EXHIBIT 10-34
PENNSYLVANIA GAS AND WATER COMPANY
BOND PURCHASE AGREEMENT
Dated September 1, 1989
First Mortgage Bonds 9.231 Series due 1999
and
First Mortgage Bonds 9.341 Series due 2019
PENNSYLVANIA GAS AND WATER COMPANY
▇▇▇▇▇▇ Barre Center
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September 1, 1989
Allstate Life Insurance Company
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Attn: Taxable Fixed Income-
Private Placements
Allstate Life Insurance Company
of ▇▇▇ ▇▇▇▇
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▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Taxable Fixed Income-
Private Placements
Dear Sirs:
The undersigned, Pennsylvania Gas and Water Company (formerly
Scranton-Spring Brook Water Service Company), a Pennsylvania
corporation (the "Company"), hereby confirms its agreement with
you as follows regarding the issuance and sale by the Company and
the purchase by you of the Company's First Mortgage Bonds, as set
forth on Schedule I hereto. This letter agreement is hereinafter
referred to as this "Agreement".
1. The Company has authorized the issuance of (i) $10,000,000
principal amount of its First Mortgage Bonds 9.23% Series due
1999 (the "9.23% Series Bonds") and (ii) $15,000,000 principal
amount of its First Mortgage Bonds 9.34% Series due 2019 (the
"9.34% Series Bonds") (the 9.23% Series Bonds and the 9.34%
Series Bonds are collectively referred to herein as the "Bonds"),
each issue to be issued under and secured by the Indenture of
Mortgage and Deed of Trust, dated as of March 15, 1946, from the
Company to Guaranty Trust Company of New York (now ▇▇▇▇▇▇
Guaranty Trust Company of New York), as Trustee (the "Trustee"),
as supplemented by twenty-one supplemental indentures, and as to
be supplemented by (x) a Twenty-Second Supplemental Indenture to
be dated as of August 15, 1989 (the "Twenty-Second Supplemental
Indenture") substantially in the form of Exhibit A hereto and (y)
a Twenty-Third Supplemental Indenture to be dated as of
August 15, 1989 (the "Twenty-Third Supplemental Indenture") sub-
stantially in the form of Exhibit B hereto. The 9.23% Series
Bonds and the 9.34% Series Bonds shall be dated, shall mature,
shall bear interest, shall be payable and shall contain and be
subject to such other terms and provisions as are provided in the
Twenty-Second Supplemental Indenture and the Twenty-Third Supple-
mental Indenture, respectively. The Indenture of Mortgage and
Deed of Trust as heretofore supplemented and as to be supple-
mented by the Twenty Second Supplemental Indenture and the
Twenty-Third Supplemental Indenture are collectively referred to
herein as the "Mortgage Indenture".
2. Subject to the terms and conditions set forth herein, the
Company will issue and sell to you, and you will purchase from
the Company, the aggregate principal amount of the Bonds set
forth opposite your name on Schedule I hereto at a purchase price
of 100% of the principal amount thereof, such purchase price to
be paid by wire transfer of immediately available funds to the
Company's account number ▇▇▇-▇-▇▇▇▇▇ designated Pennsylvania Gas
and Water Company maintained at Manufacturers Hanover Trust Com-
pany, ▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, against delivery to
Sonnenschein ▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, as your agent, of a fully-
registered and duly authenticated bond certificate or certifi-
▇▇▇▇▇ evidencing the principal amount of the Bonds to be
purchased by you, such certificate or certificates to be regis-
tered in your name or that of your nominee as specified in
Schedule I hereto.
3. The consummation of the transactions contemplated herein
(the "closing"), shall take place at the offices of ▇▇▇▇▇▇
▇▇▇▇▇▇▇ & ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, at
10:00 a.m. Eastern Daylight Time, on September 1, 1989 or such
other date, time and place as shall be mutually determined by you
and the Company. The date on which the Closing shall take place
is referred to herein as the "Closing Date".
4. The Company hereby represents and warrants to each of you
that:
(a) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the Common-
wealth of Pennsylvania and is duly authorized to transact its
business in said Commonwealth. The Company is not qualified
as a foreign corporation in any jurisdiction, there being no
jurisdiction where the ownership or character of its
properties or the nature of its business or activities makes
such qualification necessary. The Company has the requisite
corporate power and authority to own and operate its
properties, to carry on its business as now conducted and as
presently proposed to be conducted, to enter into this Agree-
ment, to issue and sell the Bonds to you and to carry out the
terms hereof and thereof.
(b) The Company has heretofore delivered to you and your
special counsel, and you hereby acknowledge receipt of, com-
plete and correct copies of (i) the Company's Annual Report on
Form 10 K for the fiscal year ended December 31, 1988 (the
"Form 10-K"), (ii) the Company's Quarterly Report on Form l0 Q
for the fiscal quarter ended March 31, 1989 (the "March 31
Form 10-Q"), (iii) the Company's Quarterly Report on Form 10 Q
for the fiscal quarter ended June 30, 1989 (the "June 30 Form
10-Q") and (iv) the Company's Current Report on Form 8 K dated
January 5, 1989 (the "Form 8-K") (the Form 10-K, the March 31
Form 10-Q, the June 30 Form lO-Q and the Form 8-K are collec-
tively referred to herein as the "SEC Reports"). The Form 8 K
is the only Current Report on Form 8-K filed by the Company
with the Securities and Exchange Commission (the "Commission")
since December 31, 1988. Neither the SEC Reports (as of the
respective dates thereof) nor this Agreement, nor any certifi-
cate or written statement furnished to you by or on behalf of
the Company in connection with the transactions contemplated
herein contains any untrue statement of a material fact or
omits to state a material fact necessary in order to make the
statements contained herein and therein, in the light of the
circumstances under which they were made not misleading. To
the best of its knowledge, there is no fact which the Company
has not disclosed to you in writing which materially and
adversely affects the business, operations or condition
(financial or otherwise) of the Company or the ability of the
Company to perform this Agreement and the transactions contem-
plated herein. The financial statements included in the SEC
Reports and the related schedules and notes thereto (a) are
true, complete and correct in all material respects (subject
in the case of interim statements to changes resulting from
year-end audit adjustments), (b) have been prepared in
accordance with generally accepted accounting principles con-
sistently followed throughout the periods involved (except as
set forth in the notes to such financial statements), (c) show
all material liabilities, direct or contingent, of the Company
as at the dates thereof and (d) fairly present the financial
position and results of operations of the Company as at the
dates and for the periods indicated. Except as set forth in
Exhibit C hereto or in the SEC Reports, there has been no
material adverse change in the business, operations or condi-
tion (financial or otherwise) of the Company since June 30,
1989. Except as set forth in Exhibit C hereto, the Company
has no obligations or liabilities, contingent or otherwise,
not disclosed in the financial statements contained in the SEC
Reports that materially affect the business, operations or
condition (financial or otherwise) of the Company.
(c) The Company has heretofore delivered to you and your
special counsel a complete and correct copy of (i) the securi-
ties certificate dated June 27, 1989, together with all
exhibits and amendments thereto (the "June 27 Application"),
filed by the Company with the Pennsylvania Public Utility
Commission (the "PPUC") and (ii) the securities certificate
dated August 18, 1989, together with all exhibits and amend-
ments thereto (the "August 18 Application"), filed by the Com-
pany with the PPUC. The PPUC held a public session on
August 3, 1989, at which session the June 27 Application was
examined, and has duly entered an order (entered at S 890952),
dated August 3, 1989 (the "August 3 Order"), registering the
issuance of the 9.23% Series Bonds in accordance with this
Agreement pursuant to 66 Pa.C.S. Section 1903. The PPUC sub-
sequently held a public session on August 31, 1989, at which
session the August 18 Application was examined, and has duly
entered an order (entered at S-890963), dated August 31, 1989
(the "August 31 Order"), registering the issuance of the 9.34%
Series Bonds in accordance with this Agreement pursuant to
66. Pa.C.S. Section 1903 (the August 3 Order and the August 31
Order are collectively referred to herein as the "Orders").
