EXHIBIT 4
E'town Corporation
$30,000,000
7.69% Senior Notes due February 1, 2010
________________
Note Purchase Agreement
________________
Dated as of February 1, 2000
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Table of Contents
Section Heading Page
Section 1. Authorization of Notes............................1
Section 2. Sale and Purchase of Notes........................1
Section 3. Closing...........................................1
Section 4. Conditions to Closing.............................2
Section 4.1. Representations and Warranties..................2
Section 4.2. Performance; No Default.........................2
Section 4.3. Compliance Certificates.........................2
Section 4.4. Opinions of Counsel.............................2
Section 4.5. Purchase Permitted by Applicable Law, etc.......3
Section 4.6. Governmental Approvals..........................3
Section 4.7. Payment of Special Counsel Fees.................3
Section 4.8. Private Placement Number........................3
Section 4.9. Changes in Corporate Structure..................3
Section 4.10. Proceedings and Documents.......................3
Section 5. Representations and Warranties of the Company.....4
Section 5.1. Organization; Power and Authority...............4
Section 5.2. Authorization, etc..............................4
Section 5.3. Disclosure......................................4
Section 5.4. Organization and Ownership of Shares of
Subsidiaries....................................4
Section 5.5. Financial Statements............................5
Section 5.6. Compliance with Laws, Other Instruments, etc....5
Section 5.7. Governmental Authorizations, etc................5
Section 5.8. Litigation; Observance of Statutes and Orders...5
Section 5.9. Taxes...........................................6
Section 5.10. Title to Property; Leases.......................6
Section 5.11. Licenses, Permits, etc..........................6
Section 5.12. Compliance with ERISA...........................6
Section 5.13. Private Offering by the Company.................7
Section 5.14. Use of Proceeds; Margin Regulations.............7
Section 5.15. Existing Indebtedness...........................8
Section 5.16. Foreign Assets Control Regulations, etc.........8
Section 5.17. Status under Certain Statutes...................8
Section 5.18. Year 2000 Compliant.............................8
Section 6. Representations of the Purchaser..................8
Section 6.1. Purchase for Investment.........................8
Section 6.2. Source of Funds.................................9
Section 7. Information as to Company........................10
Section 7.1. Financial and Business Information.............10
Section 7.2. Officer's Certificate..........................12
Section 7.3. Inspection.....................................13
Section 8. Prepayment of the Notes..........................13
Section 8.1. Prepayments....................................13
Section 8.2. Optional Prepayments with Make-Whole Amount....13
Section 8.3. Allocation of Partial Prepayments..............14
Section 8.4. Maturity; Surrender, etc.......................14
Section 8.5. Purchase of Notes..............................14
Section 8.6. Make-Whole Amount..............................14
Section 9. Affirmative Covenants............................16
Section 9.1. Compliance with Law............................16
Section 9.2. Insurance......................................16
Section 9.3. Maintenance of Properties......................16
Section 9.4. Payment of Taxes...............................16
Section 9.5. Corporate Existence, etc.; Maintenance of
Ownership of Elizabethtown Water Company.......17
Section 9.6. Year 2000 Compliance...........................17
Section 10. Negative Covenants...............................17
Section 10.1. Transactions with Affiliates...................17
Section 10.2. Merger, Consolidation, etc.....................17
Section 10.3. Fixed Charges Coverage Ratio...................18
Section 10.4. Consolidated Common Shareholders' Equity.......18
Section 10.5. Consolidated Debt..............................18
Section 10.6. Liens..........................................18
Section 10.7. Sale of Assets of Elizabethtown Water Company and
The Mount Holly Water Company..................18
Section 10.8. Restricted Investments.........................19
Section 11. Events of Default................................19
Section 12. Remedies on Default, Etc.........................21
Section 12.1. Acceleration...................................21
Section 12.2. Other Remedies.................................21
Section 12.3. Rescission.....................................22
Section 12.4. No Waivers or Election of Remedies, Expenses, etc
22
Section 13. Registration; Exchange; Substitution of Notes....22
Section 13.1. Registration of Notes..........................22
Section 13.2. Transfer and Exchange of Notes.................22
Section 13.3. Replacement of Notes...........................23
Section 14. Payments on Notes................................23
Section 14.1. Place of Payment...............................23
Section 14.2. Home Office Payment............................24
Section 15. Expenses, Etc....................................24
Section 15.1. Transaction Expenses...........................24
Section 15.2. Survival.......................................24
Section 16. Survival of Representations and Warranties; Entire
Agreement........................................24
Section 17. Amendment and Waiver.............................25
Section 17.1. Requirements...................................25
Section 17.2. Solicitation of Holders of Notes...............25
Section 17.3. Binding Effect, etc............................25
Section 17.4. Notes Held by Company, etc.....................26
Section 18. Notices..........................................26
Section 19. Reproduction of Documents........................26
Section 20. Confidential Information.........................27
Section 21. Substitution of Purchaser........................28
Section 22. Miscellaneous....................................28
Section 22.1. Successors and Assigns.........................28
Section 22.2. Payments Due on Non-Business Days..............28
Section 22.3. Severability...................................28
Section 22.4. Construction...................................28
Section 22.5. Counterparts...................................28
Section 22.6. Governing Law..................................29
Signatures.......................................................30
Schedule A Information Relating To Purchaser
Schedule B Defined Terms
Schedule 5.3 Financial Statements and Other Information
Schedule 5.4 Subsidiaries of the Company and Ownership of Subsidiary
Stock
Schedule 5.15 Existing Indebtedness
Exhibit 1 Form of 7.69% Senior Note due February 1, 2010
Exhibit 4.4(a) Form of Opinion of Counsel to the Company
Exhibit 4.4(b) Form of Opinion of Special New York Counsel for the Company
Exhibit 4.4(c) Form of Opinion of Special Counsel to the Purchaser
E'town Corporation Note Purchase Agreement
E'town Corporation
600 South Avenue
Westfield, New Jersey 07091-0788
7.69% Senior Notes due February 1, 2010
Dated as of
February 1, 2000
Teachers Insurance and Annuity
Association of America
730 Third Avenue
New York, New York 10017-3263
Ladies and Gentlemen:
E'town Corporation, a New Jersey corporation (the "Company"), agrees
with you as follows:
Section 1. Authorization of Notes.
The Company will authorize the issue and sale of $30,000,000 aggregate
principal amount of its 7.69% Senior Notes due February 1, 2010 (the "Notes",
such term to include any such notes issued in substitution therefor pursuant
to Section 13 of this Agreement). The Notes shall be substantially in the
form set out in Exhibit 1, with such changes therefrom, if any, as may be
approved by you and the Company. Certain capitalized terms used in this
Agreement are defined in Schedule B; references to a "Schedule" or an
"Exhibit" are, unless otherwise specified, to a Schedule or an Exhibit
attached to this Agreement.
Section 2. Sale and Purchase of Notes.
Subject to the terms and conditions of this Agreement, the Company will
issue and sell to you and you will purchase from the Company, at the Closing
provided for in Section 3, Notes in the principal amount specified opposite
your name in Schedule A at the purchase price of 100% of the principal amount
thereof.
Section 3. Closing.
The sale and purchase of the Notes to be purchased by you shall occur at
the offices of Chapman and Cutler, 111 West Monroe Street, Chicago, Illinois
60603, at 10:00 a.m. Chicago time, at a closing (the "Closing") which shall
take place on February 11, 2000 or on such other Business Day thereafter on
or prior to February 25, 2000 as may be agreed upon by the Company and you.
At the Closing the Company will deliver to you the Notes to be purchased by
you on such date in the form of a single Note (or such greater number of
Notes in denominations of at least $100,000 as you may request) dated the
date of the Closing and registered in your name (or in the name of your
nominee), against delivery by you to the Company or its order of immediately
available funds in the amount of the purchase price therefor by wire transfer
of immediately available funds for the account of the Company to account
number 2083605002512 at First Union National Bank, Newark, New Jersey, ABA
number 031201467. If at the Closing the Company shall fail to tender such
Notes to you as provided above in this Section 3, or any of the conditions
specified in Section 4 shall not have been fulfilled to your satisfaction,
you shall, at your election, be relieved of all further obligations under
this Agreement, without thereby waiving any rights you may have by reason of
such failure or such nonfulfillment.
Section 4. Conditions to Closing.
Your obligation to purchase and pay for the Notes to be sold to you at
the Closing is subject to the fulfillment to your satisfaction, prior to or
at the Closing, of the following conditions:
Section 4.1. Representations and Warranties. The representations and
warranties of the Company in this Agreement shall be correct when made and at
the time of the Closing.
Section 4.2. Performance; No Default. The Company shall have performed and
complied with all agreements and conditions contained in this Agreement
required to be performed or complied with by it prior to or at the Closing,
and after giving effect to the issue and sale of the Notes (and the
application of the proceeds thereof as contemplated by Section 5.14), no
Default or Event of Default shall have occurred and be continuing.
Section 4.3. Compliance Certificates.
(a) Officer's Certificate. The Company shall have delivered to
you an Officer's Certificate, dated the date of the Closing, certifying
that the conditions specified in Sections 4.1, 4.2 and 4.9 have been
fulfilled.
(b) Secretary's Certificate. The Company shall have delivered to
you a certificate certifying as to the resolutions attached thereto and
other corporate proceedings relating to the authorization, execution and
delivery of the Notes and this Agreement.
Section 4.4. Opinions of Counsel. You shall have received opinions in form
and substance satisfactory to you, dated the date of the Closing (a) from
Walter M. Braswell, Esq., Secretary of the Company, covering the matters set
forth in Exhibit 4.4(a) and covering such other matters incident to the
transactions contemplated hereby as you or your counsel may reasonably
request (and the Company hereby instructs its counsel to deliver such opinion
to you), (b) from Winthrop, Stimson, Putnam & Roberts, special New York
counsel for the Company, covering the matters set forth in Exhibit 4.4(b),
and covering such other matters incident to the transactions contemplated
hereby as you or your counsel may reasonably request (and the Company hereby
instructs its counsel to deliver such opinion to you) and (c)from Chapman
and Cutler, your special counsel in connection with such transactions,
substantially in the form set forth in Exhibit 4.4(c) and covering such other
matters incident to such transactions as you may reasonably request.
Section 4.5. Purchase Permitted by Applicable Law, etc. On the date of the
Closing your purchase of Notes shall (i) be permitted by the laws and
regulations of each jurisdiction to which you are subject, without recourse
to provisions (such as Section 1405(a)(8) of the New York Insurance Law)
permitting limited investments by insurance companies without restriction as
to the character of the particular investment, (ii) not violate any
applicable law or regulation (including, without limitation, Regulation T, U
or X of the Board of Governors of the Federal Reserve System) and (iii) not
subject you to any tax, penalty or liability under or pursuant to any
applicable law or regulation, which law or regulation was not in effect on
the date hereof. If requested by you, you shall have received an Officer's
Certificate certifying as to such matters of fact as you may reasonably
specify to enable you to determine whether such purchase is so permitted.
Section 4.6. Governmental Approvals. The Company shall have received all
necessary consents, authorizations and approvals from all Governmental
Authorities, if any, necessary for the execution, delivery and performance by
the Company of this Agreement and the Notes, and any such consent,
authorization or approval shall be final and unappealable.
Section 4.7. Payment of Special Counsel Fees. Without limiting the
provisions of Section 15.1, the Company shall have paid on or before the
Closing the reasonable fees, charges and disbursements of your special
counsel referred to in Section 4.4 to the extent reflected in a statement of
such counsel rendered to the Company at least one Business Day prior to the
Closing.
Section 4.8. Private Placement Number. A Private Placement number issued by
Standard & Poor's CUSIP Service Bureau (in cooperation with the Securities
Valuation Office of the National Association of Insurance Commissioners)
shall have been obtained for the Notes.
Section 4.9. Changes in Corporate Structure. The Company shall not have
changed its jurisdiction of incorporation or been a party to any merger or
consolidation (other than the pending merger between the Company and Thames
Water plc. described in the Company's Current Report on Form 8-K dated
November 21, 1999 included in the Investor Packet, as defined in Section 5.3
hereof) and shall not have succeeded to all or any substantial part of the
liabilities of any other entity, at any time following the date of the most
recent financial statements referred to in Section 5.5.
Section 4.10. Proceedings and Documents. All corporate and other proceedings
in connection with the transactions contemplated by this Agreement and all
documents and instruments incident to such transactions shall be satisfactory
to you and your special counsel, and you and your special counsel shall have
received all such counterpart originals or certified or other copies of such
documents as you or they may reasonably request.
Section 5. Representations and Warranties of the Company
The Company represents and warrants to you that:
Section 5.1. Organization; Power and Authority. The Company is a
corporation duly organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation, and is duly qualified as a foreign
corporation and is in good standing in each jurisdiction in which such
qualification is required by law, other than those jurisdictions as to which
the failure to be so qualified or in good standing would not, individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect.
The Company has the corporate power and authority to own or hold under lease
the properties it purports to own or hold under lease, to transact the
business it transacts and proposes to transact, to execute and deliver this
Agreement and the Notes and to perform the provisions hereof and thereof.
Section 5.2. Authorization, etc. This Agreement and the Notes have been
duly authorized by all necessary corporate action on the part of the Company,
and this Agreement constitutes, and upon execution and delivery thereof each
Note will constitute, a legal, valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except as such
enforceability may be limited by (i) applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally and (ii) general principles of equity (regardless
of whether such enforceability is considered in a proceeding in equity or at
law).
Section 5.3. Disclosure. The Company, through its agent, A.G. Edwards &
Sons, Inc., has delivered to you the financial statements and other
information listed in Schedule 5.3 (the "Investor Packet"), relating to the
transactions contemplated hereby. This Agreement and the Investor Packet
(other than items 1 and 8 through 11 on Schedule 5.3, as to which items the
Company makes no representation), taken as a whole, do not contain any untrue
statement of a material fact or omit to state any material fact necessary to
make the statements therein not misleading in light of the circumstances
under which they were made. Except as disclosed in the Investor Packet,
since December 31, 1998, there has been no change in the financial condition,
operations, business or properties of the Company or any of its Subsidiaries
except changes that individually or in the aggregate would not reasonably be
expected to have a Material Adverse Effect.
Section 5.4. Organization and Ownership of Shares of Subsidiaries.
(a) Schedule 5.4 is (except as noted therein) a complete and correct list of
the Company's Subsidiaries, showing, as to each Subsidiary, the correct name
thereof, the jurisdiction of its organization, and the percentage of shares
of each class of its capital stock or similar equity interests outstanding
owned by the Company and each other Subsidiary.
(b) All of the outstanding shares of capital stock or similar equity
interests of each Subsidiary shown in Schedule 5.4 as being owned by the
Company and its Subsidiaries have been validly issued, are fully paid and
nonassessable and are owned by the Company or another Subsidiary free and
clear of any Lien (except as otherwise disclosed in Schedule 5.4).
