<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended February 28, 1997
OR
_____ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to __________
Commission File Number 0-11
ESSEX COUNTY GAS COMPANY
(Exact name of registrant as specified in its charter)
Massachusetts 04-1427020
(State or other jurisdiction (I.R.S.Identification #)
Employer incorporation or organization)
7 North Hunt Road, Amesbury,Massachusetts 01913
(Address of principal executive offices)(Zip Code)
(508) 388-4000
(Registrant's telephone number, including area code)
_________________________________________________________________
(Former name, former address and former fiscal year, if changed
since last report)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Sections 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No _____
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all
documents and reports required to be filed by Section 12, 13 and
15(d) of the Securities Exchange Act of 1934 subsequent to the
distribution of securities under a plan confirmed by court.
Yes ----- No _____
APPLICABLE ONLY TO CORPORATE ISSUERS:
Number of shares of Common Stock outstanding as of February 28, 1997:
1,666,866
<PAGE> 2
PART I - FINANCIAL INFORMATION
Item 1 FINANCIAL STATEMENTS
The accompanying unaudited consolidated financial statements have
been prepared in accordance with generally accepted accounting
principles for interim financial information and with the
instructions to Form 10-Q and Rule 10-01 of Regulation S-X. They
do not include information and footnotes required by generally
accepted accounting principles for complete financial statements.
For further information, refer to the notes to consolidated
financial statements included in the registrant's Annual Report
on Form 10-K for the year ended August 31, 1996 (1996 10-K). In
the opinion of Management, all adjustments, consisting of normal
ly recurring adjustments considered necessary for a fair
presentation, have been included. Because of the seasonal nature
of the registrant's business, operating results for the six
months ended February 28, 1997, are not necessarily indicative of
the results that may be expected for the year ending August 31,
1997.
<PAGE> 3
ESSEX COUNTY GAS COMPANY
CONSOLIDATED BALANCE SHEET
February
28, 1997 August
(Unaudited) 31, 1996
ASSETS ----------- --------
Utility plant $101,786,287 $ 98,603,784
Less: accumulated depreciation 24,130,146 22,290,175
----------- -----------
Net utility plant 77,656,141 76,313,609
----------- -----------
Other property and investments 638,749 633,515
----------- -----------
Capitalized lease 630,124 654,391
----------- -----------
Current assets:
Cash and cash equivalents 782,898 303,526
Accounts receivable, net
Customers 8,383,628 1,654,808
Other 243,740 229,189
Recoverable gas costs 1,927,663 470,766
Income tax refund receivable - 874,000
Supplemental fuel inventory 2,824,999 4,047,421
Material and supplies 514,537 512,330
Prepaid deferred income taxes - 328,066
Prepayments and other 28,025 622,502
----------- -----------
Total current assets 14,705,490 9,042,608
----------- -----------
Deferred charges:
Regulatory assets 2,331,665 2,464,691
Unamortized debt expense
and other 990,464 663,119
----------- -----------
Total deferred charges 3,322,129 3,127,810
----------- -----------
$ 96,952,633 $ 89,771,933
=========== ===========
See Notes to Consolidated Financial Statements
<PAGE> 4
ESSEX COUNTY GAS COMPANY
CONSOLIDATED BALANCE SHEETS (Continued)
February
28, 1997 August
(Unaudited) 31, 1996
----------- --------
CAPITALIZATION AND LIABILITIES
Common stock equity:
Common stock, no par (5,000,000
authorized shares, issued
and outstanding 1,666,866 shares at
February 28, 1997 and 1,642,490
shares at August 31, 1996) $ 19,849,921 $ 19,234,915
Unrecognized gain on investments
available for sale, net 70,216 29,265
Retained earnings 15,369,362 13,833,767
ESOP shares purchased with debt - (75,000)
---------- ----------
Total common stock equity 35,289,499 33,022,947
---------- ----------
Long-term debt less current
portion 28,799,000 19,765,535
Non-current obligations under ---------- ----------
capital lease 578,443 604,823
---------- ----------
Current liabilities:
Current portion of long-term debt 1,087,567 923,831
Current obligation under capital
lease 51,681 49,568
Obligations under supplemental fuel
inventory 3,309,043 3,358,010
Notes payable, banks 7,512,000 11,940,000
Accounts payable 3,367,236 4,063,829
Accrued interest 861,133 937,988
Transition obligations 792,716 890,432
Supplier refund due customers - 275,644
Other 385,470 188,513
---------- ----------
Total current liabilities 17,366,846 22,627,815
Deferred credits: ---------- ----------
Accumulated deferred income
taxes 10,719,958 9,951,085
Unamortized investment tax credit 1,176,012 1,210,896
Deferred directors' fees 1,030,963 991,503
Other 1,991,912 1,597,329
---------- ----------
Total deferred credits 14,918,845 13,750,813
---------- ----------
$ 96,952,633 $ 89,771,933
============ ===========
See Notes to Consolidated Financial Statements
<PAGE> 5
ESSEX COUNTY GAS COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED
February February
28, 1997 29, 1996
(Unaudited) (Unaudited)
----------- -----------
Operating revenues $ 23,220,840 $ 22,632,458
Less: Cost of gas 11,671,220 11,310,328
---------- ----------
Operating margin 11,549,620 11,322,130
---------- ----------
Operating expenses:
Operations and maintenance
expenses 3,551,161 3,788,109
Depreciation 1,648,682 1,255,760
Taxes, other than federal
income 979,992 920,737
Federal income taxes 1,555,558 1,655,555
---------- ----------
Total operating expenses 7,735,393 7,620,161
---------- ----------
Operating income 3,814,227 3,701,969
Other income - net 144,826 7,227
---------- ----------
Income before interest charges 3,959,053 3,709,196
---------- ----------
Interest charges:
Interest on long-term debt 574,361 491,101
Amortization of debt expense 6,901 6,874
Other interest expense 252,812 242,286
Allowance for funds used during
construction (6,459) (9,521)
---------- ----------
Total interest charges 827,615 730,740
---------- ----------
Net income 3,131,438 2,978,456
Preferred dividend requirements - (4,620)
---------- ----------
Income available for common stock $ 3,131,438 $ 2,973,836
========== ==========
Common shares outstanding
(weighted average) 1,659,033 1,620,911
---------- ----------
Earnings per common share $ 1.89 $ 1.83
------ ------
Dividends per common share $ .41 $ .40
------ ------
See Notes to Consolidated Financial Statements
<PAGE> 6
ESSEX COUNTY GAS COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
SIX MONTHS ENDED
February February
28, 1997 29, 1996
(Unaudited) (Unaudited)
----------- -----------
Operating revenues $ 31,363,341 $ 29,594,472
Less: Cost of gas 15,801,323 14,583,808
---------- ----------
Operating margin 15,562,018 15,010,664
---------- ----------
Operating expenses:
Operations and maintenance
expenses 6,555,537 6,455,345
Depreciation 2,146,442 1,673,520
Taxes, other than federal
income 1,208,539 1,133,478
Federal income taxes 1,366,116 1,510,110
---------- ----------
Total operating expenses 11,276,634 10,772,453
---------- ----------
Operating income 4,285,384 4,238,211
Other expense- net 123,753 (9,646)
---------- ----------
Income before interest charges 4,409,137 4,228,565
Interest charges: ---------- ----------
Interest on long-term debt 1,051,528 988,504
Amortization of debt expense 13,831 13,695
Other interest expense 484,195 472,842
Allowance for funds used during
construction (11,186) (21,465)
---------- ----------
Total interest charges 1,538,368 1,453,576
---------- ----------
Net income 2,870,769 2,774,989
Preferred dividend requirements - (9,240)
---------- ----------
Income available for common stock $ 2,870,769 $ 2,765,749
========== ==========
Common shares outstanding
(weighted average) 1,653,293 1,616,852
---------- ----------
Earnings per common share $ 1.74 $ 1.71
------ ------
Dividends per common share $ 0.81 $ 0.79
------ ------
See Notes to Consolidated Financial Statements
<PAGE> 7
ESSEX COUNTY GAS COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED
February February
28, 1997 29, 1996
(Unaudited) (Unaudited)
Operating activities: --------- ---------
Net income $ 2,870,769 $ 2,774,989
Adjustments to reconcile net income ---------- ----------
to net cash:
Depreciation and amortization 2,247,481 1,953,850
Provision for uncollectible accounts 794,582 1,063,435
Deferred income taxes 1,099,395 61,905
Non-cash compensation related to ESOP 75,000 150,000
Changes in current assets and liablilities:
Accounts receivable (7,537,953) (7,575,425)
Inventories including fuel 1,220,215 3,590,069
Prepaid expenses and
other current assets 594,477 143,270
Refundable gas costs (1,456,897) (1,433,762)
Accounts payable (696,593) 174,087
Taxes payable 983,219 1,617,285
Supplier refund due customers (275,644) (1,317,101)
Other, net 326,687 382,124
---------- ----------
Total (2,626,031) (1,190,263)
Net cash provided by operating ---------- ----------
activities 244,738 1,584,726
---------- ----------
Investing activities:
Capital expenditures (3,778,338) (3,863,713)
Cost of property retirements, net of salvage 31,542 (209,183)
---------- ----------
Net cash used in investing activities (3,746,796) (4,072,896)
---------- ----------
Financing activities:
Dividends paid (1,335,174) (1,283,021)
Net proceeds from issuance of common stock 596,370 397,073
Proceeds from issuance of long-term debt 10,000,000 -
Principal retired on long-term debt (727,799) (711,974)
Decrease in fuel obligation (48,967) (418,016)
Principal payment on ESOP obligation (75,000) (150,000)
Net borrowings (repayment) of
short-term debt (4,428,000) 5,174,917
Other - 22,410
---------- ----------
Net cash provided by financing activities 3,981,430 3,031,389
---------- ----------
Net increase in cash 479,372 543,219
Cash at beginning of period 303,526 136,925
---------- ----------
Cash at end of period $ 782,898 $ 680,144
========== ==========
Supplemental disclosures:
Cash paid for interest
(net of amount capitalized) $1,615,223 $1,315,579
Cash paid for income taxes $ - $ 325,000
See Notes to Consolidated Financial Statements
<PAGE> 8
Notes to Consolidated Financial Statements:
A. Interim Accounting Policies
The amount of natural gas sold for purposes of central and
space heating, and to a lesser extent, water heating, is
directly related to the ambient air temperature.