The Orders are in full force and effect, have not been con-
tested and may not be appealed by any party other than the
Company, and the Company shall not contest the Orders. Upon
the issuance of the Bonds, the Company will be in full compli-
ance with the Orders as they relate to the issuance of the
bonds.
(d) The Company holds certificates of public convenience
or "grandfather rights" under the Pennsylvania Public Utility
Code and predecessor statutes, which the Company believes are
adequate to authorize it to carry on its business in substan-
tially all the territory in which it presently renders gas and
water service. Under applicable Pennsylvania statutes, the
Company also has the right of eminent domain and the right to
maintain its facilities in the streets and highways in its
territories. No notice has been given to the Company by any
municipality or other governmental board or body of any inten-
tion to condemn, purchase or acquire any of the properties of
the Company.
(e) The Company has good and valid title to all of the
real property purported to be held by it, good and valid
leasehold interests in all properties purported to be held by
it under lease, and good and valid title to all other
properties purported to be owned by it, including the
properties reflected in the Company's balance sheet as at
December 31, 1988 as contained in the Form 10-K, with only
such exceptions, limitations and qualifications as are stated
in the Form 10-K, other than property disposed of in the
ordinary course of business subsequent to December 31, 1988
and property the title to or an interest in and to which has
been or is to be transferred to the Luzerne County Industrial
Development Authority pursuant to any of the Project Facili-
ties Agreements dated as of October 1, 1987, as of December 1,
1987 and as of January 1, 1989, in each case between the Com-
pany and such Authority. The aforesaid properties are subject
only to liens and encumbrances reflected in the Company's
balance sheet as at December 31, 1988 as contained in the Form
10 K or Note 5 of the Notes to Financial Statements in the
Form 10 K, the Mortgage by and between the Company and the
Administrator of the Small Business Administration dated
January 17, 1974 (the "SBA Mortgage"), the interests of the
Pennsylvania Water Facilities Loan Board pursuant to loan
agreements dated June 14, 1985, February 25, 1987 and
October 16, 1987 between the Company and such Board and the
interests of the Pennsylvania Infrastructure Investment
Authority pursuant to loan agreements dated as of March 3,
1989 between the Company and such Authority, "permitted
encumbrances" (as defined in the Mortgage Indenture) and
materialmen's and other liens and encumbrances arising in the
ordinary course of business which do not have a material
adverse effect on the business, operations or condition
(financial or otherwise) of the Company. The Company main-
tains insurance in such amounts, including self insurance and
retainage agreements, and of such a character, as is usually
maintained by, or required for companies engaged in, the same
or similar business, and such insurance is considered by the
Company to be adequate.
(f) Except as expressly set forth in Exhibit C hereto or
in the SEC Reports, (i) there are no actions, suits or pro-
ceedings pending or threatened against the Company or its
properties in any court, or before or by any Federal, state,
municipal or other governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, which
could reasonably be expected to have a material adverse effect
on the business or condition (financial or otherwise), results
of operations or properties of the Company, or impair the
ability of the Company to carry on its business substantially
as now conducted or to hold and operate its properties, or
which questions the validity of this Agreement, the Mortgage
Indenture or the Bonds or any action taken or to be taken
pursuant hereto and thereto, and (ii) the Company is not in
default in any material respect with regard to any order,
judgment, writ, injunction, decree or demand of any court or
Federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality, domestic
or foreign.
(g) The Company has taken all corporate action necessary
to be taken by it to authorize the execution by it of this
Agreement, the Mortgage Indenture and the Bonds and the
performance by it of all the obligations on its part to be
performed hereunder and thereunder. This Agreement and the
Mortgage Indenture constitute, and the Bonds, when issued,
will constitute, a legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with
its terms, subject as to enforceability to bankruptcy,
insolvency, moratorium and other similar laws affecting the
rights of creditors generally and to general principles of
equity and the availability of equitable remedies being within
the discretion of the courts. The consummation of the trans-
actions contemplated herein and the fulfillment and per-
formance of the terms hereof and of the Mortgage Indenture,
and, when issued, of the Bonds, by the Company will not result
in a breach of any of the terms, conditions or provisions of,
or constitute a default under, or result in any violation of,
any provision of the Company's Restated Articles of Incorpora-
tion, as amended (the "Charter"), or By-Laws, or any evidence
of indebtedness, loan agreement, mortgage, agreement, instru-
ment, order, contract, judgment, decree, statute, law, rule or
regulation to which the Company is now a party or is subject,
or by which it is bound by succession or otherwise, or, except
for the liens created by the Mortgage Indenture as contem-
plated herein and by the SBA Mortgage, respectively, result in
the creation or imposition of any lien, charge or encumbrance
of any nature whatsoever upon any of the properties or assets
or the Company. Except as expressly set forth in Exhibit C
hereto, in connection with the Charter, the By Laws, any
evidence of indebtedness, mortgage, agreement (including,
without limitation, any loan agreement), instrument, order,
contract, judgment, decree, statute, law, rule or regulation
to which the Company is now a party or is subject, or by which
it is bound by succession or otherwise, no facts or circum-
stances exist on the date hereof which will restrict,
directly, indirectly or contingently, the Company's ability to
pay the principal of, or interest or premium on, the Bonds
when due.
(h) (a) To the best of the Company's knowledge, no com-
pany directly or indirectly owns, controls or holds with power
to vote 10% or more of the voting securities (as such terms
are defined in the Public Utility Holding Company Act of 1935,
as amended (the "Holding Company Act")) of the Company, except
Pennsylvania Enterprises, Inc., the Company's parent corpora-
tion (the "Parent"), and (b) the Parent is exempt from all the
provisions of the Holding Company Act (other than the provi-
sions of Section 9(a)(2) thereof) pursuant to Section 3(a)(l)
thereof and Rule U 2 (17 C.F.R. Section 250.2) promulgated
thereunder. Based upon the foregoing representations con-
tained in this paragraph (h), the Company is presently exempt
from the provisions of the Holding Company Act (other than the
provisions of Section 9(a)(2) thereof) pursuant to Section
3(a)(l) thereof and Rule U-2 (17 C.F.R. Section 250.2) promul-
gated thereunder and the Commission has not notified the Com-
pany that it will, and the Company is not aware of any plan of
intention of the Commission to, terminate the Company's
exemption. No approval, consent or authorization by any
governmental or public regulatory body is required on the part
of the Company for the issuance and sale of the Bonds to you
or the execution and delivery of the Twenty Second Supplemen-
tal Indenture and the Twenty-Third Supplemental Indenture,
except for the Orders.
(i) Except as expressly set forth in Exhibit C hereto or
in the SEC Reports, the Company is in compliance in all ma-
terial respects with all applicable laws, regulations, orders
and decrees of foreign countries, the United States of
America, the Commonwealth of Pennsylvania and municipalities
thereof, and all agencies and instrumentalities of the fore-
going (including, without limitation, the Occupational Safety
and Health Act of 1970, the Comprehensive Environmental Re-
sponse, Compensation, and Liability Act of 1980, the Resource
Conservation and Recovery Act of 1976, The Toxic Substances
Control Act of 1976, the Clean Air Act, the Water Pollution
Control Act, the Superfund Amendments and Reauthorization Act
of 1986, Executive Order 11738, the Dam Safety and Encroach-
ments Act, the Pennsylvania Safe Drinking Water Act of 1984,
the Federal Safe Drinking Water Act and all other laws, regu-
lations, orders and decrees relating to environmental protec-
tion, including those of the PPUC and the Pennsylvania
Department of Environmental Resources), in respect of the con-
duct of its business and the ownership of its properties.
