SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13, or 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1997 Commission file No. 0-6028
BIRMINGHAM UTILITIES, INC.
(Exact Name of registrant as specified in its charter)
CONNECTICUT 06-0878647
(State or other jurisdiction of I.R.S. Employer Identification
incorporation or organization) No.
230 Beaver Street, Ansonia, CT 06401-0426
(Address of principal executive offices Zip Code
Registrant's telephone number including area code (203) 735-1888
Securities registered pursuant to Section 12(b) of the Act
Title of each class Name of each exchange
None None
Securities registered pursuant to Section 12(g) of the Act
Common Stock (no par value)
Title of Class
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 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
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (Section 229.405 of this chapter) is not contained herein,
and will not be contained, to the best of registrant's knowledge, in
definitive proxy or information statements incorporated by reference in Part
III of this Form 10-K or any amendment to this Form 10-K. [ X ]
Aggregate market value of the voting stock held by non-affiliates* of the
registrant based on the average bid and asked prices of such stock as of
March 26, 1998: $ 7,710,304.
Indicate the number of shares outstanding or each of the registrant's class
of common stock, as of the latest practicable date.
Class Outstanding at March 26, 1998
Common Stock, no par value 761,702
* For purposes of setting forth on the cover sheet of this Annual Report
on Form 10-K the aggregate market value of the voting stock held by non-
affiliates of the registrant, the registrant has deemed that all shares
beneficially held by officers, directors, and nominees are shares held by
affiliates.
Item 1. Business
The Company is a specially chartered Connecticut public service corporation
in the business of collecting and distributing water for domestic, commercial
and industrial uses and fire protection in Ansonia and Derby, Connecticut, and
in small parts of the contiguous Town of Seymour. Under its charter, the
Company enjoys a monopoly franchise in the distribution of water in the area
which it serves. In conjunction with its right to sell water, the Company has
the power of eminent domain and the right to erect and maintain certain
facilities on and in public highways and grounds, all subject to such consents
and approvals of public bodies and others as may be required bylaw.
The current sources of the Company's water are wells located in Derby and
Seymour and interconnections with the South Central Connecticut Regional Water
Authority's (the "Regional Water Authority") system (a) at the border of
Orange and Derby (the "Grassy Hill Interconnection") and (b) near the border
of Seymour and Ansonia (the "Woodbridge Interconnection"). The Company
maintains its interconnected Beaver Lake Reservoir System, a 2.2 million
gallon per day (MGD) surface supply in case of emergency needs.
The Company's entire system has a safe daily yield (including only those
supplies that comply with the SDWA on a consistent basis) of approximately 8.0
MGD, while the average daily demand and the maximum daily demand on the system
during 1997 were approximately 3.2 MGD and 4.3 MGD, respectively. The
distribution system with the exception of the well supplies, is mainly through
gravity, but there are seven distinct areas at higher elevations where
pumping, pressure tanks and standpipes are utilized. These higher areas serve
approximately 25% of the Company's customers.
During 1997 approximately 1.16 billion gallons of water from all sources were
delivered to the Company's customers. The Company has approximately 8,848
customers of whom approximately 98.7% are residential and commercial. No
single customer accounted for as much as 10% of total billings in 1997. The
business of the Company is to some extent seasonal, since greater quantities
of water are delivered to customers in the hot summer months.
The Company had, as of February 28, 1998, 20 full-time employees. The
Company's employees are not affiliated with any union organization.
The Company is subject to the jurisdiction of the Connecticut Department of
Public Utility Control ("DPUC") as to accounting, financing, ratemaking,
disposal of property, the issuance of long term securities and other matters
affecting its operations. The Connecticut Department of Public Health (the
"Health Department" or "DPH") has regulatory powers over the Company under
state law with respect to water quality, sources of supply, and the use of
watershed land. The Connecticut Department of Environmental Protection
("DEP") is authorized to regulate the Company's operations with regard to
water pollution abatement, diversion of water from streams and rivers, safety
of dams and the location, construction and alteration of certain water
facilities. The Company's activities are also subject to regulation with
regard to environmental and other operational matters by federal, state and
local authorities, including, without limitation, zoning authorities.
The Company is subject to regulation of its water quality under the Federal
Safe Drinking Water Act ("SDWA"). The United States Environmental Protection
Agency has granted to the Health Department the primary enforcement
responsibility in Connecticut under the SDWA. The Health Department has
established regulations containing maximum limits on contaminants
which have or may have an adverse effect on health.
Executive Officers of the Registrant
Name, Age and Position Business Experience Past 5 Years
Betsy Henley-Cohn, 45
Chairwoman of the Board Chairwoman of the Board of Directors of
the Company since May of 1992;
Chairman of the Board of Directors and
Treasurer, Joseph Cohn & Sons, Inc.
(construction sub- contractors);
Director, United Illuminating Company;
Director, Aristotle Corp.; Director, Citizens
Bank of Connecticut; Society for
Savings Bancorp, Director 1985-1993.
Aldore J. Rivers, 64
President President of the Company since 1985.
Item 2. Properties
The Company's properties consist chiefly of land, wells, reservoirs, and
pipelines. The Company has 5 production wells with an aggregate effective
capacity of approximately 3.0 MGD. The Company's existing interconnections
with the Regional Water Authority can provide 5.0 MGD. The Company's entire
system has a safe daily yield (including only those supplies that comply with
the SDWA on a consistent basis) of approximately 8.0 MGD, while the average
daily demand and the maximum daily demand on the system during 1997 were
approximately 3.19 MGD and 4.26 MGD, respectively. The distribution system,
with the exception of the well supplies, is mainly through gravity, but there
are seven distinct areas at higher elevations where pumping, pressure tanks
and standpipes are utilized. These higher areas serve approximately 25% of
the Company's customers.
The Company has three emergency stand-by reservoirs (Peat Swamp, Quillinan and
Middle) with a storage capacity of 484 million gallons and a safe daily yield
of approximately 2.2 MGD. Because the water produced by those reservoirs
does not consistently meet with the quality standards of the SDWA, none
of those reservoirs is actively being used by the Company to supply water
to the system. In addition, the Company owns the Great Hill reservoir
system which was abandoned as a usable reservoir in 1994, with the approval
of the Health Department. Because this reservoir does not meet the
requirements of the SDWA and because of the minimal storage capacity, the
Company has determined that it is not large enough to build a filtration
plant to bring the water into compliance economically. During 1996 and in
January of 1998, the Company sold to the City of Ansonia and the City of
Derby the Sentinel Hill Reservoir system and its watershed located in
Ansonia and Derby.
The Company's dams are subject to inspection by and the approvalof the DEP.
All of the Company's dams are in compliance with improvements previously
ordered by the U.S. Army Corps of Engineers.
The Company has an office building at 230 Beaver Street, in Ansonia. That
building was built in 1964, is of brick construction, and contains 4,200
square feet of office and storage space. In addition, the Company owns two
buildings devoted to equipment storage. The Company also maintains some
office space in a wood frame, residential building owned by the Company at 228
Beaver Street, Ansonia.
The Company's approximately 3,400 acres of land were acquired over the years
principally in watershed areas to protect the quality and purity of the
Company's water at a time when land use was not regulated and standards for
water quality in streams were non-existent.
Under Connecticut law a water Company cannot abandon a source of supply or
dispose of any land holdings associated with a source of supply until it has
a "water supply plan" approved by the Health Department. The Health
Department approved the Company's first Water Supply Plan in 1988
and updated Water Supply Plan in 1993. Pursuant to abandonment permits
issued by the Health Department in 1988, the Company abandoned its Upper
and Lower Sentinel Hill Reservoirs, Steep Hill (Bungay) Reservoir, and
Fountain LakeReservoir, and the land associated with them then became
available for sale. In 1994, the abandonment of Great Hill Reservoir was
approved by the Health Department.
Since 1988, the Company has sold approximately 150 acres of land in
Bethany for a gain after taxes of $765,367, 102 acres in Ansonia, Derby and
Seymour for a net gain of $974,567, 151 acres in Seymour for a net gain of
$796,527 59 acres in Ansonia for a net gain of $529,739, 10 acres in Seymour
for a net gain of $142,329 and 4 acres in Seymour for a net gain of $92,811.
The Company believes that approximately 1,250 acres of its land holdings
will not be needed in the future for water supply purposes and can be sold.
The Company has proposed, and the DPUC has accepted with respect to prior
transactions, an accounting and ratemaking mechanism by which the gain on the
sale of the Company's land holdings is shared between ratepayers and
stockholders as contemplated by Connecticut law. (See Note 1 to the Company's
Financial Statements).
Item 3. Legal Proceedings
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Market for the Registrant's Common Stock and RelatedSecurity Holding
Matters
As of December 31, 1997, there were approximately 486 record holders of the
Company's common stock. Approximately 37% of the Company's stock is held in
"nominee" or "street" name. The Company's common stock is traded on the
NASDAQ Small Cap Market. The market is not active, and actual trades are
infrequent. The following table sets forth the divident record for the
Company's common stock and the range of bid prices for the last two calendar
years. The stock prices are based upon NASDAQ records provided to the
Company. The prices given are retail prices. The Company's Mortgage Bond
Indenture under which its First Mortgage Bonds are issued contains provisions
that limit the dividends the Company may pay, under certain circumstances.
<TABLE>
<S> <C> <C> <C> <C>
Bid Dividend
High Low Paid
1997 First Quarter 9.00 8.60 .15
Second Quarter 10.00 9.80 .15
Third Quarter 13.00 11.00 .15
Fourth Quarter 15.00 13.00 .15
1996 First Quarter 11.00 10.00 .12
Second Quarter 11.00 9.50 .125
Third Quarter 10.00 8.50 .13
Fourth Quarter 10.00 10.00 .13
</TABLE>
Item 6. Selected Financial Data
Presented below is a summary of selected financial data for the years 1993
through 1997:
(000's omitted except for per share data)
<TABLE>
<S> <C> <C> <C> <C> <C>
1997 1996 1995 1994 1993
Operating
Revenues $4,367 $4,380 $4,238 $4,124 $4,033
Income before
Interest
Charges 1,112 968 863 913 910
Income from Land
Dispositions* 195 387 279 ---- ----
Net Income 668 765 518 363 378
Earnings Per Share-
Basic .88 1.02 .69 .48 .50
Earnings Per Share
-Diluted .87 1.02 .69 .48 .50
Cash Dividends Declared
(per share) .60 .50 .48 .48 .46
Total Assets 16,491 15,568 14,624 15,246 14,602
Long Term Debt 5,662 5,981 6,001 6,329 5,815
Short Term Debt 1,524 294 75 165 ----
Shareholder
Equity 4,097 3,841 3,408 3,220 3,217
Dispositions
</TABLE>
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Net Income
The Company's net income for 1997 was $667,879 compared with net income of
$764,737 in 1996 and $518,068 in 1995. Earnings per share, basic for 1997,
1996 and 1995 were $.88, $1.02 and $.69, respectively.
The decrease in net income of $96,858 in 1997 is principally a result of a
decline in land sale income of $191,252. This decline, however, is largely
offset by increased other income of $70,625 and decreased income taxes from
operations of $58,745. The increase in net income in 1996 from 1995 of
$246,672 is a result of increases in land sale income including amortization
of prior year gains of $146,776 and increased income from operations of
$99,896.
Revenues
Water sales to the Company's customers, primarily in the cities of Ansonia and
Derby, Connecticut, of $4,367,357 were $12,414 lower than the sales achieved
in 1996 of $4,379,771. A 5% rate reduction that became effective July 1,
1997, as a result of the repeal of the Connecticut Gross Receipts tax, is
principally offset by increased revenues due to a 2% increase in consumption
from the Company's residential class of customers. Although overall
consumption in 1997 has only increased .6% from the level achieved in 1996,
the residential consumption increase, for the most part, can be attributed to
dry and warmer weather patterns experienced in 1997 vs. 1996. In 1996, water
service revenues were $141,696, or 3.3%, ahead of 1995 revenues. A 6.9% water
service rate increase that became effective on January 1, 1996, was minimized
by lower consumption levels achieved in 1996, as a result of that year's
wet and cool summer.
