereof within sixty (60) days from
the date of such meeting as originally called, the presence in person or by
proxy of the holders of twenty-five per cent (25%) of the outstanding shares of
the class shall then be sufficient to constitute a quorum. The absence of a
quorum of the holders of either such class shall not prevent the election at any
such meeting, or any adjournment thereof, of directors by the other such class
if the necessary quorum of the holders of stock of such class is present in
person or by proxy at such meeting. In the absence of a quorum of the holders of
stock of either such class, a majority of those holders of the stock of such
class who are present in person or by proxy shall have power to adjourn the
election of the directors to be elected by such class from time to time without
notice other than announcement at the meeting until the requisite number of
holders of such class shall be present in person or by proxy, but such
adjournment shall not be made to a date beyond the date for the mailing of
notice of the next annual meeting or special meeting in lieu thereof;
(d) Forthwith upon the election of a majority of the Board of Directors of
the Company by the holders of preferred stocks (exclusive of the Non-Cumulative
Preferred Stock) the terms of office of all persons who may be directors of the
Company at the time shall terminate, whether or not the holders of all stock
regularly entitled to vote as a class shall then have elected the remaining
members of the Board of Directors, and if the holders of all stock regularly
entitled to vote shall not have elected the remaining members of the Board of
Directors, then the directors so elected by the holders of preferred stocks
(exclusive of the Non-Cumulative Preferred Stock) shall constitute the Board of
Directors pending such election of the remaining members by such holders of
stock regularly entitled to vote. Upon the reversion of the voting powers to
their status prior to default in dividends on the preferred stocks (exclusive of
the Non-Cumulative Preferred Stock), then forthwith the terms of office of the
directors who were elected by the holders of preferred stocks (exclusive of the
Non-Cumulative Preferred Stock) shall terminate and the directors then in office
who were elected by the holders of all stock regularly entitled to vote shall
fill the vacancies caused by such termination.
Page 5
UNITIL ENERGY SYSTEMS, INC.
(formerly, CONCORD ELECTRIC COMPANY)
8. So long as any shares of any series of the Cumulative Preferred Stock
are outstanding, the Company shall not, except upon the affirmative vote at a
meeting called for that purpose of the holders of at least two-thirds (2/3) of
the shares of all series of the Cumulative Preferred Stock then issued and
outstanding, voting as a single class:
(a) Authorize any shares of preferred stocks in addition to the fifteen
thousand (15,000) shares of Cumulative Preferred Stock initially authorized or
any securities convertible into such additional shares of preferred stocks,
unless such additional shares or such securities are to be issued for the
purpose of refunding all shares of the Cumulative Preferred Stock then
outstanding; or
(b) Make any other change in the provisions relative to the Cumulative
Preferred Stock which would change the express terms and provisions of such
stock in any manner substantially prejudicial to the holders thereof, except
that, if such change is prejudicial to less than all series thereof, only the
affirmative vote of the holders of the series so affected shall be required;
provided that, in any event, the Cumulative Preferred Stock shall be entitled to
cumulative dividends at the rate or rates designated in the series then
outstanding, and to payment, in case of redemption, liquidation, dissolution or
winding up of affairs of the Company, upon the terms and at the prices herein
provided; or
(c) Merge into or consolidate with any other corporation unless such merger
or consolidation shall have been approved by the New Hampshire Public Utilities
Commission or other regulatory authority having jurisdiction in the premises,
and unless the Company shall itself be the successor corporation and the
successor corporation shall agree to abide by all the terms and conditions of
the Cumulative Preferred Stock.
