EXHIBIT B
TWENTY-THIRD SUPPLEMENTAL INDENTURE
Dated as of August 15, 1989
(Supplemental to Indenture Dated as of March 15, 1946)
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PENNSYLVANIA GAS AND WATER COMPANY
(formerly Scranton-Spring Brook Water Service Company)
XXXXXX GUARANTY TRUST COMPANY
OF NEW YORK,
Trustee
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First Mortgage Bonds 9.34% Series due 2019
(THIS PAGE INTENTIONALLY LEFT BLANK)
TWENTY-THIRD SUPPLEMENTAL INDENTURE, dated as of the fifteenth
day of August, 1989, made by and between PENNSYLVANIA GAS AND
WATER COMPANY (formerly Scranton-Spring Brook Water Service Com-
pany), a corporation organized and existing under the laws of the
Commonwealth of Pennsylvania (hereinafter sometimes called the
"Company"), and XXXXXX GUARANTY TRUST COMPANY OF NEW YORK, a
corporation organized and existing under the laws of the State of
New York, and having its principal place of business at Xx. 00
Xxxx Xxxxxx, xx Xxx Xxxx xx Xxx Xxxx, Xxx Xxxx, as Trustee (here-
inafter sometimes called the "Trustee").
WHEREAS, the Company executed and delivered its Indenture
(hereinafter called the "Original Indenture") dated as of
March 15, 1946, to Guaranty Trust Company of New York, now Xxxxxx
Guaranty Trust Company of New York, to secure its First Mortgage
Bonds and (i) has executed and delivered twenty-one indentures
supplemental thereto dated respectively as of February 15, 1951;
as of September 15, 1951; as of January 15, 1952; as of March 15,
1952; as of June 15, 1952; as of December 1, 1954; as of
April 15, 1956; as of November 15, 1956; as of March 15, 1957; as
of September 1, 1958; as of April 15; 1959; as of July 15, 1960;
as of October 31, l961; as of December 15, 1961; as of
December 15, 1963; as of June 15, 1966; as of October 15, 1967;
as of May 1, 1970; as of June 1, 1972; as of March 1, 1976; and
as of December 1, 1976 and (ii) contemporaneously herewith, will
execute and deliver a twenty-second indenture supplemental there-
to dated as of the date hereof (the "Twenty Second Supplemental
Indenture") (the Original Indenture as heretofore supplemented
and to be supplemented by the Twenty-Second Supplemental Inden-
ture and this Twenty-Third Supplemental Indenture, and as the
same may be further supplemented by additional indentures supple-
mental thereto, being hereinafter collectively called the "Inden-
ture"); and
WHEREAS, the Company at July 31, 1989 (i) had retired all of
the original issue of $24,500,000 principal amount of bonds of a
series designated First Mortgage Bonds 2 7/8% Series due 1976
(hereinafter called "bonds of the First Series"), all of the
original issue of $4,000,000 principal amount of bonds of a
series designated First Mortgage Bonds 3 1/2% Series due 1982,
all of the original issue of $1,000,000 principal amount of
bonds of a series designated First Mortgage Bonds 4 7/8% Series
due 1987, all of the original issue of $2,000,000 principal
amount of bonds of a series designated First Mortgage Bonds
4 3/4% Series due 1983, all of the original issue of $3,000,000
principal amount of bonds of a series designated First Mortgage
Bonds 5 1/2% Series due 1985, all of the original issue of
$3,000,000 principal amount of bonds of a series designated First
Mortgage Bonds 5% Series due 1986, and all of the original issue
of $5,000,000 principal amount of bonds of a series designated
First Mortgage Bonds 4 5/8% Series due 1988, and (ii) had out-
standing and secured by the Original Indenture, as so supple-
mented to the date hereof, $2,000,000 (of an original issue of
$4,000,000) principal amount of bonds of a series designated
First Mortgage Bonds 5 7/8% Series due 1991, $5,330,000 (of an
original issue $10,000,000) principal amount of bonds of a series
designated First Mortgage Bonds 6 7/8% Series due 1992,
$7,140,000 (of an original issue of $12,000,000 principal amount
of bonds of a series designated First Mortgage Bonds 10% Series
due 1995, $4,585,000 (of an original issue of $7,000,000) princi-
pal amount of bonds of a series designated First Mortgage Bonds
8% Series due 1997, $8,738,000 (of an original issue of
$20,000,000) principal amount of bonds of a series designated
First Mortgage Bonds 9 1/4% Series due 1996 and $5,550,000 (of an
original issue of $15,000,000) principal amount of bonds of a
series designated First Mortgage Bonds 9% Series due 1991; and
WHEREAS, Article 3 of the Original Indenture provides that
additional bonds of any one or more series may be issued from
time to time in accordance with and subject to the conditions,
provisions and limitations set forth in said Article 3; and
WHEREAS, Section 2.02 of original Indenture provides that
before any bonds of any series, other than bonds of the First
Series, shall be authenticated and delivered, the Company shall
execute and deliver to the Trustee a supplemental indenture, in
recordable form, containing the particulars of the new series of
bonds as required by said Section 2.02 and containing appropriate
provisions giving to such bonds the protection and security of
the Original Indenture; and
WHEREAS, Section 14.01 of the Original Indenture provides,
among other things, that the Company, when authorized by a reso-
lution of its Board of Directors, and the Trustee from time to
time may enter into an indenture or indentures supplemental
thereto and which thereafter shall form a part thereof for any
one or more of the following purposes, among others, to provide
for the creation of any series of bonds (other than bonds of the
First Series), designating the series to be created and
specifying the form and provisions of bonds of such series; and
WHEREAS, Section 14.02 of the Original Indenture provides that
the Trustee is authorized to join with the Company in the execu-
tion of any such supplemental indenture; and
WHEREAS, the Company now desires to create a new series of
bonds under the Indenture to be known and designated as its First
Mortgage Bonds 9.5% Series due 2019 (hereinafter sometimes called
"bonds of the Fifteenth Series"); and
WHEREAS, the Company proposes to execute and to request the
Trustee to authenticate and deliver up to $15,000,000 principal
amount of bonds of the Fifteenth Series pursuant to the provi-
sions of Sections 3.02 to 3.06, both inclusive, of the Original
Indenture; and
WHEREAS, the bonds of the Fifteenth Series and the Trustee's
certificate to be endorsed on such bonds are to be substantially
in the form following (any of the provisions of such bonds may be
set forth on the reverse side thereof);
[FORM OF BOND OF THE FIFTEENTH SERIES]
PENNSYLVANIA GAS AND WATER COMPANY
(formerly Scranton-Spring Brook Water Service Company)
First Mortgage Bond 9.34% Series due 2019
No. $
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PENNSYLVANIA GAS AND WATER COMPANY (formerly Scranton-Spring
Brook Water Service Company), a corporation organized and
existing under the laws of the Commonwealth of Pennsylvania
(hereinafter sometimes called the "Company"), for value received,
promises to pay to , or registered
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assigns, on September 1, 2019 (unless this bond shall have been
called for previous redemption and provision made for the payment
of the redemption price thereof), Dollars
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at the Company's office or agency in the Borough of Manhattan,
The City of New York, and, except as otherwise set forth below,
semi-annually on the first day of March and the first day of
September in each year to pay interest thereon, at said office or
agency, at the rate of 9.34% per annum from the date of this bond
(except that if this bond be dated after the first interest pay-
ment date for bonds of this series it shall bear interest from
the interest payment date next preceding the date of this bond,
and except that if this bond be dated prior to the first interest
payment date for bonds of this series it shall bear interest from
September 1, 1989, and except that if this bond be dated between
a record date as defined in the Twenty-Third Supplemental Inden-
ture dated as of August 15, 1989 (the "Twenty-Third Supplemental
Indenture") and the interest payment date in respect thereof it
shall bear interest from such interest payment date), until the
Company's obligation with respect to such principal sum shall be
discharged; provided that, so long as there is no existing
default in the payment of interest, and except for the payment or
defaulted interest, the interest payable on any March 1 or
September 1 will be paid to the person in whose name this bond
was registered at the close of business on the fifteenth day of
February or the fifteenth day of August next preceding such
interest payment date. Both the principal of and the interest on
this bond shall be payable in any coin or currency of the United
States of America which at the time of payment shall be legal
tender for the payment of public and Private debts.
Notwithstanding anything to the contrary contained in this
bond or in the Indenture (as defined below), the interest rate
payable on this bond shall, to the extent permitted by applicable
law, increase by 250 basis points (the "Additional Interest") if,
at any one or more times, the Company fails to meet the Interest
Coverage Test (as defined below); provided, however, that the
Interest Coverage Test shall not go into effect or be applicable
unless:
(i) the Company fails to comply with any Required Compli-
ance Item (as defined below); and
(ii) such non-compliance is not cured by the Company or
waived by either the Pennsylvania Department of Environmental
Resources (the "DER") or the Pennsylvania Public Utility Com-
mission (the "PPUC"), as the case may be, or successor
agencies, within the Cure Period (as defined below).
The preceding paragraph shall apply regardless of whether or
not the Company is contesting in good faith the facts and circum-
stances that resulted in such non-compliance, if the Interest
Coverage Test is in effect and the Company fails to meet such
test, the Additional Interest shall accrue from the first day of
the month in which the Interest Coverage Test was not met until
the earlier of (i) the Date of Cure (as defined below) or, if a
waiver is obtained as aforesaid, the date of such waiver and (ii)
the first day of the month in which the Interest Coverage Test is
met.
Each Required Compliance Item that the Company fails to comply
with shall have its own Cure Period. As used herein, "Cure
Period" means the period of 180 days following the first date of
non-compliance. However, (i) if the Company obtains an extension
of a compliance date with respect to a Required Compliance Item
from either the DER or the PPUC after a Cure Period has com-
menced, the Cure Period shall be tolled with respect to such
Required Compliance Item as of the date the extension is granted:
provided, however, that if the Company fails to meet the extended
compliance date, the new Cure Period shall be the 180 day period
commencing on the extended compliance date less the number of
days elapsed during the previous Cure Period with respect to such
Required Compliance item before the extension was granted, and
(ii) if the Company obtains an extension of a compliance date
with respect to a Required Compliance Item from either the DER or
the PPUC prior to the commencement of a Cure Period which might
otherwise commence, the Cure Period shall be the 180 day period
commencing on the extended compliance date. Regardless of the
number of Required Compliance Items that the Company fails to
comply with after the expiration of the respective Cure Periods,
if the Company fails to meet the Interest Coverage Test, the
Additional Interest shall in no event be more than 250 basis
points at any given time, and, provided that the Company pays the
Additional Interest when due, the holder of this bond shall have
no other remedies with respect to the Company's failure to comply
with any Required Compliance Item. Notwithstanding anything to
the contrary contained in this bond or in the Indenture, if a
holder of this bond is entitled to receive the Additional
Interest and the Company fails to pay such Additional Interest
when due, then such holder's remedies with respect so the Com-
pany's failure to comply with any Required Compliance Item shall
in no way be restricted or limited.