Operating Expenses
Operating expenses of $2,483,875 in 1997 have increased $89,145, or 3.7%, over
total operating expenses of $2,394,730 for 1996. Increased costs associated
with special services relating to professional fees principally account for
this variance. Operating expenses in 1996 were $109,136 lower than in 1995,
as a result of lower purchased water costs due to wet weather conditions in
1996, and decreased auditing fees.
Maintenance Expenses
Maintenance expenses of $185,131 for 1997 are $39,931 or 17.7% lower than
maintenance expenses of $225,062 for 1995. Lower expenses relating to main
maintenance and service repairs principally relating to milder weather
conditions in 1997 vs. 1996 contribute to this favorable variance.
Maintenance expense in 1996 was $70,133 higher than 1996 as harsh weather
conditions in 1996 caused main and service repairs to escalate.
Depreciation Expense
Depreciation expense for 1997 of $439,116 exceeds depreciation expense for
1996 of $395,059 by $44,057. Depreciation expense relating to an increasing
amount of general plant additions made in 1996 and 1997 vs. prior years
accounts for this variance. Depreciation expense in 1996 was $12,207 higher
than in 1995, due to routine plant additions.
Taxes other than Income Taxes
Taxes other than income taxes in 1997 of $403,560 are $106,239 lower than the
expense of $509,799 for 1996. The repeal of the Connecticut Gross Receipts
tax that became effective July 1, 1997 accounts for this reduction. Taxes
other than income taxes in 1996 also decreased from the previous year's
expense by $29,497 as a result of decreased property taxes due to the
disposition of property and to a reduction in the mill rate in the Town of
Ansonia, Connecticut.
Income Taxes
Taxes on the Company's income from operations were $69,714 in 1997, $128,459
in 1996 and $67,742 in 1995. The decrease in 1997 from 1996 is principally
the result of tax deductions for property donations in conjunction with the
sale of Company excess land in Seymour, CT to the Town of Seymour and property
in Derby, CT to Yale University, as well as an increase in flow through tax
deductions principally relating to rate case expense. The tax increase in
1996 from 1995 reflects an increase in operating income for that year.
The Company also incurs income tax liability for gains from land transactions,
both in the year in which they occur and in the later years in which income,
previously deferred in accordance with the DPUC's orders concerning the
sharing of the gains between the Company's shareholders and ratepayers, is
recognized by the Company. Taxes related to gains on land transactions were
$258,476, $382,107 and $286,694 in 1997, 1996 and 1995, respectively. The
Company's total income tax liability including both the tax on operating
income and on land sale gains was $328,190 in 1997, $510,566 in 1996 and
$354,436 in 1995.
Land Dispositions
When the Company disposes of land, any gain recognized, net of tax, is shared
between ratepayers and stockholders based upon a formula approved by the DPUC.
The impact of land dispositions is recognized in two places on the statement
of income.
The statement of income reflects income from the disposition of land (net of
taxes) of $195,457 in 1997, $386,709 in 1996 and $279,101 in 1995, which
represent the stockholders' immediate share of income from land dispositions
occurring in each year.
Land disposition income is also recognized in the financial statements as a
component of operating income on the line entitled "Amortization of Deferred
Income on Dispositions of Land." These amounts represent the recognition of
income deferred on land dispositions which occurred in prior years. The
amortization of deferred income on land dispositions, net of tax, was
$175,744, $161,065 and $121,897 for the years 1997, 1996 and 1995,
respectively.
Recognition of deferred income will continue over time periods ranging from
three to fifteen years, depending upon the amortization period ordered by the
DPUC for each particular disposition. See Note 7 of the Financial Statements.
Other Income
Other income in 1997 of $150,708 is $70,652 greater than the level achieved
in 1996 of $80,083. Increased jobbing income and fees associated with the
Company's managed system and increased AFUDC account for this favorable
increase. Other income in 1996 was $71,335 below the 1995 level due to
reduced interest income in conjunction with a note provided from a developer
for a land sale which note was repaid in early 1995.
Inflation
Inflation, as measured by the Consumer Price Index, increased 1.7 percent, 3.3
percent and 2.5 percent in 1997, 1996 and 1995, respectively. The regulatory
authorities allow the recovery of depreciation through revenues solely on the
basis of the historical cost of plant. The replacement cost of utility plant
would be significantly higher than the historical cost. While the
regulatory authorities give no recognition in the ratemaking process to
the current cost of replacing utility plant, the Company believes that,
based on past practices, the Utilities will continue to be allowed to earn
a return on the increased cost of their net investment when prudent
replacement of facilities actually occurs.
FINANCIAL RESOURCES
During 1997, 1996 and 1995, the Company's water operations generated funds
available for investment in utility plant and for use in financing activities,
including payment of dividends on common stock, of $489,361, $456,951 and
$498,949, respectively (see Statement of Cash Flows).
Net cash provided by operating activities increased $32,410 from 1996 to 1997.
Increases in operating income and decreases in accounts receivable and accrued
revenues are almost offset by decreases in accounts payable and decreased
income from land dispositions.
During the three-year period 1995, 1996 and 1997, the Company has generated
sufficient funds to meet its day-to-day operational needs, including regular
expenses, payment of dividends, and investment in normal plant replacements,
such as new services, meters and hydrants. It expects to be able to continue
to do so for the foreseeable future. In order to meet day-to-day cash needs
that may arise unexpectedly, the Company maintains an unsecured working
capital line of credit of up to $600,000 with a local bank. There were no
borrowings outstanding under the working capital line of credit as of December
31, 1997.
Completion of the Company's Long Term Capital Improvement Program is dependent
upon the Company's ability to raise capital from external sources, including,
for the purpose of this analysis, proceeds from the sale of the Company's
holdings of excess land. During 1997, 1996 and 1995, the Company's
additions to utility plant, net of customer advances, cost $1,281,242,
$1,461,152 and $600,278, respectively (see Statement of Cash Flows). These
additions were financed primarily from external sources, including proceeds
from land sales and increases in debt.
The Company has outstanding $4,606,000 principal amount of Mortgage Bonds,
due September 1, 2011, issued under its Mortgage Indenture. The Mortgage
Indenture limits the issuing of additional First Mortgage Bonds and the
payment of dividends. It does not, however, restrict the issuance of either
long term or short term debt which is either unsecured or secured with liens
subject to the lien of the Mortgage Indenture. The Company also has a
secured, term loan with a principal amount outstanding on December 31, 1997
of $1,225,000 at an interest rate of 8.18%. Principal and interest payments
are made monthly and must be paid in full in 2004.
The Company also maintains an additional, secured, line of credit in the
principal amount of $1,500,000 maturing on May 1, 1998. The secured line of
credit is used to provide funds to continue the Company's construction
program; at the Company's option it may be converted to a term loan on May 1,
1998, with the term loan maturing in 2004. (See Note 3 to the Financial
Statements). In April 1996, when the revolving loan financing arrangement was
approved by the DPUC, the DPUC prohibited the Company from drawing down funds
under the revolving line of credit, if at the time of or as a result of the
draw down, the amount of the Company's long-term debt (including amounts
outstanding under the revolving line of credit) would exceed 67% of the
Company's total capitalization. The effect of the limitation, as of December
31, 1997, is to limit the Company to advances outstanding under the line of
credit in the aggregate amount of approximately $145,000 for use on budgeted
projects until such time as the Company obtains additional equity capital.
There was a balance of $1,355,00 outstanding under the revolving line of
credit at December 31, 1997 at an interest rate of 8.375%.
The Company's 1998 Capital Budget of $1,300,000 is two-tiered. The first tier
consists of typical capital improvements made each year for services, hydrants
and meters budgeted for $250,000 in 1998 and is expected to be financed
primarily with internally generated funds.
The second tier of the 1998 Capital Budget consists of replacements and
betterments which are part of the Company's Long Term Capital Improvement
Program and includes $1,050,000 of budgeted plant additions. Plant additions
from this part of the 1998 budget may require external financing in addition
to the Company's line of credit. Second tier plant additions can be, and
portions of it are expected to be, deferred to future years if funds are not
available for their construction in 1998.
As of December 31, 1997, the Company has approximately 1,250 acres of excess
land available for sale, consisting of land currently classified as Class III,
non-watershed land under the statutory classification system for water company
lands. The Company believes that by selling these excess lands it can
generate sufficient equity capital to support its 10 year capital budget,
currently estimated at $10,715,000. Such land dispositions are subject to
approval by the DPUC. Proceeds from the sale of land are recorded as revenue
at the time of closing and portions of the gains are deferred and amortized
over various time periods as stipulated by the DPUC.
On June 27, 1997, the Company sold to the Connecticut Department of
Transportation ("DOT"), 3.6 acres of land in Seymour, Connecticut for
$175,000. The total gain from sale amounted to $92,811 of which $15,570 was
deferred and will be amortized over a 5-year period, as approved by the DPUC
on June 4, 1997.
On November 7, 1997, the Company sold to Nemer Associates 10.02 acres of
land in Seymour, Connecticut for $300,000. The total gain from the sale
amounted to $142,329 of which $23,876 was deferred and will be amortized
over a 4-year period, as approved by the DPUC on December 4, 1996.
On March 18, 1997, the Company entered into a Purchase and Sale Agreement with
M/1 Homes, LLC ("M/1 Homes"), pursuant to which the Company agreed to sell and
M/1 Homes agreed to purchase approximately 245 acres of the Company's
unimproved real property in Seymour, Connecticut for $3,950,000. The
agreement calls for at least 50% of the property to be dedicated for open
space. The purchase and sale was approved by the DPUC on September 17, 1997,
stipulating a four-year amortization period for the net gain, based on that
50% open space dedication. The agreement may be terminated by either party
if M/1 Homes has not received all the required development approvals by
December 31, 1998. There is a provision in the agreement to extend its term
through December 31, 2000 to accommodate appeals of required governmental
approvals, in which case the purchase price for the property will increase by
$20,000 for each month, or portion thereof, after December 31, 1999 until the
closing shall occur. The Company cannot predict whether M/1Homes will be
able to obtain all of the required approvals.
On January 21, 1998, the Company sold to the City of Derby, Connecticut 145
acres of land in Derby, Connecticut for $1,800,000. The net gain on this sale
including the deferred portion approximated $913,000. The DPUC approved this
sale on October 22, 1997 stipulating a 3-year amortization period as 75% of
this parcel will be dedicated for open space.
On February 18, 1998, the Company executed a purchase and sale agreement with
The Trust for Public Land, Inc. ("TPL") for the purchase by TPL of 465 acres
of unimproved real property in the Town of Oxford, Connecticut for $3,220,000.
TPL is a non-profit California public benefit corporation with offices in
New Haven, Connecticut. TPL is not required to purchase the property unless
voters of the Town of Oxford approve the Town to acquire such property from
TPL. The agreement is also subject to approval by the DPUC. The closing is
scheduled to be completed within 45 days after the completion of the above
events, but in no event, shall any closing occur after December 31, 1998. The
Company has no reason to believe that the DPUC will not approve the agreement.
The Company cannot predict whether or not the voters of the Town of Oxford
will vote to acquire the property or if TPL will proceed in the event that the
voters fail to approve the acquisition.
On March 3, 1998, the Company executed a purchase and saleagreement with the
Town of Seymour (the "Town") for the purchase by the Town of 229acres of
unimproved real property in the Town for $1,800,000. The salesagreement must
be approved by the DPUC and the Company has no reason to believethat the DPUC
will not approve the agreement.
The Company maintains a common stock Dividend Reinvestment Plan (the "Plan")
pursuant to which shareholders will be entitled to purchase up to 70,000 new
shares of the Company's Common Stock by applying to the purchase price of the
new shares cash dividends which otherwise would be issued by the Company with
respect to its existing common stock. The Plan provides that the purchase
price for the new shares will be their fair market value at the time of the
purchase. Dividends reinvested during 1996 totaled $51,386 and in 1997,
$45,581.
Item 8. Financial Statements and Supplementary Data
Index to Financial Statements Page
Report of Independent Accountants 12
Balance Sheet as of December 31, 1997 and December 31, 1996 13
three years ended December 31, 1997
Statement of Cash Flows for 15
the three years ended December 31, 1997
Notes to Financial Statements 16-28
Financial Statement Schedules are omitted because they are not applicable or
the required information is shown in the financial statements or the notes
thereto.
To the Shareholders
Birmingham Utilities, Inc.