Except as expressly set forth in Exhibit C hereto or in the
SEC Reports, the Company is not a party to, or bound by, any
contract, agreement or instrument, nor subject to any corpo-
rate restriction or any judgment, order, writ, injunction,
decree, rule or regulation, which materially adversely affects
the business or condition (financial or otherwise), results of
operations or properties of the Company. Except as expressly
set forth in Exhibit C hereto or in the SEC Reports, the Com-
pany is not in default under any of its contracts or agree-
ments or any instrument by which it is bound, which default
does, or would after notice or lapse of time or both,
materially and adversely affect the business, operations or
condition (financial or otherwise) of the Company.
(j) The Company has five wholly-owned subsidiaries, none
of which is a "significant subsidiary" as defined in Regula-
tion S-X under the Securities Act of 1933, as amended (the
"1933 Act"), and all of which, taken together, would not con-
stitute such a "significant subsidiary". The accounts of such
subsidiaries are not consolidated in the Company's financial
statements contained in the SEC Reports but are included
therein by the equity method. Each such subsidiary is duly
organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation, and has all
requisite corporate power and authority and all material
licenses, permits and authorizations necessary to own its
properties and to carry on its business as now being conducted
(except that the articles of incorporation of Hillcrest Water
Co., a subsidiary of the Company having approximately 50 cus-
tomers and assets of approximately $31,000, have expired and
reincorporation or transfer of assets to the Company or a sub-
sidiary of the Company by an appropriate procedure will be
required, such expiration having no material adverse effect on
the business or condition (financial or otherwise) or opera-
tions of the Company). No such subsidiary is qualified as a
foreign corporation in any jurisdiction, there being no juris-
diction where the ownership or character of its properties or
the nature of its business or activities makes such qualifica-
tion necessary. All of the outstanding shares of capital
stock of each such subsidiary have been duly authorized and
are validly issued, fully paid and nonassessable, and all such
shares are owned by the Company free and clear of any lien,
charge or encumbrance.
(k) All Federal, state and local income tax returns, State
franchise tax returns and other tax returns required to be
filed by the Company and its subsidiaries in any jurisdiction
have been timely filed, and all Federal, state and local in-
come taxes, state franchise taxes and all other taxes, assess-
ments, fees and other governmental charges on the Company and
its subsidiaries or upon any of their income, franchises or
other properties which are shown on such returns to be due and
payable have been paid or duly provided for or are not ▇▇▇▇▇-
▇▇▇▇▇ except to the extent that they are being contested in
good faith with due diligence and by appropriate proceedings
and that appropriate reserves for the payment thereof have
been recorded in accordance with generally accepted accounting
principles and practices. To the knowledge of the Company, no
tax assessment has been proposed against the Company or any of
its subsidiaries nor is there any basis for such an assess-
ment, in either case for which adequate provision in
accordance with generally accepted accounting principles and
practices has not been made. The Federal income tax liability
of the Company and its subsidiaries has been finally deter-
mined by the Internal Revenue Service and satisfied for all
years up to and including the year ended December 31, 1984.
(1) The Company is in compliance in all material respects
with the applicable provisions of the Employee Retirement In-
come Security Act of 1974, as amended ("ERISA"), and the regu-
lations and published interpretations thereunder. No
Reportable Event (as defined in Section 4043(b) of ERISA) has
occurred as to which the Company was required to file a report
with the Pension Benefit Guaranty Corporation (as referred to
and defined in ERISA), and the present value of all benefit
liabilities under each Plan (as defined below) (based on those
assumptions used to fund such Plan) did not, as of the last
annual valuation date applicable thereto, exceed the value of
the assets of such Plan as of such date. No Plan is a Multi-
employer Plan (as defined in Section 4001(a)(3) of ERISA) and
no contributions to a Multiemployer Plan have been made by the
Company within the past five years, and no contribution to a
Multiemployer Plan is required, or to the knowledge of the
Company will be required, of the Company. "Plan" means any
pension plan subject to the provisions of Title IV of ERISA or
Section 412 of the Internal Revenue Code of 1986, as amended
(the "Code"), and which is maintained for employees of the
Company.
(m) Neither the Company nor any person, entity or agent
acting on behalf of the Company, either directly or
indirectly, has sold or will sell or has offered for sale or
will offer for sale or has disposed of or will dispose of or
has attempted or offered to dispose of or will attempt or
offer to dispose of, any of the Bonds or any similar security
of the Company to, or has solicited or will solicit any offers
to buy any thereof from, or has otherwise approached or nego-
tiated in respect thereof with or will otherwise approach or
negotiate in respect thereof with, any person or entity other
than you and not more than 17 other institutions, each of
which is an Accredited Investor (as defined under Rule 501
under the 1933 Act). Based upon the foregoing representations
in this paragraph (m) and upon your representations in Section
5(a) hereof, it is not necessary in connection with the
issuance and sale of the Bonds to you to register such Bonds
under the 1933 Act or to qualify the Mortgage Indenture under
the Trust Indenture Act of 1939, as amended.
(n) The Company is not an "investment company" or, to the
best of its knowledge, a company "controlled" by an "invest-
ment company", within the meaning of the Investment Company
Act of 1940, as amended.
(o) The Company has not during the last five years been in
default as to the payment of the principal of, or interest or
premium on, any indebtedness for money borrowed, or during the
last five years been in default under the terms of any ▇▇▇▇-
▇▇▇▇ to which the Company is or was a party.
(p) The Company will use the net proceeds from the sale of
the Bonds to repay up to $25,000,000 of bank borrowings which
were incurred principally to obtain funds to finance certain
capital requirements of the Company, including construction of
filtration plants and other additions and improvements to its
water system.
(q) The Company is not issuing the Bonds for the direct or
indirect purpose of purchasing or carrying any margin security
within the meaning of Regulation G of the Board of Governors
of the Federal Reserve System or for the direct or indirect
purpose of carrying, reducing or retiring any debt incurred
for such purpose, or otherwise taking or permitting any action
which would involve a violation of such Regulation G, Regula-
tion T, Regulation X or any other regulation of the Board of
Governors of the Federal Reserve System.
5. You each severally hereby represent and warrant to the
Company that:
(a) The Bonds are being acquired by you for your own
account for investment and not with a view to, or for resale
in connection with, the distribution thereof, nor with any
intention of distributing or selling any of the Bonds, sub-
ject, however, to any requirement of law that the disposition
of your property shall at all times be within your control.
If you should in the future decide to dispose of any of the
Bonds (which you do not now contemplate or foresee), you
understand and agree that you may do so only in accordance
with Section 6 hereof. You are an "accredited investor", as
such term is defined in Rule 501 under the ▇▇▇▇ ▇▇▇.
(b) The purchase of the Bonds by you hereunder will not
constitute a "prohibited transaction" within the meaning of
Section 406 of ERISA or Section 4975 of the Code.
(c) In connection with your purchase of Bonds hereunder,
you have been provided with all information regarding the
Company which you have reasonably requested, and you have had
access to the books and records of the Company and an oppor-
tunity to ask questions of senior management of the Company,
but such access to information and opportunity to ask ques-
tions shall not affect the representations, warranties and
covenants contained herein or made pursuant hereto.