(c) Each Subsidiary identified in Schedule 5.4 is a corporation or other
legal entity duly organized, validly existing and in good standing under the
laws of its jurisdiction of organization, and is duly qualified as a foreign
corporation or other legal entity and is in good standing in each
jurisdiction in which such qualification is required by law, other than those
jurisdictions as to which the failure to be so qualified or in good standing
would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect. Each such Subsidiary has the corporate or other
power and authority to own or hold under lease the properties it purports to
own or hold under lease and to transact the business it transacts and
proposes to transact.
Section 5.5. Financial Statements. The consolidated financial statements of
the Company and its Subsidiaries included as part of the Investor Packet
(including in each case the related schedules and notes) fairly present in
all material respects the consolidated financial position of the Company and
its Subsidiaries as of their respective dates and the consolidated results of
their operations and cash flows for their respective periods and have been
prepared in accordance with GAAP consistently applied throughout the periods
involved except as set forth in the notes thereto (subject, in the case of
any interim financial statements, to normal year-end adjustments).
Section 5.6. Compliance with Laws, Other Instruments, etc. The execution,
delivery and performance by the Company of this Agreement and the Notes will
not (i) contravene, result in any breach of, or constitute a default under,
or result in the creation of any Lien in respect of any property of the
Company or any Subsidiary under, any indenture, mortgage, deed of trust,
loan, purchase or credit agreement, lease, corporate charter or by-laws, or
any other Material agreement or instrument to which the Company or any
Subsidiary is bound or by which the Company or any Subsidiary or any of their
respective properties may be bound or affected, (ii) conflict with or result
in a breach of any of the terms, conditions or provisions of any order,
judgment, decree, or ruling of any court, arbitrator or Governmental
Authority applicable to the Company or any Subsidiary or (iii) violate any
provision of any statute or other rule or regulation of any Governmental
Authority applicable to the Company or any Subsidiary.
Section 5.7. Governmental Authorizations, etc. No consent, approval or
authorization of, or registration, filing or declaration with, any
Governmental Authority (including, without limitation, the New Jersey Board
of Public Utilities) is required in connection with the execution, delivery
or performance by the Company of this Agreement or the Notes.
Section 5.8. Litigation; Observance of Statutes and Orders. (a) Except as
disclosed in the Investor Packet, there are no actions, suits or proceedings
pending or, to the knowledge of the Company, threatened against or affecting
the Company or any Subsidiary or any property of the Company or any
Subsidiary in any court or before any arbitrator of any kind or before or by
any Governmental Authority that, individually or in the aggregate, would
reasonably be expected to have a Material Adverse Effect.
(b) Neither the Company nor any Subsidiary is in default under any order,
judgment, decree or ruling of any court, arbitrator or Governmental Authority
or is in violation of any applicable law, ordinance, rule or regulation
(including without limitation Environmental Laws) of any Governmental
Authority, which default or violation, individually or in the aggregate,
would reasonably be expected to have a Material Adverse Effect.
Section 5.9. Taxes. The Company and its Subsidiaries have filed all income
tax returns that are required to have been filed in any jurisdiction, and
have paid all taxes shown to be due and payable on such returns and all other
taxes and assessments payable by them, to the extent such taxes and
assessments have become due and payable and before they have become
delinquent, except for any taxes and assessments (i) the amount of which is
not individually or in the aggregate Material or (ii) the amount,
applicability or validity of which is currently being contested in good faith
by appropriate proceedings and with respect to which the Company or a
Subsidiary, as the case may be, has established adequate reserves (if any) in
accordance with GAAP. The Federal income tax liabilities of the Company and
its Subsidiaries have been determined by the Internal Revenue Service for all
fiscal years up to and including the fiscal year ended December 31, 1995.
Section 5.10. Title to Property; Leases. The Company and its Subsidiaries
have good and sufficient title to their respective Material properties,
including all such properties reflected in the most recent audited balance
sheet referred to in Section 5.5 or purported to have been acquired by the
Company or any Subsidiary after said date (except as sold or otherwise
disposed of in the ordinary course of business), in each case free and clear
of Liens prohibited by this Agreement, except for those defects in title
that, individually or in the aggregate, would not have a Material Adverse
Effect. All Material leases are valid and subsisting and are in full force
and effect in all material respects.
Section 5.11. Licenses, Permits, etc. The Company and its Subsidiaries own
or possess all licenses, permits, franchises, authorizations, patents,
copyrights, service marks, trademarks and trade names, or rights thereto,
that are Material, without known conflict with the rights of others, except
for those conflicts that, individually or in the aggregate, would not have a
Material Adverse Effect.
Section 5.12. Compliance with ERISA. (a) The Company and each ERISA
Affiliate have operated and administered each Plan in compliance with all
applicable laws except for such instances of noncompliance as have not
resulted in and could not reasonably be expected to result in a Material
Adverse Effect. Neither the Company nor any ERISA Affiliate has incurred any
liability pursuant to Title I or IV of ERISA or the penalty or excise tax
provisions of the Code relating to employee benefit plans (as defined in
Section 3 of ERISA), and no event, transaction or condition has occurred or
exists that would reasonably be expected to result in the incurrence of any
such liability by the Company or any ERISA Affiliate, or in the imposition of
any Lien on any of the rights, properties or assets of the Company or any
ERISA Affiliate, in either case pursuant to Title I or IV of ERISA or to such
penalty or excise tax provisions or to Section 401(a)(29) or 412 of the Code,
other than such liabilities or Liens as would not be individually or in the
aggregate Material.
(b) The projected benefit obligation under each of the Plans (other than
Multiemployer Plans), determined as of December 31, 1998 in accordance with
Financial Accounting Standards Board Statement No. 87, is as disclosed in the
Company's filings with the Securities and Exchange Commission under the
Exchange Act included in the Investor Packet and does not exceed the fair
value of the assets of such Plan as of such date. To the best of the
Company's knowledge, the projected benefit obligation under each of the Plans
(other than Multiemployer Plans) as of December 31, 1999, determined in
accordance with Financial Accounting Standards Board Statement No.87, does
not exceed the fair value of the assets of such Plan as of such date by an
amount that is Material.
(c) The Company and its ERISA Affiliates have not incurred withdrawal
liabilities (and are not subject to contingent withdrawal liabilities) under
section 4201 or 4204 of ERISA in respect of Multiemployer Plans that
individually or in the aggregate are Material.
(d) The expected post retirement benefit obligation (determined as of
December 31, 1998 in accordance with Financial Accounting Standards Board
Statement No. 106, without regard to liabilities attributable to continuation
coverage mandated by section 4980B of the Code) of the Company and its
Subsidiaries is $7,938,000. To the best of the Company's knowledge, there
has been no material adverse change since December 31, 1998 in the expected
post retirement benefit obligation (determined in accordance with Financial
Accounting Standards Board Statement No. 106, without regard to liabilities
attributable to continuation coverage mandated by section 4980B of the Code)
of the Company and its Subsidiaries.
(e) The execution and delivery of this Agreement and the issuance and
sale of the Notes hereunder will not involve any transaction that is subject
to the prohibitions of section 406 of ERISA or in connection with which a tax
could be imposed pursuant to section 4975(c)(1)(A)-(D) of the Code. The
representation by the Company in the first sentence of this Section 5.12(e)
is made in reliance upon and subject to the accuracy of your representation
in Section 6.2 as to the sources of the funds to be used to pay the purchase
price of the Notes to be purchased by you.
Section 5.13. Private Offering by the Company. Neither the Company nor
anyone acting on its behalf has offered the Notes or any similar securities
for sale to, or solicited any offer to buy any of the same from, or otherwise
approached or negotiated in respect thereof with, any person other than you
and not more than seven (7) other Institutional Investors, each of which has
been offered the Notes at a private sale for investment. Neither the Company
nor anyone acting on its behalf has taken, or will take, any action that
would subject the issuance or sale of the Notes to the registration
requirements of Section 5 of the Securities Act.
Section 5.14. Use of Proceeds; Margin Regulations. The Company will apply
the proceeds of the sale of the Notes to (i) refinance existing short-term
indebtedness and (ii) to fund future capital expenditures for water and
wastewater systems. No part of the proceeds from the sale of the Notes
hereunder will be used, directly or indirectly, for the purpose of buying or
carrying any margin stock within the meaning of Regulation U of the Board of
Governors of the Federal Reserve System (12 CFR 221), or for the purpose of
buying or carrying or trading in any securities under such circumstances as
to involve the Company in a violation of Regulation X of said Board (12 CFR
224) or to involve any broker or dealer in a violation of Regulation T of
said Board (12 CFR 220). The Company does not own or presently intend to
carry or purchase any margin stock. As used in this Section, the terms
"margin stock" and "purpose of buying or carrying" shall have the meanings
assigned to them in said Regulation U.
Section 5.15. Existing Indebtedness. Schedule 5.15 sets forth a complete and
correct list of all outstanding Indebtedness of the Company and its
Subsidiaries as of January 31, 2000, since which date there has been no
Material change in the amounts, interest rates, sinking funds, installment
payments or maturities of the Indebtedness of the Company or its
Subsidiaries. Neither the Company nor any Subsidiary is in default and no
waiver of default is currently in effect, in the payment of any principal or
interest on any Indebtedness of the Company or such Subsidiary and no event
or condition exists with respect to any Indebtedness of the Company or any
Subsidiary the outstanding principal amount of which exceeds $500,000 that
would permit (or that with notice or the lapse of time, or both, would
permit) one or more Persons to cause such Indebtedness to become due and
payable before its stated maturity or before its regularly scheduled dates of
payment.
Section 5.16. Foreign Assets Control Regulations, etc. Neither the sale of
the Notes by the Company hereunder nor its use of the proceeds thereof will
violate the Trading with the Enemy Act, as amended, or any of the foreign
assets control regulations of the United States Treasury Department (31 CFR,
Subtitle B, Chapter V, as amended) or any enabling legislation or executive
order relating thereto.
Section 5.17. Status under Certain Statutes. Neither the Company nor any
Subsidiary is subject to regulation under the Investment Company Act of 1940,
as amended, the Public Utility Holding Company Act of 1935, as amended, the
ICC Termination Act of 1995, as amended, or the Federal Power Act, as amended.
Section 5.18. Year 2000 Compliant. The Company reasonably believes that the
internal computer systems of the Company and its Subsidiaries are Year 2000
Compliant in all Material respects and that the advent of the year 2000 and
its impact on said internal computer systems has not resulted, and is not
reasonably expected to result, in a Material Adverse Effect. The term "Year
2000 Compliant" means that all computer applications and equipment containing
embedded microchips material to the business and operations of the Company
and its Subsidiaries are able to recognize correctly and perform properly
date-sensitive functions for all dates before and after January 1, 2000 or,
alternatively, the Company and its Subsidiaries have designed and implemented
contingency plans so that any failure of their computer applications and
equipment to recognize correctly or to perform properly such functions for
such dates will not reasonably be expected to have a Material Adverse Effect.
Section 6. Representations of the Purchaser.
Section 6.1. Purchase for Investment. You represent that you are purchasing
the Notes for your own account or for one or more separate accounts
maintained by you or for the account of one or more pension or trust funds
and not with a view to the distribution thereof, provided that the
disposition of your or their property shall at all times be within your or
their control. You understand that the Notes have not been registered under
the Securities Act and may be resold only if registered pursuant to the
provisions of the Securities Act or if an exemption from registration is
available, except under circumstances where neither such registration nor
such an exemption is required by law, and that the Company is not required to
register the Notes.
Section 6.2. Source of Funds. You represent that at least one of the
following statements is an accurate representation as to each source of funds
(a "Source") to be used by you to pay the purchase price of the Notes to be
purchased by you hereunder:
(a) the Source is an "insurance company general account" within
the meaning of Department of Labor Prohibited Transaction Class
Exemption ("PTCE") 95-60 (issued July 12, 1995) and there is no employee
benefit plan, treating as a single plan, all plans maintained by the
same employer or employee organization, with respect to which the amount
of the general account reserves and liabilities for all contracts held
by or on behalf of such plan, exceeds ten percent (10%) of the total
reserves and liabilities of such general account (exclusive of separate
account liabilities) plus surplus, as set forth in the NAIC Annual
Statement filed with your state of domicile; or
(b) the Source is either (i) an insurance company pooled separate
account, within the meaning of PTCE 90-1 (issued January 29, 1990), or
(ii) a bank collective investment fund, within the meaning of the PTCE
91-38 (issued July 12, 1991) and, except as you have disclosed to the
Company in writing pursuant to this paragraph (b), no employee benefit
plan or group of plans maintained by the same employer or employee
organization beneficially owns more than 10% of all assets allocated to
such pooled separate account or collective investment fund; or
(c) the Source constitutes assets of an "investment fund" (within
the meaning of Part V(b) of the QPAM Exemption) managed by a "qualified
professional asset manager" or "QPAM" (within the meaning of Part V(a)
of the QPAM Exemption), no employee benefit plan's assets that are
included in such investment fund, when combined with the assets of all
other employee benefit plans established or maintained by the same
employer or by an affiliate (within the meaning of Section V(c)(1) of
the QPAM Exemption) of such employer or by the same employee
organization and managed by such QPAM, exceed 20% of the total client
assets managed by such QPAM, the conditions of Part I(c) and (g) of the
QPAM Exemption are satisfied, neither the QPAM nor a person controlling
or controlled by the QPAM (applying the definition of "control" in
Section V(e) of the QPAM Exemption) owns a 5% or more interest in the
Company and (i) the identity of such QPAM and (ii) the names of all
employee benefit plans whose assets are included in such investment fund
have been disclosed to the Company in writing pursuant to this paragraph
(c); or
(d) the Source is a governmental plan; or
(e) the Source is one or more employee benefit plans, or a
separate account or trust fund comprised of one or more employee benefit
plans, each of which has been identified to the Company in writing
pursuant to this paragraph (e); or
(f) the Source does not include assets of any employee benefit
plan, other than a plan exempt from the coverage of ERISA.
If a proposed transferee of the Notes identifies a plan pursuant to
paragraph (b), (c) or (e) above, the Company shall deliver a certificate on
or prior to the date of any transfer of the Notes to such transferee, which
certificate shall either state that (i) it is neither a "party in interest"
(as defined in Title I, Section 3(14) of ERISA) nor a "disqualified person"
(as defined in Section 4975(e)(2) of the Internal Revenue Code of 1986, as
amended), with respect to any plan identified pursuant to paragraphs (b) or
(e) above, or (ii) with respect to any plan, identified pursuant to paragraph
(c) above, neither it nor any "affiliate" (as defined in Section V(c) of the
QPAM Exemption) has at this time, and during the immediately preceding one
year has exercised the authority to appoint or terminate said QPAM as manager
of the assets of any plan identified in writing pursuant to paragraph (c)
above or to negotiate the terms of said QPAM's management agreement on behalf
of any such identified plans.