Ansonia, Connecticut
We have audited the accompanying balance sheets of Birmingham Utilities, Inc.
as of December 31, 1997 and 1996, and the related statements of income and
retained earnings and cash flows for each of the three years in the period
ended December 31, 1997. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Birmingham Utilities, Inc.
as of December 31, 1997 and 1996 and the results of its operations and its
cash flows for each of the three years in the period ended December 31, 1997
in conformity with generally accepted accounting principles.
February 12, 1998
Bridgeport, Connecticut
/s/ Dworken, Hillman, LaMorte & Sterczala
[CAPTION]
BALANCE SHEETS
<TABLE>
December 31,
1997 1996
<S> <C> <C>
Assets
Utility plant $19,045,629 $17,766,937
Accumulated depreciation (5,834,113) (5,472,071)
13,211,516 12,294,866
Current assets:
Cash and cash equivalents 62,699 185,479
Accounts receivable, net of allowance
for doubtful accounts
(1997, $50,000; 1996, $75,000) 604,627 681,194
Accrued utility and other revenue 375,327 411,542
Materials and supplies 56,976 51,792
Prepayments 15,068 34,586
Total current assets 1,114,697 1,364,593
Deferred charges 1,148,510 870,736
Unamortized debt expense 176,057 193,466
Income taxes recoverable 446,551 422,915
Other assets 394,096 421,844
2,165,214 1,908,961
$16,491,427 $15,568,420
Shareholders' Equity and Liabilities
Shareholders' equity:
Common stock, no par value;
authorized 2,000,000 shares;
issued and outstanding
(1997, 761,702 shares;
1996, 757,892 shares) $2,266,027 $2,221,786
Retained earnings 1,831,377 1,619,188
4,097,404 3,840,974
Notes payable 1,150,000 1,375,000
Long term debt 4,512,000 4,606,000
5,662,000 5,981,000
Current liabilities:
Notes payable 1,355,000 125,000
Current portion of note payable and
long term debt 169,000 169,000
Accounts payable and accrued
liabilities 454,659 747,323
Total current liabilities 1,978,659 1,041,323
Customers' advances for construction 1,238,339 1,291,114
Contributions in aid of construction 851,154 719,736
Regulatory liability - income taxes
refundable 179,916 187,477
Deferred income taxes 1,695,608 1,484,972
Deferred income on dispositions of
land 788,347 1,021,824
Commitments and contingent
liabilities (Note 13) ------- ------
$16,491,427 $15,568,420
</TABLE>
See notes to financial statements
[CAPTION]
STATEMENTS OF INCOME AND RETAINED EARNINGS
Years Ended December 31,
1997 1996 1995
<TABLE>
<S> <C> <C> <C>
Operating revenues:
Residential and commercial $3,335,743 $3,325,758 $3,214,442
Industrial 160,307 169,070 164,192
Fire protection 621,592 628,558 615,563
Public authorities 82,438 74,320 83,212
Other 167,227 182,065 160,666
4,367,357 4,379,771 4,238,075
Operating deductions:
Operating expenses 2,483,875 2,394,730 2,503,866
Maintenance expenses 185,131 225,062 154,929
Depreciation 439,116 395,059 382,852
Taxes, other than income taxes 403,560 509,799 539,296
Taxes on income 69,714 128,459 67,742
3,581,396 3,653,109 3,648,685
785,961 726,662 589,390
Amortization of deferred income on
dispositions of land (net of income
taxes of $124,718 in 1997,
$115,977 in 1996 and $90,091
in 1995) 175,744 161,065 121,897
Operating income 961,705 887,727 711,287
Other income, net 150,708 80,083 151,418
Income before interest expense 1,112,413 967,810 862,705
Interest expense 639,991 589,782 623,741
Income from dispositions of land
(net of income taxes of $133,758 in
1997, $266,130 in 1996 and
$196,603 in 1995) 195,457 386,709 279,101
Net income 667,879 764,737 518,065
Retained earnings, beginning of
year 1,619,188 1,235,482 1,077,185
Dividends 455,690 381,031 359,768
Retained earnings, end of
year $1,831,377 $1,619,188 $1,235,482
Earnings per share, basic $.88 $1.02 $.69
Earnings per share, diluted $.87 $1.02 $.69
Dividends per share $.60 $.50 $.48
</TABLE>
See notes to financial statements
[CAPTION]
STATEMENTS OF CASH FLOWS
Years Ended December 31,
<TABLE>
<S> <C> <C> <C>
Cash flows from operating activities: 1997 1996 1995
Net income $667,879 $764,737 $518,065
Adjustments to reconcile net income
to net cash provided by operating
activities:
Income from land dispositions (195,457) (386,709) (279,101)
Depreciation and amortizatin 491,208 453,116 460,108
Amortization of deferred income (175,744) (161,065) (121,897)
Deferred income taxes (91,243) (302,617) (256,489)
Allowance for funds used
during construction (41,741) (20,262) ---------
Change in assets and liabilities:
Decrease in accounts receivable
and accrued revenues 112,781 45,294 85,008
(Increase) in materials
and supplies (5,183) (952) (5,391)
(Increase) decrease in
prepayments 19,518 (7,426) (421)
Increase (decrease) in accounts
payable and accrued
liabilities (292,657) 72,835 99,067
Net cash provided by operating
activities 489,361 456,951 498,949
Cash flows from investing activities
Capital expenditures (1,359,886) (1,518,142) (671,390)
Sales of utility plant ----- ----- 2,248
Proceeds from land
disposition 475,000 1,041,350 -----
Increase in deferred charges and
other assets (306,790) (108,178) (27,753)
Note receivable ----- ----- 1,213,222
Customer advances 78,644 56,990 71,112
Customer advances for
construction ---- (9,180) (2,107)
Net cash provided by (used in)
investing activities (1,113,032) (537,160) 585,332
Cash flows from financing activities:
Borrowings under line of
credit 1,205,000 275,000 -----
Repayments of note payable and
long term debt (169,000) (75,564) (75,564)
Repayments of line of credit (125,000) ----- (340,000)
Debt issuance cost ----- (2,972) -----
Dividends paid, net (410,109) (329,645) (328,660)
Net cash provided by (used in)
financing activities 500,891 (133,181) (744,224)
Net increase (decrease) in cash (122,780) (213,290) 340,057
Cash and cash equivalents, beginning
of year 185,479 398,869 58,812
Cash and cash equivalents, end
of year $62,699 $185,479 $398,869
</TABLE>
See notes to financial statements
BIRMINGHAM UTILITIES, INC.
NOTES TO FINANCIAL STATEMENTS
Years Ended December 31, 1997, 1996, 1995
1. Accounting policies:
Description of business
Birmingham Utilities, Inc.'s (the "Company") predominant business activity is
to provide water service to various cities and towns in Connecticut. The
Company's accounting policies conform to generally accepted accounting
principles, and the Uniform System of Accounts and ratemaking practices
prescribed by the Connecticut Department of Public Utility Control ("DPUC").
Estimates and assumptions
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported revenues and expenses during the
reporting period. Actual results could vary from those estimates.
Utility plant
The costs of additions to utility plant and the costs of renewal sand
betterments are capitalized. The cost of repairs and maintenance is charged to
income. Upon retirement of depreciable utility plant in service, accumulated
depreciation is charged with the book cost of the property retired and the cost
of removal, and is credited with the salvage value and any other amounts
recovered.
Depreciation
For financial statement purposes, the Company provides for depreciation using
the straigh-line method. The rates used are intended to distribute the cost
of depreciable properties over their estimated service lives. For income tax
purposes, the Company provides for depreciation utilizing the straight-line and
accelerated methods.
Cash and cash equivalents
Cash and cash equivalents consist of cash in banks and overnight investment
accounts in banks.
From time to time, the Company has on deposit at financial institutions cash
balances which exceed federal deposit insurance limitations. The Company has
not experienced any losses in such accounts and believes it is not exposed to
any significant credit risk on cash and cash equivalents.
Allowance for funds used during construction
An allowance for funds used during construction ("AFUDC") is made by applying
the last allowed rate of return on rate base granted by the DPUC to construction
projects exceeding $10,000 and requiring more than one month to complete. AFUDC
represents the net cost, for the period of construction, of borrowed funds used
for construction purposes and a reasonable rate on other funds used. AFUDC
represents a noncash credit to income. Utility plant under construction is not
recognized as part of the Company's rate base for ratemaking purposes until
facilities are placed into service. Accordingly, the Company capitalizes AFUDC
as a portion of the construction cost of utility plant until it is completed.
Capitalized AFUDC is recovered through water service rates over the service
lives of the facilities.
Revenue recognition
The Company follows the proactive of recognizing revenue when bills are rendered
to customers. In addition, the Company accrues revenue for the estimated amount
of water sold but not billed as of the balance sheet date.
Advances for construction / contributions in aid of construction
The Company receives cash advances from developers and customers to finance
construction of new water main extensions. These advances are partially
refunded over a 10 year contract period to developers, as revenues are earned
on the new water mains. Any unrefunded balances are reclassified to
"Contributions in aid of Construction" and are no longer refundable.
Fair value of financial instruments
The carrying amount of cash and cash equivalents, trade accounts receivable, and
trade accounts payable approximates their fair values due to their short term
nature. The carrying amount of note payable and long term debt approximate fair
value based on market conditions for debt of similar terms and maturities.
Income taxes
Except for accelerated depreciation since 1981 (federal only) and the tax effect
of contributions in aid of construction for the period January 1, 1987 through
June 12, 1996, for which deferred income taxes have been provided, the Company's
policy is to reflect as income tax expense the amount of tax currently payable.
This method, known as the flow through method of accounting, is consistent with
the ratemaking policies of the DPUC, and is based on the expectation that tax
expense payments in future years will be allowed for ratemaking purposes.
The Company's deferred tax provision was determined under the liability method.
Deferred tax assets and liabilities were recognized based on differences between
the book and tax bases of assets and liabilities using presently enacted tax
rates. The provision for income taxes is the sum of the amount of income tax
paid or payable as determined by applying the provisions of enacted tax laws to
the taxable income for that year and the net change during the year in the
Company's deferred tax assets and liabilities.
In addition, the Company is required to record an additional deferred liability
for temporary differences not previously recognized. This additional deferred
tax liability totaled $266,635 at December 31, 1997 and $235,438 at December 31,
1996. Management believes that these deferred taxes will be recovered through
the ratemaking process. Accordingly, the Company has recorded an offsetting
regulatory asset and regulatory liability.
Employee benefits
The Company has a noncontributory defined benefit plan which covers
substantially all employees. The benefits are primarily based on years of
service and the employee's compensation. Pension expense includes the
amortization of a net transition obligation over a twenty three year period.
The Company's funding policy is to make annual contributions in an amount that
approximates what was allowed for ratemaking purposes consistent with ERISA
funding requirements. Contributions are intended to provide not only for
benefits attributed to service to date, but also for those expected to be earned
in the future.
The Company has a 401(k) Plan. Employees are allowed to contribute a percentage
of salary, based on certain parameters. From January 1, 1995 through March 31,
1996 the Company matched 25% of employee contributions up to 6% of total
compensation. Effective April 1, 1996, the Company matches 50% of employee
contributions up to 6% of total compensation.
In addition, the Company provides certain health care and life insurance
benefits for retired employees and their spouses. Generally, the plan provides
for Medicare wrap around coverage plus life insurance based on a percentage of
each participant's final salary. Substantially all of the Company's employees
may become eligible for these benefits if they reach retirement age while
working for the Company. The Company's obligation for postretirement benefits
expected to be provided to or for an employee must be fully accrued by the date
that the employee attains full eligibility for benefits. The Company has
elected to recognize the unfunded accumulated postretirement benefit obligation
over 20 years. The Company's funding policy is to contribute amounts annually
to a benefit trust and pay directly all current retiree premiums.
Compensated absences
Company policy and practice does not provide for any accumulated but unused
vacation, sick time or any other compensated absences to be carried over beyond
the year end.
Deferred charges
Deferred charges consist primarily of costs incurred to prepare the Company's
surplus land for future disposition. Deferred charges are allocated to
dispositions of land based on specific identification, if applicable, and on the
percentage of acres disposed to total surplus acres.