9. So long as any shares of any series of the Cumulative Preferred Stock
are outstanding, the Company shall not, except upon the affirmative vote at a
meeting called for that purpose of the holders of a majority of the shares of
all series of the Cumulative Preferred Stock then issued and outstanding, voting
as a single class: issue any shares of the Cumulative Preferred Stock other than
such of the fifteen thousand (15,000) shares of the Cumulative Preferred Stock
as may be initially issued, or any shares of any other preferred stocks ranking
as to dividends or assets on a parity with the Cumulative Preferred Stock, and
authorized pursuant to subdivision 8(a), or any securities convertible into
shares of such preferred stocks, unless (i) such issue is for the purpose of the
refunding of preferred stocks then outstanding and the par value thereof is in
an amount not in excess of the par value of the securities so to be refunded and
the shares issued are the only shares on a parity therewith; or (ii) the net
income of the Company for the period of twelve consecutive calendar months
within the next preceding fifteen months shall have been at least 2 times the
aggregate annual dividend requirements on the entire amount then to be
outstanding of Cumulative Preferred Stock and of stock ranking as to dividends
prior or equal thereto, and the net income of the Company, for a similar period
(after adding back interest charges on funded debt of the Company deducted in
the computation) shall have been at least 1-1/2 times the sum of annual interest
charges on funded debt of the Company then to be outstanding plus the aggregate
annual dividend requirements on all classes of Cumulative Preferred Stock and
stock ranking as to dividends prior to or equal to the Cumulative Preferred
Stock then to be outstanding, and the aggregate amount of capital represented by
the Common Stock and all junior stock in respect to the distribution of assets,
plus the sum of the earned
Page 6
UNITIL ENERGY SYSTEMS, INC.
(formerly, CONCORD ELECTRIC COMPANY)
surplus and premiums on capital stock of all classes, shall not be less than the
aggregate amount payable upon involuntary liquidation, dissolution or winding up
of the Company on all series of Cumulative Preferred Stock then to be
outstanding.
Without the consent of the holder or holders of at least two-thirds (2/3)
of all series of Cumulative Preferred Stock then outstanding, each voting as a
series separately, the Company shall not issue any class of stock ranking prior
to the Cumulative Preferred Stock.
The net income of the Company for any period of twelve consecutive calendar
months shall be determined for the purpose of this subdivision 9 in accordance
with such system of accounts as may be prescribed by the New Hampshire Public
Utilities Commission or any successor regulatory commission or agency of The
State of New Hampshire having the same or similar jurisdiction over accounts,
or, in the absence thereof, in accordance with sound accounting practice.
10. No holder of shares of stock of any class of the Company, whether now
or hereafter authorized, shall have any preemptive or preferential rights of
subscription or purchase in respect of any shares of Cumulative Preferred Stock
or of warrants carrying rights to Cumulative Preferred Stock, or securities
convertible into Cumulative Preferred Stock, whether now or hereafter
authorized, and whether issued for cash, property, services or otherwise, but
any and all such shares of Cumulative Preferred Stock of any class or series or
warrants carrying rights to Cumulative Preferred Stock or securities convertible
into Cumulative Preferred Stock, may, in the discretion of the Board of
Directors, be offered and sold to the holders of any one or more classes of
stock of the Company to the exclusion of any other class or classes, or may be
issued and disposed of from time to time in such manner and at such price or
prices not less than par and to such persons, whether stockholders or not, and
for such Company purposes, as may be determined by the Board of Directors and
without first being offered to stockholders. In any pro rata offering to the
holders of Common Stock of the Company of Common Stock or warrants representing
rights to subscribe to Common Stock or of securities convertible into Common
Stock, no right shall be issued, unless specifically authorized by the Board of
Directors, to any holder of Common Stock to less than a whole share of Common
Stock or to less than the smallest unit or denomination of a security
convertible into Common Stock, but in lieu thereof each such holder affected
shall be entitled to receive, as determined by the Board of Directors, either
(i) the equivalent value, if any, in cash which said right would have had, as
determined by the Board of Directors, or (ii) sufficient subscription rights to
entitle said holder to subscribe for one whole share of Common Stock or the
smallest unit or denomination of a security convertible into Common Stock.
11. The initial series of the Cumulative Preferred Stock shall consist of
five thousand (5,000) shares of Cumulative Preferred Stock, 8.70% Series, $100
par value; for which the annual dividend rate is fixed at 8.70%. In the event of
any voluntary liquidation, dissolution, or winding up of the affairs of the
Company, or upon any redemption and retirement of the whole or any part of the
Cumulative Preferred Stock, 8.70% Series, there shall be no premium. The Company
shall annually offer on December 15 of each year, commencing in 1974, to
purchase on the next January 15 not less than 150 shares thereof, on a pro rata
basis, at $100 per share plus accrued dividends.