6. The Bonds shall not be transferable except upon the condi-
tions specified in this Section 6, which conditions are intended
to insure compliance with the provisions of the 1933 Act and
state securities laws in respect of the transfer of the Bonds.
(a) (i) Unless and until otherwise permitted by this
Section 6, each certificate representing the Bonds issued to
you or to any subsequent transferee of any of the Bonds shall
be stamped or otherwise imprinted with a legend in substan-
tially the following form:
"The bonds evidenced by this certificate have been issued
in a private transaction, have not been registered under
the Securities Act of 1933, as amended, or registered or
qualified under the securities or blue sky laws of any
state and may not be offered, transferred, sold, pledged,
hypothecated or otherwise disposed of except in accordance
with that Act, such laws and the rules and regulations
promulgated thereunder."
(ii) The Company may, and may order its transfer agent
for the Bonds (if such an agent exists) to, stop the
transfer of any of the Bonds bearing the legend set forth
in paragraph (a)(i) hereof until the conditions of this
Section 6 with respect to the transfer of such Bonds have
been satisfied.
(b) At the time of any transfer or sale of any of the
Bonds, the holder desiring to effect such transfer or sale
shall give a written notice to the Company and the Company may
(but need not) require a written opinion of counsel for the
Company or other counsel designated by such holder (which
counsel may be inside counsel in your case and in the case of
other institutional holders, if any), which counsel is experi-
enced in securities laws matters and is reasonably satisfac-
tory to the Company, to the effect that such proposed transfer
or sale (the manner of which shall be briefly described in
such opinion) may be effected without the registration of such
Bonds under the 1933 Act and is to be made in compliance with
applicable state securities and blue sky laws. It the Company
either does not require such an opinion of counsel or does
require and receives such opinion of counsel, upon receipt by
the Company of such notice and receipt by the Company or its
transfer agent of the certificate or certificates representing
the Bonds to be sold or transferred, endorsed or accompanied
by an executed instrument of transfer (in either case with
signature guaranteed by a member firm of the New York Stock
Exchange or a national banking association or, in the case of
the signature of the original purchaser of the Bonds, with
such signature notarized), the Company shall permit or cause
its transfer agent to permit such transfer or sale to be
effected. The fees and disbursements of counsel (if any)
incurred in connection with the opinion described above in
this paragraph (b) shall be paid by the transferor or
transferee bondholder.
(c) Notwithstanding any other provisions of this Section
6, any record owner of Bonds may from time to time transfer
all or part of such record owner's Bonds (i) to a nominee
identified in writing to the Company as being the nominee of
or for such record owner, and any nominee of or for a bene-
ficial owner of Bonds identified in writing to the Company as
being the nominee of or for such beneficial owner may from
time to time transfer all or part of the Bonds registered in
the name of such nominee, but held as nominee on behalf of
such beneficial owner, to such beneficial owner, or (ii) to an
Affiliate (as defined below) of such record owner or, if such
record owner is a nominee as aforesaid, an Affiliate of the
person for whom such record owner is a nominee; provided, how-
ever, that each such transferee shall remain subject, except
as provided in this paragraph (c), to all restrictions on the
transfer of the Bonds herein contained. "Affiliated" shall
mean as to any person or entity, any other person or entity
directly or indirectly controlling, controlled by, or under
common control with, that person or entity. For purposes of
the foregoing definition, "control" shall have the definition
set forth in Rule 405 under the 1933 Act.
(d) (i) Notwithstanding the foregoing provisions of this
Section 6, the restrictions imposed by this Section 6 upon the
transferability of the Bonds shall terminate as to any partic-
ular Bond when (a) such Bond shall have been effectively
registered under the 1933 Act and sold by the holder thereof
in accordance with such registration to a person or entity who
does not "control" the Company (as "control" is defined in
Rule 405 under the 1933 Act), or (b) a written opinion has
been received by the Company from counsel for the Company or
other counsel designated by such holder (which counsel may be
inside counsel in your case and in the case of other institu-
tional holders) which counsel is experienced in securities
laws matters and is reasonably satisfactory to the Company
(which opinion shall be at the expense of the holder of such
Bond) to the effect that (1) such restrictions are no longer
required or necessary under any Federal or state securities
law or regulation, or (2) such Bond has been sold without
registration under the 1933 Act in compliance with Rule 144
under the 1933 Act or (3) the holder of such Bond is, in
accordance with the terms of subsection (k) of Rule 144 under
the 1933 Act, entitled to sell such Bond pursuant to such
subsection, or (c) a letter or an order shall have been issued
to the holder of such Bond by the staff of the Commission or
the Commission stating that no enforcement action shall be
recommended by such staff or taken by the Commission, as the
case may be, if such Bond is transferred without registration
under the 1933 Act in accordance with the conditions set forth
in such letter or order and such letter or order specifies
that no subsequent restrictions on transfer are required
(which letter or order shall be procured at the expense of
such holder).
(ii) Whenever the restrictions imposed by this Section
6 shall terminate as hereinabove provided, the holder of
any particular Bond then outstanding as to which such
restrictions shall have terminated shall be entitled to
receive from the Company, without expense to such holder, a
new certificate representing such Bond not bearing the
restrictive legend set forth in Section 6(a)(i).
(e) At the written request of any holder who proposes to
sell Bonds in compliance with Rule 144 under the 1933 Act, the
Company shall furnish to such holder, within 10 days after
receipt of such request, a written statement as to whether the
Company is in compliance with the filing requirements of the
Commission as set forth in such Rule.
(f) No sale, transfer or assignment of any of the Bonds
shall occur unless the transferring or assigning Bondholder
shall obtain the written consent of the transferee or assignee
Bondholder to be subject to the provisions contained in
Section 13 below.
7. The Company hereby covenants to you that:
(a) The Company will permit any person or entity desig-
nated in writing by you, so long as you (or your nominee or
parent or affiliated company) shall hold any of the Bonds, and
the designee of any institutional holder of not less than
$2,500,000 aggregate principal amount of the Bonds, to
inspect, at your expense or the expense of such institutional
holder, any of the properties, corporate books and financial
records of the Company and its subsidiaries, to make reason-
able copies and extracts from such books and records, and to
discuss its affairs, finances and accounts with its officers
and principal employees having responsibility for financial,
management and policy matters and with the Company's indepen-
dent certified public accountants, all at such reasonable
times and intervals as you or such institutional holder may
reasonably request.