Land dispositions
The Company is actively seeking to dispose of surplus land not required for
utility operations. The net gain of each disposition, after deducting costs,
expenses and taxes is allocated between the shareholders and ratepayers by a
method approved by the DPUC based on legislation passed by the Connecticut
General Assembly. The portion of income applicable to shareholders is
recognized in the year of disposition. Income attributable to ratepayers is
deferred and amortized in a manner that reflects reduced water revenue resulting
from the sharing formula as determined by the DPUC.
Unamortized debt expense
Cost related to the issuance of debt are capitalized and amortized over the term
of the related indebtedness. The Company has received permission from the DPUC
to amortize the costs associated with debt previously outstanding over the term
of the new indebtedness.
2. Utility Plant
<TABLE>
December 31,
1997 1996
<S> <C> <C>
Pumping, treatment and distribution $14,590,321 $13,368,635
Source of Supply 3,216,090 3,126,167
General Plant 1,146,517 1,132,329
Organization 30,219 30,219
18,983,147 17,657,350
Construction in process 62,482 109,587
$19,045,629 $17,766,937
</TABLE>
3. Note Payable
Notes Payable consist of a ten year $1,500,000 term loan, a $1,500,000 revolving
line of credit to fund additional capital improvements, and an unsecured line
of credit of $600,000 to be used for working capital purposes. The revolving
line of credit and unsecured line of credit become due and payable on May 1,
1998 and with the unsecured portion required to be reduced to a zero balance for
30 consecutive days prior to the maturity date. The outstanding balance of the
revolving note may be converted to a term loan at maturity with the same
maturity and payment terms as the original term loan. Both the term loan and
the revolving line of credit are secured by a lien (subordinate to the lien of
the Mortgage Bond Indenture See Note 5) on all of the Company's utility
property other than its excess land available for sale.
The term loan portion of the facility has both fixed and variable interest rate
options. The applicable interest rate at December 31, 1997 and through July
2000 is 8.18%. Interest is payable monthly. The revolving line of credit also
has various interest rate options, including a variable rate at 0.125% above the
prime rate and LIBOR rate options, fixed for various short term periods
including 30, or 90 days at 1.75% over the applicable LIBOR rate. Interest is
payable monthly. Borrowings of $1,355,000 were outstanding on the revolving
line of credit at December 31, 1997. On January 22, 1998, these borrowings were
paid in full as a result of a Land Sale that took place between the City of
Derby and the Company. (See Note 18).
The unsecured line of credit also provides for various interest rate options,
including a variable rate at 0.125% above the prime rate, a variable rate at
1.75% above the bank's cost of funds (as provided by the bank), and the LIBOR
options also available under the revolving line of credit. Borrowings of
$125,000 were outstanding on the unsecured line of credit at December 31, 1997.
All three facilities provide that a default under any of them or under the
Mortgage Bond Indenture is considered a default under the others. They also
provide that the net proceeds from the sale of any of the Company's excess land
must be used to reduce the balance of the revolving line of credit first and
then the term loan and require maintenance of certain financial ratios and
shareholders' equity of at least $3,000,000. In addition, the DPUC has
restricted the Company from borrowing funds under the revolving line of credit
if at any time or as a result of the borrowing, the Companyns long term debt
(including amounts outstanding under the revolving line of credit) would exceed
67% of the Companyns total capitalization. The DPUC has also required that the
Company's ratio of long term debt to total capital not exceed 62% by May 1,
1998.
Minimum annual principal payments due on the term loan follows:
Year ending December 31:
<TABLE>
<S> <C>
1998 $ 75,000
1999 75,000
2000 75,000
2001 75,000
Thereafter 850,000
$1,225,000
</TABLE>
4. Long Term Debt
<TABLE>
<S> <C> <C>
December 31,
1997 1996
First mortgage bonds, Series E. 9.64%,
due September 1, 2011 $4,606,000 $4,700,000
</TABLE>
Pursuant to its Mortgage Bond Indenture, the Company has outstanding, a series
of first mortgage bonds in the amount of $4,606,000 due on September 1, 2011.
The terms of the indenture provide, among other things, annual sinking fund
requirements commencing September 1, 1997, and limitations on (a) payment of
cash dividends; and (b) incurrence of additional bonded indebtedness. Under the
dividend limitation, approximately $906,700 was available to pay dividends at
December 31, 1997 after the quarterly dividend payment made on that date.
Interest is payable semi annually on the first day of March and September. The
indenture is secured by a lien on all of the Companyns utility property other
than excess land available for sale.
The Company began to pay current maturities of long term debt of $94,000 on
September 1, 1997, and is required to pay $94,000 each September 1 thereafter,
until the bonds are paid in full.
[CAPTION]
Note 5 Accounts Payable and Accrued Liabilities
<TABLE>
December 31,
1997 1996
<S> <C> <C>
Accounts payable $139,782 $239,886
Accrued liabilities:
Interest 148,005 151,027
Taxes (30,541) 173,777
Pension 160,597 147,250
Other 36,816 35,383
$454,659 $747,323
</TABLE>
Note 6 Deferred Income on Dispositions of Land
Deferred income on the prior dispositions of land is amortized to operating
income under a method that coordinates the sharing of the net gains from land
sales between the Company's shareholders and ratepayers, in accordance with a
rate making formula approved by the DPUC. Amortization of deferred income and
related taxes to be included in future years operating income for land sales
completed as of the balance sheet date follow:
<TABLE>
Deferred Amortization To
Deferred Income Be Included In
Year Ending December 31: Income Taxes Operating Income
<S> <C> <C> <C>
1998 $261,400 $108,175 $153,225
1999 191,370 79,129 112,241
2000 138,142 57,279 80,863
2001 92,470 38,508 53,962
2002 49,947 20,735 29,212
Thereafter 55,018 22,824 32,194
$788,347 $326,650 $461,697
</TABLE>
The amortization of deferred income on prior land sales does not include the
effect of anticipated future land sales under the Company's ongoing land sales
program.
7. Taxes, Other Than Income Taxes
<TABLE>
December 31,
1997 1996 1995
<S> <C> <C> <C>
Municipal $227,022 $225,320 $267,183
Gross receipts 105,403 215,300 208,201
Payroll 71,135 69,179 63,912
$403,560 $509,799 $539,296
</TABLE>
The Connecticut Gross Receipts tax was repealed as of July 1, 1997 and as a
result, water service rates were also reduced to reflect that reduction.
8. Income Taxes
The provisions for taxes on income for the years ended December 31, 1997, 1996
and 1995 consist of:
<TABLE>
1997 1996 1995
<S> <C> <C> <C>
Current:
Federal $119,666 $318,311 $212,705
State 41,291 112,765 111,526
Deferred:
Federal:
Accelerated depreciation 96,384 81,714 117,076
Alternative minimum tax
credit 76,855
Income on land
dispositions 83,117 15,127 (112,489)
Investment tax credit (14,700) (14,700) (14,700)
Construction advances
and other (12,207) (5,071) (6,165)
State 14,639 2,420 (30,372)
$328,190 $510,566 $354,436
</TABLE>
State deferred income taxes relate solely to timing differences in the
recognition of income related to land dispositions.
A reconciliation of the income tax expense at the federal statutory tax rate of
34 percent to the effective rate follows:
<TABLE>
1997 1996 1995
<S> <C> <C> <C>
Federal income tax at statutory
rates $338,665 $433,603 $296,650
Increase (decrease) resulting from:
State income tax, net of federal
benefit 17,590 72,828 93,653
Rate case expense (21,508) 4,536 (9,103)
SFAS 106 expense in excess of
funding 750 768 2,068
Other, net 7,393 13,531 (14,132)
Investment tax credit (14,700) (14,700) (14,700)
Total provision for income taxes 328,190 510,566 354,436
Taxes related to land
dispositions (258,476) (382,107) (286,694)
Operating provision for taxes $69,714 $128,459 $67,742
Deferred tax liabilities (assets) were comprised of the following:
1997 1996
Depreciation $1,662,767 $1,572,362
Investment tax credits 349,261 363,961
Other 244,573 229,181
Gross deferred tax liabilities 2,256,601 2,165,504
Land Sales (326,650) (424,405)
Alternative minimum tax (2,228) (2,228)
Other (232,115) (253,899)
Gross deferred tax assets (560,993) (680,532)
Total deferred income taxes $1,695,608 $1,484,972
</TABLE>
9. Related Party Transactions
The Company has paid legal and consulting fees to firms whose partners are
directors and shareholders of the Company. During the years ended December 31,
1997, 1996 and 1995, fees paid amounted to $123,439, $32,378 and $34,748,
respectively.
10. Allowance for Doubtful Accounts
<TABLE>
December 31,
1997 1996 1995
<S> <C> <C> <C>
Allowance for doubtful accounts,
beginning $75,000 $75,000 $75,000
Provision 28,251 43,237 46,712
Recoveries 3,051 8,549 13,036
Charge offs (56,302) (51,786) (59,748)
Allowance for doubtful accounts,
ending $50,000 $75,000 $75,000
</TABLE>
11. Postemployment Benefits
Pension Plan
The plan's funded status and related pension accrual follows:
<TABLE>
December 31,
1997 1996
<S> <C> <C>
Actuarial present value of benefit obligations:
Accumulated benefit obligation, including vested
benefits of $592,240 in 1997
and $523,864 in 1996 $598,187 $537,226
Projected benefit obligation (851,292) (742,517)
Plan assets at fair value 625,767 502,793
Projected benefit obligation in excess
of plan assets (225,525) (239,724)
Unrecognized prior service cost (41,928) (44,183)
Unrecognized deferred loss 161,758 194,709
Other liability 0 (33,311)
Unrecognized net obligation at transition 82,205 88,077
Prepaid (accrued) pension obligation
included in accounts payable accrued
liabilities $(23,490) $(34,432)
</TABLE>
The weighted average discount rate and rate of increase in future compensation
levels used in determining the actuarial present value of the projected benefit
obligations was 7.0% in 1997 and in 1996. The expected long term rate of return
on assets was 8.0% in 1997 and in 1996.
Net periodic pension costs include the following components:
<TABLE>
December 31,
1997 1996 1995
<S> <C> <C> <C>
Service cost $48,297 $40,780 $30,077
Interest cost on projected benefit
obligation 53,319 46,694 38,004
Amortization of net loss
from prior years 9,980 8,065 6,167
Amortization of net obligation at
transition 5,872 5,872 5,872
Amortization of unrecognized prior
service cost (2,254) (2,254) (2,263)
Deferred gain (loss) 53,301 (13,119) 61,097
Actual return on assets (94,454) (24,638) (91,892)
Net pension cost $74,061 $61,400 $47,062
</TABLE>
Employer matching contributions to the 401(k) plan were $17,645, $14,372 and
$7,731 in 1997, 1996 and 1995, respectively.
Other post retirement benefit
The net periodic postretirement benefit cost includes the following
components:
<TABLE>
December 31,
1997 1996 1995
<S> <C> <C> <C>
Service cost benefits earned during
the period $19,779 $19,612 $22,268
Interest cost on benefit
obligation 30,709 29,385 29,700
Actual return on plan assets (33,363) (16,003) (27,185)
Net amortization and deferral 2,508 (8,985) 11,430
Amortization of transition
obligation 25,378 25,378 25,378
Net periodic postretirement
benefit cost $45,011 $49,387 $61,591
</TABLE>
The funded status and the related accrual for postretirement benefits other
than pensions were as follows:
<TABLE>
December 31,
1997 1996
<S> <C> <C>
Accumulated postretirement benefit
obligation:
Retirees $(222,635) $(234,544)
Other vested (226,524) (196,674)
(449,159) (431,218)
Plan assets at fair value 271,622 214,759
Accumulated postretirement obligation in
excess of plan assets (177,537) (216,459)
Unrecognized net gain (203,080) (189,588)
Unrecognized net transition
obligation 380,617 406,047
Accrued postretirement benefit cost
included in current assets $ 0 $ 0
</TABLE>
The weighted average discount rate used in determining the accumulated
postretirement benefit obligation was 7.5% in 1997 and 1996. The expected long
term rate of return on assets was 7.5% in 1997 and 1996.
For measurement purposes, a 10.0% annual increase in the per capita cost of
covered health care benefits was assumed for 1998. This rate was assumed to
decrease gradually to 6% for 2004 and remain at that level thereafter. A 1%
increase in health care cost trend rate assumptions would produce an increase
in the accumulated postretirement benefit obligation at December 31, 1997 of
$71,579 and in increase in the aggregate service and interest cost of the net
periodic postretirement benefit cost of $9,718.