As used herein, "Interest Coverage Test" means that the Com-
pany's earnings before interest and taxes (determined in
accordance with generally accepted accounting principles) for the
immediately preceding twelve full months, calculated on a monthly
basis for each month that the Interest Coverage Test is in
effect, are at least equal to one and one-quarter (1 1/4) times
the annualized interest charges on all indebtedness of the Com-
pany which is outstanding at the end of such twelve month period
and which does not constitute a current liability, adjusted for
amortization of debt discount and expense, or of premium, as the
case may be.
As used herein, "Required Compliance Items" (singularly, a
"Required Compliance Item") shall mean (i) paragraphs 21, 22,
23, 24, 25 and 27 of that certain Consent Order and Agreement by
and between the Company and 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(l), b(2), b(3), c(1), c(2), c(3), c(4), c(5),
c(6), d and e of the Terms of Settlement contained in the Recom-
mended Decision of Administrative Law Judge Xxxxxx X. Xxxxx,
dated June 7, 1988 (the "Terms of Settlement"), 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").
As used herein. "Date of Cure" shall mean the date the Company
certifies to either the DER or the PPUC, as the case may be, that
non-compliance with any Required Compliance Item is cured; pro-
vided, however, that if the DER or the PPUC, as the case may be,
subsequently notifies the Company that such non-compliance with
the Required Compliance Item was not cured, then such certifica-
tion shall have no effect and a Date of Cure shall not be deemed
to have occurred as of such date, and the holder of this bond
shall promptly receive all Additional Interest it would have
received but for the Company's certification that such non-
compliance was cured.
So long as this bond is outstanding, the Company shall give to
the Trustee and to the holder of this bond prompt written notice
of any event that constitutes noncompliance 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 bolder 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 paragraph
(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.
So long as this bond is outstanding, if the Interest Coverage
Test is in effect pursuant to the terms of this bond and the
Twenty-Third Supplemental Indenture, the Company shall submit to
the Trustee and to due holder of this bond within forty-five (45)
days after the expiration of each of the Company's first three
fiscal quarters, and within ninety (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 com-
pliance with the Interest Coverage Test, and such certification
shall state that the information contained in the statement is
true and correct, except for audit adjustments, if any.
So long as this bond is outstanding, within twenty-five (25)
days after the expiration of each calendar month in which the
Interest Coverage Test is in effect, the Company shall determine
whether it meets such test. So long as this bond is outstanding,
if at any time the Company fails to meet the Interest Coverage
Test when in effect, the Company shall notify in writing the
Trustee and the holder of this bond within five (5) days after
the Company first becomes aware of such failure.
Notwithstanding anything to the contrary contained in this
bond or in the Indenture, and in addition to the Additional
Interest, if then payable, if the Company fails to make any
principal or interest payment on this bond within three days
after such payment is due, whether at stated maturity, by notice
of redemption, by acceleration or otherwise, the interest rate
payable on this bond shall, to the extent permitted by applicable
law, increase by 100 basis points, such increase to commence on
the fourth day after such principal or interest payment is due
and to continue until such unpaid amount of principal or interest
has been paid in full.
All notices and other documents delivered to the Trustee pur-
suant to the terms hereof shall be deemed to be conclusive proof
of the accuracy of the statements made therein.
This bond is one of an issue of bonds of the Company. known as
its First Mortgage Bonds, issued and to be issued in one or more
series under, and equally and ratably secured (except as any
sinking, amortization, improvement or other fund, established in
accordance with the provisions of the indenture hereinafter men-
tioned, may afford additional security for the bonds of any
particular series) by a certain mortgage and deed of trust, dated
as of March 15, 1946 (hereinafter called the "Original Inden-
ture"), and by twenty-three indentures supplemental thereto (of
which the Seventeenth Supplemental Indenture, dated as of
October 15, 1967, the Eighteenth Supplemental Indenture, dated as
of May 1, 1970, the Twentieth Supplemental Indenture, dated as of
March 1,1976, and the Twenty-First Supplemental Indenture, dated
as of December 1, 1976, amended certain provisions of the Origi-
nal Indenture) (said Original Indenture and all said indentures
supplemental thereto being hereinafter collectively called the
"Indenture"), made by the Company to Guaranty Trust Company of
New York and, after the change of name of Guaranty Trust Company
of New York to Xxxxxx Guaranty Trust Company of New York, to
Xxxxxx Guaranty Trust Company of New York, as Trustee (herein-
after called the Trustee"), to which Indenture (and to all addi-
tional indentures supplemental thereto) reference is hereby made
for a description of the property mortgaged, the nature and
extent of the security, the rights and limitations of rights of
the Company, the Trustee, and the holders of said bonds under the
Indenture, and the terms and conditions upon which said bonds are
secured, to all of the provisions of which Indenture and of all
such additional supplemental indentures in respect of such
security, including the provisions of the Indenture permitting
the issue of bonds of any series in respect of property which,
under the restrictions and limitations therein specified, may be
subject to liens prior to the lien of the Indenture, the holder,
by accepting this bond, assents. To the extent permitted by and
as provided in the Indenture, the rights and obligations of the
Company and of the holders of said bonds (including those per-
taining to any sinking or other fund) may be changed and modi-
fied, with the consent of the Company, by the holders of at least
75% in aggregate principal amount of the bonds then outstanding
(or; if one or more, but less than all, series of bonds are
affected, by the holders of at least 75% in aggregate principal
amount of outstanding bonds of such one or more series so af-
fected), such percentage being determined as provided in the
Indenture; provided, however, that without the consent of the
holder hereof no such modification or alteration shall be made
which will extend the time of payment of the principal of or the
interest on this bond or reduce the principal amount hereof or
the rate of interest hereon or effect any other modification of
the terms of payment of such principal or interest or will permit
the creation of any lien ranking prior to or on a parity with the
lien of the Indenture on any of the mortgaged property, or will
deprive any nonassenting holder of this bond of a lien upon the
mortgaged property for the security of this bond, or will reduce
the percentage of bonds required for the aforesaid action under
the Indenture and provided further that, as provided in Section
4.02 of the Twentieth Supplemental Indenture, when all bonds of
all series issued prior to January 1, 1976, shall cease to be
outstanding, each reference to "75%" in this sentence shall
become "60%." This bond is one of a series of bonds designated
as the First Mortgage Bonds 9.34% Series due 2019 of the Company.
The bonds of this series are subject to redemption, in whole
or in part, at the option of the Company or pursuant to certain
requirements of the Indenture, upon not less than thirty (30) nor
more than sixty (60) days' prior notice, all on the conditions,
at the times, to the extent and in the manner provided in the In-
denture. If redeemed pursuant the provisions of Section 8.13 of
the Indenture, the bonds of this series are redeemable at a
special redemption price equal to 100% of the principal amount
thereof, plus interest accrued to the date fixed for redemption.
If redeemed otherwise than as provided in the preceding sentence,
the bonds of this series are redeemable, in whole or in part, at
a price, equal to the outstanding principal amount thereof plus
interest accrued thereon to the date of redemption, plus a "Make-
Whole Premium," determined as follows: (i) if, on the date of
redemption, the sum of the Treasury Rate (as defined below) plus
the Addition (as defined below) is lower than the rate per annum
at which interest is then accruing on the bonds, the Make-Whole
Premium shall be an amount equal to the excess of (x) the present
value as of the date of redemption of the remaining principal and
interest payments to become due on the bonds to be redeemed, dis-
counted at the sum of the Treasury Rate plus the Addition over
(y) the sum of the aggregate outstanding principal amount of the
bonds then to be redeemed plus accrued interest or (ii) if, on
the date of redemption, the sum of the Treasury Rate plus the
Addition is equal to or higher than the rate per annum at which
interest is then accruing on the bonds, the Make-Whole Premium
shall be zero. "Treasury Rate" shall mean the arithmetic mean
calculated for the completed two week period immediately prior to
the date of redemption of the rates published in the weekly sta-
tistical release designated H.15(519) of the Federal Reserve Sys-
tem under the caption "U.S. Government Securities-Treasury
Constant Maturities" (the "Statistical Release"), or if the Sta-
tistical Release is not published, the arithmetic mean of the
rates obtained from such reasonably comparable index as may be
designated in writing by the holders of no less than 66 2/3% or
more of the outstanding principal amount of the bonds, for the
maturity corresponding to the remaining life of the bonds as of
the date of the redemption of the bond or portion of a bond, as
the case may be, with respect to which the Treasury Rate is being
calculated. If no maturity exactly corresponds to such remaining
life, the rates for the two most closely corresponding maturi-
ties, which are, respectively, greater than and lesser than such
remaining life, shall be calculated pursuant to the immediately
preceding sentence and the Treasury Rate shall be interpolated
from such rates on a straight-line basis. The "Addition" shall
mean that number of basis points to be added to the Treasury Rate
determined as follows: if redemption occurs at any time during
the period commencing on the date indicated in Column "A" below
and ending on the date indicated in Column "B" below, then the
number of basis points in the Addition shall be the number indi-
cated in Column "C" below.
"A" "B" "C"
COMMENCE DATE END DATE BASIS POINTS
September 1, 1989 August 3l, 1994 75
September 1, 1994 August 3l, 2004 50
September 1, 2004 August 3l, 2014 25
September 1, 2014 August 31, 2019 0
If this bond shall be called for redemption, and payment of
the redemption price shall be duly provided by the Company as
specified in the Indenture, interest shall cease to accrue hereon
from and after the date of redemption fixed in the notice
thereof.
The principal of this bond may be declared or may become due
prior to the maturity date hereinbefore named, on the conditions,
in the manner and at the times set forth in the Indenture, upon
the happening of a default as therein defined.
This bond is transferable by the registered owner hereof in
person or by his duly authorized attorney at the office or agency
of the Company in the Borough of Manhattan, The City of New York,
upon surrender and cancellation of this bond, and thereupon a new
bond or bonds of the same series and maturity, for a like aggre-
gate principal amount, will be issued to the transferee in
exchange therefor, as provided in the Indenture. The Company and
the Trustee and any registrar and any paying agent may deem and
treat the person in whose name this bond is registered as the
absolute owner hereof for the purpose of receiving payment and
for all other purposes.