(b) The Company will deliver to you so long as you (or
your nominee or parent or affiliated company) shall hold any
of the Bonds, and to each institutional holder of not less
than $1,000,000 aggregate principal amount of the Bonds:
(i) as soon as practicable and in any event within 45
days after the end of each quarterly period (other than the
last quarterly period) in each fiscal year of the Company,
a consolidated statement of income of the Company and its
consolidated subsidiaries for such quarterly period, a con-
solidated statement of cash flows of the Company and its
consolidated subsidiaries for the period beginning with the
first day of such fiscal year and ending at the end of such
quarterly period, and a consolidated balance sheet of the
Company and its consolidated subsidiaries as at the end of
such quarterly period, setting forth in each case in com-
parative form figures (a) for the corresponding periods
ending in the preceding fiscal year or (b) in the case of
the balance sheets, as at the end of the immediately pre-
ceding fiscal year, all in reasonable detail, prepared in
accordance with generally accepted accounting principles
consistently applied (except as disclosed therein or in the
footnotes thereto) and certified by an authorized financial
officer of the Company, subject to changes resulting from
year end audit adjustments;
(ii) as soon as practicable and in any event within 90
days after the end of each fiscal year of the Company, con-
solidated statements of income, cash flows and common
shareholder's investment of the Company and its ▇▇▇▇▇▇▇-
dated subsidiaries for such year, and a consolidated
balance sheet of the Company and its consolidated subsidi-
aries and a statement of capitalization of the Company and
its consolidated subsidiaries as at the end of such fiscal
year, setting forth in each case in comparative form corre-
sponding figures for the preceding fiscal year, all in rea-
sonable detail, together with a report thereon of
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Co. or other independent accountants of
recognized national standing selected by the Company, whose
report shall state that (a) they are independent
accountants, and that in making the audit necessary to the
certification of such financial statements they have ob-
tained no knowledge of any default by the Company or any of
its subsidiaries under any mortgage, indenture, agreement
or other instrument securing or relating to any debt for
money borrowed of the Company or any of its subsidiaries,
or if such accountants shall have obtained knowledge of
any such default, such certificate shall specify such
default or defaults and the nature thereof and (b) such
financial statements fairly present the consolidated ▇▇▇▇▇-
cial position, results of operations and cash flows of the
Company and its consolidated subsidiaries and have been
prepared in accordance with generally accepted accounting
principles consistently applied (except for changes in
application in which such accountants concur) and that the
audit of such accounts in connection with such financial
statements has been made in accordance with generally
accepted auditing standards;
(iii) with the financial statements described in
clauses (i) and (ii) above, a certificate of an authorized
financial officer of the Company to the effect that the
Company is in compliance in all respects, and has been
throughout the period to which such statements relate, with
the provisions of this Agreement and any document executed
in connection herewith, or specifying the nature of any
such noncompliance and what action the Company has taken,
is taking or proposes to take with respect thereto; in the
event that the financial statements described in clause (i)
or (ii) above are contained in a document otherwise
delivered to a holder of Bonds pursuant hereto, such other
delivery shall satisfy the delivery requirements specified
in such clause, so long as such document is delivered
within the period specified in such clause and is
accompanied by the certificates, reports and statements
specified in such clause (i) or (ii), as the case may be
and in this clause (iii);
(iv) as soon as practicable and in any event within 30
days after the filing thereof with the Commission or trans-
mittal thereof to shareholders, a copy of each (a) final
prospectus included in, and prospectus supplement relating
to, any registration statement, filed by the Company with
the Commission which becomes effective under the 1933 Act
(other than registration statements relating solely to
employee benefit plans or dividend reinvestment or common
stock purchase plans), (b) financial statement of the Com-
pany, proxy statement and report sent by the Company to the
holders of any class or series of the Company's capital
stock and (c) annual report on Form 10-K, quarterly report
on Form 10-Q and current report on Form 8 K (or any corre-
sponding forms hereafter adopted) filed by the Company with
the Commission and any registration statement relating to
the Bonds which may be filed with the Commission pursuant
to the Securities Exchange Act of 1934, as amended;
(v) as soon as practicable and in any event within 30
days after the receipt thereof by the Company, a copy of
any detailed audit reports submitted to the Company by
independent accountants in connection with each annual or
interim or special audit of the accounts of the Company
made by such independent accountants;
(vi) promptly after the delivery to the Trustee of any
supplemental indenture to the Mortgage Indenture, a copy of
such supplemental indenture;
(vii) promptly upon becoming aware of any default by
the Company under the provisions of the Mortgage Indenture,
a written notice specifying the nature of the claimed
default and what action the Company is taking or proposes
to take with respect thereto;
(viii) with reasonable promptness, such other financial
data or information as to the business or affairs of the
Company as you or such institutional holder may reasonably
request in writing, including, without limitation, copies
of any reports which the Company is required to file with
the PPUC.
(ix) promptly upon becoming aware of the occurrence of
any (a) Reportable Event (as defined in Section 4043(b) of
ERISA) having any adverse effect on any Plan (as defined in
Section 4(1) hereof), the beneficiaries thereof or the
Company, or, whether or not having such adverse effect,
which constitutes a termination of any such Plan, or (b)
Prohibited Transaction (as defined in Section 4975 of the
Code) in connection with any Plan or any trust created
thereunder which is subject to such Section 4043, a written
notice specifying the nature thereof, what action the Com-
pany is taking or proposes to take with respect thereto,
and, when known, any action taken by the Internal Revenue
Service with respect thereto;
(x) as soon as practicable and in any event within 30
days after the provision thereof, copies of each Uniform
Statistical Report, if any, provided to financial analysts
or to the American Gas Association:
(xi) promptly upon becoming aware that the holder or
holders of any evidence of indebtedness of the Company for
borrowed money which individually or in the aggregate is an
amount in excess of $1,000,000 have given written notice
with respect to a default or alleged default with respect
to any provision of such evidence of indebtedness, a
written notice specifying the notice given or action taken
by such holder or holders and the nature of the claimed
default and what action the Company is taking or proposes
to take with respect thereto;
(xii) in connection with any breach by the Company of
any covenant contained in any agreement or other instrument
to which the Company is a party and which agreement or
other instrument, by its terms, provides for the payment by
any party thereto of at least $500,000 in the aggregate, a
copy of any written notice (or a written statement of any
oral notice) which is given by or on behalf of the Company
to the other party or parties thereto, provided, however,
that the Company shall not be required to provide you with
any such notice prior to the time that such notice is pro-
vided to such other party or parties; and
(xiii) promptly upon becoming aware of any breach by
the Company of any covenant contained in any agreement or
other instrument to which the Company is a party, which
breach restricts the Company's ability to pay the principal
of, or interest or premium on, the Bonds when due, a
written notice specifying the nature of such breach and
what action the Company is taking or proposes to take with
respect thereto.
(c) So long as any Bonds are outstanding, the Company
shall do everything required on its part to maintain the
Orders in full force and effect, will not file any appeal or
objection with respect thereto, and will comply in all
respects with the conditions set forth in the Orders.
(d) The Company shall not consolidate or merge with, or
transfer or lease all or substantially all of its assets to,
any entity unless (i) such entity is a solvent corporation
organized under the laws of the United States of America, or
any state, district or territory thereof, (ii) the surviving
corporation, in the case of a merger or consolidation, or the
lessee or transferee will remain solvent immediately after
any such action and (iii) such action will not cause a breach
of or a default under any contract, agreement, mortgage, in-
strument, order, decree or judgment to which any party
involved in such action is a party or by which it is bound,
which breach or default would have a material adverse effect
on the business, operation or condition (financial or other-
wise) of such party. Prior to any such merger, consolidation,
lease or transfer, the Company shall deliver to you a certifi-
cate, signed by its chief financial officer, stating that none
of the covenants in this Agreement or in the Mortgage Inden-
ture will be violated as a result of said merger, consolida-
tion, lease or transfer. For the purposes of this Section
7(d), an entity shall be deemed to be solvent when its total
assets (exclusive of goodwill and deferred income) exceeds its
total liabilities (exclusive of deferred charges), determined
in accordance with generally accepted accounting principles.
(e) So long as any Bonds are outstanding, the Company and
its subsidiaries will comply in all material respects with all
applicable laws, regulations, orders and decrees of foreign
countries, the United States of America, all states and muni-
cipalities thereof, and agencies and instrumentalities of the
foregoing (including, without limitation, the Occupational
Safety and Health Act of 1970, the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, the
Resource Conservation and Recovery Act of 1976, the Toxic Sub-
stances Control Act of 1976, the Clean Air Act, the Water
Pollution Control Act, the Superfund Amendments and Reauthori-
zation Act of 1986, Executive Order 11738, the Dam Safety and
Encroachments Act, the Pennsylvania Safe Drinking Water Act of
1984, the Federal Safe Drinking Water Act and all other laws,
regulations, orders and decrees relating to environmental pro-
tection, including those of the PPUC and the Pennsylvania De-
partment of Environmental Resources), in respect of the con-
duct of their business and the ownership of their properties,
except to the extent that the Company's or a subsidiary's
obligation to comply with any of the foregoing is being con-
tested in good faith with due diligence and by appropriate
proceedings. Notwithstanding the foregoing provisions of this
Section 7(e), you hereby acknowledge the existence of the
litigation described in the SEC Reports, the facts and circum-
stances and agreements described in Exhibit C hereto, the
expiration of the articles of incorporation of Hillcrest Water
Co. and the fact that such litigation and facts and circum-
stances and such expiration of such articles of incorporation
may continue subsequent to the Closing and agree that the con-
tinuation of such litigation and facts and circumstances and
such expiration of such articles of incorporation shall not
constitute a default of the covenant set forth in this Section
7(e) so long as resolution thereof is pursued by the Company
with diligence reasonable under the circumstances.