Page 7
UNITIL ENERGY SYSTEMS, INC.
(formerly, CONCORD ELECTRIC COMPANY)
12. The second series of the Cumulative Preferred Stock shall consist of
3,331 shares of Cumulative Preferred Stock, 8.75% Series, $100 par value, for
which the annual dividend rate is fixed at 8.75%. In the event of any voluntary
liquidation, dissolution, or winding up of the affairs of the Company, or upon
any redemption and retirement of the whole or any part of the Cumulative
Preferred Stock, 8.75% Series, there shall be no premium.
13. The third series of the Cumulative Preferred Stock shall consist of
3,853 shares of Cumulative Preferred Stock, 8.25% Series, $100 par value, for
which the annual dividend rate is fixed at 8.25%. In the event of any voluntary
liquidation, dissolution, or winding up of the affairs of the Company, or upon
any redemption and retirement of the whole or any part of the Cumulative
Preferred Stock, 8.25% Series, there shall be no premium.
ARTICLE III
The name of the Company's registered agent is Sandra L. Whitney, Secretary,
Unitil Energy Systems, Inc., and the address of the Company's registered office
is 6 Liberty Lane West, Hampton, New Hampshire 03842-1720.
ARTICLE IV
The capital stock of the Company will be sold or offered for sale within the
meaning of RSA 421-B (Uniform Securities Act).
ARTICLE V
Shareholder action may be taken in lieu of meetings, without prior notice and
without a vote, by written consent of the holders of the outstanding shares of
capital stock having not less than the minimum number of votes that would be
necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted, in accordance with the
provisions of RSA 293-A:7.04(II).
ARTICLE VI
To the maximum extent permitted by law, the directors and officers of the
corporation shall not be personally liable to the corporation or its
shareholders for monetary damages for any action taken, or any failure to take
any action, as a director or an officer, except with respect to (a) the amount
of a financial benefit received by the director or officer to which he is not
entitled, (b) an intentional infliction of harm on the corporation or the
shareholders, (c) a violation of RSA 293-A:8.33, or (d) an intentional violation
of criminal law.
Page 8
Exhibit B-2(b)
BY-LAWS
OF
UNITIL ENERGY SYSTEMS, INC.
ARTICLE I * * * STOCKHOLDERS' MEETINGS
The annual meeting of the stockholders of Unitil Energy Systems, Inc. shall
be held on the fourth Thursday in March of each year; and special meetings of
the stockholders shall be held whenever the President or a majority of the Board
of Directors, in their discretion, shall order the same, or whenever one or more
stockholders, holding in the aggregate not less than one-tenth (1/10) of the
capital stock of the Corporation entitled to vote at such meeting, shall so
request the Secretary in writing, which writing shall indicate the purposes for
which said meeting is to be called.
All such meetings, both annual and special, may be held at such time and in
such place within or without The State of New Hampshire as the call therefor
shall specify, and notice of every such meeting shall be given to each
stockholder of record entitled to vote at the meeting by mailing a notice not
less than ten (10) nor more than fifty (50) days before the day named for the
meeting. Notices of all meetings of stockholders shall state the purposes for
which the meetings are called.
In the event of the annual meeting, by mistake or otherwise, not being
called and held as herein provided, a special meeting of the stockholders may be
called and held in lieu of and for the purposes of the annual meeting. Any such
special meeting may be called in the same manner as other special meetings or as
provided by statute, Any election had or business done at any special meeting
shall be as valid and effectual as of had or done at a meeting called as an
annual meeting and duly held on said date.
At any meeting, the holders of record of a majority of the shares entitled
to vote at the meeting, present in person or by proxy, shall constitute a
quorum, but less than a quorum may adjourn the meeting, either sine die or to a
date certain.
At any meeting, each stockholder of the Corporation entitled to vote at
such meeting shall have one vote in person or by proxy for each share of stock
having voting rights registered in his name on the books of the Corporation. A
stockholder may vote through a proxy authorized by a written instrument signed
by the stockholder or by his duly authorized attorney-in-fact. No proxy shall be
valid after eleven (11) months from the date of its execution.