Consequently, less gas is sold during the summer months than
is sold during the winter months. In order to match its
costs more properly with gas sales revenue each month, the
Company charges to certain expenses, primarily depreciation,
an amount equal to the percentage of the annual volume of
firm gas sales forecasted for the month, applied to the
estimated annual expenses.
B. Accounts Receivable
Accounts Receivable - Customers are shown net of allowance
for uncollectible accounts of $1,490,688 and $653,000 as of
February 28, 1997 and August 31, 1996, respectively.
C. Restriction on Retained Earnings
Under the terms of the Indenture of First Mortgage Bonds
dated October 1, 1955, as updated by Supplemental Indentures
numbered One through Fifteen, retained earnings in the
amount of $5,535,595 as of February 28, 1997, were
unrestricted as to the payment of cash dividends on Common
Stock and the purchase, redemption, or retirement of shares
of capital stock.
D. Commitments and Contingencies
For information regarding commitments and contingencies, see
Notes to Consolidated Financial Statements in the Company's
1996 Annual Report of Form 10-K.
Item 2
Management's Discussion and Analysis of Financial Condition
and Results of Operations
Results of Operations
For the Three Months Ended February 28, 1997 and February 29, 1996
The Company's gas sales are divided into two categories:
firm, whereby the Company must supply gas to customers on demand;
and interruptible, whereby the Company may, generally during
colder months, discontinue service to high volume industrial
customers. Sales of gas to interruptible customers do not
materially affect the Company's operating income because, unless
interruptible volumes exceed a certain threshold specified by the
Massachusetts Department of Public Utilities ("MDPU"), the
Company must return all gross profit on such sales directly to
the Company's firm customers. Once the threshold is attained,
the Company may retain 10% of gross profits. The amount retained
in the three month period ended February 28, 1997 was less than
$10,000.
The Company's sales are responsive to colder weather as the
majority of its firm customers use natural gas for space heating
purposes. The Company measures weather through the use of
effective degree days. An effective degree day is calculated by
subtracting the average temperature for the day,
<PAGE> 9
adjusted for wind and cloud cover, from 65 degrees Fahrenheit.
The Company's service territory experienced 3,215 effective
degree days ("EDD") during the three months ended February 28,
1997 as compared to 3,655 EDD for the three months ended February
29, 1996. The Company's twenty year average for the three months
ended February 28, 1997 is 3,467 EDD. As a result of the warmer
weather, the volume of firm sales decreased 8.4% to 2,431,487
thousand cubic feet ("Mcf") for the three months ended February
28, 1997 from 2,655,549 for the three months ended February 29,
1996. The Company's total operating revenues increased 2.6% to
$23,220,840 for the three months ended February 28, 1997 from
$22,632,458 for the three months ended February 29, 1996. This
increase was primarily due to higher gas costs and the December
1, 1996 increase in base rates as approved by the Massachusetts
Department of Public Utilities ("MDPU"). The average unit price
per Mcf of firm gas sold was $9.47 for the three months ended
February 28, 1997 compared to $8.44 for the three months ended
February 29, 1996. The increase in unit selling price is related
to the rate increase mentioned above as well as the Company
collecting from customers additional gas costs.
Although sales were lower, the cost of gas increased 3.2% to
$11,671,220 for the three months ended February 28, 1997 from
$11,310,325 for the three months ended February 29, 1996. The
increase in gas costs is attributable to a 12.7% increase in the
Company's average cost of gas to $4.80 per firm Mcf for the three
months ended February 28, 1997 from $4.26 per firm Mcf for the
three months ended February 29, 1996. The increase in unit cost
is due to higher prices charged by suppliers.
Operations and maintenance expenses totaled $3,551,161 for
the three months ended February 28, 1997 compared to $3,788,109
for the three months ended February 29, 1996. The change was due
primarily to a decrease in allowance for uncollectible accounts.
Depreciation expense increased $392,922 (31.3%) for the three
months ended February 28, 1997 compared to the three months ended
February 29, 1996. This increase was primarily due to an increase
in the depreciation rate approved by the MDPU from 3.03% to 3.70%.
Interest charges for the three months ended February 28, 1997
increased by $96,875 (13.3%) compared to the three months ended
February 29, 1996. The increase was primarily related to
higher outstanding balances on Notes Payable to banks and the issue
of $10,000,000 in First Mortgage Bonds.
Income available for common stock increased $157,602 to
$3,131,438 for the three months ended February 28, 1997 from
$2,973,836 for the three months ended February 29, 1996. Income
per common share increased $0.06 to $1.89 for the three months
ended February 28, 1997 from $1.83 per share for the three months
ended February 29, 1996. Dividends per common share were $.41
per share for the three months ended February 28, 1997 compared
to $.40 per share for the three months ended February 29, 1996.
In March 1997, the Company declared a dividend of $.41 per share
which was paid to shareholders on April 1, 1997.
For the Six Months Ended February 28,1997 and February 29, 1996
Total operating revenues for the six months ended February
28, 1997 increased 6.0% to $31,363,341 from $29,594,472 for the
six months ended February 29, 1996. Firm gas volumes were
3,332,754 Mcf for the six month period ended February 28, 1997
compared to 3,483,891 Mcf for the six month period ended February
29, 1996. The increase in operating revenues is primarily due
to the rate increase discussed above which was offset by
<PAGE> 10
significantly warmer weather. There were 4,193 EDD for the
six month period ended February 28, 1997 compared to 4,562 EDD for
the six months ended February 29, 1996, representing a 8.1%
decrease. Average EDD in the Company's service area for the six
month period is equivalent to 4,421 EDD. The average selling price
of firm gas was $9.08 for the six months ended February 28, 1997
compared to $8.19 for the same period last year. The increase is
due to the rate and gas cost factors discussed above.
Interruptible revenues for the six months ended February 28, 1997
and February 29, 1996 were $683,943 and $591,886, respectively.
Operations and maintenance expenses for the six months ended
February 28, 1997 increased to $6,555,537 from $6,455,345 for the
comparable period a year ago. The increase was due to pre-
planned maintenance cost for a gas main of approximately
$105,000; additional marketing expenses of $67,000; a $70,000
increase in expenses for outside services; and an increase in
general salaries of $106,000 offset by a reduction of
uncollectible accounts and bad debt expense of $268,000.
Interest expense increased $84,792 (15.8%) for the six months
ended February 28, 1997 compared to the six months ended February
29, 1996. The increase was due to the factors mentioned above for
the three month period ended February 28, 1997.
Income available for common stock increased by $105,020 to
$2,870,769 for the six months ended February 28, 1997 as compared
to $2,765,749 for the same period last year while earnings per
share increased to $1.74 from $1.71. Dividends were $.81 and
$.79 per share, respectively.
Liquidity and Capital Resources
Net cash provided by operating activities for the six months
ended February 28, 1997 was $244,738. Cash flows were generated
primarily from net income of $2,870,769, a decrease in
inventories of $1,220,215, depreciation and amortization of
$2,247,481, deferred income taxes of $1,099,395, provision of
uncollectible accounts of $794,582 and an increase in taxes
payable of $983,219. These sources of cash were offset primarily
by cash used for refundable gas costs to customers in the amount
of $1,456,897 and an increase in accounts receivable of $7,537,953.
The decrease in inventories results from the seasonal nature
of the Company's business whereby inventories are built in the
warmer months and sold in the colder months. The cash used for
refundable gas costs to customers represents return of supplier
pipeline refunds (discussed below) as well as savings in gas costs
which are also returned to the Company's firm customers.
The increase in accounts receivable is due to the seasonal
nature of the Company's business.
Occasionally the Company receives refunds from its pipeline
supplier as a result of regulatory action by the Federal Energy
Regulatory Commission. The supplier refunds are returned by the
Company to customers over a twelve month period.
The Company continues to invest a significant amount of
capital in its distribution system to satisfy current and future
customer demand. Funding has traditionally been generated from
operations, short-term bank borrowings, issuance of long-term
debt and the issuance of additional equity, including additional
shares of common stock through a Dividend Reinvestment Plan.
Management anticipates that these and other sources will remain
available and continue to adequately serve the Company's need.
<PAGE> 11
The Company finances its gas inventory with a bank through a
special purpose credit agreement which has a maximum financing
commitment of $10,000,000 with a floating interest rate. This
credit agreement extends through December 31, 2000. As of
February 28, 1997 the Company's obligation under this credit
agreement was $3,309,043.
In January 1997 the Company issued $10,000,000 in First
Mortgage Bonds due 2017. The rate on these Bonds is 7.28%.
For the three months ended February 28, 1997, the Company's
construction expenditures totaled $1,801,000. These expenditures
were funded principally from short-term bank borrowings.
Historically, the second quarter of the Company's fiscal year has
been characterized by minimal construction expenditures, high gas
sendout and high operating revenues. Cash requirements during
this period have historically been satisfied through operations.
Construction expenditures for the six months ended February 28,
1997 were $3,818,000 as compared to $3,865,000 for the same
period a year ago. These were funded by cash flow from
operations and short-term bank borrowings. The six-month period
ended February 28, 1997 is characterized by higher receivables
associated with peak season billing and higher gas purchases
which results in increased short-term borrowings. Although the
Company anticipates a reduction of short-term borrowings as
winter receivables are collected, the onset of renewed
construction activity in the subsequent quarter may require
additional short-term borrowings under existing lines of credit.
Planned construction expenditures for the remainder of fiscal
1997 are currently estimated at $2,700,000 and planned
construction expenditures for fiscal 1998 are currently estimated
at $6,200,000. The Company's planned construction expenditures
and long-term debt repayments have been and will continue to be
funded through cash generated by operations and short-term bank
borrowings which the Company anticipates will be replaced from
time to time with equity and long-term financings.