The Company has established tax effective funding vehicles for such retirement
benefits in the form of a qualified Voluntary Employee Beneficiary Association
(VEBA) trust. The Company funded the VEBA trust with tax deductible
contributions totaling $45,011, $49,387 and $57,767 in 1997, 1996 and 1995,
respectively.
The Company president's employment contract requires accounting for benefit
payable in accordance with SFAS 106. The accumulated present value of future
benefits attributable to the Companyns president is being recognized over his
remaining years of service to retirement. The liability recorded at December
31, 1997 and 1996 was $136,650 and $112,818, respectively. At December 31,
1997, an amount of $86,250 has been included in other assets relating to a
regulatory asset for cost which were included in the Company's rate case.
12. Earnings per share Supplemental Information
The following table summarizes the number of common shares used in the
calculation of earnings per share:
<TABLE>
1997 1996 1995
<S> <C> <C> <C>
Weighted average shares outstanding
for earnings per share, basic 759,495 754,449 749,827
Incremental shares from assumed
conversion of stock options 8,051
Weighted average shares outstanding
for earnings per share, diluted 767,546 754,449 749,827
</TABLE>
13. Commitments and Contingent Liabilities
Leases
The Company leases equipment under several noncancelable operating leases
expiring through 2001. Total minimum rentals under noncancelable operating
leases are as follow:
Year ending December 31:
<TABLE>
<S> <C>
1998 $16,419
1999 13,601
2000 10,452
2001 851
$41,323
</TABLE>
Lease expense was $11,907 in 1997, $27,903 in 1996 and $35,274 in 1995.
Management agreement
The Company maintains an agreement with the City of Derby (the "City"), pursuant
to which agreement, the Company manages the water system owned by the City. The
Company is responsible for costs of maintenance and improvements. Amounts
collected from customers, net of expenses, are retained by the Company.
Capital budget
Management has budgeted $1,300,000 for capital expenditures in 1998, $250,000
of which is expected to be necessary to meet its service obligations for the
coming year. The balance of the capital budget depends on the Company's ability
to raise additional capital.
Purchase commitment
The Company has an agreement with South Central Connecticut Regional Water
Authority to purchase water. This agreement provides for a minimum purchase of
600 million gallons of water annually. Charges to expense were $691,166,
$680,125 and $743,904 for the years 1997, 1996 and 1995, respectively. The
purchase price is based on South Central Connecticut Regional Water Authorityns
wholesale rate. At December 31, 1997, this rate was $1,150 per million
gallons. This agreement expires December 31, 2015 and provides for two ten year
extensions at the Company's option.
14. Year 2000 Compliance
The Company is evaluating its computer system for compliance with issues related
to the year 2000. Management anticipates that the Company's systems will be
fully compliant by the end of 1998. Costs associated with compliance are not
expected to have a material impact on the Companyns financial position or
results of operations.
15. Rate Matters
On July 18, 1997, the Company filed a rate application with the DPUC for a 14.2
percent water service rate increase designed to provide a $601,382 increase in
annual water service revenues and a return on equity of 12.95%. The Company
subsequently revised its request to $439,426 or an increase in annual revenues
of 10.4 percent. On January 21, 1998, the DPUC granted the Company a 4.1
percent water service rate increase designed to provide a $177,260 annual
increase in revenues and a 12.16% return on common equity.
On December 27, 1995, the DPUC granted the Company an increase in annual revenue
of $289,333, or 6.9%, effective January 1, 1996.
16. Equity
Stock option plans
The Company has two stock option plans and a non employee director stock option
plan and a key employee incentive stock option plan. 40,000 and 35,000 shares,
respectively, were authorized under the two plans which provide for options to
purchase common stock of the Company at the fair market value at the date of the
grant. The options vest over various periods and must be exercised within 10
years from date of grant. The following table summarizes the transactions of
the Company's stock option plans for the three years ended December 31, 1997:
<TABLE>
Granted Exercisable
Weighted Weighted
Number Average Number Average
of Shares Exercise Price of Shares Exercise Price
<S> <C> <C> <C> <C>
Outstanding at
January 1, 1995 54,000 $10.50
Granted 3,750 $11.00
Outstanding at
December 31, 1995 57,750 $10.53 22,750 $ 10.50
Granted 5,000 $8.50
Outstanding at
December 31, 1996 62,750 $10.37 55,875 $ 10.52
Granted 2,500 $12.25
Forfeited (3,000) $10.50
Outstanding at
December 31, 1997 62,250 $10.44 57,250 $ 10.45
</TABLE>
On January 1, 1996, the Company adopted Statement of Financial Accounting
Standards No. 123, "Accounting for Stock Based Compensation" (SFAS 123). As
permitted by SFAS 123, the Company has chosen to continue to apply Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" (APB
25) and, accordingly, no compensation cost has been recognized for stock options
in the financial statements. The pro forma effect of these options on net
income and earnings per share, utilizing the Black Scholes option pricing model,
consistent with the method stipulated by SFAS 123, was not material to the
Companyns results of operations in those years.
Dividend reinvestment plan
The Company has a dividend reinvestment plan which provides for the issuance and
sale of up to 70,000 shares of the Company's authorized but unissued common
stock to its shareholders who elect to reinvest cash dividends on the Company's
existing shares. Shares under the plan will be purchased at their fair market
value price on the date of the dividends to be invested in the new shares. The
following table summarizes the activity in common shares related to the dividend
reinvested plan:
<TABLE>
December 31,
1997 1996
<S> <C> <C>
Number of shares issued 3,810 5,610
Value of shares when issued $45,581 $51,386
</TABLE>
17. Supplemental Disclosure of Cash Flow Information and Noncash Financing
Activities
Cash paid for interest for the years ended 1997, 1996 and 1995 was $625,729,
$574,993 and $608,764, respectively.
Cash paid for income taxes for the years ended 1997, 1996 and 1995 was $283,150,
$539,200, and $188,575, respectively.
The Company receives contributions of plant from developers. These
contributions are reported in utility plant and in customers' advances for
construction. The contributions are deducted from construction expenditures to
determine cash expenditures by the Company.
<TABLE>
December 31,
1997 1996 1995
<S> <C> <C> <C>
Gross plant additions $1,315,886 $1,518,142 $671,390
Customersn advances for
const. (78,644) (56,990) (71,112)
$1,281,242 $1,461,152 $600,278
</TABLE>
18. Subsequent Event
On January 21, 1998, the Company sold to the City of Derby, Connecticut,
145 acres of land for $1,800,000. The net gain of this sale, including the
deferred portion, approximated $913,000.
PART III
Item 10. Directors and Executive Officers of the Registrant
(a) The following list identifies all current directors of the Company.
No director or executive officer has (i) any family relationship with any other
such person or (ii) been involved in any legal proceeding which would require
disclosure under Item 401 of Regulation S K. There are no arrangements between
any director or officer and any other person pursuant to which he or she was or
is to be selected as a director or officer or as a nominee therefor.
Business Experience during the Last Director
Name Age Five Years and Other Directorships Since
Stephen P. Ahern 68 V.P., Unicco Security Services; 1994
Principal, Ahern Builders
Edward G. Brickett 68 Retired; Director of Finance, Town 1979
of Southington, CT until June 1995
James E. Cohen 51 Lawyer in Practice in Derby; 1982
Director, Great Country Bank (1987 1993)
Betsy Henley Cohn 45 Chairwoman of the Board of Directors 1981
of the 1981 Company; Chairman and
Treasurer, Joseph Cohn & Sons, Inc.
(construction sub contractors); Director,
United Illuminating Corp.; Director,
Aristotle Corp.; Director, Citizens
Bank of Connecticut; Director, Society for
Savings Bancorp, Inc. (1985 1993)
Alvaro da Silva 52 President, B.I.D., Inc. (land May,
development and home building company); 1997
Managing Partner Connecticut Commercial
Investors, LLC., (a commercial real estate
and investment partnership); Chairman,
Shelton Inland Wetlands Commission; Board of
Governors Unquowa School
Aldore J. Rivers 64 President of the Company 1986
B. Lance Sauerteig 52 Lawyer in Practice in Westport; 1996
Principal in BLS Strategic Capital,
Inc. (financial and inv. advisory
company); President, First Spring
Corp., (1986 1994) (financial &
investment advisory company); Director,
OFFITBANK (a New York based private
investment management bank)
Kenneth E. Schaible 56 Bank Consultant and Real Estate 1994
Developer; Senior Vice President,
Webster Bank (1995 1996); President,
Shelton Savings Bank and Shelton
Bancorp.,Inc. (1967 1995)
David Silverstone 51 Group Vice President, The Southern 1994
Connecticut Gas Company; Lawyer in Practice
in Hartford until March 31, 1998.
The Board of Directors' Audit Committee consisted of Messrs. Brickett, da
Silva and Schaible during 1997. It performs the function of recommending the
engagement and reviewing the performance of the Companyns independent public
accountants. The Audit Committee met once in 1997. The Board of Directors'
Personnel and Pension Committee consisted of Ms. Henley Cohn (ex officio) and
Messrs. Ahern, Brickett, Sauerteig and Silverstone and performs the function of
reviewing Executive Office compensation and proposing the same to the full Board
of Directors for action. It also proposes to the full Board overall payroll
pool levels and pension plan arrangements for all employees. The Personnel and
Pension Committee met five times in 1997. In 1997, seven meetings of the full
Board of Directors were held, and all Directors attended at least 75% of the
meetings of the full Board and committees on which they served.
(b) Section 16(a) Beneficial Ownership Reporting Compliance. Section
16(a) of the Securities Exchange Act of 1934 requires the Company's officers and
directors, and persons who own more than ten percent of a registered class of
the Companyns equity securities, to file reports of ownership and changes in
ownership with the Securities and Exchange Commission and the Company.
Based solely on review of copies of such forms furnished to the Company,
or written representations that no reconciliation forms were required, the
Company believes that during fiscal year ending December 31, 1997, all section
16(a) filing requirements applicable to its officers, directors and greater than
ten percent shareholders were complied with.
Item 11. Compensation of Directors and Executive Officers
Directors: The Company's Directors, except for Ms. Henley Cohn and Mr. Rivers,
received an annual fee of $3,000 plus $500 for each full Board meeting and $300
for each Committee meeting actually attended in 1997. Ms. Henley Cohn received
an annual salary of $52,000 for services in pursuit of land sales during 1997
and as Chairwoman of the Board of Directors.
Executive Officers: The following table sets forth the annual cash compensation
for Mr. Rivers, the Company's Chief Executive Officer and only Executive Officer
whose total annual salary exceeded $100,000, for each of 1995, 1996 and 1997.
The Company has no long term incentive plans.
<TABLE>
Annual Compensation
Name and
Principal Position Year Salary* Bonus
<S> <C> <C> <C>
Aldore J. Rivers, President 1995 101,404 $2,500
CEO and Director 1996 105,404 N/A
1997 111,404 N/A
</TABLE>
* Includes the economic benefit of premiums on a split dollar life insurance
policy pursuant to which Mr. Rivers is the Insured and the Company is the owner
and paid the premiums in 1995, 1996 and 1997.
Employment Agreement and Split Dollar Insurance Plan
The Company entered into an Employment Agreement with Mr. Rivers in 1990
(the "Employment Agreement"), pursuant to which the Company agreed to employ Mr.
Rivers as President of the Company. The Employment Agreement was amended in
1992 and 1993.
The Employment agreement, as amended, provides for a so called "Split
Dollar Life Insurance" plan for the benefit of both the Company and Mr. Rivers.
The plan provides for the Company to maintain insurance on Mr. Rivers' life in
an amount not less than $150,000, and to pay to Mr. Rivers' designee $150,000
if he should die on or before the age of 65. The balance of the life insurance
proceeds, if any, may be retained by the Company. If Mr. Rivers dies after
reaching the age of 65, all death benefits of the policy are retained by the
Company. The Company has agreed to make one hundred eighty (180) monthly
supplemental pension payments of (a) $1,170 each to Mr. Rivers commencing when
he reaches the age of 65 and continuing until the earlier of his death or the
end of the 180 month period and (b) if he should die after reaching the age of
65 but before the end of the 180 month period and his spouse survives him, $585
each to her until the earlier of her death or the expiration of the balance of
the 180 month period. The Company expects to use the proceeds of the life
insurance to reimburse itself for the supplemental pension payments that may be
made to Mr. Rivers and his spouse after his 65th birthday.