This bond, alone or with other bonds of the same series and
maturity, may in like manner be exchanged at such office or
agency for one or more new bonds of the same series and maturity,
in denominations authorized by the Board of Directors of the
Company, of the same aggregate principal amount. Upon each such
transfer or exchange the Company may require the payment of
charges as prescribed in the Indenture.
No recourse under or upon any covenant or obligation of the
Indenture, or of any bonds thereby secured, or for any claim
based thereon, or otherwise in any manner in respect thereof,
shall be had against any incorporator, subscriber to the capital
stock, stockholder, officer or director, as such, whether former,
present or future, of the Company or any successor corporation,
either directly, or indirectly through the Company or the
Trustee, by the enforcement of any subscription to capital stock,
assessment or otherwise, or by any legal or equitable proceeding
by virtue of any constitution, statute, contract of subscription
or otherwise (including, without limiting the generality of the
foregoing, any proceeding to enforce any claimed liability of
stockholders of the Company based upon any theory of disregarding
the corporate entity of the Company or upon any theory that the
Company was acting as the agent or instrumentality of the stock-
holders), any and all such liability of incorporators, stock-
holders, subscribers, officers and directors, as such, being
released by the holder hereof, by the acceptance of this bond,
and being likewise waived and released by the terms of the
Indenture under which this bond is issued.
This bond shall not be valid or become obligatory for any
purpose until the certificate of authentication endorsed hereon
shall have been signed by Xxxxxx Xxxxxxxx Trust Company of New
York, or its successor, as Trustee under the Indenture.
In WITNESS WHEREOF, PENNSYLVANIA GAS AND WATER COMPANY has
caused this bond to be signed in its name by, or to bear the
facsimile signature of, its President or a Vice President, and
its corporate seal to be affixed hereto and attested by, or to
bear the facsimile signature of, its Secretary or an Assistant
Secretary.
Dated:
PENNSYLVANIA GAS AND WATER COMPANY
By:
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Vice President
Attest:
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Secretary
[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This bond is one of the bonds, of the series designated
therein, described in the within-mentioned Indenture.
XXXXXX GUARANTY TRUST COMPANY
OF NEW YORK, as Trustee
By:
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Authorized Officer
[End of Form of Bond]
WHEREAS, all requirements of law and of the restated articles
of incorporation, as amended, and by-laws of the Company,
including all requisite action on the part of its directors and
officers, relating to the execution of this Twenty-Third Supple-
mental Indenture have been complied with and observed, and all
things necessary to make this Twenty-Third Supplemental Indenture
a valid and legally binding instrument in accordance with its
terms for the security of all bonds from time to time issued
under the Indenture have happened, been done and been performed,
and the issue of the bonds of the Fifteenth Series, hereinafter
referred to, has been in all respects duly authorized;
NOW, THEREFORE, IT IS HEREBY COVENANTED, DECLARED AND AGREED
by and between the parties hereto that all such bonds are to be
issued, authenticated, delivered and held, and that all property
subject or to become subject to the Indenture is to be held, sub-
ject to the further covenants, conditions, uses and trusts set
forth in the Original Indenture as heretofore supplemented, and
as supplemented by this Twenty-Third Supplemental Indenture, and
the Company, for itself and its successors, doth hereby covenant
and agree to and with the Trustee, for the benefit of those who
shall hold said bonds as follows:
ARTICLE 1.
CREATION OF BONDS OF THE FIFTEENTH SERIES.
Sec. 1.01. There is hereby created a new series of bonds to
be issued under the Original Indenture which shall be designated
First Mortgage Bonds 9.34% Series due 2019. The aggregate prin-
cipal amount of bonds of the Fifteenth Series shall be limited to
$15,000,000 except as provided in Section 2.11 of the Original
Indenture. All bonds of the Fifteenth Series shall mature
September 1, 2019, and, except as otherwise set forth below in
this Section 1.01, shall bear interest at the rate of 9.34% per
annum, payable semi-annually on the first day of March and first
day of September in each year, commencing March 1, 1990. The
principal of and interest on each such bond shall be payable at
the office or agency of the Company in the Borough of Manhattan,
The City of New York, and both principal and interest shall be
payable in any coin or currency of the United States of America
which at the time of payment shall be legal tender for the pay-
ment of public and private debts.
Notwithstanding anything to the contrary contained in the
Indenture or in the bonds of the Fifteenth Series, the interest
rate payable on the bonds of the Fifteenth Series shall, to the
extent permitted by applicable law, increase by 250 basis points
(the "Additional Interest") if, at any one or more times, the
Company fails to meet the Interest Coverage Test (as defined
below); provided, however, that the Interest Coverage Test shall
not go into effect or be applicable unless:
(i) the Company fails to comply with any Required Compli-
ance Item (as defined below); and
(ii) such non-compliance is not cured by the Company or
waived by either the Pennsylvania Department of Environmental
Resources (the "DER") or the Pennsylvania Public Utility Com-
mission (the "PPUC"), as the case may be, or successor
agencies, within the Cure Period (as defined below).
The preceding paragraph shall apply regardless of whether or
not the Company is contesting in good faith the facts and circum-
stances that resulted in such non-compliance. If the Interest
Coverage Test is in effect and the Company fails to meet such
test, the Additional Interest shall accrue from the first day of
the month in which the Interest Coverage Test was not met until
the earlier of (i) the Date of Cure (as defined below), or, if a
waiver is obtained as aforesaid, the date of such waiver and (ii)
the first day of the month in which the Interest Coverage Test as
met.
Each Required Compliance Item that the Company fails to comply
with shall have its own Cure Period. As used herein, "Cure
Period" means the period of 180 days following the first date of
non-compliance. However, (i) if the Company obtains an extension
of a compliance date with respect to a Required Compliance Item
from either the DER or the PPUC after a Cure Period has com-
menced, the Cure Period shall be tolled with respect to such
Required Compliance Item as of the date the extension is granted;
provided, however, that if the Company fails to meet the extended
compliance date, the new Cure Period shall be the 180 day period
commencing on the extended compliance date less the number of
days elapsed during the previous Cure Period with respect to such
Required Compliance Item before the extension was granted, and
(ii) if the Company obtains an extension of a compliance date
with respect to a Requircd Compliance Item from either the DER or
the PPUC prior to the commencement of a Cure Period which might
otherwise commence, the Cure Period shall be the 180 day period
commencing on the extended compliance date. Regardless of the
number of Required Compliance ltems that the Company fails to
comply with after the expiration of the respective Cure Periods,
if the Company fails to meet the Interest Coverage Test, the Ad-
ditional Interest shall in no event be more than 25O basis points
at any given time, and, provided that the Company pays the Addi-
tional Interest when due, the holders of the bonds of the Fif-
teenth Series shall have no other remedies with respect to the
Company's failure to comply with any Required Compliance Item.
Notwithstanding anything to the contrary contained in the bonds
of the Fifteenth Series or in the Indenture, if a holder of a
bond is entitled to receive the Addition Interest and the Company
fails to pay such Additional Interest when due, then such
holder's remedies with respect to the Company's failure to comply
with any Required Compliance Item shall in no way be restricted
or limited.
As used herein, "Interest Coverage Test' means that the Com-
pany's earnings before interest and taxes (determined in
accordance with generally accepted accounting principles) for the
immediately preceding twelve full months, calculated on a monthly
basis for each month that the Interest Coverage Test is in
effect, are at least equal to one and one-quarter (1 1/4) times
the annualized interest charges on all indebtedness of the Com-
pany which is outstanding at the end of such twelve month period
and which does not constitute a current liability, adjusted for
amortization of debt discount and expense, or of premium, as the
case may be.
As used herein, "Required Compliance Items" (singularly, a
"Required Compliance Item") shall mean (i) paragraphs 21, 22, 23,
24, 25 and 27 of that certain Consent Order and Agreement by and
between the Company and 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(l), b(2), b(3), c(1), 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 Xxxxxx X. Xxxxx, dated
June 7, 1988 (the "Terms of Settlement"), 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 Settle-
ment").
As used herein, "Date of Cure" shall mean the dat the Company
certifies to either the DER or the PPUC, as the case may be, that
non-compliance with any Required Compliance Item is cured; pro-
vided, however, that if the DER or the PPUC, as the case may be,
subsequently notifies the Company that such non-compliance with
the Required Compliance Item was not cured, then such certifica-
tion shall have no effect and a Date of Cure shall not be deemed
to have occurred as of such date, and each holder of a bond of
the Fifteenth Series shall promptly receive all Additional
Interest it would have received but for the Company's certifica-
tion that such non-compliance was cured.
So long as any bond of the Fifteenth Series is outstanding,
the Company shall give to the Trustee and to each holder of a
bond of the Fifteenth Series 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)
ail 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 paragraph
(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.
So long as any bond of the Fifteenth Series is outstanding, if
the Interest Coverage Test is in effect pursuant to the terms of
this Twenty-Third Supplemental Indenture, the Company shall sub-
mit to the Trustee and to each holder of a bond of the Fifteenth
Series within forty-five (45) days after the expiration of each
of the Company's first three fiscal quarters, and within ninety
(90) days after the expiration of each fiscal year, a statement
certified by the chief financial officer of the Company docu-
xxxxxxx whether the Company is in compliance with the Interest
Coverage Test, and such certification shall state that the infor-
mation contained in the statement is true and correct, except for
audit adjustments, if any.
So long as any bond of the Fifteenth Series is outstanding,
within twenty-five (25) days after the expiration of each calen-
dar month in which the Interest Coverage Test is in effect, the
Company shall determine whether it meets such test. So long as
any bond of the Fifteenth Series is outstanding, if at any time
the Company fails to meet the Interest Coverage Test when in
effect, the Company shall notify in writing the Trustee and each
holder of a bond of the Fifteenth Series within five (5) days
after the Company first becomes aware of such failure.
Notwithstanding anything to the contrary contained in the In-
denture or in the bonds of the Fifteenth Series, and in addition
to the Additional Interest, if then payable, if the Company fails
to make any principal or interest payment on the bonds of the
Fifteenth Series within three (3) days after such payment is due,
whether at stated maturity, by notice of redemption, by accelera-
tion or otherwise, the interest rate payable on the bonds of the
Fifteenth Series shall, to the extent permitted by applicable
law, increase by 100 basis points, such increase to commence on
the fourth day after such principal or interest payment is due
and to continue until such unpaid amount of principal or interest
has been paid in full.
All notices and other documents delivered to the Trustee pur-
suant to the terms hereof shall be deemed to be conclusive proof
of the accuracy of the statements made therein.