As used in this Section 6.2, the terms "employee benefit plan", "governmental
plan", "party in interest" and "separate account" shall have the respective
meanings assigned to such terms in Section 3 of ERISA.
Section 7. Information as to Company
Section 7.1. Financial and Business Information. The Company shall deliver
to each holder of Notes that is an Institutional Investor:
(a) Quarterly Statements- promptly, and in any event, within 60
days after the end of each quarterly fiscal period in each fiscal year
of the Company (other than the last quarterly fiscal period of each such
fiscal year), duplicate copies of,
(i) a consolidated balance sheet of the Company and its
Subsidiaries as at the end of such quarter, and
(ii) consolidated statements of income, changes in
shareholders' equity and cash flows of the Company and its
Subsidiaries, for such quarter and (in the case of the second and
third quarters) for the portion of the fiscal year ending with such
quarter,
setting forth in each case in comparative form the figures for the
corresponding periods in the previous fiscal year, all in reasonable
detail, prepared in accordance with GAAP applicable to quarterly
financial statements generally, and certified by a Senior Financial
Officer as fairly presenting, in all material respects, the financial
position of the companies being reported on and their results of
operations and cash flows, subject to changes resulting from year-end
adjustments, provided that delivery within the time period specified
above of copies of the Company's Quarterly Report on Form 10-Q prepared
in compliance with the requirements therefor and filed with the
Securities and Exchange Commission shall be deemed to satisfy the
requirements of this Section 7.1(a);
(b) Annual Statements - promptly, and in any event, within 105
days after the end of each fiscal year of the Company, duplicate copies
of,
(i) a consolidated balance sheet of the Company and its
Subsidiaries, as at the end of such year, and
(ii) consolidated statements of income, changes in
shareholders' equity and cash flows of the Company and its
Subsidiaries, for such year,
setting forth in each case in comparative form the figures for the
previous fiscal year, all in reasonable detail, prepared in accordance
with GAAP, and accompanied by an opinion thereon of independent
certified public accountants of recognized national standing, which
opinion shall state that such financial statements present fairly, in
all material respects, the financial position of the companies being
reported upon and their results of operations and cash flows and have
been prepared in conformity with GAAP, and that the examination of such
accountants in connection with such financial statements has been made
in accordance with generally accepted auditing standards, and that such
audit provides a reasonable basis for such opinion in the circumstances,
provided that the delivery within the time period specified above of the
Company's Annual Report on Form 10-K for such fiscal year (together with
the Company's annual report to shareholders, if any, prepared pursuant
to Rule 14a-3 under the Exchange Act) prepared in accordance with the
requirements therefor and filed with the Securities and Exchange
Commission shall be deemed to satisfy the requirements of this
Section 7.1(b);
(c) SEC and Other Reports - promptly upon their becoming
available, one copy of (i) each financial statement, report, notice or
proxy statement sent by the Company or any Subsidiary to public
securities holders generally, (ii) each regular or periodic report, each
registration statement that shall have become effective (without
exhibits except as expressly requested by such holder), and each final
prospectus and all amendments thereto filed by the Company or any
Subsidiary with the Securities and Exchange Commission, and (iii) a copy
of each Annual Report of each of Elizabethtown Water Company and The
Mount Holly Water Company delivered to the New Jersey Board of Public
Utilities;
(d) Notice of Default or Event of Default - promptly following,
and in any event within five Business Days after a Responsible Officer
becoming aware of, the existence of any Default or Event of Default, a
written notice specifying the nature and period of existence thereof and
what action the Company is taking or proposes to take with respect
thereto;
(e) ERISA Matters - promptly following, and in any event within
five Business Days after a Responsible Officer becoming aware of, any of
the following, a written notice setting forth the nature thereof and the
action, if any, that the Company or an ERISA Affiliate proposes to take
with respect thereto:
(i) with respect to any Plan, any reportable event, as
defined in section 4043(c) of ERISA and the regulations thereunder,
for which notice thereof has not been waived pursuant to such
regulations as then in effect on the date hereof; or
(ii) the taking by the PBGC of steps to institute, or the
threatening by the PBGC of the institution of, proceedings under
section 4042 of ERISA for the termination of, or the appointment of
a trustee to administer, any Plan, or the receipt by the Company or
any ERISA Affiliate of a notice from a Multiemployer Plan that such
action has been taken by the PBGC with respect to such
Multiemployer Plan; or
(iii) any event, transaction or condition that could result in
the incurrence of any liability by the Company or any ERISA
Affiliate pursuant to Title I or IV of ERISA or the penalty or
excise tax provisions of the Code relating to employee benefit
plans, or in the imposition of any Lien on any of the rights,
properties or assets of the Company or any ERISA Affiliate pursuant
to Title I or IV of ERISA or such penalty or excise tax provisions,
if such liability or Lien, taken together with any other such
liabilities or Liens then existing, would reasonably be expected to
have a Material Adverse Effect; and
(f) Requested Information - with reasonable promptness, such other
data and information relating to the business, operations, affairs,
financial condition, assets or properties of the Company or any of its
Subsidiaries or relating to the ability of the Company to perform its
obligations hereunder and under the Notes as from time to time may be
reasonably requested by any such holder of Notes.
Section 7.2. Officer's Certificate. Each set of financial statements
delivered to a holder of Notes pursuant to Section 7.1(a) or Section 7.1(b)
hereof shall be accompanied by a certificate of a Senior Financial Officer
setting forth:
(a) Covenant Compliance - the information (including detailed
calculations) required in order to establish whether the Company was in
compliance with the requirements of Section 10.2 through 10.8 hereof,
inclusive, during the quarterly or annual period covered by the
statements then being furnished (including with respect to each such
Section, where applicable, the calculations of the maximum or minimum
amount, ratio or percentage, as the case may be, permissible under the
terms of such Sections, and the calculation of the amount, ratio or
percentage then in existence); and
(b) Event of Default - a statement that such officer has reviewed
the relevant terms hereof and has made, or caused to be made, under his
or her supervision, a review of the transactions and conditions of the
Company and its Subsidiaries from the beginning of the quarterly or
annual period covered by the statements then being furnished to the date
of the certificate and that such review shall not have disclosed the
existence during such period of any condition or event that constitutes
a Default or an Event of Default or, if any such condition or event
existed or exists (including, without limitation, any such event or
condition resulting from the failure of the Company or any Subsidiary to
comply with any Environmental Law), specifying the nature and period of
existence thereof and what action the Company shall have taken or
proposes to take with respect thereto.
Section 7.3. Inspection. The Company shall permit the representatives of
each holder of Notes that is an Institutional Investor:
(a) No Default - if no Default or Event of Default then exists, at
the expense of such holder and upon reasonable prior notice to the
Company, to visit the principal executive office of the Company, to
discuss the affairs, finances and accounts of the Company and its
Subsidiaries with the Company's officers, and, with the consent of the
Company (which consent will not be unreasonably withheld) to visit the
other offices and properties of the Company and each Subsidiary, all at
such reasonable times and as often (but not more than twice by any such
holder within any 12 month period) as may be reasonably requested in
writing; and
(b) Default - if a Default or Event of Default then exists, at the
expense of the Company to visit and inspect any of the offices or
properties of the Company or any Subsidiary, to examine all their
respective books of account, records, reports and other papers, to make
copies and extracts therefrom, and to discuss their respective affairs,
finances and accounts with their respective officers and their
independent public accountants (and by this provision the Company
authorizes said accountants to discuss the affairs, finances and
accounts of the Company and its Subsidiaries), all at such times and as
often as may be requested.
Section 8. Prepayment of the Notes.
Section 8.1. Prepayments. The entire outstanding principal amount of the
Notes shall be due on February 1, 2010. Except as set forth in Section 8.2,
the Notes may not be prepaid prior to maturity at the option of the Company.
Section 8.2. Optional Prepayments with Make-Whole Amount. The Company may,
at its option, upon notice as provided below, prepay at any time all, or from
time to time any part of, the Notes, in an amount not less than $1,000,000 in
the case of a partial prepayment, at 100% of the principal amount so prepaid,
and accrued interest thereon to the date of prepayment, plus the Make-Whole
Amount determined for the prepayment date with respect to such principal
amount. The Company will give each holder of Notes written notice of each
optional prepayment under this Section 8.2 not less than 30 days and not more
than 60 days prior to the date fixed for such prepayment. Each such notice
shall specify such date, the aggregate principal amount of the Notes to be
prepaid on such date, the principal amount of each Note held by such holder
to be prepaid (determined in accordance with Section 8.3), and the interest
to be paid on the prepayment date with respect to such principal amount being
prepaid, and shall be accompanied by a certificate of a Senior Financial
Officer as to the estimated Make-Whole Amount due in connection with such
prepayment (calculated as if the date of such notice were the date of the
prepayment), setting forth the details of such computation. Two Business
Days prior to such prepayment, the Company shall deliver to each holder of
Notes a certificate of a Senior Financial Officer specifying the calculation
of such Make-Whole Amount as of the specified prepayment date.
Section 8.3. Allocation of Partial Prepayments. In the case of each partial
prepayment of the Notes, the principal amount of the Notes to be prepaid
shall be allocated among all of the Notes at the time outstanding in
proportion, as nearly as practicable, to the respective unpaid principal
amounts thereof.
Section 8.4. Maturity; Surrender, etc. In the case of each prepayment of
Notes pursuant to this Section 8, the principal amount of each Note to be
prepaid shall mature and become due and payable on the date fixed for such
prepayment, together with interest on such principal amount accrued to such
date and the applicable Make-Whole Amount, if any. From and after such date,
unless the Company shall fail to pay such principal amount when so due and
payable, together with the interest and Make-Whole Amount, if any, as
aforesaid, interest on such principal amount shall cease to accrue. Any Note
paid or prepaid in full shall be surrendered to the Company and cancelled and
shall not be reissued, and no Note shall be issued in lieu of any prepaid
principal amount of any Note.
Section 8.5. Purchase of Notes. The Company will not and will not permit
any Affiliate to purchase, redeem, prepay or otherwise acquire, directly or
indirectly, any of the outstanding Notes except (a) upon the payment or
prepayment of the Notes in accordance with the terms of this Agreement and
the Notes or (b) pursuant to an offer to purchase made by the Company or an
Affiliate pro rata to the holders of all Notes at the time outstanding upon
the same terms and conditions. Any such offer shall provide each holder with
sufficient information to enable it to make an informed decision with respect
to such offer, and shall remain open for at least 10 Business Days. If the
holders of more than 25% of the principal amount of the Notes then
outstanding accept such offer, the Company shall promptly notify the
remaining holders of such fact and the expiration date for the acceptance by
holders of Notes of such offer shall be extended by the number of days
necessary to give each such remaining holder at least 10 Business Days from
its receipt of such notice to accept such offer. The Company will promptly
cancel all Notes acquired by it or any Affiliate pursuant to any payment,
prepayment or purchase of Notes pursuant to any provision of this Agreement
and no Notes may be issued in substitution or exchange for any such Notes.
Section 8.6. Make-Whole Amount. The term "Make-Whole Amount" means, with
respect to any Note, an amount equal to the excess, if any, of the Discounted
Value of the Remaining Scheduled Payments with respect to the Called
Principal of such Note over the amount of such Called Principal, provided
that the Make-Whole Amount may in no event be less than zero. For the
purposes of determining the Make-Whole Amount, the following terms have the
following meanings:
"Called Principal" means, with respect to any Note, the principal
of such Note that is to be prepaid pursuant to Section 8.2 or has become
or is declared to be immediately due and payable pursuant to
Section 12.1, as the context requires.
"Discounted Value" means, with respect to the Called Principal of
any Note, the amount obtained by discounting all Remaining Scheduled
Payments with respect to such Called Principal from their respective
scheduled due dates to the Settlement Date with respect to such Called
Principal, in accordance with accepted financial practice and at a
discount factor (applied on the same periodic basis as that on which
interest on the Notes is payable) equal to the Reinvestment Yield with
respect to such Called Principal.
"Reinvestment Yield" means, with respect to the Called Principal of
any Note, 0.50% over the yield to maturity implied by (i) the yields
reported, as of 10:00 A.M. (New York City time) on the second Business
Day preceding the Settlement Date with respect to such Called Principal,
on the display designated as "Page 678" on the Dow Jones Markets, a
division of Dow & Jones Company, Telerate Access Service (or such other
display as may replace Page 678 on the Telerate Access Service) for
actively traded on-the-run U.S. Treasury securities having a maturity
equal to the Remaining Average Life of such Called Principal as of such
Settlement Date, or (ii) if such yields are not reported as of such time
or the yields reported as of such time are not ascertainable, the
Treasury Constant Maturity Series Yields reported, for the latest day
for which such yields have been so reported as of the second Business
Day preceding the Settlement Date with respect to such Called Principal,
in Federal Reserve Statistical Release H.15 (519) (or any comparable
successor publication) for actively traded on-the-run U.S. Treasury
securities having a constant maturity equal to the Remaining Average
Life of such Called Principal as of such Settlement Date. Such implied
yield will be determined, if necessary, by (a) converting U.S. Treasury
bill quotations to bond-equivalent yields in accordance with accepted
financial practice and (b) interpolating linearly between (1) the
actively traded on-the-run U.S. Treasury security with the maturity
closest to and greater than the Remaining Average Life and (2) the
actively traded on-the-run U.S. Treasury security with the maturity
closest to and less than the Remaining Average Life.
"Remaining Average Life" means, with respect to any Called
Principal, the number of years (calculated to the nearest one-twelfth
year) obtained by dividing (i) such Called Principal into (ii) the sum
of the products obtained by multiplying (a) the principal component of
each Remaining Scheduled Payment with respect to such Called Principal
by (b) the number of years (calculated to the nearest one-twelfth year)
that will elapse between the Settlement Date with respect to such Called
Principal and the scheduled due date of such Remaining Scheduled Payment.
Remaining Scheduled Payments means, with respect to the Called
Principal of any Note, all payments of such Called Principal and
interest thereon that would be due after the Settlement Date with
respect to such Called Principal if no payment of such Called Principal
were made prior to its scheduled due date, provided that if such
Settlement Date is not a date on which interest payments are due to be
made under the terms of the Notes, then the amount of the next
succeeding scheduled interest payment will be reduced by the amount of
interest accrued to such Settlement Date and required to be paid on such
Settlement Date pursuant to Section 8.2 or 12.1.
"Settlement Date" means, with respect to the Called Principal of
any Note, the date on which such Called Principal is to be prepaid
pursuant to Section 8.2 or has become or is declared to be immediately
due and payable pursuant to Section 12.1, as the context requires.
Section 9. Affirmative Covenants.