Item 12. Security Ownership of Management and Certain Beneficial Owners
(a) The following table sets forth certain information with respect to
the only persons, to the knowledge of the Company, who own as much as 5% of the
Company's stock as of February 28, 1998.
Name and Address Amount and Nature of Percent
of Beneficial Owner Beneficial Ownership Of Class
Group consisting of Cohn Realty
& Investment, 185,960 Shares (1) 24.25%
Betsy Henley Cohn, John J. Crawford,
as custodian for Juri Henley Cohn,
and as custodian for Jesse Henley Cohn,
Joel Cohn Revocable Trusts 1A
2A and 2B, Betsy Cohn Spray Trust,
Harry Berkowitz Revocable Trust,
Betsy Cohn Income Trust, 80 Hamilton, Street,
New Haven, CT 06511, and Ruth Weisman,
26 Kohary Drive, New Haven, CT 06515.
James E. Cohen, 315 Main Street 39,098 (2) 5.10%
Derby, Connecticut 06418
John J. Crawford, 70 Indian Road,
Guilford, CT 06437 66,262 Shares (2) 8.74%
(1) Of the 185,960 shares owned by this Group, Betsy Henley Cohn owns
options to purchase 10,000 shares of the Company's Common Stock under
the Company's 1994 Stock Incentive Plan, which options are exercisable
within 60 days of April 13, 1998, the record date for the Company's 1998
Annual Shareholders Meeting (the "Record Date"); Cohn Realty &
Investment (a Connecticut general partnership consisting of three
investment trusts whose managing agent is Betsy Henley Cohn, whose
beneficiaries are certain members of the Cohn Family and whose Trustees
are Rhoda Cohn and Stanley Bergman) has beneficial ownership of 36,000
shares; John J. Crawford, as custodian for Juri Henley Cohn, has
beneficial ownership of 21,900 shares; John J. Crawford, as custodian
for Jesse Henley Cohn, has beneficial ownership of 22,206 shares; Joel
Cohn Revocable Trust 1A has beneficial ownership of 26,380 shares; Joel
Cohn Revocable Trust 2A has beneficial ownership of 1,500 shares; Joel
Cohn Revocable Trust 2B has beneficial ownership of 1,000 shares; Betsy
Cohn Spray Trust has beneficial ownership of 32,188 shares; Betsy Cohn
Income Trust has beneficial ownership of 10,960 shares; Harry Berkowitz
Revocable Trust has beneficial ownership of 16,098 shares; and Ruth
Weisman has beneficial ownership of 10,228 shares. Betsy Henley Cohn
has either a controlling or a beneficial interest in Cohn Realty &
Investment, Betsy Cohn Spray Trust and Betsy Cohn Income Trust. Except
for the options owned by Betsy Henley Cohn described above, no member
of the Group owns or has the right to acquire, directly or indirectly,
any other shares. Unless otherwise indicated, the named beneficial
owner of the shares has sole voting and dispositive power with respect
thereto. The information set forth in this footnote is derived from
filings with the Securities and Exchange Commission made by the Group
and from other information available to the Company.
(2) Includes 32,598 shares held by Mr. Cohen as Trustee for the David B.
Cohen Family Trust, options to purchase 5,000 shares under the Company's
Stock Option Plan for Non Employee Directors exercisable within 60 days
of the Record Date, and 1,500 shares held in a brokerage custodial
account for Mr. Cohen's benefit.
(3) Includes 5,830 shares held jointly by Mr. Crawford and his wife, 22,206
shares held by Mr. Crawford as custodian for the benefit of Jesse
Henley Cohn, and 21,900 shares held by Mr. Crawford as custodian for the
benefit of Juri Henley Cohn. Mr. Crawford has sole voting power over
the shares held for the benefit of Jesse Henley Cohn and Juri Henley
Cohn, but has no family relationship with Jesse Henley Cohn or Juri
Henley Cohn. The 22,091 shares held in trust for the benefit of Jesse
Henley Cohn and the 21,785 shares held in trust for the benefit of Juri
Henley Cohn are also included in the shares set forth in footnote (1),
above, as being held by John J. Crawford as custodian for Jesse Henley
Cohn and Juri Henley Cohn.
(b) The following table sets forth certain information concerning
ownership of the Company's Shares by management:
<TABLE>
Common Shares
Beneficially Owned Percent
Name As of February 28, 1998 (1) of Class (2)
<S> <C> <C>
Stephen P. Ahern 18,377 (3) 2.40%
Edward G. Brickett 8,925 1.16
James E. Cohen 39,098 (4) 5.10
Betsy Henley Cohn 185,960 (5) 24.25
Alvaro da Silva 100 .01
Aldore J. Rivers 12,156 1.58
B. Lance Sauerteig 825 .11
Kenneth E. Schaible 5,855 .76
David Silverstone 4,490 .59
John S. Tomac 200 .03
Executive Officers and
Directors as a group,
10 in number 275,986 34.26%
</TABLE>
(1) Includes options to purchase shares of Common Stock exercisable within
60 days of the Record Date, as follows: Mr. Ahern, 4,375; Mr. Brickett,
5,000; Mr. Cohen, 5,000; Ms. Henley Cohn, 10,000; Mr. Rivers, 10,000;
Mr. Sauerteig, 825; Mr. Schaible, 4,375; and Mr. Silverstone, 4,375.
(2) For the purpose of calculating the percentage of Common Stock
beneficially owned (a) by the individual persons listed in the table,
the number of options held by such person is included in both the number
of shares beneficially owned by the person and in the total number of
shares outstanding in the class with respect to the individual person's
percentage calculation, and (b) by the directors and officers as a
group, the total number of shares beneficially owned by the group and
the total number of shares outstanding includes the 43,950 shares
issuable upon the exercise of options exercisable by all persons in the
group within 60 days of the Record Date.
(3) Includes 1,700 shares owned by Ahern Family Limited Partnership.
(4) Includes 32,598 shares held by Mr. Cohen, as Trustee for the David B.
Cohen Family Trust, and 1,500 shares held in a brokerage custodial
account for Mr. Cohen's benefit.
(5) Ms. Henley Cohn is a member of the shareholder group described in the
preceding table. The 185,690 shares set forth in this table is the
aggregate number of shares held by all of the members of the group. See
note (1) to the preceding table for information concerning shares
beneficially held by Ms. Henley Cohn.
Item 13. Certain Relationships and Related Transactions
Mr. Cohen is a partner in the law firm of Cohen and Thomas, which has
represented the Company on occasions in past years; the Company may continue to
employ that firm on occasion in the future.
Mr. Silverstone was, until March 31, 1998, a partner in the law firm of
Silverstone & Koontz, which represented the Company on rate matters in 1997.
Mr. Sauerteig is a principal in the law firm of Levett, Rockwood and
Sanders, which provided legal services to the Company in past years and may do
so in the future.
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8 K
(a) (1) and (2). See Index to Item 8. Financial Statements and
Supplementary Data are herein incorporated by reference.
(3) Certificate of Incorporation and By Laws of Birmingham Utilities,
Inc. Incorporated herein by reference is Exhibit 3 of Birmingham Utilities,
Inc.ns Annual report on Form 10K for the period ended December 31, 1994.
(4) Instruments Defining Rights of Security Holders
(i) Amended and Restated Mortgage Indenture by and between The Ansonia
Derby Water Company and The Connecticut National Bank as Trustee, dated as of
August 9, 1991. Attached hereto as pp. 39 to 149 .
(ii) Commercial Term and Revolving Loan Agreement by and between
Birmingham Utilities, Inc. and Fleet Bank, N.A., dated April 29, 1994.
Incorporated herein by reference is Exhibit 10(1) of the Quarterly Report on
Form 10 Q/A of Birmingham Utilities, Inc. for the period ended June 30, 1994.
(iii) Birmingham Utilities, Inc. Dividend Reinvestment Plan, adopted by
its Board of Directors on September 13, 1994. Incorporated herein by reference
is Exhibit 4 (iii) of Birmingham Utilities, Inc.ns Annual Report on Form 10 K
for the period ended December 31, 1994.
(10) Material Contracts
(10.1) Agreement to Purchase Water by and between The Ansonia Derby Water
Company and South Central Connecticut Regional Water Authority dated January 18,
1984 for the sale of water by the Authority to the Company and subsequent
amendment dated December 29, 1988. Incorporated herein by reference is Exhibit
(10.1) of the Annual Report on Form 10 K of Birmingham Utilities, Inc. for the
period ended December 31, 1993.
(10.2) Agreement to Purchase Water by and between The Ansonia Derby Water
Company and South Central Connecticut Regional Water Authority dated November
30, 1984 for the sale by the Authority to the company of water and for the
construction of the pipeline and pumping and storage facilities in connection
therewith by the Authority at the expense primarily of the Company and
Bridgeport Hydraulic Company. Incorporated herein by reference is Exhibit
(10.2) of the Annual Report on Form 10 K of Birmingham Utilities, Inc. for the
period ended December 31, 1996.
(10.3) Employment Agreement between The Ansonia Derby Water Company and
Aldore J. Rivers dated August 5, 1990, as amended by amendments dated July 28,
1992 and April 20, 1993. Incorporated herein by reference is Exhibit (10.6) of
the Annual Report on Form 10 K of Birmingham Utilities, Inc. for the period
ended December 31, 1993.
(10.4) Birmingham Utilities, Inc. 1994 Stock Incentive Plan adopted by
its Board of directors on September 13, 1994. Incorporated herein by reference
is Exhibit (10.9) of Birmingham Utilities, Inc.'s Annual Report on Form 10 K for
the period ended December 31, 1994.
(10.5) Birmingham Utilities, Inc. Stock Option plan for Non Employee
Directors adopted by its Board of directors on September 13, 1994. Incorporated
herein by reference is Exhibit (10.10) of Birmingham Utilities, Inc.'s Annual
Report on Form 10 K for the period ended December 31, 1994.
(10.6) Purchase and Sale Agreement by and between Birmingham Utilities,
Inc. and M/1 Homes, LLC dated March 18, 1997 for the sale by the Company to M/1
Homes of approximately 245 acres of unimproved land in Seymour, Connecticut.
Incorporated herein by reference is Exhibit (10.6) of the Annual Report on Form
10 K of Birmingham Utilities, Inc. for the period ended December 31, 1996.
(10.7) Purchase and Sale Agreement by and between Birmingham Utilities,
Inc. and the Trust for Public Land (Inc.) ("TPL") dated as of January 27, 1998
for the sale by the Company to TPL of approximately 516 acres of unimproved land
located in Oxford and Seymour, Connecticut. Attached hereto as pp. 150 to 166.
(10.8) Purchase and Sale Agreement by and between Birmingham Utilities,
Inc. and the town of Seymour (the "Town") dated as of March 3, 1998 for the sale
by the Company to the Town of approximately 229 acres of unimproved land located
in Seymour, Connecticut. Attached hereto as pp. 167 to 183.
(23) Consent of Dworken, Hillman, LaMorte & Sterczala, P.C. Attached
hereto as pp. 184.
(b) Reports on Form 8 K. No reports on Form 8 K were filed by the Registrant
during the last quarter of 1997.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
(Registrant) BIRMINGHAM UTILITIES, INC.
BY: /s/ Betsy Henley Cohn
Betsy Henley Cohn
Chairwoman of the Board
BY: /s/ John S. Tomac
John S. Tomac
Vice President and Treasurer
Date: March 30, 1998
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
/s/ Stephen P. Ahern /s/ Aldore J. Rivers
Stephen P. Ahern, Director Aldore J. Rivers, President
Date: March 30, 1998 Date: March 30, 1998
Edward G. Brickett, Director B. Lance Sauerteig, Director
Date: March , 1998 Date: March , 1998
/s/ James E. Cohen /s/ Kenneth E. Schaible
James E. Cohen, Director Kenneth E. Schaible, Director
Date: March 30, 1998 Date: March 30, 1998
/s/ Betsy Henley Cohn /s/ David Silverstone
Betsy Henley Cohn, Chairwoman David Silverstone, Director
Board of Directors Date: March 31, 1998
Date: March 30, 1998
Alvaro da Silva, Director
Date: March , 1998
BIRMINGHAM UTILITIES, INC.