Regulatory and Accounting Issues
The Company's revenues are based on rates regulated by the
MDPU. These rates are designed to allow the Company to recover
its operating costs and provide an opportunity to earn a
reasonable rate of return on investor supplied funds. Once
approved, the Company's rates are adjusted by a CGA which,
subject to approval by the MDPU, permits the Company to change
rates to recover its gas costs and certain other costs on a
dollar-for-dollar basis. The CGA is also used as the mechanism
to reduce charges to firm customers by the margin earned on sales
to interruptible customers. In September 1996 the Company
received approval for a rate increase of $2,100,000 which was
effective December 1, 1996.
PART II - OTHER INFORMATION
Item 1 Legal Proceedings
The information called for by this item is unchanged
from that filed in the Company's Annual Report on Form
10-K for fiscal 1996 filed November 26, 1996.
Item 2 Changes in Securities
None.
<PAGE> 12
Item 3 Defaults Upon Senior Securities
None.
Item 4 Submission of Matters to a Vote of Security Holders
The Company's Annual Meeting of Shareholders was held
on January 21, 1997. For a description of the meeting
and the matters voted thereat, see the Company's
Notice of Annual Meeting and Proxy Statement ("Proxy
Statement"), filed with the Securities and Exchange
Commission on December 2, 1996, which is incorporated
herein by reference. There was no solicitation in
opposition to the management's nominees as listed in
the Proxy Statement, and all such nominees were
selected.
The votes cast for, against or withheld, as well as
the number of abstentions and broker non-votes as to
each matter voted on at the Annual Meeting, is as
follows:
1. Election of Directors
Number of Shares
For Against Withheld
C.E. Billups 1,304,920 13,171 4,462
B.C. Bixby 1,309,530 8,561 4,462
D.A. Burkhardt 1,308,877 9,215 5,115
E.J. Curtis 1,308,677 9,415 5,315
D.J. Dotson 1,309,430 8,661 4,562
R.P. Hamel 1,305,139 12,952 4,462
R.S. Jackson 1,309,530 8,561 4,462
E.H. Jostrom 1,309,232 8,859 4,760
R.L. Meade 1,309,311 8,780 4,462
K.L. Paul 1,309,525 8,566 4,462
P.H. Reardon 1,309,402 8,690 4,701
R.L. Wellman 1,309,430 8,661 4,562
Item 5 Other Information
None.
Item 6(a) Exhibits
3.1 Restated Articles of Organization of Essex County
Gas Company.1
3.2 By Laws of Essex County Gas Company.2
4.6 Fifteenth Supplemental Indenture Dated as of
December 1, 1996 providing for a 7.28% Series Due 2017.
<PAGE> 13
27. Financial Data Schedule.
1 Previously filed as an exhibit to the Registrant's 10-K filed
for the fiscal year ended August 31, 1988 and is incorporated
herein by this reference.
2 Previously filed as an exhibit to the Registrant's 10-Q filed
February 28, 1991 and is incorporated herein by this reference.
Item 6(b) Reports on Form 8-K
None.
<PAGE> 14
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
ESSEX COUNTY GAS COMPANY
By ________________
Philip H. Reardon
President and Chief Executive Officer
By_____________________________________________
James H. Hastings
Vice President and Treasurer
(Principal Financial Officer)
Date: April 11, 1997
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
This schedule contains summary financial information extracted
from the balance sheet, statement of income and statement of cash
flows contained in Form 10-Q of Essex County Gas Company for the
six months ended February 28, 1997 and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> AUG-31-1997
<PERIOD-END> FEB-28-1997
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 77,656
<OTHER-PROPERTY-AND-INVEST> 639
<TOTAL-CURRENT-ASSETS> 14,706
<TOTAL-DEFERRED-CHARGES> 3,322
<OTHER-ASSETS> 630
<TOTAL-ASSETS> 96,953
<COMMON> 19,850
<CAPITAL-SURPLUS-PAID-IN> 0
<RETAINED-EARNINGS> 15,369
<TOTAL-COMMON-STOCKHOLDERS-EQ> 35,289
0
0
<LONG-TERM-DEBT-NET> 28,799
<SHORT-TERM-NOTES> 7,512
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 1,088
0
<CAPITAL-LEASE-OBLIGATIONS> 579
<LEASES-CURRENT> 52
<OTHER-ITEMS-CAPITAL-AND-LIAB> 23,635
<TOT-CAPITALIZATION-AND-LIAB> 96,953
<GROSS-OPERATING-REVENUE> 31,363
<INCOME-TAX-EXPENSE> 2,575
<OTHER-OPERATING-EXPENSES> 24,503
<TOTAL-OPERATING-EXPENSES> 27,078
<OPERATING-INCOME-LOSS> 4,285
<OTHER-INCOME-NET> 124
<INCOME-BEFORE-INTEREST-EXPEN> 4,409
<TOTAL-INTEREST-EXPENSE> 1,538
<NET-INCOME> 2,871
0
<EARNINGS-AVAILABLE-FOR-COMM> 2,871
<COMMON-STOCK-DIVIDENDS> 1,335
<TOTAL-INTEREST-ON-BONDS> 1,052
<CASH-FLOW-OPERATIONS> 245
<EPS-PRIMARY> 1.74
<EPS-DILUTED> 1.74
</TABLE>
[ARTICLE]
Essex County Gas Company
(formerly known as Haverhill Gas Company)
to
State Street Bank and Trust Company
(formerly known as Second Bank-State Street Trust Company),
Trustee
_________________________________________________________________
Fifteenth Supplemental Indenture
Dated as of December 1, 1996
Supplementing the Indenture of First Mortgage
dated as of October 1, 1955
_________________________________________________________________
This is a Mortgage of Personal Property as well as a
Mortgage upon Real Estate.
Fifteenth Supplemental Indenture, dated as of December 1,
1996, between Essex County Gas Company (formerly known as
Haverhill Gas Company), a corporation organized and existing
under the laws of The Commonwealth of Massachusetts (its Federal
tax identification number being 04-1427020) and having its
principal place of business at 7 North Hunt Road in the Town of
Amesbury in said Commonwealth (hereinafter called the "Company"),
party of the first part, and State Street Bank and Trust Company
(formerly known as Second Bank-State Street Trust Company), a
corporation organized and existing under the laws of The
Commonwealth of Massachusetts (its Federal tax identification
number being 04-1867445) and having its principal place of
business at 225 Franklin Street in the City of Boston in said
Commonwealth (hereinafter called the Trustee), party of the
second part.
Whereas, the Company has heretofore executed and delivered
to the Trustee an Indenture of First Mortgage dated as of
October 1, 1955 (hereinafter called the "Original Indenture"), to
secure, as provided therein, its bonds (in the Original Indenture
and herein called the "Bonds"), not limited as to principal
amount except as provided in Section 3.01 of the Original
Indenture, to be known generally as its "First Mortgage Bonds,"
and to be issued in one or more series as provided in the
Original Indenture; and
Whereas, the Company has executed and delivered to the
Trustee fourteen indentures supplemental to the Original
Indenture as follows: a First Supplemental Indenture, dated as
of October 1, 1958, a Second Supplemental Indenture, dated as of
May 1, 1961, a Third Supplemental Indenture, dated as of
October 1, 1961, a Fourth Supplemental Indenture, dated as of
April 1, 1964, a Fifth Supplemental Indenture, dated as of
December 1, 1965, a Sixth Supplemental Indenture, dated as of
January 1, 1971, a Seventh Supplemental Indenture, dated as of
November 1, 1975, an Eighth Supplemental Indenture, dated as of
July 1, 1979, a Ninth Supplemental Indenture, dated as of
April 1, 1982 and a Tenth Supplemental Indenture, dated as of
June 1, 1984 an Eleventh Supplemental Indenture, dated as of
September 18, 1988, a Twelfth Supplemental Indenture, dated as of
December 1, 1990, a Thirteenth Supplemental Indenture, dated as
of September 23, 1994 and a Fourteenth Supplemental Indenture
dated as of May 15, 1995 (the Original Indenture, as supplemented
and/or modified by said fourteen supplemental indentures and this
Fifteenth Supplemental Indenture being hereinafter sometimes
called the "Indenture"); and
Whereas, pursuant to the Original Indenture, as heretofore
supplemented and modified, there have been executed,
authenticated, delivered and issued and there are now outstanding
First Mortgage Bonds of series and in principal amounts as
follows:
Title Issued Outstanding
10-1/4% Series due 2003 $ 6,000,000 $ 4,200,000
10.10% Series due 2020 8,000,000 8,000,000
7.28% Series due 2016 10,000,000 10,000,000
Whereas, the Board of Directors of the Company has
established under Section 3.02 of the Original Indenture a new
series of Bonds to be designated First Mortgage Bonds, 7.28%
Series due 2016 (hereinafter referred to as the "Bonds of the
7.28% 2016 Series"), and has authorized the issue of Bonds of the
7.28% 2016 Series in the aggregate principal amount of Ten
Million Dollars ($10,000,000) pursuant to the provisions of
Article Two of this Fifteenth Supplemental Indenture; and
Whereas, Section 18.01 of the Original Indenture provides,
among other things, that the Company, when authorized by a
resolution of the Board of Directors, and the Trustee, from time
to time and at any time, subject to the restrictions in the
Original Indenture contained, may, and when so required by the
Original Indenture, shall, enter into indentures supplemental to
the Original Indenture and which thereafter shall form a part
thereof, for the purposes, among others, of (a) mortgaging,
pledging, conveying, transferring or assigning to the Trustee,
and subjecting to the lien of the Indenture additional properties
acquired by the Company, (b) adding to the Indenture other
covenants and agreements thereafter to be observed by the
Company, and (c) providing for the creation of a series of Bonds,
designating the series to be created and specifying the form and
provisions of the Bonds of such series; and
Whereas, the Board of Directors as authorized by the
Stockholders of the Company by votes duly adopted have authorized
the execution of this Fifteenth Supplemental Indenture for the
purpose of (a) subjecting to the lien of the Indenture additional
properties acquired by the Company since the date of execution of
the Original Indenture, (b) adding to the Original Indenture
certain covenants and agreements hereafter to be observed by the
Company, and (c) creating the Bonds of the 7.28% 2016 Series,
designating the series created and specifying the form and
provisions of the Bonds of such series; and
Whereas, all acts and proceedings required by law and by the
Charter and by-laws of the Company necessary to secure the
payment of the principal of and interest and premium, if any, on
the Bonds of the 7.28% 2016 Series, to make the Bonds of the
7.28% 2016 Series to be issued hereunder, when executed by the
Company, authenticated and delivered by the Trustee and duly
issued, the valid, binding and legal obligations of the Company,
and to constitute the Indenture a valid and binding mortgage for
the security of the Bonds, in accordance with its and their
terms, have been done and taken; and the execution and delivery
of this Fifteenth Supplemental Indenture and the issue of the
Bonds of the 7.28% 2016 Series have been in all respects duly
authorized;
Now, Therefore, This Indenture Witnesseth, that in order to
secure the payment of the principal of and premium, if any, and
interest on all Bonds at any time issued and outstanding under
the Indenture, according to their tenor, purport and effect, to
confirm the lien of the Indenture upon property purchased,
constructed or otherwise acquired by the Company since the date
of execution of the Original Indenture, to secure the performance
and observance of all the covenants and conditions in the Bonds
and in the Indenture contained, and to declare the terms and
conditions upon and subject to which the Bonds of the 7.28% 2016
Series are and are to be issued and secured and for and in
consideration of the premises and of the mutual covenants herein
contained and of the purchase and acceptance of the Bonds of the
7.28% 2016 Series by the holders thereof, and of the sum of Ten
Dollars ($10) duly paid to the Company by the Trustee, at or
before the ensealing and delivery hereof, and for other valuable
considerations, the receipt whereof is hereby acknowledged, the
Company has executed and delivered this Fifteenth Supplemental
Indenture; and by these presents does grant, bargain, sell,
alien, remise, release, convey, assign, transfer, mortgage,
pledge, set over and confirm unto State Street Bank and Trust
Company, Trustee, its successors in the trust created by the
Indenture, and its and their successors and assigns, all the
property rights, privileges and franchises (other than excepted
property) of the character described in the Granting Clauses and
in Section 9.14 of the Original Indenture now owned of record or
otherwise by the Company, whether or not constructed or acquired
since the date of execution of the Original Indenture or which
may hereafter be constructed or acquired by it, but subject to
all exceptions, reservations and matters of the character therein
referred to, and expressly excepting and excluding from the lien
and operation of the Indenture the property described in the
"Schedule of Specifically Excepted Properties" in Article Twenty
of the Original Indenture and all properties of the character
specifically excepted by Paragraphs B through I of Granting
Clause IX of the Original Indenture and all property released or
otherwise disposed of pursuant to the provisions of the
Indenture.