The Company covenants that so long as any of the Notes are outstanding:
Section 9.1. Compliance with Law. The Company will and will cause each of
its Subsidiaries to comply with all laws, ordinances or governmental rules or
regulations to which each of them is subject, including, without limitation,
Environmental Laws, and will obtain and maintain in effect all licenses,
certificates, permits, franchises and other governmental authorizations
necessary to the ownership of their respective properties or to the conduct
of their respective businesses, in each case to the extent necessary to
ensure that non-compliance with such laws, ordinances or governmental rules
or regulations or failures to obtain or maintain in effect such licenses,
certificates, permits, franchises and other governmental authorizations would
not reasonably be expected, individually or in the aggregate, to have a
Material Adverse Effect, provided that such compliance with any such law,
ordinance, rule or regulation by the Company or any Subsidiary shall not be
required to the extent that the applicability or validity thereof is
contested by the Company or such Subsidiary on a timely basis in good faith
and in appropriate proceedings, the Company or a Subsidiary has established
adequate reserves therefor in accordance with GAAP on the books of the
Company or such Subsidiary and such contest would not reasonably be expected
to have a Material Adverse Effect.
Section 9.2. Insurance. The Company will and will cause each of its
Subsidiaries to maintain, with financially sound and reputable insurers,
insurance with respect to their respective properties and businesses against
such casualties and contingencies, of such types, on such terms and in such
amounts (including deductibles, co-insurance and self-insurance, if adequate
reserves are maintained with respect thereto) as is customary in the case of
entities of established reputations engaged in the same or a similar business
and similarly situated.
Section 9.3. Maintenance of Properties. The Company will and will cause
each of its Subsidiaries to maintain and keep, or cause to be maintained and
kept, their respective properties in good repair, working order and condition
(other than ordinary wear and tear), so that the business carried on in
connection therewith may be properly conducted at all times, provided that
this Section shall not prevent the Company or any Subsidiary from
discontinuing the operation and the maintenance of any of its properties if
such discontinuance is desirable in the conduct of its business and the
Company has concluded that such discontinuance would not, individually or in
the aggregate, have a Material Adverse Effect.
Section 9.4. Payment of Taxes. The Company will and will cause each of its
Subsidiaries to file all income tax or similar tax returns required to be
filed in any jurisdiction and to pay and discharge all taxes shown to be due
and payable on such returns and all other taxes, assessments, governmental
charges, or levies payable by any of them, to the extent such taxes and
assessments have become due and payable and before they have become
delinquent, provided that neither the Company nor any Subsidiary need pay any
such tax or assessment if (i) the amount, applicability or validity thereof
is contested by the Company or such Subsidiary on a timely basis in good
faith and in appropriate proceedings, and the Company or a Subsidiary has
established adequate reserves therefor in accordance with GAAP on the books
of the Company or such Subsidiary or (ii) the nonpayment of all such taxes
and assessments in the aggregate would not reasonably be expected to have a
Material Adverse Effect.
Section 9.5. Corporate Existence, etc.; Maintenance of Ownership of
Elizabethtown Water Company. (a) Except as permitted by Section 10.2, the
Company will at all times preserve and keep in full force and effect its
corporate existence. Subject to Section 10.7, the Company will at all times
preserve and keep in full force and effect the corporate existence of each of
its Utility Subsidiaries (unless merged into the Company or a Utility
Subsidiary) and all rights and franchises of the Company and its Utility
Subsidiaries unless, in the good faith judgment of the Company, the
termination of or failure to preserve and keep in full force and effect such
corporate existence, right or franchise would not, individually or in the
aggregate, have a Material Adverse Effect.
(b) The Company will at all times own and hold 100% of the shares of the
outstanding common stock of Elizabethtown Water Company.
Section 9.6 Year 2000 Compliance. The Company shall continue to take all
necessary steps to ensure that the "Year 2000 Problem" (that is, the risk
that computer applications or equipment containing embedded microchips are
unable to recognize correctly and perform properly date-sensitive functions
involving all dates before and after January 1, 2000), will not have a
Material Adverse Effect.
Section 10. Negative Covenants.
The Company covenants that so long as any of the Notes are outstanding:
Section 10.1. Transactions with Affiliates. The Company will not and will
not permit any Subsidiary to enter into directly or indirectly any Material
transaction or Material group of related transactions (including without
limitation the purchase, lease, sale or exchange of properties of any kind or
the rendering of any service) with any Affiliate (other than the Company or
another Subsidiary), except pursuant to the reasonable requirements of the
Company's or such Subsidiary's business and upon fair and reasonable terms no
less favorable to the Company or such Subsidiary than would be obtainable in
a comparable arm's-length transaction with a Person not an Affiliate.
Section 10.2. Merger, Consolidation, etc. The Company shall not consolidate
with or merge with any other corporation unless:
(a) the successor formed by such consolidation or the survivor of
such merger, as the case may be (the "Successor Corporation"), shall be
a solvent corporation organized and existing under the laws of the
United States of America, any State thereof or the District of Columbia;
(b) if the Company is not the Successor Corporation, (i) such
Successor Corporation shall have executed and delivered to each holder
of Notes its assumption of the due and punctual performance and
observance of each covenant and condition of this Agreement and the
Notes and (ii) shall have caused to be delivered to each holder of any
Notes an opinion of nationally recognized independent counsel, or other
independent counsel reasonably satisfactory to the Required Holders, in
form and substance reasonably satisfactory to the Required Holders, to
the effect that all agreements or instruments effecting such assumption
are enforceable in accordance with their terms and comply with the terms
hereof; and
(c) immediately after giving effect to such transaction:
(i) no Default or Event of Default would exist, and
(ii) the Successor Corporation would be in compliance with the
provisions of Section 10.5 hereof if the ratio specified thereunder
were calculated as of the date of such transaction and after giving
effect thereto.
Section 10.3. Fixed Charges Coverage Ratio. The Company will not, at the end
of any fiscal quarter of the Company, permit the Fixed Charges Coverage Ratio
to be less than 1.5 to 1.
Section 10.4. Consolidated Common Shareholders' Equity. The Company will
not, at any time, permit Consolidated Common Shareholders' Equity to be less
than $165,000,000.
Section 10.5. Consolidated Debt. The Company will not at the end of any
calendar year permit the ratio of (a) the sum of (i) Consolidated Debt plus
(ii) the aggregate Redeemable Preferred Stock of the Company and its
Subsidiaries outstanding on such date, minus $10,000,000, to (b) the sum of
(i) Consolidated Debt plus (ii) the aggregate Preferred Stock of the Company
and its Subsidiaries outstanding on such date plus (iii) Consolidated Common
Shareholders' Equity, to exceed 0.65 to 1.
Section 10.6. Liens. The Company will not directly or indirectly create,
incur, assume or permit to exist (upon the happening of a contingency or
otherwise) any Consensual Lien on or with respect to any of the common stock
of Elizabethtown Water Company, or any income or profits therefrom, or assign
or otherwise convey any right to receive such income or profits.
Section 10.7. Sale of Assets of Elizabethtown Water Company and The Mount
Holly Water Company. The Company will not permit Elizabethtown Water Company
or its Subsidiary, The Mount Holly Water Company, to make any Asset
Disposition unless:
(a) in the good faith opinion of the Company, the Asset
Disposition is in exchange for consideration having a Fair Market Value
at least equal to that of the property exchanged and is in the best
interest of (i) the Company and (ii) Elizabethtown Water Company or
Mount Holly Water Company, as the case may be; and
(b) immediately after giving effect to the Asset Disposition, no
Default or Event of Default would exist; and
(c) immediately after giving effect to the Asset Disposition, the
Disposition Value of all property that was the subject of any Asset
Disposition occurring on or after December 22, 1997 would not exceed 25%
of Consolidated Assets of Elizabethtown Water Company as of December 31,
1997.
If the Net Proceeds Amount for any Transfer is applied to (i) a Debenture
Indenture Application, (ii) a Debt Prepayment Application, or (iii) a
Property Reinvestment Application, then such Transfer, only for the purpose
of determining compliance with subsection (c) of this Section 10.7 as of any
date, shall be deemed not to be an Asset Disposition.
Section 10.8. Restricted Investments.
(a) Limitation. The Company will not, and will not permit any of its
Subsidiaries to, declare, make or authorize any Restricted Investment unless
immediately after giving effect to such action:
(i) the aggregate value of all Restricted Investments of the
Company and its Subsidiaries (valued immediately after such action)
would not exceed $30,000,000; and
(ii) no Default or Event of Default would exist.
(b) Investments of Subsidiaries. Each Person which becomes a Subsidiary
of the Company after the date of the Closing will be deemed to have made, on
the date such Person becomes a Subsidiary of the Company, all Restricted
Investments of such Person in existence on such date.
Section 11. Events of Default.
An "Event of Default" shall exist if any of the following conditions or
events shall occur and be continuing:
(a) the Company defaults in the payment of any principal or
Make-Whole Amount, if any, on any Note when the same becomes due and
payable, whether at maturity or at a date fixed for prepayment or by
declaration or otherwise; or
(b) the Company defaults in the payment of any interest on any
Note for more than five Business Days after the same becomes due and
payable; or
(c) the Company defaults in the performance of or compliance with
any term contained herein (other than those referred to in paragraphs
(a) and (b) of this Section 11) and such default is not remedied within
30 Business Days; or
(d) any representation or warranty made in writing by or on behalf
of the Company or by any officer of the Company in this Agreement or in
any writing furnished in connection with the transactions contemplated
hereby proves to have been false or incorrect in any material respect on
the date as of which made; or
(e) either (i) the Company or any Subsidiary is in default (as
principal or as guarantor or other surety) in the payment of any
principal of or premium or Make-Whole Amount or interest on any
Indebtedness that is outstanding in an aggregate principal amount of at
least $5,000,000 beyond any period of grace provided with respect
thereto, or (ii) the Company or any Subsidiary is in default in the
performance of or compliance with any term of any evidence of any
Indebtedness in an aggregate outstanding principal amount of at least
$5,000,000 or of any mortgage, indenture or other agreement relating
thereto or any other condition exists, and as a consequence of such
default or condition such Indebtedness has become, or has been declared
due and payable before its stated maturity or before its regularly
scheduled dates of payment; or
(f) the Company or any Principal Subsidiary (i) is generally not
paying, or admits in writing its inability to pay, its debts as they
become due, (ii) files, or consents by answer or otherwise to the filing
against it of, a petition for relief or reorganization or arrangement or
any other petition in bankruptcy, for liquidation or to take advantage
of any bankruptcy, insolvency, reorganization, moratorium or other
similar law of any jurisdiction, (iii) makes an assignment for the
benefit of its creditors, (iv) consents to the appointment of a
custodian, receiver, trustee or other officer with similar powers with
respect to it or with respect to any substantial part of its property,
(v) is adjudicated as insolvent or to be liquidated, or (vi) takes
corporate action for the purpose of any of the foregoing; or
(g) a court or governmental authority of competent jurisdiction
enters an order appointing, without consent by the Company or any
Principal Subsidiary, a custodian, receiver, trustee or other officer
with similar powers with respect to it or with respect to any
substantial part of its property, or constituting an order for relief or
approving a petition for relief or reorganization or any other petition
in bankruptcy or for liquidation or to take advantage of any bankruptcy
or insolvency law of any jurisdiction, or ordering the dissolution,
winding-up or liquidation of the Company or any of its Principal
Subsidiaries, or any such petition shall be filed against the Company or
any of its Principal Subsidiaries and such petition shall not be
dismissed within 60 days; or
(h) a final judgment or judgments for the payment of money
aggregating in excess of 5% of Consolidated Total Assets are rendered
against one or more of the Company and its Principal Subsidiaries and
are not, within 60 days after entry thereof, bonded, discharged or
stayed pending appeal, or are not discharged within 60 days after the
expiration of such stay; or
(i) if (i) any Plan shall fail to satisfy the minimum funding
standards of ERISA or the Code for any plan year or part thereof or a
waiver of such standards or extension of any amortization period is
sought or granted under section 412 of the Code, (ii) a notice of intent
to terminate any Plan shall have been filed with the PBGC or the PBGC
shall have instituted proceedings under ERISA section 4042 to terminate
or appoint a trustee to administer any Plan or the PBGC shall have
notified the Company or any ERISA Affiliate that a Plan may become a
subject of any such proceedings, (iii) the Company or any ERISA
Affiliate shall have incurred any liability pursuant to Title I or IV of
ERISA or the penalty or excise tax provisions of the Code relating to
employee benefit plans, (iv) the Company or any ERISA Affiliate incurs
withdrawal liability in connection with the withdrawal from any
Multiemployer Plan, or (v) the Company or any Subsidiary establishes or
amends any employee welfare benefit plan that provides post-employment
welfare benefits in a manner that would increase the liability of the
Company or any Subsidiary thereunder; provided, however, none of the
events described in clauses (i) through (v) above shall constitute an
Event of Default unless any such event or events described in clauses
(i) through (v) above, either individually or together with any other
such event or events, would reasonably be expected to have a Material
Adverse Effect.
As used in Section 11(i), the terms "employee benefit plan" and "employee
welfare benefit plan" shall have the respective meanings assigned to such
terms in Section 3 of ERISA.
Section 12. Remedies on Default, Etc.
Section 12.1. Acceleration. (a) If an Event of Default with respect to the
Company described in paragraph (f) or (g) of Section 11 (other than an Event
of Default described in clause (i) of paragraph (f) or described in clause
(vi) of paragraph (f) by virtue of the fact that such clause encompasses
clause (i) of paragraph (f)) has occurred, all the Notes then outstanding
shall automatically become immediately due and payable.
(b) If any other Event of Default has occurred and is continuing, any
holder or holders of at least 51% in principal amount of the Notes at the
time outstanding may at any time at its or their option, by written notice or
notices to the Company, declare all the Notes then outstanding to be
immediately due and payable.
(c) If any Event of Default described in paragraph (a) or (b) of
Section 11 has occurred and is continuing, any holder or holders of Notes at
the time outstanding affected by such Event of Default may at any time, at
its or their option, by notice or notices to the Company, declare all the
Notes held by it or them to be immediately due and payable.
Upon any Note s becoming due and payable under this Section 12.1,
whether automatically or by declaration, such Note will forthwith mature and
the entire unpaid principal amount of such Note, plus (x) all accrued and
unpaid interest thereon and (y) the Make-Whole Amount determined in respect
of such principal amount (to the full extent permitted by applicable law),
shall all be immediately due and payable, in each and every case without
presentment, demand, protest or further notice, all of which are hereby
waived. The Company acknowledges, and the parties hereto agree, that each
holder of a Note has the right to maintain its investment in the Notes free
from repayment by the Company (except as herein specifically provided for)
and that the provision for payment of a Make-Whole Amount by the Company in
the event that the Notes are prepaid or are accelerated as a result of an
Event of Default, is intended to provide compensation for the deprivation of
such right under such circumstances.