Effective: December 2, 2002 1
ARTICLE II * * * BOARD OF DIRECTORS
The property, business and affairs of the Corporation shall be managed by a
Board of not less than nine (9) nor more than fifteen (15) Directors, and they
are hereby vested in such management with all the powers which the Corporation
itself possess so far as such delegation of power is not incompatible with the
provisions of these By-Laws or the statutes of The State of New Hampshire. No
Director need be a stockholder of the Corporation.
The number of Directors shall be fixed within the limits provided in the
immediately preceding paragraph by the Board of Directors. The Directors of this
Corporation shall be elected by ballot at the annual meeting of the stockholders
of the Corporation, or special meeting held in lieu thereof. The Directors shall
hold their office for one year from the date hereinbefore fixed for the annual
meeting and until their successors are elected and qualified.
Any vacancy occurring in the Board of Directors from the death,
resignation, removal, disqualification or inability to act of any Director, or
from any other cause, may be filled for the unexpired term by a majority vote of
the remaining Directors, though said remaining Directors may be less than a
quorum.
The Directors may appoint and remove at pleasure such subordinate officers
and employees as may seem to them wise.
They shall have access to the books, vouchers and funds of the Corporation;
shall determine upon the forms of certificates of stock and of the corporate
seal; shall fix all salaries and fees; may fill all vacancies that may occur at
any time during the year in any office; and shall declare dividends from time to
time as they may deem best.
Meetings of the Board of Directors may be held at any time and place within
The State of New Hampshire or elsewhere within the United States on notice of
the Secretary, who may and on request of the President or any two Directors
shall call any such meeting, twenty-five hours notice thereof being given. Any
such meeting, however, and all business transacted thereat, shall be legal and
valid without notice if all the members of the Board are present in person or
participating therein, or if the members who are absent waive notice by a signed
written instrument filed with the records of the meeting or assent in writing to
the action taken or to be taken.
A majority of the Board of Directors shall constitute a quorum for the
transaction of business, but a lesser number may adjourn any meeting from time
to time, and the meeting may be held as adjourned without further notice. When a
quorum is present at or participating in any meeting, a majority of the members
in attendance thereat or participating therein shall decide any question brought
before such meeting, unless otherwise required by statute, the Articles of
Incorporation or these By-Laws.
Members of the Board of Directors shall be entitled to such reasonable
compensation for their services as Directors as shall be fixed from time to time
by vote of the Board of Directors and shall also be entitled to reimbursement
for any reasonable expenses incurred in connection with attendance at meetings
thereof. The compensation of Directors may be on such basis as shall be
determined in the vote of the Board relating thereto.
Effective: December 2, 2002 2
ARTICLE III * * * COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors, by vote or votes duly adopted, may appoint such
committees as said Board may deem appropriate. Each committee shall consist of
three (3) or more members of the Board of Directors and shall have and may
exercise such powers and authority as shall be conferred or authorized by the
vote(s) establishing it. The existence of any committee may be terminated, or
its powers and authority modified, at any time by vote of the Board of
Directors. Members of each committee shall be entitled to receive a fee for
attendance at meetings thereof as shall be provided or authorized by the vote(s)
establishing it, and all members of each committee shall be entitled to
reimbursement for expenses incurred in connection with attendance at meetings
thereof.
Each committee shall keep regular minutes of its proceedings and report the
same to the Board of Directors when required. Unless otherwise determined by the
Board of Directors, each committee may appoint a chairman and a secretary and
such other officers of the committee as it may deem advisable and may determine
(a) the time and place of holding each meeting thereof, (b) the notice of
meetings to be given to members and (c) all other procedural questions which may
arise in connection with the work of such committee.
ARTICLE IV * * * OFFICERS
The officers of the Corporation shall be a President, one or more Vice
Presidents, a Treasurer, one or more Assistant Treasurers, a Secretary, a
Controller and such other officers and agents as the Directors may from time to
time authorize. No officer need be a stockholder of the Corporation.