The bonds of the Fifteenth Series shall be dated the date of
their authentication and shall bear interest from the date of the
bond (except that if any such bond shall be authenticated after
the first interest payment date for bonds of the Fifteenth Series
it shall bear interest from the interest payment date next pre-
ceding the date of such bond, and except that if any bond of the
Fifteenth Series shall be authenticated prior to the first
interest payment date for bonds of the Fifteenth Series it shall
bear interest from September 1, 1989, and except that if any bond
of the Fifteenth Series is authenticated between a record date,
as defined below, and the interest payment date in respect
thereof it shall bear interest from such interest payment date).
So long as there is no existing default in the payment of
interest on the bonds of the Fifteenth Series, the person in
whose name any bond of the Fifteenth Series is registered at the
close of business on the record date with respect to any interest
payment date (the term "record date" as used with respect to an
interest payment date shall mean the fifteenth day of February or
the fifteenth day of August next preceding the interest payment
date whether or not such fifteenth day is a business day) shall
be entitled to receive the interest payable on such interest pay-
ment date notwithstanding any transfer or exchange of the bond of
the Fifteenth Series subsequent to the record date and on or
prior to the interest payment date, except if, and to the extent,
the Company shall default in the payment of the interest due on
such interest payment date, the defaulted interest shall be paid
to the person in whose name the bond of the Fifteenth Series is
registered five (5) days before the date of payment of the
defaulted interest.
The bonds of the Fifteenth Series shall be redeemable at any
time, upon not less than thirty (30) nor more than sixty (60)
days' prior notice, in whole or in part, either at the option of
the Company, or pursuant to the requirements of the Indenture,
upon the terms and conditions hereinafter specified in Section
1.02 hereof.
Bonds of the Fifteenth Series shall be issued as fully regis-
tered bonds without coupons, in denominations of $1,000 and
multiples thereof from time to time authorized by the Board of
Directors.
Bonds of the Fifteenth Series shall be registrable and inter-
changeable at the office or agency of the Company in the Borough
of Manhattan, The City of New York, in the manner and upon the
terms set forth in Section 2.05 of the Original Indenture, upon
payment of charges as required or permitted by the provisions of
Section 2.08 of the Original Indenture as amended.
Sec. 1.02. (1) The bonds of the Fifteenth Series shall be
redeemable, in whole or in part, at any time and from time to
time, pursuant to the provisions of Section 8.13 of the Inden-
ture, at the special redemption price provided for on the form of
bond of the Fifteenth Series included herein, together with
interest accrued to the date fixed for redemption.
(2) The bonds of the Fifteenth Series shall also be redeem-
able, in whole or in part, at any time and from time to time, at
the option of the Company, or pursuant to any provisions of the
Indenture other than Section 8.13 of the Indenture, at the
applicable redemption price provided for on the form of bond of
the Fifteenth Series included herein, together with interest
accrued to the date fixed for redemption.
Any redemption of bonds of the Fifteenth Series shall be
effected in accordance with the provisions of Sections 5.02 to
5.05, both inclusive, of the Original Indenture.
Sec. 1.03. The holder of each and every bond of the Fifteenth
Series hereby agrees to accept payment thereof prior to maturity
on the terms and conditions in Section 1.02 hereof and in Section
8.13 of the Indenture.
ARTICLE 2.
NO SINKING FUND FOR BONDS OF THE FIFTEENTH SERIES.
Bonds of the Fifteenth Series will not be entitled to the
benefit of a Sinking Fund.
ARTICLE 3.
ISSUANCE OF BONDS OF THE FIFTEENTH SERIES.
Bonds of the Fifteenth Series may be executed, authenticated
and delivered from time to time as provided or permitted by the
provisions of Article 3 of the Original Indenture and the provi-
sions of this Twenty-Third Supplemental Indenture.
ARTICLE 4.
MISCELLANEOUS.
Sec. 4.01. Sections 4.10, 4.11 and 8.13 of the Original
Indenture, as amended by Section 4.01 of Article 4 of the Fourth,
Ninth, Tenth, Twelfth, Fourteenth, Fifteenth, Sixteenth, Seven-
teenth, Eighteenth, Nineteenth, Twentieth and Twenty-First
Supplemental Indentures, are hereby further amended by this
Twenty-Third Supplemental Indenture and, contemporaneously here-
with, by the Twenty-Second Supplemental Indenture, by inserting
in each such section the words "or bonds of the 9.23% Series due
1999 or bonds of the 9.34% Series due 2019," immediately after
the words "bonds of the 2 7/8% Series due 1976 or bonds of the
3 1/2% Series due 1982 or bonds of the 4 7/8% Series due 1987 or
bonds of the 4 3/4% Series due 1983 or bonds of the 5 1/2% Series
due 1985 or bonds of the 5% Series due 1986 or bonds of the
4 5/8% Series due 1968 or bonds of the 5 7/8% Series due 1991 or
bonds of the 6 7/8% Series due 1992 or bonds of the 10% Series
due 1995 or bonds of the 8% Series due 1997 or bonds of the
9 !/4% Series due 1996 or bonds of the 9% Series due 1991 or
bonds of the 9.23% Series due 1999" each time such last mentioned
words occur therein.
Sec. 4.02. The Trustee accepts the trusts hereby declared and
provided and agrees to perform the same upon the terms and condi-
tions in the Original Indenture and in this Twenty-Third Supple-
mental Indenture set forth. The Trustee shall not be responsible
in any manner whatsoever for or in respect of the validity or
sufficiency of this Twenty-Third Supplemental Indenture or the
due execution hereof by the Company, or for or in respect of the
recitals contained herein, all of which recitals are made by the
Company solely.
The Original Indenture as heretofore supplemented by twenty-
one supplemental indentures and as supplemented by the Twenty-
Second Supplemental Indenture and this Twenty-Third Supplemental
Indenture is in all respects ratified and confirmed, and the
Original Indenture, together with the twenty-three indentures
supplemental thereto, shall be read, taken and construed as one
and the same indenture.
Sec. 4.03. This Twenty-Third Supplemental Indenture may be
executed in any number of counterparts, and all said counterparts
executed and delivered, each as an original, shall constitute but
one and the same instrument.
Pennsylvania Gas and Water Company does hereby constitute and
appoint Xxxxxx X. Xxxx to be its attorney for it, and in its name
and as and for its corporate act and deed to acknowledge this
Twenty-Third Supplemental Indenture before any person having
authority by the laws of the Commonwealth of Pennsylvania to take
such acknowledgment, to the intent that the same may be duly
recorded, and Xxxxxx Guaranty Trust Company of New York does
hereby constitute and appoint Xxxxxxxxx X. Xxxxxxx to be its
attorney for it, and in its name and as and for its corporate act
and deed to acknowledge this Twenty-Third Supplemental Indenture
before any person having authority by the laws of the State of
New York to take such acknowledgment, to the intent that the same
may be duly recorded.
In WITNESS WHEREOF, said Pennsylvania Gas and Water Company
and said Xxxxxx Guaranty Trust Company of New York have caused
this Twenty-Third Supplemental Indenture to be signed in their
respective corporate names, and their respective corporate seals
to be hereunto affixed and attested by their respective officers
thereunto duly authorized, all as of the day and year first above
written.
PENNSYLVANIA GAS AND WATER COMPANY
By: XXXX X. XXXX, XX.
-----------------------
Name: Xxxx X. Xxxx, Xx.
Title: Vice President and Controller
[CORPORATE SEAL]
Attest: XXXXXX X. XXXX
----------------------
Secretary
XXXXXX GUARANTY TRUST COMPANY OF
NEW YORK, as Trustee
By: X. XXXXXXX
---------------------
Name: X. Xxxxxxx
Title: Vice-President
[CORPORATE SEAL]
Attest: XXXXXXXXX X. XXXXXXX
--------------------------
Assistant Secretary
COMMONWEALTH OF PENNSYLVANIA
COUNTY OF LUZERNE
ss:
BE IT REMEMBERED that on the 25th day of August, A.D., 1989,
before me, XxXxxx XxXxxx, a Notary Public in and for said County
and said Commonwealth, commissioned for and residing in the
County of Luzerne, personally came Xxxxxx X. Xxxx, who, being
duly sworn according to law, doth depose and say that he was per-
sonally present and did see the common or corporate seal of the
above-name PENNSYLVANIA GAS AND WATER COMPANY affixed to the
foregoing Supplemental Indenture; that the seal so affixed is the
common or corporate seal of said PENNSYLVANIA GAS AND WATER COM-
PANY and was so affixed by authority of said corporation as the
act and deed thereof; that the above-named Xxxx X. Xxxx, Xx. is
the Vice President and Controller of said corporation and did
sign the said Supplemental Indenture as such in the presence of
this deponent; that this deponent is the Secretary of the said
corporation and that the name of this deponent, above signed in
attestation of the due execution of the said Supplemental Inden-
ture, is in this deponent's own proper handwriting.
XXXXXX X. XXXX
---------------------
Xxxxxx X. Xxxx
Sworn and subscribed before me
the day and year aforesaid. [NOTARIAL SEAL]
XXXXXX XXXXXX
---------------------
Notary Public
COMMONWEALTH OF PENNSYLVANIA
COUNTY OF LUZERNE
ss:
I HEREBY CERTIFY that on this 25th day of August, A.D., 1989,
before me, XxXxxx XxXxxx, a Notary Public in and for said County
and said Commonwealth, commissioned for and residing in the
County of Luzerne, personally appeared Xxxxxx X. Xxxx, the
attorney named in the foregoing Supplemental Indenture, and he,
by virtue and in pursuance of the authority therein conferred
upon him, acknowledged said Supplemental Indenture to be the act
and deed of the said PENNSYLVANIA GAS AND WATER COMPANY.
Witness my hand and notarial seal the day and year aforesaid.
XXXXXX XXXXXX
-------------------
Notary Public
[NOTARIAL SEAL]
STATE OF NEW YORK
COUNTY OF NEW YORK
ss:
BE IT REMEMBERED that on the 25th day of August, A.D., 1989,
before me, Xxxxxx X. Xxxxxxxx, a Notary Public in and for said
County and State, commissioned for and residing in the County of
New York, personally came Xxxxxxxxx X. Xxxxxxx, who, being duly
sworn according to law, doth depose and say that she was per-
sonally present and did see the common or corporate seal of the
above-named XXXXXX XXXXXXXX TRUST COMPANY OF NEW YORK affixed to
the foregoing Supplemental Indenture; that the seal so affixed is
the common or corporate seal of said MORGAN GUARANTY TRUST COM-
PANY OF NEW YORK and was so affixed by authority of said corpora-
tion as the act and deed thereof; that the above-named X. Xxxxxxx
is a Vice President of said corporation and did sign the said
Supplemental Indenture as such in the presence of this deponent;
that this deponent is an Assistant Secretary of said corporation
and that the name of this deponent, above signed in attestation
of the due execution of the said Supplemental Indenture, is in
this deponent's own proper handwriting.