If upon the happening of any default as defined in Article Twelve
of the Original Indenture, as supplemented and modified by this
Fifteenth Supplemental Indenture, the Trustee or a receiver or
trustee shall enter upon and take possession of the trust estate,
the Trustee or such receiver or trustee may, to the extent
permitted by law, at the same time likewise take possession of
any and all of the property specifically excepted under the
heading "Excepted Property" of Granting Clause IX of the Original
Indenture, other than Paragraph G thereof, then on hand and use
and administer the same to the same extent as if such property
were part of the trust estate, unless and until such default
shall be remedied or waived and possession of the trust estate
restored to the Company.
To Have and To Hold all of the property, real, personal and
mixed, and all and singular the lands, properties, estates,
rights, franchises, privileges and appurtenances hereby granted,
bargained, sold, aliened, remised, released, conveyed, assigned,
transferred, mortgaged, pledged, set over or confirmed, or
intended so to be unto the Trustee and its successors in trust
and to its and their successors and assigns, forever.
But In Trust, Nevertheless, for the equal and proportionate
use, benefit, security and protection of those who from time to
time shall hold the Bonds and coupons, or any of them,
authenticated and delivered under the Indenture, and duly issued
by the Company, without any discrimination, preference or
priority of any one Bond or coupon over any other by reason of
priority in the time of issue, sale or negotiation thereof or
otherwise, except as provided in Section 12.28 of the Original
Indenture, so that, subject to said Section 12.28, each and all
of said Bonds and coupons shall have the same right, lien and
privilege under the Indenture, and shall be equally and
proportionately secured thereby and hereby (except as any
sinking, depreciation or other analogous fund established in
accordance with the provisions of the Indenture may afford
additional security for the Bonds of any particular series), with
the same effect as if all the Bonds and coupons had been issued,
sold and negotiated simultaneously on the date of delivery of the
Original Indenture.
The Company Hereby Declares that it holds and will hold and
apply all property and rights of the character described in
Paragraph G of Granting Clause IX of the Original Indenture as
specifically reserved and excepted, upon the trusts as set forth
in the Original Indenture, as heretofore supplemented and
modified and as supplemented by this Fifteenth Supplemental
Indenture, and as the Trustee (or any purchaser upon any sale of
the mortgaged property) shall for such purpose direct from time
to time, to the fullest extent permitted by law or in equity and
by any instruments creating the same, as fully as if the same
could be and had been hereby granted, conveyed, mortgaged,
pledged, transferred and assigned to and vested in the Trustee.
It is hereby covenanted, declared and agreed by and between the
parties hereto that all Bonds and coupons, if any, are to be
authenticated, delivered and issued and that all property subject
or to become subject to the Indenture is to be held, subject to
the further covenants, conditions, uses and trusts set forth in
the Indenture, and the Company for itself and its successors or
assigns does hereby covenant and agrees to and with the Trustee
and its successor or successors in such trust, for the benefit of
those who shall hold said Bonds, or coupons, or any of them, as
follows:
Article One
Bonds of the 7.28% 2016 Series and Certain
Provisions Relating Thereto
Section 1.01. A. Terms of Bonds of the 7.28% 2016
Series;. There shall be and hereby is created a new series of
Bonds, known as and entitled "First Mortgage Bonds, 7.28% Series
due 2016." The principal amount of the Bonds of the 7.28% 2016
Series shall be and hereby is limited, except for duplicate Bonds
authenticated and delivered pursuant to Section 3.12 of the
Original Indenture, to Ten Million Dollars ($10,000,000) in
aggregate principal amount.
The definitive Bonds of the 7.28% 2016 Series shall be
issued only as registered Bonds without coupons of the
denomination of $1,000 or any integral multiple thereof.
All Bonds of the 7.28% 2016 Series shall mature December 1,
2016, and shall bear interest at the rate of 7.28% per annum
until payment of the principal thereof, such interest to be
payable semi-annually, on June 1 and December 1 in each year, and
shall bear interest at the rate of 8.28% per annum on any overdue
payment of principal and, so far as the same may be legally
enforceable, on any overdue payment of interest or premium, until
the same shall be paid in full, such interest on any such overdue
payment to be payable on demand. Interest on the Bonds shall be
computed on the basis of a 360-day year of twelve 30-day months.
The principal of, the premium, if any, and interest on, the Bonds
of the 7.28% 2016 Series shall be paid in any coin or currency of
the United States of America which at the time of payment is
legal tender for the payment of public and private debts, at the
principal corporate trust office of the Trustee in the City of
Boston, Commonwealth of Massachusetts; provided, however, that,
subject to any applicable direct payment provisions, interest on
the Bonds of the 7.28% 2016 Series may be paid by checks payable
to the order of the respective holders entitled thereto and
mailed by the Trustee by first class mail, postage prepaid, to
such holders at their respective registered addresses as shown on
the Bond register for the Bonds of the 7.28% 2016 Series.
The definitive Bonds of the 7.28% 2016 Series may be issued
in the form of Bonds engraved, printed or lithographed on steel
engraved borders or, notwithstanding the provisions of the
Original Indenture, in the form of typewritten or other word
processed or photo-reproduced Bonds.
The person in whose name any Bond of the 7.28% 2016 Series is
registered at the close of business on any record date (as
hereinbelow defined) with respect to any interest payment date
shall be entitled to receive the interest payable on such
interest payment date notwithstanding the cancellation of such
Bond of the 7.28% 2016 Series upon any transfer or exchange
thereof (including any exchange effected as an incident to a
partial redemption thereof) subsequent to the record date and
prior to such interest payment date, except that, if and to the
extent that the Company shall default in the payment of the
interest due on such interest payment date, then the registered
holders of Bonds of the 7.28% 2016 Series on such record date
shall have no further right to or claim in respect of such
defaulted interest as such registered holders on such record
date, and the persons entitled to receive payment of any
defaulted interest thereafter payable or paid on any Bonds of the
7.28% 2016 Series shall be the registered holders of such Bonds
of the 7.28% 2016 Series on the record date for payment of such
defaulted interest. The term "record date" as used in this
Section 1.01, and in the form of the Bonds of the 7.28% 2016
Series, with respect to any interest payment date applicable to
the Bonds of the 7.28% 2016 Series, shall mean the May 15 next
preceding a June 1 interest payment date or the November 15 next
preceding a December 1 interest payment date, as the case may be,
or such record date established for defaulted interest as
hereinafter provided.
In case of failure by the Company to pay any interest when
due, the claim for such interest shall be deemed to have been
transferred by transfer of any Bond of the 7.28% 2016 Series
registered on the Bond register for the Bonds of the 7.28% 2016
Series, and the Company, by not less than 10 days written notice
to bondholders, may fix a subsequent record date, not more than 1
day prior to the date fixed for the payment of such interest, for
determination of holders entitled to payment of such interest.
Such provision for establishment of a subsequent record date,
however, shall in no way affect the rights of bondholders or of
the Trustee consequent on any default.
Every Bond of the 7.28% 2016 Series shall be dated as provided in
Section 3.05 of the Original Indenture, except that, so long as
there is no existing default in the payment of interest on the
Bonds of the 7.28% 2016 Series, all Bonds of the 7.28% 2016
Series authenticated by the Trustee between the record date for
any interest payment date and such interest payment date shall be
dated such interest payment date and shall bear interest from
such interest payment date; provided, however, that if and to the
extent that the Company shall default in the payment of the
interest due on such interest payment date, then any such Bond of
the 7.28% 2016 Series shall bear interest from the June 1 or
December 1, as the case may be, to which interest has been paid,
unless such interest payment date is June 1, 1997, in which case
such Bond shall bear interest from the date of authentication
upon original issue of such Bond.
Any notice affecting or relating to the Bonds of the 7.28%
2016 Series required or permitted to be given under the Indenture
may be given by mailing the same by nationally recognized
overnight mail or delivery service, at the expense of the sender,
to the holders of record at the date of mailing at their
respective addresses as shown on the Bond register for the Bonds
of the 7.28% 2016 Series.