(f) So long as any Bonds are outstanding, the Company and
its subsidiaries will file, in a timely manner, all Federal,
state and local income tax returns, state franchise tax re-
turns and all other tax returns which are required to be
filed by the Company and its subsidiaries in any jurisdic-
tion, and the Company and its subsidiaries will pay, in a
timely manner, all Federal, state and local income taxes,
state franchise taxes and all other taxes, assessments, fees
and other governmental charges on the Company and its sub-
sidiaries or upon any of their income, franchises or other
properties which are shown on such returns to be due and pay-
able, except to the extent that any particular tax, assess-
ment, fee or other governmental charge is being contested in
good faith with due diligence and by appropriate proceedings
and that appropriate reserves for the payment thereof have
been recorded in accordance with generally accepted
accounting principles and practices.
(g) The Company covenants that, so long as any Bonds are
outstanding, the Company will, and will cause each of its sub-
sidiaries to, maintain its financial records (including, but
not limited to, its journals and ledgers) so as to accurately
reflect its financial condition in accordance with generally
accepted accounting principles and in accordance with any
prescribed system of accounts applicable to the Company or any
such subsidiary, as the case may be.
(h) So long as any Bonds are outstanding, the Company will
not, and will not permit any subsidiary to, become a party to
or bound by any contract, indenture, agreement, instrument,
charter provision (except as presently provided in the Com-
pany's Charter) or authorizing resolution for any class or
series of capital stock or any note, debenture, bond or other
security, under the terms of or pursuant to which the Com-
pany's obligation to pay interest or premium on, or to redeem
any of, the Bonds will in any way be restricted, other than to
the extent that any such contract, indenture, agreement or
instrument incorporates by reference or contains provisions
restricting the Company's obligation to pay interest or pre-
mium or make any such redemption which are no more restrictive
than the provisions contained in the Mortgage Indenture, the
Charter, the Letter of Credit Agreement dated as of October 1,
1987 between the Company and Swiss Bank Corporation, New York
Branch, the Letter of Credit Agreement dated as of December 1,
1987 between the Company and Swiss Bank Corporation, New York
Branch and the Letter of Credit Agreement dated as of
January 1, 1989 between the Company and National Australian
Bank Limited, New York Branch.
(i) So long as any Bonds are outstanding, the Company
shall comply with all provisions in (i) paragraphs 21, 22, 23,
24, 25 and 27 of that certain Consent Order and Agreement by
and between the Company and the Pennsylvania Department of
Environmental Resources (the "DER"), dated December 20, 1988,
which was approved by the Pennsylvania Environmental Hearing
Board on December 30, 1988 (the "DER Consent Order") and (ii)
items a(l), a(2), b(1), b(2), b(3), c(l), c(2), c(3), c(4),
c(5), c(6), d and e of the Terms of Settlement contained in
the Recommended Decision of Administrative Law Judge
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, dated June 7, 1988 (the "Terms of Settle-
ment"), approving the Joint Petition for Settlement by and
between the Company and the PPUC, which was adopted by the
PPUC on July 8, 1988 (the "PPUC Settlement"). The foregoing
enumerated items shall collectively be referred to herein as
the "Required Compliance Items"; singularly, a "Required
Compliance Item."
(j) So long as any Bonds are outstanding, the Company
shall give to the Trustee and to each holder of any Bonds
prompt written notice of any event that constitutes non-
compliance by the Company of any Required Compliance Item
(such notice to set forth the first date of non-compliance),
and shall promptly forward to the Trustee and to each such
holder a copy of (i) any request for a waiver of any provision
of the DER Consent Order or the PPUC Settlement, including a
request for an extension of a compliance date, (ii) all
penalty notices and all notices or complaints of non-
compliance with the DER Consent Order or the PPUC Settlement,
(iii) all annual progress reports submitted pursuant to para-
graph (d) of the Terms of Settlement and (iv) all notices by
the DER or the PPUC to the effect that a Required Compliance
Item was not cured.
(k) So long as any Bonds are outstanding, if the Interest
Coverage Test (as defined in the Twenty-Second Supplemental
Indenture and the Twenty-Third Supplemental Indenture) is in
effect pursuant to the terms of the Twenty-Second Supplemental
Indenture and the Twenty-Third Supplemental Indenture, the
Company shall submit to the Trustee and to each holder of any
Bonds within 45 days after the expiration of each of the Com-
pany's first three fiscal quarters, and within 90 days after
the expiration of each fiscal year, a statement certified by
the chief financial officer of the Company documenting whether
the Company is in compliance with the Interest Coverage Test,
and such certification shall state that the information con-
tained in the statement is true and correct, except for audit
adjustments, if any.
(1) So long as any Bonds are outstanding, within 25 days
after the expiration of each calendar month in which the
Interest Coverage Test is in effect, the Company shall deter-
mine whether it meets such test. So long as any Bonds are
outstanding, if at any time the Company fails to meet the
Interest Coverage Test when in effect, the Company shall
notify the Trustee and each holder of any Bonds in writing
within 5 days after the Company first becomes aware of such
failure.
8. Your obligations to purchase and pay for the Bonds to be
purchased by you hereunder on the Closing Date shall be subject
to the satisfaction of the following conditions, any of which,
except as otherwise set forth in Section 8(g) hereof, may be
waived by you in writing:
(a) You shall have received from Sonnenschein ▇▇▇▇▇▇ ▇▇▇▇
& ▇▇▇▇▇▇▇▇▇, who are acting as special counsel for you in con-
nection with the transactions contemplated herein, an opinion,
dated the Closing Date, substantially in the form set forth in
Exhibit D hereto. In giving such opinion, Sonnenschein ▇▇▇▇▇▇
▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ may rely upon (i) the opinion delivered to
you pursuant to Section 8(c) hereof by ▇▇▇▇▇▇ & ▇▇▇▇▇▇ as to
matters of Pennsylvania law and (ii) the factual representa-
tions made in this Agreement by the Company and by you.
(b) You shall have received from ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇,
special counsel for the Company, (i) an opinion, dated the
Closing Date, substantially in the form set forth in Exhibit E
hereto and (ii) a memorandum, dated the Closing Date, substan-
tially in the form set forth in Exhibit F hereto. In giving
such opinion and memorandum, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ may rely upon
(a) the opinion delivered to you pursuant to Section 8(c)
hereof by ▇▇▇▇▇▇ & ▇▇▇▇▇▇ as to matters of Pennsylvania law,
(b) the opinion of ▇▇▇▇▇▇ & ▇▇▇▇▇▇ addressed to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
& ▇▇▇▇ and attached to such memorandum as Annex A as to mat-
ters of Pennsylvania law and (c) the factual representations
made in this Agreement by the Company and by you and on cer-
tificates of the Company or officers of the Company.