XXXXXXXXX X. XXXXXXX
----------------------------
Xxxxxxxxx X. Xxxxxxx
Sworn and subscribed before me
the day and year aforesaid. [NOTARIAL SEAL]
XXXXXX X. XXXXXXXX
----------------------------
Notary Public
STATE OF NEW YORK
COUNTY OF NEW YORK
ss.:
I HEREBY CERTIFY that on this 25th day of August, A.D., 1989,
before me, Xxxxxx X. Xxxxxxxx, a Notary Public in and for said
County and State, commissioned for and residing in the County of
New York, personally appeared Xxxxxxxxx X. Xxxxxxx, the attorney
named in the foregoing Supplemental Indenture, and she, by virtue
and in pursuance of the authority therein conferred upon her,
acknowledged said Supplemental Indenture to be the act and deed
of the said XXXXXX GUARANTY TRUST COMPANY OF NEW YORK.
Witness my hand and notarial seal the day and year aforesaid.
XXXXXX X. XXXXXXXX
------------------------
Notary Public
[NOTARIAL SEAL]
XXXXXX GUARANTY TRUST COMPANY OF NEW YORK hereby certifies
that its precise name and address as Trustee hereunder are:
XXXXXX XXXXXXXX TRUST COMPANY OF NEW YORK, Xx. 00 Xxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000.
By: XXXXX XXXX
----------------
Name: Xxxxx Xxxx
Title: Trust Officer
EXHIBIT C
1. Recent decreases in the pre tax interest and fixed charge
coverages of the Company, caused by lower earnings and increased
interest costs, may continue, which, if such decreases were to
continue, may result in such coverages falling within the next 12
to 18 months to levels at which the Company would generally be
precluded by covenants in its Restated Articles of Incorporation,
as amended, and various of its debt instruments from issuing any
additional shares of preferred stock or debt maturing more than
one year after issuance .
2. The Company has failed to maintain as of June 30, 1989,
the 1.50 times fixed charge coverage required under the terms of
Paragraph 5Q(1) of the Letter of Credit Agreement dated as of
January 1, 1989 between the Company and National Australia Bank,
a failure which will not constitute a default under the terms of
such agreement unless such failure is not cured by November 11,
1989.
3. The Pennsylvania Public Utility Commission ("PPUC") denied
in 1986 and again in 1988 the requests by the Company to increase
its rates for water service. However, a water rate increase was
granted on July 20, 1989 for residential and commercial customers
receiving filtered water.
4. The PPUC has to date refused to allow any increase in the
rates for water service provided by the Company to residential
and commercial customers not receiving filtered water.
5. Expenditures planned by the Company for additions and
improvements to its water utility system during the next several
years will necessitate substantial external financing.
6. The PPUC has issued a policy statement that indicates that
there should be a sharing between customers and shareholders of
the take or pay liabilities of local gas distribution companies
such as the Company, which could result in a significant write-
off by the Company.
7. By Consent Order and Agreement dated December 20, 1988
(the "Agreement") the Company and the Pennsylvania Department of
Environmental Resources ("DER") reached an agreement to resolve
various DER orders and appeals related thereto. The terms and
conditions of the Agreement which were approved by the Pennsyl-
vania Environmental Hearing Board require the Company to complete
four filtration plants in the Scranton Rate Area by December 31,
1989 and to submit a schedule by September 20, 1989 providing for
the filtration of all water supplies serving the Spring Brook
Rate Area by December 31, 1992. The Agreement provides for
penalties of $1,000 per day for each day these requirements are
not met and provides for penalties of $1,000 per day for each day
certain other requirements are not met. In addition, failure to
satisfy the foregoing requirements could result in various civil
penalties being assessed against the Company and further delays
in obtaining approval of the PPUC to increase water rates charged
to customers. Although the Company believes that it is reason-
ably possible that the Chinchilla Treatment Plant may be in
operation by December 31, 1989 as provided for in the Agreement,
it is probable that the completion of the other Scranton Rate
Area filtration plants will be delayed until the first or second
quarter of 1990 depending upon weather and availability of labor
and materials. It is the Company's position that the force
-----
majeure provisions of the Agreement and the liquidated damage
-------
provisions of the contracts with respect to construction of the
treatment plants will provide the Company with certain protection
against the penalties provided for in the Agreement. The Company
is not able at this time to determine what factors may impact its
ability to complete the treatment plants in the Spring Brook Rate
Area by the end of 1992.
8. Under the Pennsylvania Safe Drinking Water Act and the
Federal Safe Drinking Water Act and amendments thereto, certain
water quality standards and regulations have been promulgated.
Pursuant to these laws, certain maximum contaminant levels
(MCL's) have been established and certain public notification re-
quirements were revised. The Company periodically exceeds these
MCL's and among other requirements must issue notices concerning
lead and turbidity levels which exceed the MCL. To date, no
fines or penalties have been assessed against the Company as a
result of such violations. The Company believes, however, that
the construction of the filtration facilities and the removal of
all Company owned lines containing lead will negate these
problems.
EXHIBIT D
[FORM OF OPINION OF SONNENSCHEIN
XXXXXX XXXX AND XXXXXXXXX]
September , 1989
--
Allstate Life Insurance Company
Allstate Plaza West; J 2A
Northbrook, Illinois 60062
Allstate Life Insurance Company of New York
Allstate Plaza West; J-2A
Northbrook, Illinois 60062
RE: Pennsylvania Gas and Water Company First
Mortgage Bonds, 9.23% Series due 1999 and
9.34% Series due 2019
-----------------------------------------
Ladies and Gentlemen:
We have acted as your special counsel in connection with the
transactions contemplated by the Bond Purchase Agreement dated
September , 1989 (the "Agreement"), between both of you and
--
Pennsylvania Gas and Water Company (the "Company"). Capitalized
terms used herein and not expressly defined herein are used as
defined in the Agreement.
We have examined and are familiar with such documents, corporate
records, certificates of officers of the Company and public
officials and other matters of fact and law as we have deemed
relevant or necessary as a basis of our opinion set forth herein.
In giving this opinion, we have assumed the legal capacity of all
natural persons, the genuineness of all signatures, the authen-
ticity of all documents submitted to us, and the conformity to
original documents of all documents submitted to us as copies.
Based upon the foregoing and assuming the accuracy on the data
hereof and relying upon the representations set forth in Sections
(4)a and 5(a) of the Agreement, it is our opinion that the
issuance, sale and delivery of the Bonds under the circumstances
contemplated by the Agreement dose not require
PAGE>
Allstate Life Insurance Company
Allstate Life Insurance Company
of New York
September , 1989
--
Page 2
DRAFT
the registration of the Bonds under the Securities Act of 1933
as amended or the qualification of an indenture with respect to
the Bonds under the Trust Indenture Act of 1939, as amended.
We have reviewed the opinion letter of Xxxxxx & Xxxxxx, counsel
for the Company, and the opinion letter of Xxxxxx Xxxxxxx and
Xxxx, special counsel for the Company, both dated the date
hereof, and believe that such opinion letters are satisfactory in
form and substance and that you are justified in relying thereon.
This opinion is furnished solely for your benefit and may not be
relied upon by any person other than you.
Very truly yours,
EXHIBIT E
[HH&R Letterhead]
September 1. 1989
Allstate Life Insurance Company
Allstate Plaza West J 0X
Xxxxxxxxxx, Xxxxxxxx 00000
Allstate Life Insurance Company
of New York
Allstate Plaza West J 2A
Northbrook, Illinois 60062
Re: Pennsylvania Gas and Water Company -- First
Mortgage Bonds 9.23% Series due 1999 and
First Mortgage Bonds 9.34% Series due 2019
------------------------------------------
Dear Sirs:
We have acted as special counsel to Pennsylvania Gas and Water
Company, a Pennsylvania corporation (the "Company"), in connec-
tion with the Company's issuance and sale to you, pursuant to the
Bond Purchase Agreement dated September 1, 1989 between the Com-
pany and you (the "Bond Purchase Agreement"), of (i) $10,000,000
principal amount of the Company's First Mortgage Bonds 9.23%
Series due 1999 and (ii) $15,000,000 principal amount of the Com-
pany's First Mortgage Bonds 9.34% Series due 2019 (the First
Mortgage Bonds 9.23% Series due 1999 and the First Mortgage Bonds
9.34% Series due 2019 are collectively referred to herein as the
"Bonds"). This opinion is delivered to you pursuant to Section
8(b) of the Bond Purchase Agreement. All capitalized terms used
herein and not otherwise defined herein have the respective
meanings ascribed to them in the Bond Purchase Agreement.
In this connection and as a basis for the opinion set forth
below, we have examined and relied upon originals or copies of
such corporate records, certificates and other documents,
including certificates of public officials and officers of the
Company and the documents referred to in paragraph 4 below, and
made such examination of law, as we have considered necessary or
appropriate for purposes of giving the opinion set forth below.
In all such examinations, we have assumed the genuineness of all
signatures on original and certified documents, the authenticity
of all documents submitted to us as original documents and the
conformity to original or certified documents of all documents
submitted to us as copies. Insofar as this opinion relates to
factual matters, we have made such inquiry of officers and
representatives of the Company with respect to such matters as we
have considered necessary or appropriate and have relied upon
representations by such persons with respect thereto and on the
representations of the Company set forth in the Bond Purchase
Agreement.
Based upon and subject to the foregoing, we are of the opinion
that:
1. Assuming the accuracy on the date hereof of, and relying
upon, the representations of the Company set forth in Section
4(m) of the Bond Purchase Agreement and your representations set
forth in Section 5(a) of the Bond Purchase Agreement, (i) the
sale and delivery of the Bonds to you pursuant to the Bond Pur-
chase Agreement are exempt from registration under the Securities
Act of 1933, as amended, and (ii) it is not necessary in connec-
tion with the sale and delivery of the Bonds to you pursuant to
the Bond Purchase Agreement to qualify the Mortgage Indenture
under the Trust Indenture Act of 1939, as amended.
2. Assuming the accuracy on the date hereof of, and relying
upon, the representations of the Company set forth in Sections
4(h)(a) and 4(h)(b) of the Bond Purchase Agreement, the Company
is exempt from the provisions of the Public Utility Holding Com-
pany Act of 1935, as amended, except the provisions of Section
9(a)(2) thereof.