All officers of the Corporation shall be elected, chosen or appointed by
the Board of Directors at its first meeting after the annual meeting of
stockholders, or special meeting held in lieu thereof. Each of said officers so
elected, chosen or appointed shall hold his office until the first meeting of
Directors after the next annual meeting of stockholders, or special meeting in
lieu thereof, and until his successor shall have been chosen and qualified, or
until his death, resignation or removal.
Any officer may be removed from office, with or without cause, at any time
by the affirmative vote of a majority of the Board of Directors.
ARTICLE V * * * PRESIDENT
The President shall be chosen from among the members of the Board of
Directors. He shall be the chief executive officer of the Corporation and,
subject to its Board of Directors, shall exercise general supervision of its
affairs. He shall preside at all meetings of the stockholders and of the
Directors when present.
Effective: December 2, 2002 3
The President, subject to the Board of Directors and its Chairman, shall
also have charge of the business of the Corporation relating to general
operation and shall perform all the duties of his office prescribed by law or by
vote of the Directors.
In the absence of the President from any meeting of the stockholders or of
the Directors, any Vice President shall preside thereat with like authority. In
the absence of the President and all the Vice Presidents, a President pro
tempore shall be chosen.
ARTICLE VI * * * VICE PRESIDENTS
Any Vice President shall have, in addition to any duties and powers set
forth in these By-Laws, such duties and powers as are usually incident to such
office and as the Directors shall from time to time designate.
ARTICLE VII * * * SECRETARY
The Secretary, who shall be sworn, shall be the Secretary of the
Corporation; and shall attend all meetings of the stockholders, keep accurate
records thereof and perform all other duties incident to such office.
In the absence of the Secretary from any of such meetings, a Secretary pro
tempore shall be chosen.
ARTICLE VIII * * * TREASURER
The Treasurer shall perform such duties as are required by statute, deemed
by superior executive officers of the Corporation incident to the office of
Treasurer and such other duties as from time to time may be assigned by the
Board of Directors.
ARTICLE IX * * * ASSISTANT TREASURERS
In case of the death, absence or inability to act of the Treasurer, any
Assistant Treasurer may exercise any or all of the powers of the Treasurer,
subject, however, to the limitation expressed in Article VIII hereof and such
further limitations as the Board of Directors may impose.
ARTICLE X * * * CONTROLLER
The Controller shall direct the Corporation's accounting functions, which
shall include responsibility for the preparation and filing of necessary
statements and reports, and he shall have such other duties as the Directors
shall from time to time designate.
Effective: December 2, 2002 4
ARTICLE XI * * * INDEMNIFICATION
The Corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative, by
reason of the person's having served as, or by reason of the person's alleged
acts or omissions while serving as a director, officer, employee or agent of the
Corporation, or while serving at the request of the Corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, against expenses, including attorney's fees,
judgments, fines and amounts paid in settlement or otherwise actually and
reasonably incurred by him in connection with the action, suit or proceeding, if
the person acted in good faith and in a manner he reasonable believed to be in
or not opposed to the best interests of the Corporation, and, with respect to
any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful, said indemnification to be to the full extent permitted by
law under the circumstances, including, without limitation, by all applicable
provisions of the New Hampshire Business Corporation Act ("the Act").
Any indemnification under this Article shall be made by the Corporation
with respect to Directors or other persons after a determination that the person
to be indemnified has met the standards of conduct set forth in the Act, such
determination to be made by the Board of Directors, by majority vote of a
quorum, or by other persons authorized to make such a determination under the
Act.
The right of indemnification arising under this Article is adopted for the
purpose of inducing persons to serve and to continue to serve the Corporation
without concern that their service may expose them to personal financial harm.
It shall be broadly construed, applied and implemented in light of this purpose.