INDEX TO EXHIBITS
Item No. Page No.
4(i) Amended and Restated Mortgage Indenture by and 39-149
between the Ansonia Derby Water Company and The
Connecticut National Bank as Trustee, dated as of
August 9, 1991
10.7 Purchase and Sale Agreement by and between 150-166
Birmingham Utilities, Inc. and the Trust for Public
Land (Inc.) ("TPL") dated as of January 27, 1998
for the sale by the Company to TPL of approximately
516 acres of unimproved land located in Oxford and
Seymour, Connecticut.
10.8 Purchase and Sale Agreement by and between 167-183
Birmingham Utilities, Inc. and the Town of Seymour
(the "Town") dated as of March 3, 1998 for the
sale by the Company to the Town of approximately 229
acres of unimproved land located in Seymour, Connecticut.
23 Consent of Dworken, Hillman, LaMorte & Sterczala, P.C. 184
THE ANSONIA DERBY WATER COMPANY
to
THE CONNECTICUT NATIONAL BANK,
as Trustee
AMENDED AND RESTATED MORTGAGE INDENTURE
Dated as of August 9, 1991
FIRST MORTGAGE BONDS
TABLE OF CONTENTS
PAGE
PARTIES 1
RECITALS 1-5
GRANTING CLAUSES 5-6
PROPERTY CONVEYED
I. Real Estate 6
II. Buildings and Equipment 6
III. Franchises and Other Rights 6
IV. Further Property Conveyed to Trustee 7
V. Other Property; Exceptions 7
HABENDUM 7
DECLARATION OF TRUST 7-8
ARTICLE I
FORMS, TERMS AND EXECUTION OF BONDS
1.01 Bonds Issuable in Series 9
1.02 Series E Bonds 10
1.03 Other Series 11
1.04 Execution of Bonds 11
1.05 Dating of Bonds 12
1.06 Registered Owner 12
1.07 Transfer and Exchange 13
1.08 Consolidation and Merger 13
1.09 Temporary Bonds 14
1.10 Loss, Theft, Destruction or Mutilation 15
1.11 Authentication Certificate 15
1.12 Agreements for Payment 16
ARTICLE II
ISSUE OF BONDS
2.01 Lien of the Indenture 16
2.02 Issuance of Series E Bonds 17
2.03 Resolutions, Certificates and Opinions on All Issues 17
2.04 Issuance of Additional Bonds - Total Capitalization Test 19
2.05 Issuance of Additional Bonds against Deposit of Cash 21
2.06 Issuance of Additional Bonds against other Bonds Satisfied
and Discharged 22
2.07 Exchange of Bonds for Other Series 24
2.08 Acceptance of Instruments by Trustee; Further
Investigation 25
ARTICLE III
PARTICULAR COVENANTS OF THE COMPANY
3.01 Lawful Seisin and Possession 25
3.02 Payment; Non-Extension of Coupons 25
3.03 Office or Agency in the State of Connecticut 26
3.04 Payment of Taxee and Liens 26
3.05 Insurance Against Loss 27
3.06 Maintenance of Premises 27
3.07 Recording and Re-Recording 28
3.08 Trustee's Right to Perform Certain Covenants 28
3.09 Execution of Further Instruments 28
3.10 Information to be Furnished Trustee 29
3.11 Subsequent Mortgages Subject to Prior Lien 29
3.12 No Bonds Except as Provided Herein 30
3.13 (a) Inspection by Independent Engineer 30
(b) Reserve for Depreciation 31
3.14 Covenant Against Issuance of Senior Debt 32
3.15 Covenant Limiting Long Term Debt 32
3.16 Covenants in Respect of Dividends 32
3.17 Covenants with Respect to Issuance of Additional Bonds 33
3.18 Truth of Facts Stated Herein 34
3.19 Waiver 35
ARTICLE IV
REDEMPTION OF BONDS
4.01 Reservation of Right to Redeem 35
4.02 Procedure for Redemption 36
4.03 Cancellation of Redeemed Bonds 37
4.04 Bonds Held by Company not Deemed Outstanding for
Redemption Purposes 38
ARTICLE V
COVENANTS WITH RESPECT TO SERIES E BONDS
5.01 Exclusive Benefit Covenants 38
5.02 Sinking Fund for Series E Bonds 38
ARTICLE VI
POSSESSION, USE AND RELEASE OF PROPERTY
6.01 Possession in Absence of Default 39
6.02 Releases not Requiring Consent of Trustee 40
6.03 Release upon Sale or Exchange 41
6.04 Release of Property not Exceeding $100,000 in Value in
One Year 45
6.05 Acquisitions in Place of Property Released 46
6.06 (a) Release upon Eminent Domain Proceedings 46
(b) Redemption of Bonds upon Certain Releases 47
6.07 Purchaser not Bound to Ascertain Authority 49
6.08 Exercise of Powers by Receiver, Trustee or Company
in Event of Default 49
6.09 Deposit with Trustee Reduced by Amount of Taxes and
Expenses 50
6.10 Acceptance of Instruments by Trustee; Further
Investigation 51
ARTICLE VII
CONCERNING OBLIGATIONS AND APPLICATION OF
MONEYS RECEIVED BY THE TRUSTEE
7.01 Obligations Received by the Trustee 51
7.02 (a) Certain Moneys Received by Trustee Payable to
Company in Absence of Default 52
(b) Exercise of Powers by Receiver, the Trustee or
Company in Event of Default 53
(C) Acceptance of Instruments by Trustee; Further
Investigation 53
7.03 Use of Moneys for Purchase or Redemption of Bonds 54
7.04 Redemption of Bonds by Application of Moneys Held
Three Years by Trustee 55
7.05 Investment of Moneys Held by Trustee 56
ARTICLE VIII
REMEDIES UPON DEFAULT
8.01 Events of Default Defined; Acceleration Provisions 58
8.02 Entry and Possession by Trustee 61
8.03 Trustee's Power of Sale 61
8.04 Foreclosure and Judicial Proceedings 63
8.05 Remedies Cumulative 64
8.06 Direction of Method of Proceedings for Sale by Holders
of Majority in Principal Amount of Bonds 64
8.07 Trustee's Right to Receiver in Judicial Proceedings 64
8.08 Acceleration of Principal on Sale or Foreclosure 65
8.09 Purchase at Sale by Bond Owner or Trustee 65
8.10 Receipt as Discharge to Purchaser 65
8.11 Application of Proceeds of Sale 65
8.12 Waiver of Benefit of Laws 66
8.l3 No Waiver of Default Affects Other Default 67
8.14 Discontinuance or Abandonment of Proceedings, or
Decision Adverse to Trustee 67
8.15 Trustee Appointed Attorney-in-Fact 67
8.16 Trustee may Recover Judgment for Amounts in Default 68
8.17 Enforcement of Rights Without Possession of Bonds;
Proceedings in Name of Trustee 69
8.18 Delay or Omission Not to Impair or Waive Rights 69
8.19 Remedies Subject to Applicable Law 69
ARTICLE IX
EVIDENCE OF RIGHTS OF BOND HOLDERS 70
ARTICLE X
IMMUNITY OF INCORPORATORS, STOCKHOLDERS,
OFFICERS AND DIRECTORS 70-71
ARTICLE XI
EFFECT OF MERGER, CONSOLIDATION OR SALE;
RIGHT OF SUCCESSOR CORPORATION TO EXCHANGE BONDS
11.01 Covenants of the Company in Connection with Permitted
Consolidation, Merger, Transfer or Lease 71
11.02 Rights and Obligations of Successor Corporation 72
11.03 Limitation of Lien on Properties of Successor
Corporation 73
11.04 Exchange of Successor Corporation Bonds for Company's
Bonds 74
11.05 "Company" and "Seal" Includes Successor Corporation 76
11.06 Surrender of Reserved Power by Company or Successor
Corporation 76
11.07 Release of Company's Liability on Certain Conditions 77
ARTICLE XII
CONCERNING THE TRUSTEE
12.01 Trustee's Duty of Care; Exculpatory Clauses 77
12.02 Resignation and Removal of Trustee 82
12.03 Provisions for Successor Trustee 82
12.04 Merger or Consolidation of Trustee 83
12.05 Appointment of Separate Trustee or Co-Trustee; Limit
on Their Authority 83
ARTICLE XIII
SUPPLEMENTAL INDENTURES
13.01 Purposes for Which Permitted 85
13.02 Joinder by Trustee in Supplemental Indentures; Opinion
of Counsel 86
ARTICLE XIV
DEFEASANCE 87
ARTICLE XV
MISCELLANEOUS PROVISIONS
15.01 No Rights Conferred on Others than Parties Hereto and
Bond Owners 87
15.02 Successors and Assigns of Parties 88
15.03 Payment of Moneys Held in Trust; Return to Company
after Six Years 88
15.04 Registered Owners of a Particular Percentage or
Proportion Defined 88
15.05 Cremation in Lieu of Delivery to Company 89
15.06 Severability of Covenants and Agreements 89
15.07 Simultaneous Execution of Counterparts 89
ARTICLE XVI
AMENDMENT BY CONSENT OF BOND HOLDERS 89-91
ARTICLE XVII
DEFINITIONS
17.01 "Certified Resolution" 91
17.02 "Long Term Debt" 91
17.03 "Mailing Address" 91
17.04 "Opinion of Counsel" 92
17.05 "Outstanding"; "Issued and Outstanding" 92
17.06 "Permitted Encumbrances" 93
17.07 "Prior Mortgage" 94
17.08 "Total Capitalization" 94
17.09 "Utility Business" 94
17.10 "Utility Property" 94
17.11 "Exclusive Benefit Covenant" 94
17.12 "Direct Income From the Sale of Real Property" 94
17.13 "Base Rate" 95
17.14 "Excluded Real Property" 95
ARTICLE XVIII
APPLICABLE LAW 95
TESTIMONIUM AND SIGNATURES 95-96
ACKNOWLEDGMENTS 97-98
EXHIBIT A (Bond Form and Trustee's Authentication Certificate)
EXHIBIT B (Identification of Mortgaged Real Estate)
EXHIBIT B-1 (Identification of Excluded Real Property)
EXHIBIT B-2 (Identification of Buildings and Equipment
AMENDED AND RESTATED MORTGAGE INDENTURE, dated as of the 9th day of
August, 1991, made by and between THE ANSONIA DERBY WATER COMPANY, a
corporation organized and existing under the laws of the State of
Connecticut (hereinafter Called the "Company"), and THE CONNECTICUT NATIONAL
BANK, a national banking association organized and existing under the laws
of the United States, as Trustee (hereinafter called the "Trustee").