(c) You shall have received from ▇▇▇▇▇▇ & ▇▇▇▇▇▇, counsel
for the Company, an opinion, dated the Closing Date, substan-
tially in the form set forth in Exhibit G hereto. In giving
such opinion, ▇▇▇▇▇▇ & ▇▇▇▇▇▇ may rely upon (i) the factual
representations made in this Agreement by the Company and on
certificates of the Company or officers of the Company and
(ii) the opinions of other counsel who have made searches,
recordings and filings necessary as a basis for the opinion of
▇▇▇▇▇▇ & ▇▇▇▇▇▇.
(d) The representations and warranties contained in Sec-
tion 4 hereof shall be true on and as of the Closing Date.
All of the terms, covenants, agreements and conditions of this
Agreement to be complied with and performed by the Company on
or before the Closing Date shall have been complied with and
performed in all respects. The Company shall have delivered
to you on the Closing Date a certificate to such effects
signed by the President or any Vice President of the Company.
(e) The purchase of and payment for the Bonds shall not be
prohibited by any applicable law or governmental regulation
and shall not subject you to any penalty or other onerous con-
dition under or pursuant to any applicable law or governmental
regulation.
(f) The Bonds shall qualify as a legal investment for
insurance companies under Section 1404(a)(2)(B) of the New
York Insurance Law and Section 125.9a(l) of the Illinois
Insurance Code (but not as a high yield-high risk obligation,
as such term is defined in the Illinois Insurance Code, or as
an obligation described in clause (e) of such section of the
Illinois Insurance Code) and you shall have received a certif-
icate signed by the Treasurer or the Controller of the Company
setting forth the computation necessary to show the satisfac-
tion of this condition.
(g) The Company shall have obtained the requisite approval
for the issuance and sale of the Bonds under this Agreement of
all regulatory bodies to which it is subject, including,
specifically, the Orders, without conditions which in the rea-
sonable judgment of the Company are unduly burdensome and not
in the best interest of the Company or which would prevent the
fulfillment of the terms of this Agreement in any respect, or
which are otherwise reasonably unacceptable to you; provided,
however, that you may not waive the condition that all such
approvals be granted without conditions which in the reason-
able judgment of the Company are unduly burdensome and not in
the best interests of the Company or which would prevent the
fulfillment of the terms of this Agreement in any respect.
The Company shall have delivered to you an original or
officially certified copy of each of the Orders (and of any
such approvals required by any other regulatory body).
(h) All corporate and other actions to be taken by the
Company in connection with the transactions contemplated
herein and all documents incident hereto shall be reasonably
satisfactory in substance and form to you and your special
counsel, and you and your special counsel shall have received
all such counterpart originals or certified or other copies of
such documents as you or they may reasonably request.
(i) All fees and taxes payable in connection with the
offer, issuance, sale and delivery of the Bonds hereunder or
in connection with the execution, delivery and performance of
this Agreement which are required to be paid by or on behalf
of the Company prior to or on the Closing Date to any govern-
mental or administrative board or body shall have been paid.
(j) All conditions set forth in Article 3 of the Mortgage
Indenture for the authentication and delivery of the Bonds
shall have been satisfied, and you shall have received a cer-
tificate to that effect signed by the President or any Vice
President of the Company.
(k) You shall have received a certificate from the
Trustee, dated the Closing Date, substantially in the form set
forth in Exhibit H hereto.
(1) You shall have received a checklist of dates of com-
pliance for each Required Compliance Item, substantially in
the form attached hereto as Exhibit I.
9. (i) The Company agrees, whether or not the transactions
contemplated herein shall be consummated to pay, and hold you
harmless against liability for the payment of, all reasonable
out-of pocket expenses arising in connection with the transac-
tions contemplated herein, including, without limitation, the
fees and expenses of your special counsel, Sonnenschein ▇▇▇▇▇▇
▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, in connection with such transactions, unless
the transactions contemplated herein to be consummated at the
Closing are not consummated because of your default under this
Agreement.
(ii) The Company agrees, whether or not the transactions
hereby contemplated are consummated, to pay and hold you harm-
less against, any claim for any brokerage or finder's fee
arising in connection with the purchase and sale of the Bonds
under this Agreement, including, without limitation, the fees
of the Company's direct placement agents, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Inc. and Butcher & Singer Inc. You represent and warrant to
the Company that, in connection with your purchase of Bonds
pursuant to this Agreement, you have not made any contract in
respect of any such brokerage or finder's fees or dealt with
any broker, finder or agent other than the Company's direct
placement agents, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Inc. and Butcher &
Singer Inc.
(iii) The Company agrees to pay, and hold you and any
holder of Bonds that have not been transferred to such holder
pursuant to Rule 144 under the 1933 Act harmless against
liability for the payment of, all reasonable out of-pocket
expenses arising in connection with any request by the Company
to such holder for such holder's consent to or waiver of acts
or omissions of the Company not permissible under the terms of
the Mortgage Indenture, the Bonds, this Agreement or any
document delivered in connection herewith without such consent
or waiver, or in connection with amendments thereto requested
by the Company, including, without limitation, the fees and
expenses of counsel.
(iv) The obligations of the parties hereto under this Sec-
tion 9 shall survive the transfer of the Bonds.
10. All covenants, agreements, representations and warranties
made herein or in any certificates delivered pursuant hereto
shall survive the delivery of the Bonds to you and payment there-
for, notwithstanding any investigation heretofore or hereafter
made by you or on your behalf.
11. All covenants, agreements, representations and warranties
made herein or in any certificates delivered pursuant hereto by
or on behalf of the parties hereto shall bind and inure to the
benefit of the respective successors and assigns of the parties
hereto, whether so expressed or not, including, without limita-
tion, each transferee of Bonds. Except as otherwise indicated
herein, the provisions of this Agreement are intended to be for
the benefit of and binding upon any holder, from time to time, of
any of the Bonds, and shall be enforceable against the Company,
its successors and assigns, by any such holder, and against such
holder by the Company, whether or not an express assignment to
such holder of rights under this Agreement has been made by you
or your successors or assigns.
12. Notwithstanding any provision to the contrary contained
in the Bonds or the Mortgage Indenture, the Company will duly and
punctually pay to you at your address and in the manner set forth
in Schedule II hereto (or in such other manner and to such other
address as you may designate from time to time by written notice
to the Company) all amounts payable in respect of the principal
of, or interest on, or premium, if any, on, the Bonds, provided
that, upon the redemption of any Bond in whole, the amount due
thereon shall be paid only upon presentation and surrender of
such Bond in accordance with the terms of the Mortgage Indenture.
You agree that if you sell, assign or transfer any Bond, prior to
such sale, assignment or transfer, you will (i) present such Bond
to the Trustee to permit the Company to verify the making, or
make a proper notation thereon, of the amount of principal and
interest paid thereon or (ii) surrender such Bond to the Trustee
against receipt of one or more Bonds in an aggregate principal
amount equal to the unredeemed portion of the Bond so surren-
dered, which Bond or Bonds shall bear interest from the date to
which interest has been paid on the Bond so surrendered. Pay-
ments to you made by wire transfer shall be promptly confirmed to
you in writing at the address set forth on Schedule II hereto.
13. So long as (i) all of the Bonds are registered bonds,
(ii) all holders of the Bonds at any time that any selection for
redemption shall take place shall have agreed in writing to the
provisions of this Section 13 and (iii) the number of registered
holders of the Bonds does not exceed fifty, then, in case the
Company shall at any time redeem less than all of the Bonds, the
Company shall at the time of each such partial redemption allo-
cate the amount of each such partial redemption in units of
$1,000 or integral multiples thereof among the holders of Bonds
at the time outstanding in proportion, as nearly as practicable,
to the respective unpaid principal amount of the Bonds held
thereby, with adjustments, to the extent practicable, to equalize
for any previous partial redemptions not made in such proportion,
instead of drawing the Bonds to be redeemed by lot.