It shall not be exclusive of any other right to which any such person is
entitled under any agreement, vote of the stockholders or the Board of
Directors, statute, or as a matter of law, or otherwise, nor shall it be
construed to limit or confine in any respect the power of the Board of Directors
to grant indemnity pursuant to any applicable statutes or laws of The State of
New Hampshire. The provisions of this Article are separable, and, if any
provision or portion hereof shall for any reason be held inapplicable, illegal
or ineffective, this shall not affect any other right of indemnification
existing under this Article or otherwise. As used herein, the term "person:
includes heirs, executors, administrators or other legal representatives. As
used herein, the terms "Director" and "officer" include persons elected or
appointed as officers by the Board of Directors, persons elected as Directors by
the stockholders or by the Board of Directors, and persons who serve by vote or
at the request of the Corporation as directors, officers or trustees of another
organization in which the Corporation has any direct or indirect interest as a
shareholder, creditor or otherwise.
The Corporation may purchase and maintain insurance on behalf of any person
who was or is a Director, officer or employee of the Corporation or any of its
subsidiaries, or who was or is serving at the request of the Corporation as a
fiduciary of
Effective: December 2, 2002 5
any employee benefit plan of the Corporation or any subsidiary, against any
liability asserted against, and incurred by, such person in any such capacity,
or arising out of such person's status as such, whether or not the Corporation
would have the power to indemnify such person against such liability under the
provisions of the Act. The obligation to indemnify and reimburse such person
under this Article, if applicable, shall be reduced by the amount of any such
insurance proceeds paid to such person, or the representatives or successors of
such person.
ARTICLE XII * * * CERTIFICATES OF STOCK
Each stockholder shall be entitled to a certificate representing shares of
the capital stock of the Corporation owned by him, in such form as shall, in
conformity to law, be prescribed from time to time by the Board of Directors.
Certificates of stock shall be signed by the President and the Treasurer of the
Corporation and sealed with the corporate seal. In case any officer who has
signed or whose facsimile signature has been placed upon any certificate shall
have ceased to be such before the 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 time of its issue.
Shares of stock of the Corporation may be transferred on the books of the
Corporation by the registered owner thereof or by his duly authorized attorney
by assignment thereof in writing, accompanied by delivery of the certificate. No
such transfer of stock, however, shall affect the right of the Corporation to
pay any dividend thereon or to treat the holder of record as the holder in fact
until the transfer has been recorded upon the books of the Corporation or a new
certificate has been issued to the person to whom the stock has been
transferred.
In case of the loss of a certificate, a duplicate may be issued upon such
reasonable terms as the Board of Directors shall prescribe.
The Board of Directors may appoint one or more transfer agents and
registrars and may require all certificates representing shares of the
Corporation's stock to bear the signatures of any of them.
ARTICLE XIII * * * CLOSING OF TRANSFER BOOKS
The transfer books of the Corporation may be closed for not exceeding
fifteen (15) days next prior to any meeting of the stockholders, and at such
other times and for such reasonable periods as may be determined by the Board of
Directors.
ARTICLE XIV * * * FIXING OF RECORD DATES
The Board of Directors may fix in advance a date not exceeding sixty (60)
days prior to the date of (1) any meeting of the stockholders, (2) the payment
of any dividend, (3) the making of any distribution to stockholders, (4) the
last day upon which the consent or dissent of stockholders may be effectively
expressed for any purpose or (5) delivery of evidences of rights or interests
arising out of any issue, change, conversion or
Effective: December 2, 2002 6
exchange of capital stock, as a record date for the determination of the
stockholders entitled (a) to notice of and to vote at any meeting and
adjournments thereof, (b) to receive dividend, (c) to receive any distribution
to stockholders, (d) to consent or dissent for any purpose or (e) to receive
delivery of evidences or rights or interests arising out of any issue, change,
conversion or exchange of capital stock, and in such case only stockholders of
record on such record date shall have such rights notwithstanding any transfer
of stock upon the books of the Corporation after such record date.
ARTICLE XV * * * FISCAL YEAR
The fiscal year of the Corporation shall end on the 31st day of December in
each year.
ARTICLE XVI * * * AMENDMENTS
These By-Laws may, upon notice, be altered, amended or repealed at any
meeting of the stockholders by vote of the holders of a majority or more of the
stock entitled to vote at such meeting. Notwithstanding the foregoing, as
provided by statute, a majority of the Board of Directors may make, amend or
repeal these By-Laws in whole or in part, except with respect to any provision
thereof which by statute or by the Articles of Incorporation requires action by
the stockholders.
* * *