As permitted by the provisions of Section 3.10 of the
Original Indenture and upon payment at the option of the Company
of a sum sufficient to reimburse it for any stamp tax or other
governmental charge as provided in Section 3.11 of the Original
Indenture, Bonds of the 7.28% 2016 Series may be exchanged for
other registered Bonds of the 7.28% 2016 Series of different
authorized denominations of like aggregate principal amount.
Notwithstanding the provisions of said Section 3.11, no further
sum, other than the sum sufficient to reimburse the Company for
such stamp taxes or other governmental charges, shall be required
to be paid upon any exchange of Bonds of the 7.28% 2016 Series or
upon any transfer thereof.
Neither the Company nor the Trustee shall be required to
make transfers or exchanges of Bonds of the 7.28% 2016 Series for
a period of 10 days next preceding any designation of Bonds of
the 7.28% 2016 Series to be redeemed, and neither the Company nor
the Trustee shall be required to make transfers or exchanges of
any Bonds designated in whole for redemption or that part of any
Bond designated in part for redemption.
The Trustee hereunder shall by virtue of its office as such
Trustee, be a paying agent of the Company for the purpose of the
payment of the principal of and premium, if any, and interest on
the Bonds of the 7.28% 2016 Series and the registrar and transfer
agent of the Company for the purpose of registering and
transferring Bonds of the 7.28% 2016 Series, and shall maintain a
Bond Register for the Bonds of the 7.28% 2016 Series.
B. Form of Bonds of the 7.28% 2016 Series. The Bonds of
the 7.28% 2016 Series and the Trustee's authentication
certificate to be executed on the Bonds of said series, shall be
in substantially the following form, respectively:
[Form of Bond of the 7.28% 2016 Series]
No. RK- $______________
Essex County Gas Company
(formerly known as Haverhill Gas Company)
First Mortgage Bond, 7.28% Series Due 2016
Due December 1, 2016
Essex County Gas Company (formerly known as Haverhill Gas
Company), a Massachusetts corporation (hereinafter sometimes
called the "Company"), for value received, hereby promises to pay
to ____________________________ or registered assigns,
_________________________________________ Dollars on December 1,
2016 and to pay to the registered owner hereof interest hereon
from the date of authentication upon original issue hereof, or
from the interest payment date next preceding the date of this
bond, or from the date of this bond if it be an interest payment
date, whichever date is the later, at the rate per annum
specified in the title of this bond, semi-annually on June 1 and
on December 1 in each year until payment of the principal hereof,
and to pay the registered holder hereof interest on any overdue
payment of principal and, so far as the same may be legally
enforceable, on any overdue payment of interest or premium, at
the rate per annum which is 1% greater than the rate per annum
specified in the title of this bond, such interest on any such
overdue payment to be payable on demand, until any such overdue
payment shall be paid in full. Interest shall be computed on the
basis of a 360-day year of twelve 30-day months.
The interest so payable upon any June 1 or December 1 will,
subject to certain exceptions described herein, be paid to the
person in whose name this bond is registered at the close of
business on the May 15 preceding such June 1 or the November 15
preceding such December 1, as the case may be.
The principal of and premium, if any, and interest on this bond
will be paid in any coin or currency of the United States of
America which at the time is legal tender for the payment of
public and private debts, at the principal corporate trust office
of the Trustee or its successor in trust, in the City of Boston,
Massachusetts; provided, however, subject to applicable direct
payment provisions, that interest on this bond may be paid by
check payable to the order of the registered holder entitled
thereto and mailed by the Trustee by first class mail, postage
prepaid, to such holder at his address as shown on the bond
register for the bonds of this series.
This bond shall not become or be valid or obligatory for any
purpose until the authentication certificate hereon shall have
been signed by the Trustee.
This bond is one of the bonds, of the above designated
series, of an authorized issue of bonds of the Company, known as
First Mortgage Bonds, issued or issuable in one or more series
under and equally and proportionately secured (except insofar as
any sinking fund, depreciation fund or other analogous fund
established in accordance with the provisions of the Indenture
hereinafter mentioned may afford additional security for the
bonds of any specific series) by an Indenture of First Mortgage
dated as of October 1, 1955, executed and delivered by the
Company to Second Bank-State Street Trust Company (now known as
State Street Bank and Trust Company), Boston, Massachusetts, as
Trustee (herein with its successors under said Indenture called
the " Trustee"), to which Indenture of First Mortgage as
supplemented and/or modified by fifteen supplemental indentures,
including, in particular, the First Supplemental Indenture, dated
as of October 1, 1958, the Second Supplemental Indenture, dated
as of May 1, 1961, the Third Supplemental Indenture, dated as of
October 1, 1961, the Fourth Supplemental Indenture, dated as of
April 1, 1964, the Fifth Supplemental Indenture, dated as of
December 1, 1965, the Sixth Supplemental Indenture, dated as of
January 1, 1971, the Seventh Supplemental Indenture, dated as of
November 1, 1975, the Eighth Supplemental Indenture, dated as of
July 1, 1979, the Ninth Supplemental Indenture, dated as of
April 1, 1982, the Tenth Supplemental Indenture, dated as of
June 1, 1984, the Eleventh Supplemental Indenture, dated as of
September 15, 1988, the Twelfth Supplemental Indenture, dated as
of December 1, 1990, the Thirteenth Supplemental Indenture, dated
as of September 23, 1994, the Fourteenth Supplemental Indenture
dated as of May 15, 1995, and the Fifteenth Supplemental
Indenture, dated as of December 1, 1996 executed and delivered by
the Company to said Trustee, and as hereafter supplemented or
modified in accordance with the terms thereof by all other
indentures supplemental thereto (hereinafter collectively called
the "Indenture") reference is hereby made for a description of
the property mortgaged and pledged as security for said bonds,
the nature and extent of the security, and the rights, duties and
immunities thereunder of the Trustee, the rights of the holders
of said bonds and of the Trustee and of the Company in respect of
such security, and the terms upon which said bonds may be issued
thereunder; but neither the foregoing reference to the Indenture
nor any provision of this bond or of the Indenture or of any
indenture supplemental thereto shall affect or permit the
impairment of the obligation of the Company, which is absolute
and unconditional, to pay at the stated or accelerated times
herein provided, the principal of and the premium, if any, and
the interest on this bond as herein provided.
The bonds of this series are subject to mandatory redemption
prior to maturity as a whole at any time or in part from time to
time, by operation of the sinking fund provided for in the
Fifteenth Supplemental Indenture at 100% of the principal amount
thereof, all in accordance with the terms of the Indenture. In
addition, the Company shall have the right, at its option (an
"Optional Redemption"), exercisable at any time and from time to
time, of paying the outstanding bonds of this series, either in
whole or in part (but if in part, then in units in excess of
$100,000) by payment of the principal amount of the bonds of this
series, or portion thereof to be redeemed, and accrued interest
thereon to the date of such redemption, together with a premium
equal to the Make-Whole Premium (determined three business days
prior to the date of redemption). Notice of an Optional
Redemption shall be given by nationally recognized overnight mail
or delivery service, at the expense of the sender, to the holder
of record of each bond affected and subject to all other
conditions and provisions of the Indenture, not less than thirty
days nor more than ninety days prior to the date fixed for
redemption. Three business days prior to the date specified in
such notice for such Optional Redemption, the Company shall
provide each holder of the Bonds of this series written notice
(by telecopy transmission and overnight mail or delivery service)
of the Make-Whole Premium payable in connection with such
Optional Redemption, determined as of such date, together with a
reasonably detailed computation thereof. The Trustee shall have
no obligation to calculate or verify any calculation of the Make-
Whole Premium.
As used herein, the following terms shall be defined as follows:
"Make-Whole Premium" shall mean, in connection with the above
described Optional Redemption, the excess, if any, of (i) the
aggregate present value as of the date of such redemption of each
dollar of principal being paid (taking into account the
application of such Optional Redemption required by Section 1.03
of the Fifteenth Supplemental Indenture) and the amount of
interest (exclusive of interest accrued to the date of
redemption) that would have been payable in respect of such
dollar if such Optional Redemption had not been made, determined
by discounting such amounts at the Reinvestment Rate from the
respective dates on which they would have been payable, over (ii)
100% of the principal amount of the outstanding bonds of this
series being redeemed. If the Reinvestment Rate is equal to or
higher than 7.28%, the Make-Whole Premium shall be zero.
"Reinvestment Rate" shall mean .50% plus the yield to
maturity implied by the yields reported, as of 10:00 A.M. (New
York City time) on the third business day next preceding the date
upon which payment of principal is required hereunder with
respect to the outstanding principal amount of the Bonds of this
series to be paid, on the display designated as "USD" of the
Bloomberg Financial Markets Services Screen (or such other
display as may replace page "USD" of the Bloomberg Financial
Markets Services Screen) for actively traded U.S. Treasury
securities having a maturity equal to the Weighted Average Life
to Maturity of such outstanding principal as of such date upon
which the payment of principal is required hereunder (taking into
account the application of such Optional Redemption required by
Section 1.03 of the Fifteenth Supplemental Indenture). If no
such published maturity exactly corresponds to such Weighted
Average Life to Maturity, yields for the two published maturities
most closely corresponding to such Weighted Average Life to
Maturity shall be calculated pursuant to the immediately
preceding sentence and the Reinvestment Rate shall be
interpolated or extrapolated from such yields on a straight-line
basis, rounding in each of such relevant periods to the nearest
month or, if no month is nearest, rounding up to the greater
number of months. For the purposes of calculating the
Reinvestment Rate, the most recent Statistical Release published
prior to the date of determination of the premium hereunder shall
be used.
"Statistical Release" shall mean the statistical release
designated "H.15(519)" or any successor publication which is
published weekly by the Federal Reserve System and which
establishes yields on actively traded U.S. Government Securities
adjusted to constant maturities or, if such statistical release
is not published at the time of any determination hereunder, then
such other reasonably comparable index which shall be designated
by the holders of 66-2/3% in aggregate principal amount of the
outstanding bonds of this series.