3. Assuming the due authorization, execution, authentication
and delivery of the Bonds and the due authorization, execution
and delivery of the Mortgage Indenture and if New York substan-
tive law is the law applicable to the determination of whether
the Bonds and the Mortgage Indenture are the legal, valid and
binding obligations of the Company and whether the Bonds are
entitled to the benefits and security afforded by the Mortgage
Indenture, then, under New York law, (i) the Bonds are the legal,
valid and binding obligations of the Company, enforceable in
accordance with their 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, (ii) the Bonds are
entitled to the benefits and security afforded by the Mortgage
Indenture and are secured equally and ratably (except as to any
sinking, amortization or other similar fund established for the
bonds of any particular series) with all other bonds outstanding
under the Mortgage Indenture on the date hereof and (iii) the
Mortgage Indenture is a legal, valid and binding obligation of
the Company, enforceable 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.
4. The execution and delivery by the Company of the Bond Pur-
chase Agreement and the certificates delivered to you at the
Closing representing the Bonds and compliance by the Company with
the terms and provisions of the Bond Purchase Agreement, did not
and do not conflict with, or result in a breach of or constitute
a default under, or, except for the liens created by the Mortgage
Indenture and by the Mortgage by and between the Administrator of
the Small Business Administration and the Company dated
January 17, 1974, respectively, result in the creation or imposi-
tion of any lien, charge or encumbrance upon, or security
interest in, any of the properties or assets of the Company
pursuant to the terms of the Mortgage Indenture, the Letter of
Credit Agreement dated as of October 1, 1987 between the Company
and Swiss Bank Corporation, New York Branch (the "1987 Series A
Letter of Credit Agreement"), the Letter of Credit Agreement
dated as of December 1, 1987 between the Company and Swiss Bank
Corporation, New York Branch (the "1987 Series B Letter of Credit
Agreement"), the Preferred Stock Purchase Agreement dated as of
December 6, 1988 between the Company and Westinghouse Credit
Corporation (the "Preferred Stock Purchase Agreement") and the
Letter of Credit Agreement dated as of January 1, 1989 between
the Company and National Australia Bank Limited, New York Branch
(the "1989 Series A Letter of Credit Agreement").
5. There are no limitations with respect specifically to the
payment of interest or premium on, or the principal of, the Bonds
contained in the 1987 Series A Letter of Credit Agreement, the
1987 Series B Letter of Credit Agreement, the Preferred Stock
Purchase Agreement or the 1989 Series A Letter of Credit Agree-
ment.
6. Except for the fees related to the Company's application
to the CUSIP Service Bureau of Standard and Poor's Corporation
for private placement numbers to be assigned to the Bonds, all
governmental fees and other charges required to be paid prior to
or on the date hereof by the Company to the Commission or under
the laws of the State of New York in connection with the execu-
tion and delivery of the Bond Purchase Agreement and the issuance
sale and delivery of the certificates pursuant thereto have been
paid.
Very truly yours,
EXHIBIT F
[HH&R Letterhead]
September 1, 1989
Allstate Life Insurance Company
Allstate Plaza West J 0X
Xxxxxxxxxx, Xxxxxxxx 00000
Allstate Life Insurance Company
of New York
Allstate Plaza West J 2A
Northbrook, Illinois 60062
Re: Pennsylvania Gas and Water Company
First Mortgage Bonds 9.23% Series due 1999 and
First Mortgage Bonds 9.34% Series due 2019
----------------------------------------------
Dear Sirs:
In connection with the Bond Purchase Agreement dated
September 1, 1989 between Pennsylvania Gas and Water Company, a
Pennsylvania corporation (the "Company"), and you (the "Bond Pur-
chase Agreement"), we set forth below certain information
relating to the registration requirements of the securities or
Blue Sky laws of certain states of the United States with respect
to the issuance and sale to you of the Company's First Mortgage
Bonds 9.23% Series due 1999 and First Mortgage Bonds 9.34% Series
due 2019 (the "Bonds").
We have prepared this letter for your information on the basis
of an examination of the securities or Blue Sky laws of the
States of Pennsylvania, New York and Illinois, and the published
rules and regulations, if any, of the authorities administering
such laws, as reported in a standard compilation. Special
rulings of the securities commissions or other administrative
bodies or officials charged with the administration of the
respective securities or Blue Sky laws have not been obtained.
As members of the Bar of the State of New York, we do not purport
to be experts in the law of any other jurisdiction. We have not
consulted with or obtained opinions from local counsel in any
jurisdiction, except that, with respect to the securities, or
Blue Sky laws of the Commonwealth of Pennsylvania, we have relied
upon the opinion of Xxxxxx & Xxxxxx dated the date hereof and
addressed to us, a copy of which is attached hereto as Annex A.
Statements made herein are subject to the existence of broad
discretionary powers of the administrative bodies or officials
having jurisdiction, authorizing them, among other things, to
withdraw the exceptions accorded by statute or regulation, to
impose additional requirements, to issue stop orders, to require
additional information and to revoke or suspend permits where
such have been granted.
Accordingly, the information furnished herein must be regarded
as a practical guide for your general information, rather than an
opinion from us with regard to the laws of the jurisdictions
concerned.
Based upon and subject to the foregoing, assuming the accuracy
of, and in reliance upon, the representations of the Company set
forth in paragraph 4(m) of the Bond Purchase Agreement and the
representations of each of you set forth in paragraph 5(a) of the
Bond Purchase Agreement, and relying upon information provided to
us by the Company with respect to certain factual matters, the
sale and delivery of the Bonds pursuant to the Bond Purchase
Agreement are exempt as of the date hereof from the registration
requirements of the securities or Blue Sky laws of the States of
Pennsylvania, New York and Illinois.
Very truly yours,
ANNEX A
Xxxxxx & Xxxxxx
Attorneys and Counsellors at Law
000 Xxxxxx Xxxxxx
P. 0. Box 999
Harrisburg, PA. 17106
(000) 000-0000 FAX: (000) 000-0000
September 1, 1989
Xxxxxx Xxxxxxx & Xxxx
Xxx Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Re: Pennsylvania Gas and Water Company
Issuance of First Mortgage Bonds
----------------------------------
Dear Sirs:
We are rendering this opinion to you for your use in rendering
a blue sky memorandum in connection with the issuance and sale by
Pennsylvania Gas and Water Company of $10,000,000 principal
amount of First Mortgage Bonds 9.23% Series due 1999 and
$15,000,000 principal amount of First Mortgage Bonds 9.34% Series
due 2019 ("The Bonds"). You are authorized to rely on this
letter in rendering your memorandum.
In our opinion the Bonds constitutes an exempt security within
the meaning of the Pennsylvania Securities Act of 1972, 70 P.S.
1-202 (the "Act") and as such are exempt from the registration
requirements of the Act. Subsection (b) of Section 202 of the
Act exempts a security the issuance of which is registered under
the Public Utility Law (now Public Utility Code). The Bonds were
registered with the Public Utility Commission pursuant to the
Public Utility Code on August 3, 1989 at Securities Certificate
No. S-890952 and on August 31, 1989 at Securities Certificate No.
S-890963.
Very truly yours,
XXXXXX & XXXXXX
(THIS PACE INTENTIONALLY LEFT BLANK)
EXHIBIT G
Xxxxxx & Xxxxxx
Attorneys and Counsellors at Law
000 Xxxxxx Xxxxxx
P. 0. Box 999
Harrisburg, PA. 17106
(000) 000-0000 FAX: (000) 000-0000
September 1, 1989
Allstate Life Insurance Company
Allstate Plaza West; J-2A
Northbrook, Illinois 60062
Allstate Life Insurance Company
of New York
Allstate Plaza West; J-2A
Northbrook, Illinois 60062
Re: Pennsylvania Gas and Water Company -- First
Mortgage Bonds 9.23% Series due 1999 and
First Mortgage Bonds 9.34% Series due 2019
-------------------------------------------
Dear Sirs:
We have acted as counsel to Pennsylvania Gas and Water Com-
pany, a Pennsylvania corporation (the "Company"), in connection
with the Company's issuance and sale to you, pursuant to the Bond
Purchase Agreement dated as of September 1, 1989 between the
Company and you (the "Bond Purchase Agreement"), of (i)
$10,000,000 principal amount of the Company's First Mortgage
Bonds 9.23% Series due 1999 and (ii) $15,000,000 principal amount
of the Company's First Mortgage Bonds 9.34% Series due 2019 (the
First Mortgage Bonds 9.23% Series due 1999 and the First Mortgage
Bonds 9.34% Series due 2019 are collectively referred to herein
as the "Bonds"). This opinion is delivered to you pursuant to
Section 8(c) of the Bond Purchase Agreement. All capitalized
terms used herein and not otherwise defined herein have the
respective meanings ascribed to them in the Bond Purchase Agree-
ment.
We have examined and are familiar with the proceedings rela-
tive to the organization and present corporate status of the Com-
pany and the Company's properties and franchises, and as a basis
for the opinion set forth below, we have examined and relied upon
originals or copies of such corporate records, certificates and
other documents including certificates of public officials and
officers of the Company, and made such examination
Allstate Life Insurance Company
Allstate Life Insurance Company
of New York
September 1, 1989
Page 2
of law, as we have deemed necessary or appropriate for purposes
of giving the opinion set forth below. In all such examinations,
we have assumed the genuineness of all signatures on original and
certified documents, the authenticity of all documents submitted
to us as originals and the conformity to original or certified
documents of all documents submitted to us as copies. Insofar as
this opinion relates to factual matters, we have made such
inquiry of officers and representatives of the Company with
respect to such matters as we have considered necessary or
appropriate and have relied upon representations by such persons
with respect thereto and on the representations of the Company
set forth in the Bond Purchase Agreement.
We have acted as counsel for the Company in connection with
the proceedings before the Pennsylvania Public Utility Commission
("PPUC") which resulted in the granting by it of an Order dated
August 3, 1989 and an Order dated August 31, 1989 registering the
Applications relating to the Bonds.
Based on the foregoing, we are of the following opinion:
1. The Bond Purchase Agreement has been duly authorized,
executed and delivered by the Company, and is a legal, valid and
binding obligation of the Company, enforceable against the Com-
pany 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.