Section 12.2. Other Remedies. If any Default or Event of Default has
occurred and is continuing, and irrespective of whether any Notes have become
or have been declared immediately due and payable under Section 12.1, the
holder of any Note at the time outstanding may proceed to protect and enforce
the rights of such holder by an action at law, suit in equity or other
appropriate proceeding, whether for the specific performance of any agreement
contained herein or in any Note, or for an injunction against a violation of
any of the terms hereof or thereof, or in aid of the exercise of any power
granted hereby or thereby or by law or otherwise.
Section 12.3. Rescission. At any time after any Notes have been declared due
and payable pursuant to clause (b) of Section 12.1, the Required Holders, by
written notice to the Company, may rescind and annul any such declaration and
its consequences if (a) the Company has paid all overdue interest on the
Notes, all principal of and Make-Whole Amount, if any, on any Notes that are
due and payable and are unpaid other than by reason of such declaration, and
all interest on such overdue principal and Make-Whole Amount, if any, and (to
the extent permitted by applicable law) any overdue interest in respect of
the Notes, at the Default Rate, (b) all Events of Default and Defaults, other
than non-payment of amounts that have become due solely by reason of such
declaration, have been cured or have been waived pursuant to Section 17, and
(c) no judgment or decree has been entered for the payment of any monies due
pursuant hereto or to the Notes. No rescission and annulment under this
Section 12.3 will extend to or affect any subsequent Event of Default or
Default or impair any right consequent thereon.
Section 12.4. No Waivers or Election of Remedies, Expenses, etc. No course
of dealing and no delay on the part of any holder of any Note in exercising
any right, power or remedy shall operate as a waiver thereof or otherwise
prejudice such holder's rights, powers or remedies. No right, power or
remedy conferred by this Agreement or by any Note upon any holder thereof
shall be exclusive of any other right, power or remedy referred to herein or
therein or now or hereafter available at law, in equity, by statute or
otherwise. Without limiting the obligations of the Company under Section 15,
the Company will pay to the holder of each Note on demand such further amount
as shall be sufficient to cover all costs and expenses of such holder
incurred in any enforcement or collection under this Section 12, including,
without limitation, reasonable attorneys' fees, expenses and disbursements.
Section 13. Registration; Exchange; Substitution of Notes.
Section 13.1. Registration of Notes. The Company shall keep at its principal
executive office a register for the registration and registration of
transfers of Notes. The name and address of each holder of one or more
Notes, each transfer thereof and the name and address of each transferee of
one or more Notes shall be registered in such register. Prior to due
presentment for registration of transfer, the Person in whose name any Note
shall be registered shall be deemed and treated as the owner and holder
thereof for all purposes hereof, and the Company shall not be affected by any
notice or knowledge to the contrary. The Company shall give to any holder of
a Note that is an Institutional Investor promptly upon request therefor, a
complete and correct copy of the names and addresses of all registered
holders of Notes.
Section 13.2. Transfer and Exchange of Notes. Upon surrender of any
Note at the principal executive office of the Company for registration of
transfer or exchange (and in the case of a surrender for registration of
transfer, duly endorsed or accompanied by a written instrument of transfer
duly executed by the registered holder of such Note or its attorney duly
authorized in writing and accompanied by the address for notices of each
transferee of such Note or part thereof), the Company shall execute and
deliver, at the Company s expense (except as provided below), one or more new
Notes (as requested by the holder thereof) in exchange therefor, in an
aggregate principal amount equal to the unpaid principal amount of the
surrendered Note. Each such new Note shall be payable to such Person as such
holder may request and shall be substantially in the form of Exhibit 1. Each
such new Note shall be dated and bear interest from the date to which
interest shall have been paid on the surrendered Note or dated the date of
the surrendered Note if no interest shall have been paid thereon. The
Company may require payment of a sum sufficient to cover any stamp tax or
governmental charge imposed in respect of any such transfer of Notes. Notes
shall not be transferred in denominations of less than $100,000, provided
that if necessary to enable the registration of transfer by a holder of its
entire holding of Notes, one Note may be in a denomination of less than
$100,000. Any transferee of a Note, or purchaser of a participation therein,
shall, by its acceptance of such Note be deemed to make the same
representations to the Company regarding the Note or participation as you
have made pursuant to Section 6.2, provided that such entity may (in reliance
upon information provided by the Company, which shall not be unreasonably
withheld) make a representation to the effect that the purchase by such
entity of any Note will not constitute a non-exempt prohibited transaction
under Section 406(a) of ERISA.
Section 13.3. Replacement of Notes. Upon receipt by the Company of evidence
reasonably satisfactory to it of the ownership of and the loss, theft,
destruction or mutilation of any Note (which evidence shall be, in the case
of an Institutional Investor, notice from such Institutional Investor of such
ownership and such loss, theft, destruction or mutilation), and
(a) in the case of loss, theft or destruction, of indemnity
reasonably satisfactory to it (provided that if the holder of such Note
is, or is a nominee for, you or another holder of a Note with a minimum
net worth of at least $50,000,000, such Person's own unsecured agreement
of indemnity shall be deemed to be satisfactory), or
(b) in the case of mutilation, upon surrender and cancellation
thereof,
the Company at its own expense shall execute and deliver, in lieu thereof, a
new Note, dated and bearing interest from the date to which interest shall
have been paid on such lost, stolen, destroyed or mutilated Note or dated the
date of such lost, stolen, destroyed or mutilated Note if no interest shall
have been paid thereon.
Section 14. Payments on Notes.
Section 14.1. Place of Payment. Subject to Section 14.2, payments of
principal, Make-Whole Amount, if any, and interest becoming due and payable
on the Notes shall be made in Westfield, New Jersey at the principal office
of the Company in such jurisdiction. The Company may at any time, by notice
to each holder of a Note, change the place of payment of the Notes so long as
such place of payment shall be either the principal office of the Company in
such jurisdiction or the principal office of a bank or trust company in such
jurisdiction.
Section 14.2. Home Office Payment. So long as you or your nominee shall be
the holder of any Note, and notwithstanding anything contained in
Section 14.1 or in such Note to the contrary, the Company will pay all sums
becoming due on such Note for principal, Make-Whole Amount, if any, and
interest by the method and at the address specified for such purpose below
your name in Schedule A, or by such other method or at such other address as
you shall have from time to time specified to the Company in writing for such
purpose, without the presentation or surrender of such Note or the making of
any notation thereon, except that upon written request of the Company made
concurrently with or reasonably promptly after payment or prepayment in full
of any Note, you shall surrender such Note for cancellation, reasonably
promptly after any such request, to the Company at its principal executive
office or at the place of payment most recently designated by the Company
pursuant to Section 14.1. The Company will afford the benefits of this
Section 14.2 to any Institutional Investor that is the direct or indirect
transferee of any Note purchased by you under this Agreement and that has
made the same agreement relating to such Note as you have made in this
Section 14.2.
Section 15. Expenses, Etc.
Section 15.1. Transaction Expenses. Whether or not the transactions
contemplated hereby are consummated, the Company will pay all costs and
expenses (including reasonable attorneys' fees of a special counsel and, if
reasonably required, local or other counsel) incurred by you and each holder
of a Note in connection with such transactions and in connection with any
amendments, waivers or consents under or in respect of this Agreement or the
Notes (whether or not such amendment, waiver or consent becomes effective),
including, without limitation: (a) the costs and expenses incurred in
enforcing or defending (or determining whether or how to enforce or defend)
any rights under this Agreement or the Notes or in responding to any subpoena
or other legal process or informal investigative demand issued in connection
with this Agreement or the Notes, or by reason of being a holder of any Note,
and (b) the costs and expenses, including financial advisors' fees, incurred
in connection with the insolvency or bankruptcy of the Company or any
Subsidiary or in connection with any work-out or restructuring of the
transactions contemplated hereby and by the Notes. The Company will pay, and
will save you and each other holder of a Note harmless from, all claims in
respect of any fees, costs or expenses, if any, of brokers and finders (other
than those retained by you).
Section 15.2. Survival. The obligations of the Company under this Section 15
will survive the payment or transfer of any Note, the enforcement, amendment
or waiver of any provision of this Agreement or the Notes, and the
termination of this Agreement.
Section 16. Survival of Representations and Warranties; Entire Agreement.
All representations and warranties contained herein shall survive the
execution and delivery of this Agreement and the Notes, the purchase or
transfer by you of any Note or portion thereof or interest therein and the
payment of any Note, and may be relied upon by any subsequent holder of a
Note, regardless of any investigation made at any time by or on behalf of you
or any other holder of a Note. All statements contained in any certificate
or other instrument delivered by or on behalf of the Company pursuant to this
Agreement shall be deemed representations and warranties of the Company under
this Agreement. Subject to the preceding sentence, this Agreement and the
Notes embody the entire agreement and understanding between you and the
Company and supersede all prior agreements and understandings relating to the
subject matter hereof.
Section 17. Amendment and Waiver.
Section 17.1. Requirements. This Agreement and the Notes may be amended, and
the observance of any term hereof or of the Notes may be waived (either
retroactively or prospectively), with (and only with) the written consent of
the Company and the Required Holders, except that (a) no amendment or waiver
of the notice periods in Section 8 hereof, any of the provisions of
Section 1, 2, 3, 4, 5, 6 or 21 hereof, or any defined term (as it is used
therein), will be effective as to you unless consented to by you in writing,
and (b) no such amendment or waiver may, without the written consent of the
holder of each Note at the time outstanding affected thereby, (i) subject to
the provisions of Section 12 relating to acceleration or rescission, change
the amount or time of any prepayment or payment of principal of, or reduce
the rate or change the time of payment or method of computation of interest
or of the Make-Whole Amount on, the Notes, (ii) change the percentage of the
principal amount of the Notes the holders of which are required to consent to
any such amendment or waiver, or (iii) amend any of Sections 8 (other than
the notice periods therein), 11(a), 11(b), 12, 17 or 20.
Section 17.2. Solicitation of Holders of Notes.
(a) Solicitation. The Company will provide each holder of the Notes
(irrespective of the amount of Notes then owned by it) with sufficient
information, sufficiently far in advance of the date a decision is required,
to enable such holder to make an informed and considered decision with
respect to any proposed amendment, waiver or consent in respect of any of the
provisions hereof or of the Notes. The Company will deliver executed or true
and correct copies of each amendment, waiver or consent effected pursuant to
the provisions of this Section 17 to each holder of outstanding Notes
promptly following the date on which it is executed and delivered by, or
receives the consent or approval of, the requisite holders of Notes.
(b) Payment. The Company will not directly or indirectly pay or cause to
be paid any remuneration, whether by way of supplemental or additional
interest, fee or otherwise, or grant any security, to any holder of Notes as
consideration for or as an inducement to the entering into by any holder of
Notes or any waiver or amendment of any of the terms and provisions hereof or
of the Notes unless such remuneration is concurrently paid, or security is
concurrently granted, on the same terms, ratably to each holder of Notes then
outstanding whether or not such holder consented to such waiver or amendment.
Section 17.3. Binding Effect, etc. Any amendment or waiver consented to as
provided in this Section 17 applies equally to all holders of Notes and is
binding upon them and upon each future holder of any Note and upon the
Company without regard to whether such Note has been marked to indicate such
amendment or waiver. No such amendment or waiver will extend to or affect
any obligation, covenant, agreement, Default or Event of Default not
expressly amended or waived or impair any right consequent thereon. No
course of dealing between the Company and the holder of any Note nor any
delay in exercising any rights hereunder or under any Note shall operate as a
waiver of any rights of any holder of such Note. As used herein, the term
"this Agreement" and references thereto shall mean this Agreement as it may
from time to time be amended or supplemented.
Section 17.4. Notes Held by Company, etc. Solely for the purpose of
determining whether the holders of the requisite percentage of the aggregate
principal amount of Notes then outstanding approved or consented to any
amendment, waiver or consent to be given under this Agreement or the Notes,
or have directed the taking of any action provided herein or in the Notes to
be taken upon the direction of the holders of a specified percentage of the
aggregate principal amount of Notes then outstanding, Notes directly or
indirectly owned by the Company or any of its Affiliates shall be deemed not
to be outstanding.
Section 18. Notices.
All notices and communications provided for hereunder shall be in
writing and sent (a) by telefacsimile if the sender on the same day sends a
confirming copy of such notice by a recognized overnight delivery service
(charges prepaid), or (b) by registered or certified mail with return receipt
requested (postage prepaid), or (c) by a recognized overnight delivery
service (with charges prepaid). Any such notice must be sent:
(i) if to you or your nominee, to you or it at the address
specified for such communications in Schedule A, or at such other
address as you or it shall have specified to the Company in writing,
(ii) if to any other holder of any Note, to such holder at such
address as such other holder shall have specified to the Company in
writing, or
(iii) if to the Company, to the Company at its address set forth at
the beginning hereof to the attention of the Treasurer, or at such other
address as the Company shall have specified to the holder of each Note
in writing.
Notices under this Section 18 will be deemed given only when actually
received.
Section 19. Reproduction of Documents.
This Agreement and all documents relating thereto, including, without
limitation, (a) consents, waivers and modifications that may hereafter be
executed, (b) documents received by you at the Closing (except the Notes
themselves), and (c) financial statements, certificates and other information
previously or hereafter furnished to you, may be reproduced by you by any
photographic, photostatic, microfilm, microcard, miniature photographic or
other similar process and you may destroy any original document so
reproduced. The Company agrees and stipulates that, to the extent permitted
by applicable law, any such reproduction shall be admissible in evidence as
the original itself in any judicial or administrative proceeding (whether or
not the original is in existence and whether or not such reproduction was
made by you in the regular course of business) and any enlargement, facsimile
or further reproduction of such reproduction shall likewise be admissible in
evidence. This Section 19 shall not prohibit the Company or any other holder
of Notes from contesting any such reproduction to the same extent that it
could contest the original, or from introducing evidence to demonstrate the
inaccuracy of any such reproduction.
Section 20. Confidential Information.
For the purposes of this Section 20, "Confidential Information" means
information delivered to you by or on behalf of the Company or any Subsidiary
in connection with the transactions contemplated by or otherwise pursuant to
this Agreement that is proprietary in nature and that was clearly marked or
labeled or otherwise adequately identified when received by you as being
confidential information of the Company or such Subsidiary, provided that
such term does not include information that (a) was publicly known or
otherwise known to you prior to the time of such disclosure, (b) subsequently
becomes publicly known through no act or omission by you or any person acting
on your behalf, (c) otherwise becomes known to you other than through
disclosure by the Company or any Subsidiary or (d) constitutes financial
statements delivered to you under Section 7.1 that are otherwise publicly
available. You will maintain the confidentiality of such Confidential
Information in accordance with procedures adopted by you in good faith to
protect confidential information of third parties delivered to you, provided
that you may deliver or disclose Confidential Information to (i) your
directors, officers, employees, agents, attorneys and affiliates (to the
extent such disclosure reasonably relates to the administration of the
investment represented by your Notes), (ii) your financial advisors and other
professional advisors who agree to hold confidential the Confidential
Information substantially in accordance with the terms of this Section 20,
(iii) any other holder of any Note, (iv) any Institutional Investor to which
you sell or offer to sell such Note or any part thereof or any participation
therein (if such Person has agreed in writing prior to its receipt of such
Confidential Information to be bound by the provisions of this Section 20),
(v) any federal or state regulatory authority having jurisdiction over you,
(vi) the National Association of Insurance Commissioners or any similar
organization, or any nationally recognized rating agency that requires access
to information about your investment portfolio, or (vii) any other Person to
which such delivery or disclosure may be necessary or appropriate (w) to
effect compliance with any law, rule, regulation or order applicable to you,
(x) in response to any subpoena or other legal process, (y) in connection
with any litigation involving or related to the Company, this Agreement or
the Notes to which you are a party or (z) if an Event of Default has occurred
and is continuing, to the extent you may reasonably determine such delivery
and disclosure to be necessary or appropriate in the enforcement or for the
protection of the rights and remedies under your Notes and this Agreement.