"Weighted Average Life to Maturity" of the principal amount
of the bonds of this series being optionally redeemed shall mean,
as of the time of any determination thereof, the number of years
obtained by dividing the then Remaining Dollar-Years of such
principal by the aggregate amount of such principal. The term
"Remaining Dollar-Years" of such principal shall mean the amount
obtained by (i) multiplying (1) the remainder of (A) the amount
of principal that would have become due on each scheduled sinking
fund payment date if such Optional Redemption had not been made,
less (B) the amount of principal on the bonds of this series
scheduled to become due on such date after giving effect to such
Optional Redemption and the application thereof in accordance
with the provisions of Section 1.03 of the Fifteenth Supplemental
Indenture, by (2) the number of years (calculated to the nearest
one-twelfth) which will elapse between the date of determination
and such scheduled payment date, and (ii) totaling the products
obtained in (i).
If this bond or any portion hereof ($100,000 or any integral
multiple hereof) is duly designated for redemption, if payment of
the principal hereof or of such portion together with accrued
interest and premium, if any, is irrevocably provided for, and if
notice of such redemption is duly given or provided for, all as
specified in the Indenture, this bond or such portion shall cease
to be entitled to the lien of the Indenture from and after the
date such payment and notice are irrevocably so provided for and
shall cease to bear interest from and after the date fixed for
redemption.
Except as may be otherwise provided in any agreement entered
into pursuant to the provisions of the Indenture, in the event of
the selection for redemption of a portion only of the principal
of this bond, payment of the redemption price will be made at the
option of the registered owner, either (a) upon presentation of
this bond for notation hereon of such payment of the portion of
the principal of this bond so called for redemption, or (b) upon
surrender of this bond in exchange for a bond or bonds, of
authorized denominations of the same series, for the unredeemed
balance of the principal amount of this bond. In the event of
the redemption of this bond in whole, payment of the redemption
price will be made only upon surrender of this bond.
The Indenture contains provisions permitting the Company and
the Trustee, with the consent of the holders of not less than
sixty-six and two-thirds per cent in principal amount of the
bonds at the time outstanding (determined as provided in the
Indenture) including, if more than one series of bonds shall be
at the time outstanding, not less than sixty-six and two-thirds
per cent in principal amount of the bonds at the time outstanding
of each series affected, to effect, by an indenture supplemental
to the Indenture, modifications or alterations of the Indenture
and of the rights and obligations of the Company and of the
holders of the bonds and coupons; provided, however, that no such
modification or alteration shall be made without the consent of
the registered owner hereof which will (a) extend the maturity of
this bond or reduce the rate or extend or otherwise change the
time of payment of interest hereon or reduce the amount of the
principal hereof or reduce any premium payable on the redemption
hereof, or (b) permit the creation of any lien, not otherwise
permitted, prior to or on a parity with the lien of the
Indenture, or alter the equal and proportionate security afforded
by the lien of the Indenture for the bonds issued thereunder, or
(c) reduce the number or percentage of the principal amount of
the bonds upon the consent of the holders of which modifications
or alterations may be made as aforesaid or defaults may be
waived.
The Company and the Trustee, any paying agent and any bond
registrar may deem and treat the person in whose name this bond
is registered upon the bond register for the bonds of this series
as the absolute owner of such bond for the purpose of receiving
payment of or on account of the principal of, the premium, if
any, and interest on this bond and for all other purposes,
whether or not this bond be overdue, and neither the Company nor
the Trustee nor any paying agent nor any bond registrar shall be
affected by any notice to the contrary; and all such payments so
made to such registered owner or upon his order shall be valid
and effectual to satisfy and discharge the liability upon this
bond to the extent of the sum or sums so paid.
This bond is transferable by the registered owner hereof in
person or by his duly authorized attorney, on the books of the
Company kept for the purpose, at the principal corporate trust
office of the Trustee upon surrender of this bond for
cancellation and upon payment, if the Company shall so require,
of the charges provided for in the Indenture, and thereupon a new
registered bond of the same series of like principal amount will
be issued to the transferee in exchange therefor.
The registered owner of this bond at his option may
surrender the same for cancellation at said office and receive in
exchange therefor the same aggregate principal amount of
registered bonds of the same series but of other authorized
denominations, upon payment, if the Company shall so require, of
the charges provided for in the Indenture and subject to the
terms and conditions therein set forth.
Neither the Company nor the Trustee shall be required to
make transfers or exchanges of bonds of this series for a period
of ten days next preceding any designation of bonds of said
series to be redeemed, and neither the Company nor the Trustee
shall be required to make transfers or exchanges of any bonds
designated in whole for redemption or that part of any bond
designated in part for redemption. Subject to the provisions of
the Fifteenth Supplemental Indenture, if this bond is surrendered
for any transfer or exchange between the record date for any
regular interest payment date and such interest payment date, the
new bond will be dated such interest payment date. If this bond
is surrendered for any transfer or exchange between such record
date and such interest payment date, the Fifteenth Supplemental
Indenture provides that in the event of any default in payment of
the interest due on such payment date, such interest shall not be
payable to the holder of the bond on the original record date but
shall be paid to the registered holder of such bond on the
subsequent record date established for payment of such defaulted
interest.
If a default as defined in the Indenture shall occur, the
principal of this bond may become or be declared due and payable
before maturity in the manner and with the effect provided in the
Indenture. The holders, however, of certain specified
percentages of the bonds at the time outstanding, including in
certain cases specified percentages of bonds of particular
series, may in these cases, to the extent and under the
conditions provided in the Indenture, waive past defaults
thereunder and the consequences of such defaults.
No recourse shall be had for the payment of the principal of
or premium, if any, or the interest on this bond, or for any
claim based hereon, or otherwise in respect hereof or of the
Indenture, against any incorporator, stockholder, director or
officer, past, present or future, as such, of the Company or of
any predecessor or successor corporation, either directly or
through the Company or such predecessor or successor corporation,
under any constitution or statute or rule of law, or by the
enforcement of any assessment or penalty, or otherwise, all such
liability of incorporators, stockholders, directors and officers,
as such, being waived and released by the holder and owner hereof
by the acceptance of this bond and as provided in the Indenture.
In Witness Whereof, Essex County Gas Company has caused
these presents, which are intended to take effect as a sealed
instrument, to be executed in its corporate name by its President
or one of its Vice Presidents, under its corporate seal or a
facsimile thereof, attested by its Clerk or one of its Assistant
Clerks, all as of January __, 1997.
Essex County Gas Company
By
President
Attest:
__________________________________
Clerk
[Form of Trustee's Authentication Certificate]
This is one of the bonds, of the series designated therein,
described in the within-mentioned Indenture.
State Street Bank and Trust Company, as Trustee,
By
Authorized Officer
[Form of Endorsement]
For value received the undersigned hereby sells, assigns, and
transfers unto
____________________
Please insert Social Security or
other identifying number of Assignee
the within bond, and all rights thereunder, hereby irrevocably
constituting and appointing ___________________________________
attorney to transfer said bond on the books of the Company, with
full power of substitution in the premises.
Dated:
Signature guaranteed by:
Notice: The signature to this assignment must correspond with
the name as it appears upon the face of the within bond in every
particular, without alteration or enlargement or any change
whatever.
Section 1.02. Redemption Provisions for Bonds of the 7.28%
2016 Series. The Bonds of the 7.28% 2016 Series shall be subject
to redemption prior to maturity as a whole at any time or in part
(but if in part, then in units in excess of $100,000) from time
to time,
(a) at the option of the Company upon payment of the Make-Whole
Premium, if any; and
(b) upon payment of the called principal amount thereof,
(I) through the application of cash deposited with the Trustee
for the sinking fund for the Bonds of said series
provided for in Section 1.03 hereof, or
(ii) inn the case of an Optional Redemption, through the
application of cash deposited with the Trustee for
such purpose, or
(iii) through the application pursuant to Section 8.05 of
the Original Indenture of any trust moneys held by the
Trustee received from (a) the proceeds of property
sold or taken pursuant to the provisions of
Section 7.04 of the Original Indenture or (b) the
proceeds of insurance not applied or required to
be applied to the repair, restoration or
replacement of the property destroyed or damaged
or to other additions to the trust estate pursuant
to the provisions of Section 9.09 and
Article Eight of the Original Indenture, provided,
however, that if more than one series of Bonds is
at the time outstanding, such trust moneys
referred to in this clause (ii) shall be applied,
as to the Bonds of the 7.28% 2016 Series, as
nearly as may be in the proportion that the
aggregate principal amount of the outstanding
Bonds of the 7.28% 2016 Series bears to the
aggregate principal amount of the Bonds of all
series then outstanding;
together in any case with interest accrued thereon to the date
fixed for redemption, upon not less than thirty nor more than
ninety days notice given by nationally recognized overnight mail
or delivery service, at the expense of the sender, to the holders
of record at the date of mailing of such notice of each Bond of
the 7.28% 2016 Series affected, at his address as shown on the
Bond register for Bonds of the 7.28% 2016 Series. Such notice
shall comply with the requirements of Sections 2.07 and 10.02 of
the Original Indenture. In addition to the foregoing, in the
event that the Company elects to make an Optional Redemption,
three business days prior to the date of such Optional
Redemption, as specified in the notice given pursuant to
Sections 2.07 and 10.02 of the Original Indenture, the Company
shall provide each holder of the Bonds of the 7.28% 2016 Series
written notice (by telecopy transmission and overnight mail or
delivery service) of the Make-Whole Premium payable in connection
with such Optional Redemption, as of such date, together with a
reasonably detailed computation thereof. The Trustee shall have
no obligation to calculate or verify any calculation of the Make-
Whole Premium.
Notwithstanding the provisions of the Original Indenture
(including, without limitation, Section 10.03 thereof), whenever
less than all the outstanding Bonds of the 7.28% 2016 Series are
to be redeemed, whether at the option of the Company or through
the operation of the sinking fund or otherwise, the principal
amount of such Bonds to be redeemed shall be prorated in units of
$1,000 among the holders of the Bonds of the 7.28% 2016 Series in
the proportions that their respective holdings bear to the
aggregate principal amount of Bonds of the 7.28% 2016 Series
outstanding on the date of selection. In case any holder of two
or more registered Bonds of the 7.28% 2016 Series shall so
request in writing filed with the Trustee, the Trustee, until
further notice from said holder, shall, for the purposes of
proration as aforesaid, treat each such registered Bond held by
said holder as if it were held by a separate and distinct holder.