14. All communications provided for herein shall be sent by
first class mail, certified, postage prepaid (except that ▇▇▇▇▇-
cial and other information to be delivered pursuant to Section 7
hereof need not be sent by certified mail unless requested by you
in writing to the Company) and if sent to you, shall be mailed to
your address set forth on Schedule II hereto and in such other
manner as you may theretofore have designated, or if addressed to
the Company, shall be mailed to the Company at ▇▇▇▇▇▇-▇▇▇▇▇
Center, ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇,
attention. Vice President and Controller.
15. The Company will pay all stamp and other taxes, if any,
which may be payable in respect of the sale of the Bonds to you
and the issuance thereof to you or your nominee, and will hold
you harmless against any loss or liability resulting from nonpay-
ment or delay in payment of any such tax. The Company will also
pay all reasonable costs of delivery to such reasonable place as
shall be designated by you or your nominee, as the case may be,
of certificate(s) representing the Bonds purchased by you here-
under. Within ten days after the Closing Date, the Company shall
apply to the CUSIP Service Bureau of Standard and Poor's Corpora-
tion for private placement numbers to be assigned to the 9.23%
Series Bonds and the 9.34% Series Bonds, respectively, and, with-
in ten days after the company is notified of the private place-
ment numbers so assigned, it shall notify you of the numbers so
assigned.
16. This Agreement and all documents relating hereto,
including, without limitation, (i) consents, waivers and modifi-
cations which may hereafter be executed, (ii) documents received
by you at the Closing (except the certificates representing the
Bonds) and (iii) financial statements, certificates and other
information previously or hereafter furnished to, or received
from, you, may be reproduced by the Company or you by any photo-
graphic, photostatic, microfilm, micro-card, miniature photo-
graphic or other similar process and the Company and you may
destroy any original document so reproduced. The Company and you
agree and stipulate that any such reproduction shall be admissi-
ble in evidence as the original itself in any judicial or
administrative proceeding (whether or not the original is in
existence and whether or not such reproduction was made by the
Company or you in the regular course of business) and that any
enlargement, facsimile or further reproduction of such reproduc-
tion shall likewise be admissible in evidence.
17. Notwithstanding any other provision of this Agreement,
if, after your purchase of the Bonds hereunder, you or your
nominee transfers such Bonds to any Affiliate of yours or the
nominee of such Affiliate, such transferee shall be entitled to
all rights and benefits to which the transferor would be entitled
hereunder.
18. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania.
19. Should any part of this Agreement for any reason be
declared invalid by a court of competent jurisdiction, such
declaration shall not affect the validity of any remaining por-
tion, which remaining portion shall remain in full force and
effect as if this Agreement had been executed with the invalid
portion thereof eliminated and it is hereby declared the inten-
tion of the parties hereto that they would have executed the
remaining portion of this Agreement without including therein any
such part, parts or portion which may, for any reason, be here-
after declared invalid.
20. You or your special counsel may at any time prior to the
Closing Date make such reasonable investigation of the Company
and its subsidiaries and the assets and businesses of the Company
and its subsidiaries as you or your special counsel deem neces-
sary or advisable, but such investigation shall not affect the
representations, warranties and covenants of the Company con-
tained herein or made pursuant hereto.
21. All references in this Agreement to any particular
statute shall include any successor thereto and to any particular
provision of any statute or to any particular rule or regulation
under any statute shall include any successor provision thereto.
22. Any term, covenant, agreement or condition ("Provision")
contained in this Agreement may be amended, or compliance there-
with may be waived (either generally or in particular instances
and either retroactively or prospectively) (i) if prior to the
Closing, by a written instrument signed by you and the Company
and (ii) if subsequent to the Closing, by a written instrument
signed by the Company and holders of not less than 51% of the
then unpaid principal amount of the Bonds then outstanding. This
Agreement shall not be altered, amended or supplemented except by
a written instrument. Any waiver of any Provision contained in
this Agreement shall not be deemed a waiver of any other Provi-
sion, and any waiver of any default in any such Provision shall
not be deemed a waiver of any later default thereof or of any
default of any other Provision.
23. This Agreement may be executed in two or more counter-
parts, each of which shall be deemed an original but all of which
sha11 constitute one document.
If you agree with the foregoing, please sign the form of
acceptance below and return this Agreement to the Company, where-
upon this Agreement will become and evidence a binding agreement
between the Company and you as of the day and year first above
written.
Very truly yours,
PENNSYLVANIA GAS AND WATER COMPANY
By: ▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
-----------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇ ▇▇.
Title: Vice President and
Controller
The foregoing Agreement is hereby accepted
as of the day and year first above written.
ALLSTATE LIFE INSURANCE COMPANY ALLSTATE LIFE INSURANCE COMPANY
OF NEW YORK
By: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ By: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------- ----------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Authorized Signatory Title: Authorized Signatory
By: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ By: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------- ----------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Authorized Signatory Title: Authorized Signatory
SCHEDULE I
PENNSYLVANIA GAS AND WATER COMPANY
FIRST MORTGAGE BONDS
Principal Amount
----------------
9.23% 9.34%
Purchaser Series Bonds Series Bonds
--------- ------------ ------------
Allstate Life Insurance Company $ 10,000,000 $ 12,000,000
Allstate ▇▇▇▇▇ ▇▇▇▇ ▇-▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Allstate Life Insurance Company $ 3,000,000
of ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇-▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
SCHEDULE II
PENNSYLVANIA GAS AND WATER COMPANY
Communications and Notices;
Method of Payment
Allstate Life Insurance Company ($10,000,000 principal amount of
9.23% Series Bonds)
(EIN No. ▇▇▇▇▇▇▇▇▇)
State of Incorporation: Illinois
State of Principal Place of Business: Illinois
Payments by wire transfer of immediately available funds
to be made to its Account No. 23 80524 in:
▇▇▇▇▇▇ Trust and Savings Bank (ABA #0710 0028 8)
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn. Trust Collection Dept.
with sufficient information to identify the source
and application of such funds
Notices of payments, written confirmations of such wire
transfers and all other communications to be sent to:
Allstate Life Insurance Company
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇ ▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Investment Department -
Taxable Fixed Income Division
Allstate Life Insurance Company ($12,000,000 principal amount of
9.34% Series Bonds)
(EIN No. ▇▇▇▇▇▇▇▇▇)
State of Incorporation: Illinois
State of Principal Place of Business: Illinois
Payments by wire transfer of immediately available funds
to be made to its Account No. 23 87158 in:
▇▇▇▇▇▇ Trust and Savings Bank (ABA #0710 0028 8)
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn. Trust Collection Dept.
with sufficient information to identity the source
and application of such funds
Notices of payments, written confirmations of such wire
transfers and all other communications to be sent to:
Allstate Life Insurance Company
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇-▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Investment Department -
Taxable Fixed Income Division
Allstate Life Insurance Company of New York ($3,000,000 principal
amount of 9.34% Series Bonds)
(EIN No. 36 2608394)
State of Incorporation: New York
State of Principal Place of Business: New York
Payments by wire transfer of immediately available funds
to be made to its Account No. 7 3761-0 in:
Marine Midland Bank, N.A. (ABA #0210 0108 8)
▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: Trust Teller
with sufficient information to identify the source
and application of such funds
Notices of payments, written confirmations of such wire
transfers and all other communications to be sent to:
Allstate Life Insurance Company of ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇-▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Investment Department - Private Place-
ment taxable Fixed Income Division