Each holder of a Note, by its acceptance of a Note, will be deemed to have
agreed to be bound by and to be entitled to the benefits of this Section 20
as though it were a party to this Agreement. On reasonable request by the
Company in connection with the delivery to any holder of a Note of
information required to be delivered to such holder under this Agreement or
requested by such holder (other than a holder that is a party to this
Agreement or its nominee or any other holder that shall have previously
delivered such a confirmation), such holder will confirm in writing that it
is bound by the provisions of this Section 20.
Section 21. Substitution of Purchaser.
You shall have the right to substitute any one of your Affiliates as the
purchaser of the Notes that you have agreed to purchase hereunder, by written
notice to the Company, which notice shall be signed by both you and such
Affiliate, shall contain such Affiliate's agreement to be bound by this
Agreement and shall contain a confirmation by such Affiliate of the accuracy
with respect to it of the representations set forth in Section 6. Upon
receipt of such notice, wherever the word "you" is used in this Agreement
(other than in this Section 21), such word shall be deemed to refer to such
Affiliate in lieu of you. In the event that such Affiliate is so substituted
as a purchaser hereunder and such Affiliate thereafter transfers to you all
of the Notes then held by such Affiliate, upon receipt by the Company of
notice of such transfer, wherever the word "you" is used in this Agreement
(other than in this Section 21), such word shall no longer be deemed to refer
to such Affiliate, but shall refer to you, and you shall have all the rights
of an original holder of the Notes under this Agreement.
Section 22. Miscellaneous.
Section 22.1. Successors and Assigns. All covenants and other agreements
contained in this Agreement by or on behalf of any of the parties hereto bind
and inure to the benefit of their respective successors and assigns
(including, without limitation, any subsequent holder of a Note) whether so
expressed or not.
Section 22.2. Payments Due on Non-Business Days. Anything in this Agreement
or the Notes to the contrary notwithstanding, any payment of principal of or
Make-Whole Amount or interest on any Note that is due on a date other than a
Business Day shall be made on the next succeeding Business Day without
including the additional days elapsed in the computation of the interest
payable on such next succeeding Business Day.
Section 22.3. Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and
any such prohibition or unenforceability in any jurisdiction shall (to the
full extent permitted by law) not invalidate or render unenforceable such
provision in any other jurisdiction.
Section 22.4. Construction. Each covenant contained herein shall be
construed (absent express provision to the contrary) as being independent of
each other covenant contained herein, so that compliance with any one
covenant shall not (absent such an express contrary provision) be deemed to
excuse compliance with any other covenant. Where any provision herein refers
to action to be taken by any Person, or which such Person is prohibited from
taking, such provision shall be applicable whether such action is taken
directly or indirectly by such Person.
Section 22.5. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original but all of which together
shall constitute one instrument. Each counterpart may consist of a number of
copies hereof, each signed by less than all, but together signed by all, of
the parties hereto.
Section 22.6. Governing Law. This Agreement shall be construed and enforced
in accordance with, and the rights of the parties shall be governed by, the
law of the State of New York excluding choice-of-law principles of the law of
such State that would require the application of the laws of a jurisdiction
other than such State.
* * * * *
If you are in agreement with the foregoing, please sign the form of
agreement on the accompanying counterpart of this Agreement and return it to
the Company, whereupon the foregoing shall become a binding agreement between
you and the Company.
Very truly yours,
E'town Corporation
By
[Title]
The foregoing is hereby
agreed to as of the
date thereof.
Teachers Insurance and Annuity
Association of America
By
- ---------------------------------------
Its
Schedule A
(to Note Purchase Agreement)
Information Relating to Purchaser
Name and Address of Purchaser Principal Amount of Notes to Be
Purchased
Teachers Insurance and Annuity $30,000,000
Association of America
730 Third Avenue
New York, New York 10017-3263
Payments
All payments on or in respect of the Notes to be made in immediately
available funds (identifying each payment as E'town Corporation) through the
Automated Clearing House System to:
The Chase Manhattan Bank
ABA #021-000-021
New York, New York
Account Number 900-9-000200
For Further Credit to the TIAA Account Number G07040
Reference: PPN#/Maturity Date/Coupon Rate/P&I Breakdown
with sufficient information to identify the source and application of such
funds.
Notices
Contemporaneous with the above electronic funds transfer, advice setting
forth (a) the full name, private placement number, and coupon rate;
(b) allocation of payment between principal, interest, premium and any special
payment; and (c) name and address of Bank from which wire transfer was sent,
shall be delivered, mailed, or telecopied to:
Teachers Insurance and Annuity Association of America
730 Third Avenue
New York, New York 10017-3206
Attention: Securities Accounting Division
Telephone: (212) 916-4188
Telefacsimile: (212) 916-6955
All other notices and communications to be addressed to:
Teachers Insurance and Annuity Association of America
730 Third Avenue, 4th Floor
New York, New York 10017-3206
Attention: Jose Almonte, Securities Division
Telephone: (212) 916-6539 (Analyst's Number) or (212) 490-9000 (General
Number)
Telefacsimile: (212) 916-6667 (Team Fax Number)
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 13-1624203
B-11
Schedule B
(to Note Purchase Agreement)
Defined Terms
General Provisions
Where the character or amount of any asset or liability or item of
income or expense is required to be determined or any consolidation or other
accounting computation is required to be made for the purposes of this
Agreement, the same shall be done in accordance with GAAP, to the extent
applicable, except where such principles are inconsistent with the express
requirements of this Agreement.
Definitions
As used herein, the following terms have the respective meanings set
forth below or set forth in the Section hereof following such term:
"Affiliate" means, at any time, and with respect to any Person, any
other Person that at such time directly or indirectly through one or more
intermediaries Controls, or is Controlled by, or is under common Control
with, such first Person. As used in this definition, "Control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise. Unless the context
otherwise clearly requires, any reference to an "Affiliate" is a reference to
an Affiliate of the Company.
"Asset Disposition" means any Transfer except:
(a) any
(i) Transfer from a Subsidiary of Elizabethtown Water Company
to Elizabethtown Water Company or a Wholly-Owned Subsidiary of
Elizabethtown Water Company;
(ii) Transfer from Elizabethtown Water Company to a
Wholly-Owned Subsidiary of Elizabethtown Water Company; and
(iii) Transfer from Elizabethtown Water Company to a Subsidiary
of Elizabethtown Water Company (other than a Wholly-Owned
Subsidiary of Elizabethtown Water Company) or from a Subsidiary of
Elizabethtown Water Company to another Subsidiary of Elizabethtown
Water Company (other than a Wholly-Owned Subsidiary of
Elizabethtown Water Company), which in either case is for Fair
Market Value,
so long as immediately before and immediately after the consummation of
any such Transfer and after giving effect thereto, no Default or Event
of Default exists; and
(b) any Transfer made in the ordinary course of business and
involving only property that is either (i) inventory held for sale or
(ii) pipes and other utility plant assets, equipment, vehicles,
fixtures, supplies or materials no longer required in the operation of
the business of Elizabethtown Water Company or any Subsidiary of
Elizabethtown Water Company or that is worn out, permanently
unserviceable or obsolete.
"Business Day" means (a) for the purposes of Section 8.6 only, any day
other than a Saturday, a Sunday or a day on which commercial banks in New
York City are required or authorized to be closed, and (b) for the purposes
of any other provision of this Agreement, any day other than a Saturday, a
Sunday or a day on which commercial banks in Newark, New Jersey or New York,
New York are required or authorized to be closed.
"Capital Lease" means, at any time, a lease with respect to which the
lessee is required concurrently to recognize the acquisition of an asset and
the incurrence of a liability in accordance with GAAP.
"Capital Lease Obligation" means, with respect to any Person and a
Capital Lease, the amount of the obligation of such Person as the lessee
under such Capital Lease which would, in accordance with GAAP, appear as a
liability on a balance sheet of such Person.
"Closing" is defined in Section 3.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and the rules and regulations promulgated thereunder from time to time.
"Company" means E'town Corporation, a New Jersey corporation.
"Confidential Information" is defined in Section 20.
"Consensual Lien" means any Lien that is voluntarily agreed to or
consented to by the Company or that has been granted or created by the
Company for the benefit of any other Person.
"Consolidated Assets" means, at any time, the total assets of the
Company and its Subsidiaries which would be shown as assets on a consolidated
balance sheet of the Company and its Subsidiaries as of such time prepared in
accordance with GAAP, after eliminating all amounts properly attributable to
minority interests, if any, in the stock and surplus of Subsidiaries.
"Consolidated Common Shareholders' Equity" means, at any time,
(a) the sum of (i) the par value (or value stated on the books of
the corporation) of the common stock of the Company and its Subsidiaries
plus (ii) the amount of the paid-in capital and retained earnings of the
Company and its Subsidiaries, in each case as such amounts would be
shown on a consolidated balance sheet of the Company and its
Subsidiaries as of such time prepared in accordance with GAAP, provided
that there shall be excluded from this clause (a) treasury stock and
common stock subscribed and unissued, minus
(b) to the extent included in clause (a), all amounts properly
attributable to minority interests, if any, in the stock and surplus of
Subsidiaries.
"Consolidated Debt" means, as of any date of determination, the total of
all Debt of the Company and its Subsidiaries outstanding on such date, after
eliminating all offsetting debits and credits between the Company and its
Subsidiaries and all other items required to be eliminated in the course of
the preparation of consolidated financial statements of the Company and its
Subsidiaries in accordance with GAAP.
"Consolidated Income Available for Fixed Charges" means, with respect to
any period, Consolidated Net Income for such period plus all amounts deducted
in the computation thereof on account of (a) Fixed Charges and (b) taxes
imposed on or measured by income or excess profits.
"Consolidated Net Income" means, with reference to any period, the
income (or loss) of the Company and its Subsidiaries for such period, before
Distributions paid during such period by the Company and its Subsidiaries
(taken as a cumulative whole excluding Extraordinary Items), as determined in
accordance with GAAP, after eliminating all offsetting debits and credits
between the Company and its Subsidiaries and all other items required to be
eliminated in the course of the preparation of consolidated financial
statements of the Company and its Subsidiaries in accordance with GAAP.
"Consolidated Operating Revenues" means, for any period, the operating
revenues of the Company and its Subsidiaries which would be shown as
operating revenues on a consolidated statement of income of the Company and
its Subsidiaries for such period prepared in accordance with GAAP.
"Debenture Indenture Application" means, with respect to any Transfer of
property, the application by Elizabethtown Water Company within 365 days of
such Transfer of the Net Proceeds Amount with respect to such Transfer in
accordance with Section 5.08 (and the related definitions) of the Indenture
dated as of October 15, 1988 between Elizabethtown Water Company and
Citibank, N.A., as trustee, as amended through the date of the Closing (or
any provision of any other Debenture Indenture which is substantially the
same as such Section 5.08 (and the related definitions)).
"Debenture Indentures" means (i) the Indentures pursuant to which the
Debentures of Elizabethtown Water Company listed on Schedule 5.15 were issued
and are outstanding, and (ii) substantially similar Indentures pursuant to
which future series of the Debentures of Elizabethtown Water Company may be
issued.
"Debt" means, with respect to any Person, without duplication,
(a) its liabilities for borrowed money;
(b) its liabilities for the deferred purchase price of property
acquired by such Person (excluding accounts payable arising in the
ordinary course of business but including, without limitation, all
liabilities created or arising under any conditional sale or other title
retention agreement with respect to any such property);
(c) its Capital Lease Obligations;
(d) all liabilities for borrowed money secured by any Lien with
respect to any property owned by such Person (whether or not it has
assumed or otherwise become liable for such liabilities); and
(e) any Guaranty of such Person with respect to liabilities of a
type described in any of clauses (a) through (d) hereof.
Debt of any Person shall include all obligations of such Person of the
character described in clauses (a) through (e) to the extent such Person
remains legally liable in respect thereof notwithstanding that any such
obligation is deemed to be extinguished under GAAP.
"Debt Prepayment Application" means, with respect to any Transfer of
property, the application within 180 days of such Transfer (other than in a
Debenture Indenture Application) of cash in an amount equal to the Net
Proceeds Amount with respect to such Transfer to pay Debt of the Subsidiary
of the Company making such Transfer, Elizabethtown Water Company or any
Wholly-Owned Subsidiary (other than Debt owing to the Company, any of its
Subsidiaries or any Affiliate and Debt in respect of any revolving credit or
similar credit facility providing the Company or any of its Subsidiaries with
the right to obtain loans or other extensions of credit from time to time,
except to the extent that in connection with such payment of Debt the
availability of credit under such credit facility is permanently reduced by
an amount not less than the amount of such proceeds applied to the payment of
such Debt).
"Default" means an event or condition the occurrence or existence of
which would, with the lapse of time or the giving of notice or both, become
an Event of Default.
"Default Rate" means that rate of interest that is the greater of (i) 2%
per annum above the rate of interest stated in clause (a) of the first
paragraph of the Notes or (ii) 2% over the rate of interest publicly
announced by The Bank of New York in New York, New York as its "base" or
"prime" rate.
"Disposition Value" means, at any time, with respect to any property
(a) in the case of property that does not constitute Subsidiary
Stock, the book value thereof, valued at the time of such disposition in
good faith by the Company, and
(b) in the case of property that constitutes Subsidiary Stock, an
amount equal to that percentage of book value of the assets of the
Subsidiary that issued such stock as is equal to the percentage that the
book value of such Subsidiary Stock represents of the book value of all
of the outstanding capital stock of such Subsidiary (assuming, in making
such calculations, that all Securities convertible into such capital
stock are so converted and giving full effect to all transactions that
would occur or be required in connection with such conversion)
determined at the time of the disposition thereof, in good faith by the
Company.
"Distribution" means, in respect of any corporation, association or
other business entity dividends paid on Preferred Stock of such corporation,
association or other business entity (except distributions in such stock or
other equity interest).