The principal of pro rata redemption provided for herein shall be
maintained in successive partial redemptions, as well as in any
single partial redemption, so that, so far as practicable, at all
times the aggregate principal amount of Bonds of the 7.28% 2016
Series registered in the name of any holder which have been
redeemed shall be equal to the principal amount of Bonds of the
7.28% 2016 Series registered in the name of such holder which
would have been redeemed if redemptions in multiples of $1,000
were not required. Such allocations as may be requisite for the
purposes of the two next preceding sentences shall be made by the
Trustee in its uncontrolled discretion.
Section 1.03. Sinking Fund for Bonds of the 7.28% 2016
Series. As a sinking fund for the benefit of the Bonds of the
7.28% 2016 Series, the Company covenants that it will, on or
before November 30, in each year, beginning November 30, 2006,
and continuing to and including November 30, 2016, pay to the
Trustee cash sufficient to redeem on the next succeeding
December 1 at 100% of the principal amount thereof, Bonds of the
7.28% 2016 Series then outstanding, in the principal amount of
$909,091 or the then aggregate principal amount of the
outstanding Bonds of the 7.28% 2016 Series, if less than such
amount. The payments and the dates upon which payments are
required for the sinking fund as above provided are in this
Section 1.03 and in the annual sinking fund certificate
hereinafter provided for referred to as "mandatory sinking fund
payments" and "sinking fund payment dates," respectively. No
partial redemption of the Bonds of the 7.28% 2016 Series
(including, specifically, the optional and other redemptions
contemplated by Section 1.02) shall relieve the Company of its
obligation to pay mandatory sinking fund payments.
The Company shall file with the Trustee on or before the
October 15 next preceding any sinking fund payment date an
officers' certificate (herein referred to as an "annual sinking
fund certificate"), substantially in the following form:
Essex County Gas Company
(formerly known as Haverhill Gas Company)
Indenture Dated as of October 1, 1955, as Supplemented
By a Fifteenth Supplemental Indenture Dated as of
December 1, 1996
____________________________
Annual Sinking Fund Certificate
The undersigned, one of whom is an accountant, in compliance
with the provisions for a sinking fund contained in Section 1.03
of the above-mentioned Fifteenth Supplemental Indenture
(hereinafter called the "Fifteenth Supplemental Indenture")
supplementing the above-mentioned Indenture (hereinafter called
the "Original Indenture"), do hereby certify as follows:
1. The amount of the mandatory cash sinking fund payment
due on November 30, ____ (here there should be specified the
November 30 next succeeding the date of filing of the
certificate) as provided in Section 1.03 of the Fifteenth
Supplemental Indenture, is $________________.
2. The Company is not in default in the performance of any
covenant, agreement or condition contained in the Original
Indenture, as supplemented (provided, that in the event the
Company is in default, this paragraph 2 shall describe such
default and the actions the Company is taking to cure such
default).
[Here insert statements required by Section 2.04 of the Original
Indenture.]
Dated: ___________________
______________________________________
President
______________________________________
Treasurer of Essex County Gas Company
All Bonds of the 7.28% 2016 Series redeemed by operation of
the sinking fund, shall be deemed to be thereupon funded, but
only so long as any Bonds of the 7.28% 2016 Series are
outstanding. All Bonds of the 7.28% 2016 Series so redeemed
shall, if not previously cancelled, be forthwith cancelled by the
Trustee.
Forthwith after the October 15 preceding each sinking fund
payment date, the Trustee shall proceed to select for redemption,
in the manner provided in the last paragraph of Section 1.02 of
this Fifteenth Supplemental Indenture, a principal amount of
Bonds of the 7.28% 2016 Series equal to the amount of the
mandatory sinking fund payment required at such date and, in the
name of the Company, shall give notice as required by the
provisions of Section 1.02 of this Fifteenth Supplemental
Indenture and Article Ten of the Original Indenture, of the
redemption for the sinking fund on the then next ensuing
December 1, of the Bonds so selected. On or before the sinking
fund payment date next preceding such December 1, the Company
shall pay to the Trustee the mandatory sinking fund payment
required by this Section, plus the amount of all interest accrued
on Bonds of the 7.28% 2016 Series to be redeemed by the
application of such cash payments, and the money so paid shall be
applied by the Trustee to the redemption of such Bonds.
All cash paid to the Trustee pursuant to the provisions of
this Section 1.03 or pursuant to the provisions of Section 1.02
above, shall be held by the Trustee as security for the payment
of the Bonds of the 7.28% 2016 Series until applied as herein or
therein provided.
The Company, upon request of the Trustee from time to time, will
pay to the Trustee an amount equal to the cost of giving notice
of redemption of Bonds of the 7.28% 2016 Series for such sinking
fund, for giving notice of any Optional Redemption and any other
expense of operation of such sinking fund, the intention being
that such fund shall not be charged for such expenses.
Section 1.04. Restriction on Payment of Dividends on
Common Stock;. The Company shall not directly or indirectly
(a) declare or pay any dividend (other than dividends payable in
Common Stock of the Company) or declare or make any other
distribution on any shares of Common Stock, or (b) make any
expenditures for the purchase, redemption or other retirement for
a consideration of any shares of capital stock of the Company
(other than in exchange for, or from the net cash proceeds of,
other and new shares of capital stock of the Company and other
than any shares of any class of stock required to be purchased,
redeemed or otherwise retired for any sinking fund or purchase
fund for such class of stock), if the aggregate amount of all
such dividends, distributions and expenditures made since
August 31, 1996 would exceed the aggregate amount of the net
income of the Company accumulated after August 31, 1996 plus the
sum of $4,000,000.
Net income of the Company for the purpose of this
Section shall mean the sum of (a) the total operating revenues of
the Company, less an amount equal to the total operating expenses
of the Company, including but not limited to (i) all taxes
(including without limitation income, excess profits and other
taxes imposed on or measured by income or undistributed earnings
or income), (ii) rentals, insurance, current repairs and
maintenance, (iii) provision for retirements, depreciation or
obsolescence, which shall be the amount actually charged by the
Company on its books of account (but in respect of depreciable
gas utility property not subject to prior liens shall not be less
than the minimum provision for depreciation as defined in
Section 1.05 of this Fifteenth Supplemental Indenture), and
(iv) all charges on account of interest on indebtedness and on
account of debt discount and expense, and (b) net income or loss
from the operation of properties other than the trust estate and
any other income received (less applicable expenses) or loss
incurred by the Company; which sum shall be diminished by an
amount equal to all dividends accrued (whether or not paid) on
any outstanding stock of the Company having preference over the
Common Stock as to dividends, assets or otherwise, all of the
foregoing determined in accordance with sound accounting
practice. In determining the net income of the Company for the
purpose of this Section, no deduction or adjustment shall be made
for or in respect of any charges or credits which under sound
accounting practice are not appropriate charges or credits in
determining net income and, without limiting the generality of
the foregoing, the following items shall be excluded from the
computation: (1) expenses in connection with the issuance of
stock of the Company and expenses in connection with the
redemption or retirement of any securities issued by the Company,
including any amount paid in excess of the principal amount or
par or stated value of securities redeemed or retired, or, in the
event that such redemption or retirement is effected with the
proceeds of sale of other securities of the Company, any interest
or dividends on the securities redeemed or retired from the date
on which the funds required for such redemption or retirement are
deposited in trust for such purpose to the date of redemption or
retirement; (2) profits or losses from the sale, abandonment or
other disposition of property or other assets carried in plant or
investment accounts of the Company, or from the reacquisition of
any securities of the Company, or taxes in respect of any such
profits or reduction of taxes in respect of any such losses;
(3) any change in or adjustment of the book value of any assets
owned by the Company arising from a revaluation thereof; (4) any
adjustment (including tax adjustments) applicable to any period
prior to January 1, 1973; or (5) amortization or elimination of
gas utility property, plant adjustment or acquisition accounts or
intangibles.
Section 1.05. Minimum Provision for Depreciation;. So
long as any of the Bonds of the 7.28% 2016 Series remain
outstanding, the term "minimum provision for depreciation" shall
have the meaning specified in Section 1.32 of the Original
Indenture except that the rate of 1-3/4% per annum referred to in
said Section 1.32 shall for the purposes of this Section 1.05, be
computed at the rate of 2% per annum.
Section 1.06. Compliance with Laws;. The Company
shall conduct its operations and keep and maintain its property
in compliance with all Environmental Legal Requirements and shall
obtain all necessary governmental permits, approvals, licenses
and consents ("Environmental Permits") to the extent that non-
compliance with such Environmental Legal Requirements or failure
to obtain such Environmental Permits will have a material adverse
effect, and solely with respect to non-compliance with
governmental orders or directives issued pursuant to
Environmental Legal Requirements, the Company has diligently
applied for and obtained Environmental Permits necessary to
effect such compliance, and such non-compliance continues for
more than 180 days after the Environmental Permits have issued
and become effective; provided, however, that nothing contained
in this Section shall prevent the Company from contesting, in
good faith by appropriate legal proceedings, any Environmental
Legal Requirements, the interpretation thereof or the application
thereof, or the necessity or applicability of any Environmental
Permit, provided, further, that the Company shall comply with the
order of any court or other governmental body of applicable
jurisdiction relating to such laws unless the Company shall
currently be prosecuting an appeal or proceedings for review and
shall have secured a stay of enforcement or execution or other
arrangement, postponing, enforcement or execution pending such
appeal or proceedings for review.