2. The execution, delivery and consummation of the transac-
tions contemplated in the Bond Purchase Agreement and the ful-
fillment of the terms thereof 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 Incorporation, as
amended, or By-Laws, or any mortgage, and to our knowledge, after
due inquiry, will not result in the violation of any 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, or result in
the creation or imposition of any lien, charge, security interest
or encumbrance of any nature whatsoever upon any of the
properties or assets of the Company other than that resulting
from the Mortgage Indenture itself, except that we express no
opinion in respect to the Mortgage Indenture, the Note Purchase
Agreements dated July 11, 1972 between the Company and the pur-
chasers of the Company's 8% Notes due June 1, 1997, the
Allstate Life Insurance Company
Allstate Life Insurance Company
of New York
September 1, 1989
Page 3
Reimbursement Agreement dated as of March 1, 1982 between the
Company and Manufacturers Hanover Trust Company, 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, the Preferred Stock Pur-
chase Agreement dated as of December 6, 1988 between the Company
and Westinghouse Credit Corporation and the Letter of Credit
Agreement dated as of January 1, 1989 between the Company and
National Australia Bank Limited, New York Branch.
3. The Mortgage Indenture has been duly authorized, executed
and delivered by the Company, and is a legal, valid and binding
obligation of the Company, enforceable against the Company in
accordance with its terms, subject as to enforceability to bank-
ruptcy, 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.
4. The Bonds have been duly authorized by the Company and are
in due and proper form and have been duly issued in accordance
with the terms of the Indenture, and have been duly executed and
delivered by the authorized officers of the Company and duly
authenticated by the Trustee, and are the legal, valid and
binding obligations of the Company, enforceable in accordance
with their terms, subject as to enforceability to bankruptcy,
insolvency, moratorium, and other similar laws affecting the
rights or creditors generally and to general principles of equity
and the availability of equitable remedies being within the dis-
cretion of the courts, and the Bonds are entitled to the benefits
and security afforded by the Mortgage Indenture, and are secured
equally and ratably (except as to any sinking, amortization or
other similar fund established for the bonds of any particular
series) with all other bonds outstanding under the Mortgage
Indenture on the date hereof.
5. The Applications relating to the Bonds have been regis-
tered by the Pennsylvania Public Utility Commission (the "PPUC")
as evidenced by the Orders of the PPUC, and no further approval,
authorization, consent or other order of any governmental or
public regulatory body of the Commonwealth of Pennsylvania 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 Supplemental Indenture and the Twenty-Third Supplemental
Indenture.
Allstate Life Insurance Company
Allstate Life Insurance Company
of New York
September 1, 1989
Page 4
6. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the Commonwealth
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 the Bond Purchase Agreement, the Twenty Second Supplemental
Indenture and the Twenty-Third Supplemental Indenture, to issue
and sell the Bonds to you and to carry out the respective terms
of the Bond Purchase Agreement, the Mortgage Indenture and the
Bonds.
7. The Company has good, valid and marketable title to the
properties specifically or generally described in the Mortgage
Indenture as subject to the lien thereof (except such property as
may have been disposed of or released from the lien thereof in
accordance with the terms thereof or parcels recently sold for
which a release has not yet been obtained but which are not
material as listed on Exhibit A), subject only to (a) permitted
encumbrances as defined in the Mortgage Indenture, (b) other
liens permitted under the Mortgage Indenture and (c) minor de-
fects and encumbrances customarily found in the case of
properties of like size and character and defects in rights of-
way and easements existing at the time of acquisition thereof by
the Company none of which impair the use of such properties by
the Company (the items described in the foregoing clauses (a),
(b) and (c) being collectively called "Permitted Title Excep-
tions") and, based upon information furnished to us by officers
of the Company as to property owned by it, the Mortgage Indenture
contains a correct, specific and legally sufficient description
of all real property owned by the Company and intended to be
subject to the lien of the Mortgage Indenture.
8. The Mortgage Indenture has been recorded or filed for
record in such manner and in such places as are required to
establish, perfect and protect the lien of the Mortgage Indenture
in favor of the Trustee for the benefit of the holders of bonds
outstanding under the Mortgage Indenture, including, without
limitation the Bonds, on all property of the Company not specifi-
cally excepted from the lien thereof and under present laws it
will not be necessary to re record and/or refile the Mortgage
Indenture anywhere where it has been recorded or filed for
record. The Mortgage Indenture constitutes a legal, valid and
forceable first mortgage lien of record in favor of the
Allstate Life Insurance Company
Allstate Life Insurance Company
of New York
September 1, 1989
Page 5
Trustee for the benefit of the holders of bonds outstanding under
the Mortgage Indenture, including, without limitation, the Bonds,
on the properties specifically or generally described therein as
subject to the lien thereof, except such property as may have
been disposed of or released from the lien thereof in accordance
with the terms thereof, or parcels recently sold for which a
release has not yet been obtained but which are not material as
listed on Exhibit A, subject only to Permitted Title Exceptions.
The Mortgage Indenture effectively subjects to the lien thereof
all property (except property of the kinds specifically excepted
or released from the lien of the Mortgage Indenture) acquired by
the Company after March 14, 1946, subject only to Permitted Title
Exceptions and also subject to the provisions of Article 12 of
the Mortgage Indenture. The lien of the Mortgage Indenture,
however, as to real property acquired by the Company after
March 14, 1946 will be an equitable lien rather than a legal lien
in the absence of proper recordation of supplemental indentures
specifically conveying such property.
9. The Mortgage Indenture creates a legal, valid and enforce-
able first lien and/or perfected first security interest, in
favor of the Trustee for the benefit of the holders of bonds
outstanding under the Mortgage Indenture, including, without
limitation, the Bonds, subject to Permitted Title Exceptions in
all personal property specifically or generally described or
referred to in the Mortgage Indenture as subject to the lien
thereof, and has been recorded or filed in each place in the
Commonwealth of Pennsylvania in which such recording or filing is
required to create the first mortgage lien or to perfect and
preserve the first security interest intended by the Mortgage
Indenture.
10. No vote, approval, consent or other authorization of
stockholders of the Company is required in connection with the
execution, authentication, issuance or delivery of the Bonds.
11. The Company holds certificates of public convenience or
"grandfather rights" under the Pennsylvania Public Utility Code
and predecessor statutes, which we believe are adequate to
authorize the Company to carry on its business, in substantially
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.
12. Except as expressly set forth in the SEC Reports or in
Exhibit C to the Bond Purchase Agreement, to our knowledge, after
due inquiry, (i) there are no actions, suits or proceedings
Allstate Life Insurance Company
Allstate Life Insurance Company
of New York
September 1, 1989
Page 6
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,
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 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 depart-
ment, commission, board, bureau, agency or instrumentality,
domestic or foreign.
13. Except as expressly set forth in the SEC Reports or in
Exhibit C to the Bond Purchase Agreement, to our knowledge, after
due inquiry, the Company is not a party to, or bound by, any
contract, agreement or instrument, nor subject to any corporate
restriction or any judgment, order, writ, injunction, decree,
rule or regulation, which materially adversely affects the busi-
ness, results of operations or properties of the Company. Except
as expressly set forth in the SEC Reports or in Exhibit C to the
Bond Purchase Agreement, to our knowledge, after due inquiry, (a)
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 depart-
ment, commission, board, bureau, agency or instrumentality,
domestic or foreign, and (b) the Company is not in default under
any of its contracts or agreements 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 financial condition of the Company.
14. All of the existing subsidiaries of the Company are duly
organized and existing and in good standing under the laws of the
Commonwealth of Pennsylvania and have corporate power to carry on
their respective businesses as they are now being conducted,
except that the Articles of Incorporation of Hillcrest Water Co.,
a subsidiary of the Company, have expired and re-incorporation or
transfer of assets to the Company or a subsidiary thereof by an
appropriate procedure will be required.
15. All Pennsylvania taxes and filing fees payable in connec-
tion with the execution, delivery or recordation of the Mortgage
Indenture, or the execution, authentication, issuance and
delivery of the Bonds, or the mortgaging of the property under
the Mortgage Indenture, have been paid, except that a
Allstate Life Insurance Company
Allstate Life Insurance Company
of New York
September 1, 1989
Page 7
Commonwealth of Pennsylvania tax of fifty cents must be paid in
each county in which the Twenty-Second Supplemental Indenture and
the Twenty-Third Supplemental Indenture are recorded, at the time
of recording.
The opinions expressed above in paragraphs 7 and 8 are based upon
the opinions of other counsel who have made the searches,
recordings and filings necessary as a basis therefore; and in our
opinion, such other counsel are, or in the case of prior opinions
were, competent and qualified and may be relied upon.
We hereby consent to Xxxxxx Xxxxxxx & Xxxx and Xxxxxxxxxxxx
Xxxxxx Xxxx & Xxxxxxxxx relying on this Opinion as to matters of
Pennsylvania law in giving their opinions to you on the date
hereof with respect to the matters covered by the Opinion.
Very truly yours,
Xxxxxx & Xxxxxx
1989 CONVEYANCES FROM PENNSYLVANIA GAS AND WATER COMPANY
WHICH HAVE NOT BEEN RELEASED FROM THE MORTGAGE INDENTURE
--------------------------------------------------------
DATE CONSIDERA- MORTGAGE
PROPERTY GRANTEE CONVEYED TION INDENTURE
------------ ----------- -------- ---------- ---------
1. 4307 sq. ft. Commonwealth March 2, $ 925.00 Eleventh
of land, Rte. of Pennsyl- 1989 Supplemen-
487, Town of vania De- tal, page
Bloomsburg partment of 4, part of
Columbia Transporta- Item 1 in
County tion Article II
2. 9450 sq. ft. Commonwealth May 3, $ 1,000.00 Original
of land, of Pennsyl- 1989 Indenture,
intersection vania De- page 78
of S.R. 0029 partment of part of
and S.R. Transporta- Item 71
4001, Xxxxxx tion
Township,
Luzern
County
3. 12,909.84 sq. Xxxxxxx June 15, $ 2,600.00 Original
ft. of land Xxxxxxxx, 1989 Indenture,
Rear 88 Deer et ux page 92,
Park Drive Item 160,
Fairview part of the
Township, 21st tract
Luzerne (Xxxx Fos-
County ter War-
rant)
listed on
page 94
4. 6.60 acs. of Xxxxxx Xxxxx, June 15, $25,000.00 Original
land, Rte. et ux 1989 Indenture,
437 Fairview page 92,
Township Item 160,
Luzerne 2.4 acs.
County from the
21st tract
(Xxxx Xxx-
ter War-
rant)
listed on
page 94 and
4.2 acs.
from the
12th tract
(Xxxxx
Xxxxxx
Warrant)
listed on
page 93
5. 8055 sq. ft. Xxxxx August 31, $5,000.00 Original
of land, Orleski, Indenture,
intersection et ux page 71,
of Rtes. 309 Item 19,
and 437 part of the
Fairview second
Township tract (24
Luzerne acs. 32
County ps.)