"Environmental Laws" means any and all Federal, state, local, and
foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or
governmental restrictions relating to pollution and the protection of the
environment or the release of any materials into the environment, including
but not limited to those related to hazardous substances or wastes, air
emissions and discharges to waste or public systems.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the rules and regulations promulgated
thereunder from time to time in effect.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) that is treated as a single employer together with the Company
under section 414 of the Code.
"Event of Default" is defined in Section 11.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Extraordinary Items" shall mean extraordinary items as defined and
determined in accordance with GAAP.
"Fair Market Value" means, at any time and with respect to any property,
the sale value of such property that would be realized in an arm's-length
sale at such time between an informed and willing buyer and an informed and
willing seller (neither being under a compulsion to buy or sell).
"Fixed Charges" means, with respect to any period, the sum of
(a) Interest Charges for such period plus (b) Lease Rentals for such period.
"Fixed Charges Coverage Ratio" means, at the end of any fiscal quarter
of the Company, the ratio of (a) Consolidated Income Available for Fixed
Charges for the period of four consecutive fiscal quarters ending at the end
of such fiscal quarter, to (b) the sum of (i) Fixed Charges for such period
plus (ii) Distributions paid during such period by the Company and its
Subsidiaries.
"GAAP" means generally accepted accounting principles as in effect from
time to time in the United States of America.
"Governmental Authority" means
(a) the government of
(i) the United States of America or any State or other
political subdivision thereof, or
(ii) any jurisdiction in which the Company or any Subsidiary
conducts all or any part of its business, or which asserts
jurisdiction over any properties of the Company or any Subsidiary,
or
(b) any entity exercising executive, legislative, judicial,
regulatory or administrative functions of, or pertaining to, any such
government (including, without limitation, the New Jersey Board of
Public Utilities).
"Guaranty" means, with respect to any Person, any obligation (except the
endorsement in the ordinary course of business of negotiable instruments for
deposit or collection) of such Person guaranteeing or in effect guaranteeing
(whether by reason of being a general partner of a partnership or otherwise)
any Indebtedness, dividend or other obligation of any other Person in any
manner, whether directly or indirectly, including (without limitation)
obligations incurred through an agreement, contingent or otherwise, by such
Person:
(a) to purchase such Indebtedness or obligation or any property
constituting security therefor;
(b) to advance or supply funds (i) for the purchase or payment of
such indebtedness or obligation, or (ii) to maintain any working capital
or other balance sheet condition or any income statement condition of
any other Person or otherwise to advance or make available funds for the
purchase or payment of such Indebtedness or obligation;
(c) to lease properties or to purchase properties or services
primarily for the purpose of assuring the owner of such Indebtedness or
obligation of the ability of any other Person to make payment of the
Indebtedness or obligation; or
(d) otherwise to assure the owner of such Indebtedness or
obligation against loss in respect thereof.
In any computation of the Indebtedness or other liabilities of the
obligor under any Guaranty, the Indebtedness or other obligations that are
the subject of such Guaranty shall be assumed to be direct obligations of
such obligor.
"holder" means, with respect to any Note, the Person in whose name such
Note is registered in the register maintained by the Company pursuant to
Section 13.1.
"Indebtedness" with respect to any Person means, at any time, without
duplication,
(a) its liabilities for borrowed money and its redemption
obligations in respect of mandatorily Redeemable Preferred Stock;
(b) its liabilities for the deferred purchase price of property
acquired by such Person (excluding accounts payable arising in the
ordinary course of business but including all liabilities created or
arising under any conditional sale or other title retention agreement
with respect to any such property);
(c) all liabilities appearing on its balance sheet in accordance
with GAAP in respect of Capital Leases;
(d) all liabilities for borrowed money secured by any Lien with
respect to any property owned by such Person (whether or not it has
assumed or otherwise become liable for such liabilities);
(e) all its liabilities in respect of letters of credit or
instruments serving a similar function issued or accepted for its
account by banks and other financial institutions (whether or not
representing obligations for borrowed money);
(f) Swaps of such Person; and
(g) any Guaranty of such Person with respect to liabilities of a
type described in any of clauses (a) through (f) hereof.
"Institutional Investor" means (a) any original purchaser of a Note,
(b) any holder of a Note holding more than 10% of the aggregate principal
amount of the Notes then outstanding, and (c) any bank, trust company,
savings and loan association or other financial institution, any pension
plan, any investment company, any insurance company, any broker or dealer
holding Notes other than in trading accounts, or any other similar financial
institution or entity, regardless of legal form.
"Interest Charges" means, with respect to any period, the sum (without
duplication) of the following (in each case, eliminating all offsetting
debits and credits between the Company and its Subsidiaries and all other
items required to be eliminated in the course of the preparation of
consolidated financial statements of the Company and its Subsidiaries in
accordance with GAAP): (a) all interest in respect of Debt of the Company and
its Subsidiaries (including imputed interest on Capital Lease Obligations) to
the extent deducted in determining Consolidated Net Income for such period,
together with all interest capitalized or deferred during such period and not
deducted in determining Consolidated Net Income for such period, and (b) all
debt discount and expense amortized or required to be amortized in the
determination of Consolidated Net Income for such period.
"Investor Packet" is defined in Section 5.3.
"Lease Rentals" means, with respect to any period, the sum of the
minimum amount of rental and other obligations required to be paid during
such period by the Company or any Subsidiary as lessee under all leases of
real or personal property (other than (i) any leases with annual rentals that
do not exceed $10,000 in the case of any single lease and $100,000 in the
aggregate for all such leases excluded pursuant to this clause (i), and (ii)
Capital Leases), excluding any amounts required to be paid by the lessee
(whether or not therein designated as rental or additional rental) (a) which
are on account of maintenance and repairs, insurance, taxes, assessments,
water rates and similar charges, or (b) which are based on profits, revenues
or sales realized by the lessee from the leased property or otherwise based
on the performance of the lessee.
"Lien" means, with respect to any Person, any mortgage, lien, pledge,
charge, security interest or other encumbrance, or any interest or title of
any vendor, lessor, lender or other secured party to or of such Person under
any conditional sale or other title retention agreement or Capital Lease,
upon or with respect to any property or asset of such Person (including in
the case of stock, stockholder agreements, voting trust agreements and all
similar arrangements).
"Make-Whole Amount" is defined in Section 8.6.
"Material" means material in relation to the business, operations,
affairs, financial condition, assets, or properties of the Company and its
Subsidiaries taken as a whole.
"Material Adverse Effect" means a material adverse effect on (a) the
business, operations, affairs, financial condition, assets or properties of
the Company and its Subsidiaries taken as a whole, or (b) the ability of the
Company to perform its obligations under this Agreement and the Notes, or
(c) the validity or enforceability of this Agreement or the Notes.
"Multiemployer Plan" means any Plan that is a "multiemployer plan" (as
such term is defined in section 4001(a)(3) of ERISA).
"Net Proceeds Amount" means, with respect to any Transfer of any
Property by any Person, an amount equal to the difference of
(a) the aggregate amount of the consideration (valued at the Fair
Market Value of such consideration at the time of the consummation of
such Transfer) received by such Person in respect of such Transfer, minus
(b) all ordinary and reasonable out-of-pocket costs and expenses
actually incurred by such Person in connection with such Transfer.
"Notes" is defined in Section 1.
"Officer's Certificate" means a certificate of a Senior Financial
Officer or of any other officer of the Company whose responsibilities extend
to the subject matter of such certificate.
"PBGC" means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA or any successor thereto.
"Person" means an individual, partnership, corporation, limited
liability company, association, trust, unincorporated organization, or a
government or agency or political subdivision thereof.
"Plan" means an "employee benefit plan" (as defined in section 3(3) of
ERISA) that is or, within the preceding five years, has been established or
maintained, or to which contributions are or, within the preceding five
years, have been made or required to be made, by the Company or any ERISA
Affiliate or with respect to which the Company or any ERISA Affiliate may
have any liability.
"Preferred Stock" means, in respect of any corporation, shares of the
capital stock of such corporation that are entitled to preference or priority
over any other shares of the capital stock of such corporation in respect of
payment of dividends or distribution of assets upon liquidation.
"Principal Subsidiary" means any Subsidiary for which either (i) total
assets equal or exceed 30% of Consolidated Assets or (ii) operating revenues
for the immediately preceding four fiscal quarters equal or exceed 30% of
Consolidated Operating Revenues for such period.
"property" or "properties" means, unless otherwise specifically limited,
real or personal property of any kind, tangible or intangible, choate or
inchoate.
"Property Reinvestment Application" means, with respect to any Transfer
of property, the satisfaction of each of the following conditions:
(a) the application within 180 days of such Transfer (other than
in a Debenture Indenture Application) of an amount equal to the Net
Proceeds Amount with respect to such Transfer to the acquisition by the
Subsidiary of the Company making such Transfer, Elizabethtown Water
Company or a Wholly-Owned Subsidiary of utility property of such
Subsidiary to be used in the ordinary course of business of such
Subsidiary and which has a Fair Market Value (after deduction for any
Liens attributable thereto) at least equal to the Disposition Value of
the property sold; and
(b) the Company shall have delivered a certificate of a
Responsible Officer of the Company to each holder of a Note referring to
Section 10.7 and identifying the property that was the subject of such
Transfer if such Transfer shall have resulted in a Net Proceeds Amount
greater than $500,000, the Disposition Value of such property, and the
nature, terms, amount and application of the proceeds from the Transfer.
"QPAM Exemption" means Prohibited Transaction Class Exemption 84-14
issued by the United States Department of Labor.
"Redeemable" means, with respect to the capital stock of any Person,
each share of such Person's capital stock that is:
(a) redeemable, payable or required to be purchased or otherwise
retired or extinguished, or convertible into Debt of such Person (i) at
a fixed or determinable date, whether by operation of sinking fund or
otherwise, (ii) at the option of any Person other than such Person, or
(iii) upon the occurrence of a condition not solely within the control
of such Person; or
(b) convertible into other Redeemable capital stock.
"Required Holders" means, at any time, the holders of at least 51% in
principal amount of the Notes at the time outstanding (exclusive of Notes
then owned by the Company or any of its Affiliates).
"Responsible Officer" means any Senior Financial Officer and any other
officer of the Company with responsibility for the administration of the
relevant portion of this Agreement.
"Restricted Investments" means all investments in cash in the common
equity interests of Persons which are not primarily engaged in the
generation, distribution or sale of electric energy or natural gas or the
distribution or sale of water, or the furnishing of communications services,
or water treatment and analysis services, or in the treatment of wastewater.
"Security" shall have the same meaning as in Section 2(a)(1) of the
Securities Act.
"Securities Act" means the Securities Act of 1933, as amended from time
to time.
"Senior Financial Officer" means the chief financial officer, principal
accounting officer, treasurer or controller of the Company.
"Subsidiary" means, as to any Person, any corporation, association,
limited liability company, or other business entity (a "Business Entity") in
which such Person and/or one or more of its Subsidiaries own directly or
indirectly a majority of (a) the combined voting power of all classes of
voting stock having general voting power under ordinary circumstances to
elect a majority of the directors of such Business Entity, if it is a
corporation, (b) the capital interest or profits interest of such Business
Entity, if it is a partnership, joint venture or similar entity or (c) the
beneficial interest of such Business Entity, if it is a trust, association or
other unincorporated organization. Unless the context otherwise clearly
requires, any reference to a "Subsidiary" is a reference to a Subsidiary of
the Company.
"Subsidiary Stock" means, with respect to any Person, the stock (or any
options or warrants to purchase stock or other Securities exchangeable for or
convertible into stock) of any Subsidiary of such Person.
"Swaps" means, with respect to any Person, payment obligations with
respect to interest rate swaps, currency swaps and similar obligations
obligating such Person to make payments, whether periodically or upon the
happening of a contingency. For the purposes of this Agreement, the amount
of the obligation under any Swap shall be the amount determined in respect
thereof as of the end of the then most recently ended fiscal quarter of such
Person, based on the assumption that such Swap had terminated at the end of
such fiscal quarter, and in making such determination, if any agreement
relating to such Swap provides for the netting of amounts payable by and to
such Person thereunder or if any such agreement provides for the simultaneous
payment of amounts by and to such Person, then in each such case, the amount
of such obligation shall be the net amount so determined.
"Transfer" means, with respect to any Person, any transaction in which
such Person sells, conveys, transfers or leases (as lessor) any of its
property, including, without limitation, Subsidiary Stock. For purposes of
determining the application of the Net Proceeds Amount in respect of any
Transfer, the Company may designate any Transfer as one or more separate
Transfers each yielding a separate Net Proceeds Amount. In any such case,
the Disposition Value of any property subject to each such separate Transfer
shall be determined by ratably allocating the aggregate Disposition Value of
all property subject to all such separate Transfers to each such separate
Transfer on a proportionate basis.
"Utility Subsidiary" means any Subsidiary of the Company that is
generally subject to regulation by the New Jersey Board of Public Utilities
or any other public service commission, public utility commission or similar
regulatory authority in the United States of America or any State or other
political subdivision thereof.
"Wholly-Owned Subsidiary" means any Subsidiary of Elizabethtown Water
Company all of the equity interests (except director's qualifying shares) and
voting interests are owned by any one or more of Elizabethtown Water Company
and Elizabethtown Water Company's other Wholly-Owned Subsidiaries.
Schedule 5.3
(to Note Purchase Agreement)
Financial Statements and Other Information
1. Note Purchase Agreement dated as of December 15, 1997 between the
Company and American General Life Insurance Company.
2. Form 10-K of the Company for the year ended December 31, 1998, including
audited financial statements for the fiscal year ended December 31, 1998.
3. Form 10-Q of the Company for the quarter ended March 31, 1999, including
unaudited financial statements for the fiscal quarter ended March 31,
1999.
4. Form 10-Q/A of the Company for the quarter ended June 30, 1999,
including unaudited financial statements for the fiscal quarter ended
June 30, 1999, filed November 15, 1999.
5. Form 10-Q of the Company for the quarter ended September 30, 1999,
including unaudited financial statements for the fiscal quarter ended
September 30, 1999.
6. Form 8-K of the Company dated November 21, 1999.
7. Press release re: proposed merger of E'town Corporation with a
subsidiary of Thames Water plc.
8. A.G. Edwards Research Report on the Company, dated November 12, 1999.
9. A.G. Edwards Water Utility Stock update, dated November 29, 1999.
10. Reports of Standard & Poor's Ratings Group dated November 22, 1999 and
Moody's Investors Service Inc., dated November 30, 1999.
11. Thames Water plc. 1999 annual report.
Schedule 5.4
(to Note Purchase Agreement)
Subsidiaries of the Company and Ownership of Subsidiary Stock
Schedule 5.15
(to Note Purchase Agreement)
Existing Indebtedness
E-1-2
Exhibit 1
(to Note Purchase Agreement)
[Form of Note]
This Note has not been registered under the Securities Act of
1933, as amended, or any state securities law, and may not be
transferred in violation thereof.