For purposes of this Section 1.06, the term "Environmental
Legal Requirements" shall mean any applicable law relating to
public health, safety or the environment, including, without
limitation, relating to releases, discharges or emissions to air,
water, land or groundwater, to the withdrawal or use of
groundwater, to the use and handling of polychlorinated byphenyls
or asbestos, to the disposal, treatment, storage or management of
solid or hazardous wastes or to exposure to toxic or hazardous
materials, to the handling, transportation, discharge or release
of gaseous or liquid substances and any regulation, order, notice
or demand issued pursuant to such statute or ordinance, in each
case applicable to the property or assets of the Company or the
operation, construction or modification of any thereof, including
without limitation the following: the Clear Air Act, the Federal
Water Pollution Control Act, the Safe Drinking Act, the Toxic
Substances Control Act, the Comprehensive Environmental Response
Compensation and Liability Act as amended by the Superfund
Amendments and Reauthorization Act of 1986, the Resource
Conservation and Recovery Act as amended by the Solid and
Hazardous Waste Amendments of 1984, the Occupational Safety and
Health Act, the Emergency Planning and Community Right-to-Know
Act of 1986, the Solid Waste Disposal Act, and any state statutes
addressing similar matters, and any state statute providing for
financial responsibility for cleanup or other actions with
respect to the release or threatened release of hazardous
substances and any state nuisance statute.
Section 1.07. Duration of Effectiveness of Article
One;. This Article shall be of force and effect only so long as
any Bonds of the 7.28% 2016 Series are outstanding.
Article Two
Principal Amount Presently to be Outstanding
Section 2.01. The total aggregate principal amount of First
Mortgage Bonds of the Company issued and outstanding and
presently to be issued and outstanding under the provisions of
and secured by the Indenture will be as set forth below:
Designation of First
Mortgage Bonds Principal Amount
10 1/4% Series due 2003 $ 4,200,000
10.10% Series due 2020 $ 8,000,000
7.28% Series due 2016 $10,000,000
Additional Bonds of any other series established after the
execution and delivery of this Fifteenth Supplemental Indenture
may from time to time be authenticated, delivered and issued
pursuant to the terms of the Indenture.
Section 2.02. Bonds of the 7.28% 2016 Series in the
aggregate principal amount of Ten Million Dollars ($10,000,000)
may forthwith, upon the execution and delivery of this Fifteenth
Supplemental Indenture, or from time to time thereafter, and upon
compliance by the Company with the provisions of Sections 5.02
and 5.03 of the Original Indenture, be executed by the Company
and delivered to the Trustee and shall thereupon be authenticated
and delivered by the Trustee to or upon the written order of the
Company.
Article Three
Certain Definitions
As used in this Fifteenth Supplemental Indenture, the
following terms shall be defined as follows:
"Make-Whole Premium" shall mean, in connection with an
Optional Redemption of the Bonds of the 7.28% 2016 Series, the
excess, if any, of (i) the aggregate present value as of the date
of such redemption of each dollar of principal being paid (taking
into account the application of such Optional Redemption required
by Section 1.03 of the Fifteenth Supplemental Indenture) and the
amount of interest (exclusive of interest accrued to the date of
redemption) that would have been payable in respect of such
dollar if such Optional Redemption had not been made, determined
by discounting such amounts at the Reinvestment Rate from the
respective dates on which they would have been payable, over (ii)
100% of the principal amount of the Bonds of the 7.28% 2016
Series being redeemed. If the Reinvestment Rate is equal to or
higher than 7.28%, the Make-Whole Premium shall be zero.
"Reinvestment Rate" shall mean .50% plus the yield to
maturity implied by the yields reported, as of 10:00 A.M. (New
York City time) on the third business day next preceding the date
upon which payment of principal is required hereunder with
respect to the outstanding principal amount of the Bonds of the
7.28% 2016 Series to be paid, on the display designated as "USD"
of the Bloomberg Financial Markets Services Screen (or such other
display as may replace page "USD" of the Bloomberg Financial
Markets Services Screen) for actively traded U.S. Treasury
securities having a maturity equal to the Weighted Average Life
to Maturity of such outstanding principal as of such date upon
which the payment of principal is required hereunder (taking into
account the application of such Optional Redemption required by
Section 1.03 of the Fifteenth Supplemental Indenture). If no
such published maturity exactly corresponds to such Weighted
Average Life to Maturity, yields for the two published maturities
most closely corresponding to such Weighted Average Life to
Maturity shall be calculated pursuant to the immediately
preceding sentence and the Reinvestment Rate shall be
interpolated or extrapolated from such yields on a straight-line
basis, rounding in each of such relevant periods to the nearest
month. For the purposes of calculating the Reinvestment Rate,
the most recent Statistical Release published prior to the date
of determination of the premium hereunder shall be used.
"Statistical Release" shall mean the statistical release
designated "H.15(519)" or any successor publication which is
published weekly by the Federal Reserve System and which
establishes yields on actively traded U.S. Government Securities
adjusted to constant maturities or, if such statistical release
is not published at the time of any determination hereunder, then
such other reasonably comparable index which shall be designated
by the holders of 66-2/3% in aggregate principal amount of the
outstanding Bonds of the 7.28% 2016 Series.
"Weighted Average Life to Maturity" of the principal amount
of the Bonds of the 7.28% 2016 Series being optionally redeemed
shall mean, as of the time of any determination thereof, the
number of years obtained by dividing the then Remaining Dollar-
Years of such principal by the aggregate amount of such
principal. The term "Remaining Dollar-Years" of such principal
shall mean the amount obtained by (i) multiplying (1) the
remainder of (A) the amount of principal that would have become
due on each scheduled sinking fund payment date if such Optional
Redemption had not been made, less (B) the amount of principal of
the Bonds of the 7.28% 2016 Series scheduled to become due on
such date after giving effect to such Optional Redemption and the
application thereof in accordance with the provisions of
Section 1.03 of the Fifteenth Supplemental Indenture, by (2) the
number of years (calculated to the nearest one-twelfth) which
will elapse between the date of determination and such scheduled
payment date, and (ii) totaling the products obtained in (i).
Article Four
Miscellaneous
Section 4.01. For the purpose of the last paragraph of
Section 12.01 of the Indenture, the rate of interest referred to
therein for the Bonds of the 7.28% 2016 Series is seven and
twenty-eight one-hundredths percent (7.28%) per annum.
Section 4.02. This Fifteenth Supplemental Indenture is
executed and shall be construed as an indenture supplemental to
the Original Indenture, and shall form a part thereof, and the
Original Indenture as heretofore supplemented and modified and
hereby supplemented is hereby confirmed. Except to the extent
inconsistent with the express terms hereof, all of the
provisions, terms, covenants and conditions of the Original
Indenture shall be applicable to the Bonds of the 7.28%
2016 Series to the same extent as if specifically set forth
herein. All terms used in this Fifteenth Supplemental Indenture
shall be taken to have the same meaning as in the Original
Indenture as heretofore supplemented and modified except in cases
where the context clearly indicates otherwise.
Section 4.03. All recitals in this Fifteenth Supplemental
Indenture are made by the Company only and not by the Trustee;
and all of the provisions contained in the Original Indenture in
respect of the rights, privileges, immunities, powers and duties
of the Trustee shall be applicable in respect hereof as fully and
with like effect as if set forth herein in full.
Section 4.04. The Company covenants that it is lawfully
seized and possessed at the date of execution of this Fifteenth
Supplemental Indenture of all the trust estate described in this
Fifteenth Supplemental Indenture, except as specifically
otherwise stated in this Fifteenth Supplemental Indenture, and
that all the trust estate so described is free and clear of any
lien other than the lien of the Indenture and permitted
encumbrances; that the Company will warrant and forever defend
all the trust estate so described to the Trustee against the
claims of all persons whosoever except as in the Indenture
specifically otherwise stated, that it will maintain and preserve
the lien of the Indenture so long as any of the Bonds issued
under the Indenture are outstanding; and that it has good right
and lawful authority to subject all the trust estate so described
to the lien of the Indenture as provided in and by the Original
Indenture as heretofore supplemented and modified and as
supplemented by this Fifteenth Supplemental Indenture.
Section 4.05. This Fifteenth Supplemental Indenture may be
executed in several counterparts, and each of such counterparts
shall for all purposes be deemed to be an original, and all such
counterparts, or as many of them as the Company and the Trustee
shall preserve undestroyed, shall together constitute but one and
the same instrument.
Section 4.06. Although this Fifteenth Supplemental
Indenture is dated for convenience and for purposes of
identification and reference as of December 1, 1996, the actual
date or dates of execution by the Company and by the Trustee are
as indicated by their respective acknowledgments hereto annexed
and this Fifteenth Supplemental Indenture has been delivered and
has become effective for all purposes between the parties on the
later such date of execution.
In Witness Whereof, Essex County Gas Company has caused this
Fifteenth Supplemental Indenture to be signed in its corporate
name and behalf by its President and its corporate seal to be
hereunto affixed and attested by its Clerk or one of its
Assistant Clerks, and State Street Bank and Trust Company in
token of its acceptance of the trust hereby created has caused
this Fifteenth Supplemental Indenture to be signed in its
corporate name and behalf by one of its Assistant Vice
Presidents, and its corporate seal to be hereunto affixed and
attested by one of its Assistant Secretaries, all on the ____ day
of January, 1997.
Essex County Gas Company
By
Its President
Attest:
_____________________________
Clerk
(Corporate Seal)
State Street Bank and Trust Company
By
Its_____________________________________________________________
Attest:
______________________________
Assistant Secretary
(Corporate Seal)
Commonwealth of Massachusetts )
) ss.:
County of )
At ___________________________ on this ____ day of
_____________, 19__, before me appeared
____________________________, to me personally known, who, being
by me duly sworn, did say that he is
_____________________________ of the Essex County Gas Company,
and that the seal affixed to the foregoing instrument is the
corporate seal of said Corporation, and that the said instrument
was signed and sealed by him on behalf of said Corporation by
authority of its Board of Directors, and the said
_______________________ acknowledged said instrument to be the
free act and deed of said Corporation.
Notary Public
My Commission Expires
_______________________________
(Notarial Seal)
Commonwealth of Massachusetts )
) ss.:
County of )
At ___________________________ on this ___ day of
_____________, 19__, before me appeared
____________________________, to me personally known, who, being
by me duly sworn, did say that he is
_____________________________ of State Street Bank and Trust
Company, and that the seal affixed to the foregoing instrument is
the corporate seal of said Trust Company, and that the said
instrument was signed and sealed by him on behalf of said Trust
Company by authority of its Board of Directors, and the said
_______________________ acknowledged said instrument to be the
free act and deed of said Trust Company.
Notary Public
My Commission Expires
_______________________________
(Notarial Seal)