EXHIBIT H
XXXXXX GUARANTY TRUST COMPANY OF NEW YORK
TRUSTEE'S CERTIFICATE
-----------------------------------------
Xxxxxx Guaranty Trust Company of New York, the trustee under
an Indenture of Mortgage and Deed of Trust dated as of March 15,
1946 (the "Mortgage Indenture") between Scranton Spring Brook
Water Service Company, now Pennsylvania Gas and Water Company, a
Pennsylvania corporation (the "Company"), and Guaranty Trust
Company of New York, now Xxxxxx Guaranty Trust Company of New
York (the "Trustee"), hereby certifies:
1. That the Mortgage Indenture has been supplemented hereto-
fore by twenty-one supplemental indentures and currently by a
Twenty Second Supplemental Indenture and a Twenty-Third Supple-
mental Indenture, each dated as of August 15, 1989. Each of the
Twenty Second Supplemental Indenture and the Twenty Third Supple-
mental Indenture were executed and delivered on behalf of the
Trustee by X. Xxxxxxx, a Vice President thereof, and
Xxxxxxxxx X. Xxxxxxx, an Assistant Secretary thereof.
2. That $10,000,000 aggregate principal amount of the Com-
pany's First Mortgage Bonds 9.23% Series due 1999 and $15,000,000
aggregate principal amount of the Company's First Mortgage Bonds
9.34% Series due 2019 have been duly authenticated by the Trustee
and delivered to the Company.
3. That each person who executed the Twenty Second Supplemen-
tal Indenture and the Twenty-Third Supplemental Indenture or au-
thenticated the aforementioned Xxxxx was duly elected, appointed
or authorized, qualified and acting as an officer of the Trustee
and empowered to perform such acts at the respective times of
such execution or authentication and the signatures of such per-
sons appearing on such documents are their genuine signatures.
IN WITNESS WHEREOF, Xxxxxx Guaranty Trust Company of New York
has caused this certificate to be executed by an officer there-
unto duly authorized this 1st day of September, 1989.
XXXXXX GUARANTY TRUST COMPANY
OF NEW YORK
By
--------------------------
Name:
Title:
EXHIBIT I
COMPLIANCE -DATES
PURSUANT TO
PENNSYLVANIA PUBLIC UTILITY COMMISSION SHOW CAUSE ORDER
AND DECEMBER 20, 1988
DEPARTMENT OF ENVIRONMENTAL RESOURCES CONSENT ORDER
The Pennsylvania Public Utility Commission ("PUC") by Order
entered July 11, 1988, at C-861049, approved a Settlement entered
into by Pennsylvania Gas and Water Company ("PG&W" or "Company")
which established certain commitments on the part of the Company.
Similarly, by Consent Order and Agreement dated December 20,
1988, between the Company and the Department of Environmental
Resources ("DER" or "Department") which was approved by the
Environmental Hearing Board ("EHB") under date of December 30,
1988, at EHB Docket No. 86-356-W, PG&W committed to undertake
certain actions. The Settlement Agreement and Order and Consent
Order and Agreement speak for themselves and are not in any way
to be limited or constrained by the following summary.
DER Consent Order and Agreement
-------------------------------
The schedules and requirements contained in the DER Consent
Order and Agreement are as follows:
1. "PG&W shall ... complete and commence operation of the
Scranton Area Treatment Plant in accordance with Public Drinking
Water Supply Permit No. 3587504, no later than December 31,
1989."
2. "PG&W shall ... provide long term treatment for all suf-
face water sources serving its Scranton Rate Division and its
Springbrook Rate Division by means of permanent Water Treatment
Plant(s) capable of providing for the reduction of unsatisfactory
turbidity levels and the effective and reliable removal and/or
inactivation of Giardia lamblia cysts and Giardia type organisms
-------
in the water entering PG&W's transmission mains from such surface
water sources or shall remove any unfiltered surface water
sources from its system in supplying potable water to the public
except in cases of emergency with the approval of the Department.
All such actions shall be completed for its Scranton Rate Divi-
sion by December 31, 1989 and its Spring Brook Rate Division by
December 31, 1992."
3. "PG&W shall submit to the Department complete public water
supply permit applications meeting the requirements of 25 Pa.
Code Section 109.503 for the Scranton Rate Division as listed
below:
(1) Lake Scranton/Mill Street Station December 7, 1988
(2) Chinchilla Water Treatment Plant-
Renovation of Facilities December 31, 1988
(3) Fallbrook Water Treatment Plant
and Assessory Facilities December 22, 1988
(4) No. 7/No. 1 Main March, 1989"
[All PG&W Water Supply Permit Applications set forth above have
been filed.]
4. "PG&W shall, within nine months [of December 20, 1988] ...
submit to the Department for its review and approval a staggered
schedule for the submission of public water supply permit appli-
cations for each required long-term treatment plant facility in
the Springbrook Rate Division."
5. "Upon approval of the schedule [set forth in 4. above] by
the Department, PG&W shall submit complete permit application(s)
meeting the requirements of 25 Pa. Code Section 109.503 according
to the dates in the approved schedule."
6. "Within thirty (30) days from the date of notification
from the Department, PG&W shall submit all additional informa-
tion required to process each permit application as the Depart-
ment shall reasonably request."
7. "PG&W shall continue operation of interim treatment facil-
ities serving Mill Creek, Fallbrook, Ceasetown, Xxxxxxxx and
Xxxxxxx Creek Reservoirs, in accordance with the permits issued
by the Department, until the implementation of long-term treat-
ment projects [provided in 2 above]..." [PG&W continues to
operate these interim treatment facilities.]
8. "PG&W shall immediately make available an alternate source
of potable water to any customer located in the Keystone Indus-
trial Park served by the Dunmore No. 1 Reservoir who request such
service until such time as the boil water advisory ... [in effect
on December 20, 1988] is lifted." [Alternate sources of potable
water have been made available.]
9. "PG&W will provide to the Department such related auxili-
ary planning documents [with respect to two reports addressing
its water supply and distribution system] upon their final
acceptance by PG&W, on a quarterly basis." [PG&W has filed two
such reports.]
10. "PG&W ... [shall] pay an aggregate civil penalty of ...
$341,850." [The payment has been made.]
11. "PG&W shall promptly certify under penalty of law pursu-
ant to 18 Pa. Cons. Stat. 4904 to the Department any delay
incurred due to an alleged force majeure event by a letter within
twenty (20) business days from the day that PG&W first becomes
aware of its occurrence." [PG&W haa notified the Department of
such force majeure events with regard to the Scranton Area,
----- -------
Xxxxxxxx, Fallbrook and Chinchilla Water Treatment Plants.]
12. "PG&W shall submit to the Department copies of all
records, papers, or correspondence in its possession or available
to it, substantiating the cause of delay and all steps taken by
PG&W to mitigate, to limit, or to remedy the delay." [PG&W has
provided this information to the Department and has met with the
Department as to the Scranton Area, Xxxxxxxx, Fallbrook and
Chinchilla Water Treatment Plants.]
13. "PG&W shall formally request from the Department an ex-
tension in writing at any time prior to the compliance date ..."
All the foregoing are subject to and impacted by the other
provisions of the Consent Order and Agreement including, but not
limited to, extensions of deadlines for force majeure events.
----- -------
[Items 11, 12 and 13 are for informational purposes only and are
not compliance dates.]
PUC Show Cause Order Settlement
-------------------------------
By Order entered July 11, 1988, the PUC adopted the Recom-
mended Decision of Administrative Law Judge Xxxxx dated June 7,
1988, at C-861049, which provided that in consideration of the
settlement, PG&W agreed:
1. "PG&W will establish a Metering Assistance Fund ... [and]
will place up to $125,000 with [the Fund] ... during the period
1989-1992, with $25,000 being immediately placed into the Fund
upon approval of [the settlement]. PG&W will place additional
annual increment amounts of $25,000 in the fund no later than
June 30 of each calendar year during the period 1989-1992."
[PG&W has made all such contributions required to date.]
2. "PG&W through the ratemaking process will forego the com-
mon equity return on $900,000 of the capital utilized in
financing the construction of the new facilities ... Such ...
forbearance ... to be reflected in the rate of return allowance
in the ... rate increase filing, docketed at R-870853." [PG&W
has foregone such return. ]
3. "The $900,000 will be amortized for ratemaking purposes
over a ten year period ending July 31, 1998." [PG&W has begun to
amortize the $900,000 for ratemaking purposes.]
4. "PG&W will continue with planning and constructing the
necessary facilities with the objective of providing for the
total filtration of its service area by the end of 1992, as
described in direct testimony of Xxxxxx X. Xxxxx." [PG&W has
continued with planning and constructing with said objective.]
5. "PG&W will complete the construction of storage tanks,
which will operate as chlorine contact tanks, for the Xxxxxxxx,
Mill Creek and Xxxxxxx Creek Reservoirs, as described in direct
testimony of Xxxxxx X. Xxxxxx." [Said storage tank construction
has been completed.]
6. "PG&W will complete the survey of its total distribution
system in conjunction with its leak detection program and telem-
etry, instrumentation and engineering improvements, as described
in direct testimony of Xxxxxx X. Xxxxx." [The survey has been
completed with a program established for ongoing surveys.]
7. "PG&W will continue to provide for the augmentation of pH
adjustment and corrosion control program so that by the end of
1987 98% of all customers will receive pH-adjusted water and 95%
will receive water treatment with bi-metallic phosphate, as
described in direct testimony of Xx. Xxxxxx Xxxxxxx." [PG&W has
so augmented its program and as of July 31, 1989 approximately
98% of the customers receive pH-adjusted water and 99% receive
water treated with bi-metallic phosphate.]
8. "PG&W will remove all lead-lined service lines from its
distribution system by the end of 1991, as described in direct
testimony of Xxxxxx X. Xxxxx." [The program is continuing as
scheduled.]
9. "PG&W will provide for the installation of an average of
14 miles of pipe per year to replace mains and eliminate dead
ends for the period 1988-1992, as described in Xxxxxx X. Xxxxx
direct testimony and PG&W Water Distribution Assessment and
Improvement Program Plan." [The program is continuing as sched-
uled and for the months ended July 31, 1989 in excess of 20 miles
of such pipe was installed.]
10. "PG&W agrees that it will on an annual basis commencing
September 1, 1988 and terminating September 1, 1992, submit a
report detailing its progress with respect to the steps
enunciated [in 4, 5, 6, 7, 8 and 9] ... above." [PG&W filed such
a report on September 1, 1988 and is currently preparing the
report for 1989.]