E'town Corporation
7.69% Senior Note due February 1, 2010
No. R-[_______] [Date]
$[__________] PPN 269242 B# 9
For Value Received, the undersigned, E'town Corporation (herein called
the "Company"), a corporation organized and existing under the laws of the
State of New Jersey, hereby promises to pay to [_____________________] or
registered assigns, the principal sum of [______________] Dollars on
February 1, 2010 with interest (computed on the basis of a 360-day year of
twelve 30-day months) (a) on the unpaid balance thereof at the rate of 7.69%
per annum from the date hereof, payable semiannually, on the first day of
February and August in each year, commencing with the February 1 or August 1
next succeeding the date hereof, until the principal hereof shall have become
due and payable, and (b) to the extent permitted by law on any overdue
payment (including any overdue prepayment) of principal, any overdue payment
of interest and any overdue payment of any Make-Whole Amount (as defined in
the Note Purchase Agreement referred to below), payable semiannually as
aforesaid (or, at the option of the registered holder hereof, on demand), at
a rate per annum from time to time equal to the greater of (i) 9.69% or
(ii) 2% over the rate of interest publicly announced by The Bank of New York
from time to time in New York, New York as its "base" or "prime" rate.
Payments of principal of, interest on and any Make-Whole Amount with
respect to this Note are to be made in lawful money of the United States of
America in Westfield, New Jersey at the principal office of the Company in
such jurisdiction or at such other place as the Company shall have designated
by written notice to the holder of this Note as provided in the Note Purchase
Agreement referred to below.
This Note is one of a series of Senior Notes (herein called the "Notes")
issued pursuant to the Note Purchase Agreement, dated as of February 1, 2000
(as from time to time amended, the "Note Purchase Agreement"), between the
Company and Teachers Insurance and Annuity Association of America and is
entitled to the benefits thereof. Each holder of this Note will be deemed,
by its acceptance hereof, (i) to have agreed to the confidentiality
provisions set forth in Section 20 of the Note Purchase Agreement and (ii) to
have made the representation set forth in Section 6.2 of the Note Purchase
Agreement, provided that such holder may (in reliance upon information
provided by the Company, which shall not be unreasonably withheld) make a
representation to the effect that the purchase by such holder of any Note
will not constitute a non-exempt prohibited transaction under Section 406(a)
of ERISA.
This Note is a registered Note and, as provided in the Note Purchase
Agreement, upon surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a written instrument of transfer duly executed,
by the registered holder hereof or such holder's attorney duly authorized in
writing, a new Note for a like principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the Company may treat the person in whose name this
Note is registered as the owner hereof for the purpose of receiving payment
and for all other purposes, and the Company will not be affected by any
notice to the contrary.
This Note is subject to optional prepayment, in whole or from time to
time in part, at the times and on the terms specified in the Note Purchase
Agreement, but not otherwise.
If an Event of Default, as defined in the Note Purchase Agreement,
occurs and is continuing, the principal of this Note may be declared or
otherwise become due and payable in the manner, at the price (including any
applicable Make-Whole Amount) and with the effect provided in the Note
Purchase Agreement.
This Note shall be construed and enforced in accordance with, and the
rights of the parties shall be governed by, the law of the State of New York
excluding choice-of-law principles of the law of such State that would
require the application of the laws of a jurisdiction other than such State.
E'town Corporation
By
Its: Treasurer
By
Its: Secretary
[Seal]
E-4.4(a)-2
Exhibit 4.4(a)
(to Note Purchase Agreement)
Form of Opinion of Counsel
to the Company
The closing opinion of Walter M. Braswell, Esq., counsel for the
Company, which is called for by Section 4.4 of the Note Purchase Agreement,
shall be dated the date of the Closing and addressed to you, shall be
satisfactory in scope and form to you and shall be to the effect that:
1. The Company is a corporation, duly organized and validly
existing and in good standing under the laws of the State of New Jersey
and has the corporate power and the corporate authority to execute and
perform the Note Purchase Agreement and to issue the Notes and has the
full corporate power and the corporate authority to conduct the
activities in which it is now engaged and is duly licensed or qualified
and is in good standing as a foreign corporation in each jurisdiction in
which such qualification is required by law, other than those
jurisdictions as to which the failure to be so qualified, licensed or in
good standing would not be reasonably expected to have a Material
Adverse Effect.
2. Each Subsidiary of the Company is a corporation or other legal
entity duly organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation and is duly licensed or
qualified as a foreign corporation or other legal entity and is in good
standing in each jurisdiction in which such qualification is required by
law, other than those jurisdictions as to which the failure to be so
qualified, licensed or in good standing would not be reasonably expected
to have a Material Adverse Effect, and all of the issued and outstanding
shares of capital stock of each such Subsidiary have been duly issued,
are fully paid and nonassessable and are owned by the Company, by one or
more Subsidiaries, or by the Company and one or more Subsidiaries.
3. The Note Purchase Agreement has been duly authorized, executed
and delivered by the Company.
4. The Notes have been duly authorized, executed and issued and
constitute valid obligations of the Company.
5. No approval, consent or withholding of objection on the part
of, or filing, registration or qualification with, any New Jersey state
or local governmental body (including, without limitation, the New
Jersey Board of Public Utilities), is necessary in connection with the
execution, delivery and performance of the Note Purchase Agreement or
the Notes (other than such approvals, consents, filings, registrations
or qualifications as may be required under the provisions of the
securities or "Blue Sky" laws, or of any regulatory laws applicable to
the Purchaser as an insurance company, as to which such counsel
expresses no opinion).
6. The issuance and sale of the Notes and the execution, delivery
and performance by the Company of the Note Purchase Agreement and the
Notes will not conflict with any law or any order of any court or
governmental authority or agency applicable to or binding on the
Company, or conflict with or result in any breach of any of the
provisions of or constitute a default under or result in the creation or
imposition of any Lien upon any of the property of the Company pursuant
to the Certificate of Incorporation or By-laws of the Company or any
agreement or other instrument known to such counsel to which the Company
is a party or by which the Company may be bound.
7. Except as disclosed in the Investor Packet, there is no
litigation pending or, to the best knowledge of such counsel, threatened
which in such counsel's opinion could reasonably be expected to have a
materially adverse effect on the Company's business or assets, or which
would question the validity of the Note Purchase Agreement or the Notes
or impair the ability of the Company to issue and deliver the Notes or
to comply with the provisions of the Note Purchase Agreement.
The opinion of Walter M. Braswell, Esq. shall cover such other matters
relating to the sale of the Notes as you may reasonably request. With
respect to matters of fact on which such opinion is based, such counsel shall
be entitled to rely on appropriate certificates of public officials and
officers of the Company.
E-4.4(b)-2
Exhibit 4.4(b)
(to Note Purchase Agreement)
Form of Opinion of Special New York Counsel
for the Company
The closing opinion of Winthrop, Stimson, Putnam & Roberts, special New
York counsel for the Company, which is called for by Section 4.4 of the Note
Purchase Agreement, shall be dated the date of the Closing and addressed to
you, shall be satisfactory in scope and form to you and shall be to the
effect that:
1. The Note Purchase Agreement constitutes a legal, valid and
binding obligation of the Company, enforceable against the Company in
accordance with its terms, provided that no opinion is expressed as to
(i) the enforceability of the provisions of Section 12.1 of the Note
Purchase Agreement requiring the payment of a Make-Whole Amount upon
acceleration of the Notes to the extent such payment may be deemed a
penalty, and (ii) the enforceability of the provisions of Section 15 of
the Note Purchase Agreement requiring the payment by the Company of the
costs and expenses of the holders of the Notes incurred in connection
with the insolvency or bankruptcy of the Company or any Subsidiary, and
except as the binding effect and enforceability of the Note Purchase
Agreement against the Company may be limited by (i) applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws affecting creditors' rights generally,
(ii) general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or in law), and
(iii) an implied covenant of good faith and fair dealing.
2. The Notes constitute legal and binding obligations of the
Company enforceable in accordance with their terms, except as the
binding effect and enforceability against the Company may be limited by
(i) applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws now or hereafter in
effect affecting creditors' rights generally, (ii) general principles of
equity (regardless of whether such enforceability is considered in a
proceeding in equity or in law), and (iii) an implied covenant of good
faith and fair dealing.
3. No approval, consent or withholding of objection on the part
of, or filing, registration or qualification with, any New York or
Federal governmental body, is necessary in connection with the
execution, delivery and performance of the Note Purchase Agreement or
the Notes (other than such approvals, consents, filings, registrations
or qualifications as may be required under the provisions of the
securities or "Blue Sky" laws, or of any regulatory laws applicable to
the Purchaser as an insurance company, as to which such counsel
expresses no opinion).
4. The issuance and sale of the Notes and the execution, delivery
and performance by the Company of the Note Purchase Agreement and the
Notes will not conflict with any law or any order of any court or New
York or Federal governmental authority or agency known to such counsel
applicable to or binding on the Company, or conflict with or result in
any breach of any of the provisions of or constitute a default under or
result in the creation or imposition of any Lien upon any of the
property of the Company pursuant to the Certificate of Incorporation or
By-laws of the Company or any agreement or other instrument known to
such counsel to which the Company is a party or by which the Company may
be bound.
5. The issuance, sale and delivery of the Notes under the
circumstances contemplated by the Note Purchase Agreement does not
require the registration of the Notes under the Securities Act of 1933,
as amended, or the qualification of an indenture under the Trust
Indenture Act of 1939, as amended.
6. Neither the issue and sale of the Notes by the Company nor the
intended use of the proceeds in the manner contemplated by Section 5.14
of the Note Purchase Agreement will violate Regulation T, U or X of the
Board of Governors of the Federal Reserve System of the United States of
America.
7. The Company is not an "investment company", or a company
"controlled" by an "investment company", subject to registration or
regulation under the Investment Company Act of 1940, as amended.
The opinion of Winthrop, Stimson, Putnam & Roberts shall cover such other
matters relating to the sale of the Notes as you may reasonably request.
With respect to matters of fact on which such opinion is based, such counsel
shall be entitled to rely on appropriate certificates of public officials and
officers of the Company.
E-4.4(c)-3
Exhibit 4.4(c)
(to Note Purchase Agreement)
Form of Opinion of Special Counsel
to the Purchaser
February ___, 2000
Teachers Insurance and Annuity
Association of America
New York, New York
Re: $30,000,000 7.69% Senior Notes
Due February 1, 2010
of
E'town Corporation
Ladies and Gentlemen:
We have acted as your special counsel in connection with your purchase
on the date hereof of $30,000,000 aggregate principal amount of the 7.69%
Senior Notes due February 1, 2010 (the "Notes") of E'town Corporation, a New
Jersey corporation (the "Company"), issued under and pursuant to the Note
Purchase Agreement as of February 1, 2000 (the "Note Purchase Agreement"),
between the Company and you.
In that connection, we have examined the following:
(a) The Note Purchase Agreement;
(b) A copy of the Certificate of Incorporation of the Company and
all amendments thereto certified by the Secretary of State of the State
of New Jersey and the Certificate of the Secretary of State of the State
of New Jersey evidencing that the Company is in good standing in such
state (the "Good Standing Certificate");
(c) A copy of the By-laws of the Company, as amended to the date
hereof, and a copy of the resolutions adopted by the Board of Directors
of the Company with respect to the authorization of the Note Purchase
Agreement, the issuance, sale and delivery of the Notes and related
matters, each as certified by the Secretary of the Company;
(d) The opinion of Walter M. Braswell, Esq., counsel for the
Company, dated the date hereof and delivered responsive to
Section 4.4(a) of the Note Purchase Agreement, and the opinion of
Winthrop, Stimson, Putnam & Roberts, special New York counsel to the
Company, dated the date hereof and delivered responsive to Section
4.4(b) of the Note Purchase Agreement;
(e) The Notes delivered on the date hereof;
(f) Such certificates of officers of the Company and of public
officials as we have deemed necessary to give the opinions hereinafter
expressed; and
(g) Such other documents and matters of law as we have deemed
necessary to give the opinions hereinafter expressed.
We believe that each opinion referred to in clause (d) above is
satisfactory in scope and form and that you are justified in relying
thereon. Our opinion as to matters referred to in paragraph 1 below is based
solely upon an examination of the Certificate of Incorporation, the By-laws
and the Good Standing Certificate of the Company and the Business Corporation
Act of the State of New Jersey. We have also relied, as to certain factual
matters, upon appropriate certificates of public officials and officers of
the Company and upon representations of the Company and you delivered in
connection with the issuance and sale of the Notes.
Based upon the foregoing, we are of the opinion that:
1. The Company is a corporation, validly existing and in good
standing under the laws of the State of New Jersey and has the corporate
power and the corporate authority to execute and deliver the Note
Purchase Agreement and to issue the Notes.
2. The Note Purchase Agreement has been duly authorized by all
necessary corporate action on the part of the Company, has been duly
executed and delivered by the Company and constitutes the legal, valid
and binding contract of the Company enforceable in accordance with its
terms, subject to bankruptcy, insolvency, fraudulent conveyance and
similar laws affecting creditors' rights generally, and general
principles of equity (regardless of whether the application of such
principles is considered in a proceeding in equity or at law).
3. The Notes have been duly authorized by all necessary corporate
action on the part of the Company, and the Notes being delivered on the
date hereof have been duly executed and delivered by the Company and
constitute the legal, valid and binding obligations of the Company
enforceable in accordance with their terms, subject to bankruptcy,
insolvency, fraudulent conveyance and similar laws affecting creditors'
rights generally, and general principles of equity (regardless of
whether the application of such principles is considered in a proceeding
in equity or at law).
4. The issuance, sale and delivery of the Notes under the
circumstances contemplated by the Note Purchase Agreement do not, under
existing law, require the registration of the Notes under the Securities
Act of 1933, as amended, or the qualification of an indenture under the
Trust Indenture Act of 1939, as amended.
Our opinion is limited to the laws of the State of New York, the
Business Corporation Act of the State of New Jersey and the Federal laws of
the United States and we express no opinion on the laws of any other
jurisdiction.
Respectfully submitted,
E'TOWN CORPORATION
7.69% SENIOR NOTES DUE JANUARY 15, 2010
SCHEDULE 5.4
LIST OF SUBSIDIARIES
State of Percentage
Incorporation Owned
E'town Corporation
Elizabethtown Water Company New Jersey 100%
E'town Properties, Inc. Delaware 100%
Applied Water Management, Inc. New Jersey 100%
Applied Wastewater Services, Inc. New Jersey 100%
Applied Wastewater Technology, Inc. New Jersey 100%
Applied Environmental Services, Inc. New Jersey 100%
Applied Watershed Management, Inc. New Jersey 100%
Edison Water Company New Jersey 100%
Liberty Water Company New Jersey 100%
Elizabethtown Water Company
The Mount Holly Water Company New Jersey 100%
SCHEDULE 5.4