WHEREAS, The Ansonia Water Company (hereinafter called the "Original
Company") has heretofore executed and delivered to The First National Bank
and Trust Company of New Haven a certain Trust indenture, dated as of July
15, 1954 (hereinafter sometimes called the "Original Indenture") which
Original Indenture is recorded in the Office of the Secretary of the State
of Connecticut in Volume 48, Page Y, Railroad Mortgages, etc., as well as
otherwise recorded and filed, and is also on file in the offices of the
Trustee and the Company, and to which Original Indenture reference is hereby
expressly made; and
WHEREAS, the Original Company has issued, pursuant to the original
Indenture, a series of unsecured debentures known as the Thirty-Year 3-1/2%
Debentures, 1984 Series (hereinafter sometimes called the "1984 Series
Debentures") in the aggregate principal amount of Three Hundred Twenty-Five
Thousand Dollars ($325,000.00); and
WHEREAS, the First National Bank and Trust Company of New Haven and
another banking association, as of the close of business on September 27,
1957, consolidated under the charter of The First National Bank and Trust
Company of New Haven, into one national banking association, resulting in
a national banking association named The First New Haven National Bank
which, pursuant to the provisions of Section 11.20 of Article Eleven of the
Original Indenture, became the successor of the Trustee under the Original
Indenture; and
WHEREAS, the Original Company and the Birmingham Water Company, a
public service company organized under the laws of the State of Connecticut,
consolidated and merged on January 1, 1972, in accordance with Article Seven
of the Original Indenture, and the resulting company was named The Ansonia
Derby Water Company which, in accordance with Article Seven of the Original
Indenture, has previously assumed the due and punctual payment of the
principal of and interest on all debentures issued under the Original
Indenture and the due and punctual performance and observance of all the
covenants and conditions of the Original Indenture to be kept or performed
by the Original Company, and became the successor to the Original company
under the Original Indenture; and
WHEREAS, pursuant to the provisions of Section 12.01 of Article 12 of
the Original Indenture, the Company executed and delivered a First
Supplemental Indenture and Mortgage to the First New Haven National Bank,
as successor Trustee, dated as of October 1, 1974 (hereinafter called
the "First Supplemental Indenture"), which First Supplemental Indenture is
recorded in the Office of the Secretary of the State of Connecticut in
Volume 48, Page X, Railroad Mortgages, etc., as well as otherwise recorded
and filed, and is also on file in the offices of the Trustee and the
Company, and to which First Supplemental Indenture reference is hereby
expressly made; and
WHEREAS, the Company has converted, pursuant to the First Supplemental
Indenture, the 1984 Series Debentures into First Mortgage 3-1/2% Bonds,
Series A (hereinafter sometimes called the "Series A Bonds"); and
WHEREAS, the Company has issued, pursuant to the First Supplemental
Indenture, a series of First Mortgage 9-1/2% Bonds, Series B, due October
1, 1994 (hereinafter sometimes called the "Series B Bonds"), in an aggregate
principal amount of One Million Five Hundred Thousand Dollars
($1,500,000.00); and
WHEREAS, the First New Haven National Bank, as of the close of
business on April 1, 1977, surrendered its charter as a national banking
association and converted into a state bank and trust company organized
under the laws of the State of Connecticut under the name First Bank, which,
pursuant to the provisions of Section 11.20 of Article Eleven of the
Original Indenture, became the successor to the Trustee under the Original
Indenture; and
WHEREAS, pursuant to the provisions of Section 12.02 of Article 12 of
the Original Indenture, the Company executed and delivered a Second
Supplemental Indenture to First Bank, as successor Trustee, dated as of June
1, 1981 (hereinafter called the "Second Supplemental Indenture"), which
Second Supplemental Indenture amended the provisions of Section 1.01 of
Article One of the Original Indenture with respect to the definition of "net
earnings available for interest", and which Second Supplemental Indenture
is on file in the offices of the Trustee and the Company, and to which
Second Supplemental Indenture reference is hereby expressly made; and
WHEREAS, pursuant to the provisions of Section 12.01 of Article 12 of
the Original Indenture, the Company executed and delivered a Third
Supplemental Indenture to First Bank, as successor Trustee, dated as of
June 2, 1982 (hereinafter called the "Third Supplemental Indenture"), which
Third Supplemental Indenture is recorded in the office of the Secretary of
the State of Connecticut in Volume 57, Page 970, Railroad Mortgages, etc.,
as well as otherwise recorded and filed, and is also on file in the offices
of the Trustee and the Company, and to which Third Supplemental Indenture
reference is expressly made; and
WHEREAS, the Company has issued, pursuant to the Third Supplemental
Indenture, a series of First Mortgage 12% Bonds, Series C, due June 3, 2012
(hereinafter sometimes called the "Series C Bonds"), in an aggregate
principal amount of Three Hundred Ninety-Two Thousand Dollars ($392,000.00);
and
WHEREAS, First Bank, as of the close of business on March 31, 1984,
was merged into the Trustee which, pursuant to the provisions of Section
11.20 of Article Eleven of the Original Indenture, became the successor of
the Trustee under the Original Indenture; and
WHEREAS, the Series A Bonds have been, as of their stated maturity
date, July 15, 1984, redeemed by the Company in their entirety; and
WHEREAS, pursuant to the provisions of Section 12.01 of Article 12 of
the Original Indenture, the Company executed and delivered a Fourth
Supplemental Indenture to the Trustee, as successor Trustee, dated as of
March 8, 1985 (hereinafter called the "Fourth Supplemental Indenture"),
which Fourth Supplemental Indenture is recorded in the office of the
Secretary of the State of Connecticut in Volume 59, Page 390, Railroad
Mortgages, etc., as well as otherwise recorded and filed, and is also on
file in the offices of the Trustee and the Company, and to which Fourth
supplemental Indenture reference is expressly made; and
WHEREAS, the Company has issued, pursuant to the Fourth Supplemental
Indenture, a series of First Mortgage 9.8% Bonds, Series D, due March 8,
2015 (hereinafter sometimes called the "Series D Bonds"), in an aggregate
principal amount of Seven Hundred Thirteen Thousand Dollars ($713,000.00);
and
WHEREAS, pursuant to the provisions of Section 12.02 of Article 12 of
the Original Indenture, the Company executed and delivered a Fifth
Supplemental Indenture to the Trustee, as successor Trustee, dated as of
July 1, 1988 (hereinafter called the "Fifth Supplemental Indenture"), which
Fifth Supplemental Indenture amended the provisions of Section 9.05 of
Article Nine of the Original Indenture with respect to the use of proceeds
from the disposition by the Company of property not essential for the
operation of its plants or system, and which Fifth Supplemental Indenture
is on file in the offices of the Trustee and the Company, and to which Fifth
Supplemental Indenture reference is hereby expressly made; and
WHEREAS, the Company is entitled, pursuant to the provisions of the
Original Indenture, as amended by this Amended and Restated Mortgage
Indenture, to issue and to have the Trustee authenticate Four Million Seven
Hundred Thousand Dollars ($4,700,000.00) in aggregate principal amount of
additional bonds of a new series to be designated by the Company; and
WHEREAS, Section 12.01 of Article Twelve of the Original Indenture
provides, among other things, that the Company, when authorized by
resolution of its Board of Directors, and the Trustee, from time to time
and at any time, may enter into an indenture or indentures supplemental to
the Original Indenture for the purpose, among others, of setting forth the
terms and provisions of any series of bonds to be issued thereunder and the
form of the bonds of such series; and
WHEREAS, the Company, by appropriate and sufficient corporate actions
pursuant to the provisions of the original Indenture, has duly determined
to create a new series of bonds thereunder and hereunder to be known as its
First Mortgage 9.64% Bonds, Series E, due September 1, 2011 (hereinafter
called the "Series E Bonds"), in the aggregate principal amount of Four
Million Seven Hundred Thousand Dollars ($4,700,000.00); and
WHEREAS, the Series E Bonds and the Trustee's authentication
certificate upon such bonds are to be substantially in the respective forms
set forth in Exhibit A hereto, which Exhibit is hereby incorporated in and
made a part of this Amended and Restated Mortgage Indenture as if set forth
in full in the body hereof, the proper amount and numbers of such bonds to
be inserted therein, the reference therein to the Original Indenture to be
omitted if inapplicable, and such other appropriate insertions, omissions
and changes to be made therein as may be authorized by the Board of
Directors of the Company to express the terms and conditions upon which the
Series E Bonds are issued as required or permitted by this Amended and
Restated Mortgage Indenture; and
WHEREAS, all things prescribed by law, by the Certificate of
Incorporation and Bylaws of the Company, and by the terms of the Original
Indenture, necessary to make the Series E Bonds, when duly authenticated by
the Trustee and issued by the Company, valid and binding and legal
obligations of the Company entitled in all respects to the security of the
Original Indenture and to make this Amended and Restated Mortgage Indenture
a valid and binding instrument, enforceable in accordance with its terms,
and otherwise to effectuate the issuance of the Series E Bonds, have been
done and performed, and the execution and delivery of this Amended and
Restated Mortgage Indenture have been in all respects duly authorized; and
WHEREAS, the Company desires to amend and restate the provisions of
the Original Indenture; and
WHEREAS, the Board of Directors of the Company, by resolution dated
July 18, 1991, has approved such amendment and restatement; and
WHEREAS, Section 12.02 of Article Twelve of the Original Indenture
provides, among other things, that the Company and the Trustee may from time
to time enter into an indenture supplemental to the Original Indenture in
order to modify, alter, amend, suspend or rescind or in order to insert a
provision in the Original Indenture upon approval of the Board of Directors
of the Company and upon the written consent, filed with the Trustee, of not
less than sixty-six and two-thirds percent (66-2/3%) in aggregate principal
amount of all the bonds at the time outstanding which would be affected by
the action proposed to be taken; and
WHEREAS, the holders of all of the Series B Bonds, the Series C Bonds
and the Series D Bonds outstanding under the Original Indenture have (a)
consented to the issuance by the Company of the Series E Bonds upon such
terms as may be acceptable to the Company, the Trustee and the purchaser of
the Series E Bonds, and (b) waived the provisions of Articles Four and
Twelve of the Original Indenture with respect to the issuance of the Series
E Bonds, on the condition that the Company redeem all of the outstanding
Series B Bonds, Series C Bonds and Series D Bonds; and
WHEREAS, the Company has simultaneously with the delivery of this
Amended and Restated Mortgage Indenture delivered to the Trustee all of the
documents required by Section 12.02 of Article Twelve of the Original
Indenture;
NOW, THEREFORE, THIS AMENDED AND RESTATED MORTGAGE INDENTURE
WITNESSETH that the Company, in consideration of the premises and of the
acceptance by the Trustee of the trusts hereby created and of the purchase
and acceptance of the bonds by the registered owners thereof and of One
Dollar to it duly paid by the Trustee at or before the ensealing and
delivery of these presents, the receipt whereof is hereby acknowledged, and
in order to secure equally the payment of the principal of and premium (if
any) and interest on all bonds at any time issued and outstanding hereunder,
according to their tenor and effect, and the performance and observance by
the Company of all the covenants and conditions herein and therein
contained, and in order further to declare and set forth the terms and
provisions of the Series E Bonds and to amend and restate the terms of the
Original Indenture, intending to be legally bound hereby, has granted,
bargained, sold, released, conveyed, assigned, transferred, mortgaged,
pledged, set over and confirmed, and by these presents does grant, bargain,
sell, release, convey, assign, transfer, mortgage, pledge, set over and
confirm unto The Connecticut National Bank, as Trustee, and to its
successors in the trust, and to them and their assigns forever:
All and singular the premises, property, assets, rights and franchises
of the Company, whether now or hereafter owned, constructed or acquired,
of whatever character and wherever situate (except as hereinafter expressly
excepted), including, among other things, all right, title and interest of
the Company in and to the following (except as so excepted), but reference
to or enumeration of any particular kinds, classes or items of property
shall not be deemed to exclude from the operation and effect of this Amended
and Restated Mortgage Indenture any kind, class or item not so referred to
or enumerated:
I. Real Estate
All real property, wherever situate, and interests in or relating to
real property, whether now owned by the Company or hereafter acquired by it
including, without limiting the generality of the foregoing, all those
pieces or parcels of land more particularly identified in Exhibit B hereto,
which Exhibit is hereby incorporated in and made a part of this Granting
Clause as if set forth herein in full, but excluding all Excluded Real
Property identified in Exhibit B-1 hereto, which Exhibit is hereby
incorporated in and made a part of this Granting Clause as if set forth
herein in full. "Excluded Real Property", as used in this Amended and
Restated Mortgage Indenture, shall mean all of the real property, wherever
situate, and interests in or relating to such real property, now owned by
the Company and identified in Exhibit B-1 hereto as not being included in
the Company's property for ratemaking purposes by the Connecticut Department
of Public Utility Control, or its successor (hereinafter called the "DPUC").
II. Buildings and Equipment
All buildings, improvements, standpipes, reservoirs, wells, flumes,
sluices, canals, basins, cribs, machinery, mains, conduits, hydrants, pipes,
pipe lines, service pipes, water works plants and systems, tanks, shops,
structures, purification systems, pumping stations, fixtures, engines,
boilers, pumps, meters and equipment (including all improvements, additions
and extensions appurtenant to any property hereby conveyed) used or useful
in connection with the Company's utility business, whether the same or any
thereof are now owned or may hereafter be acquired by the Company,
including, without limiting the generality of the foregoing, all property
identified in Exhibit B-2 hereto, which Exhibit is hereby incorporated in
and made a part of this Granting Clause as if set forth herein in full.
III. Franchises and Other Rights
All corporate and other franchises, all water and flowage rights,
riparian rights, easements and rights-of-way, and all permits, licenses,
rights, grants, privileges and immunities, and all renewals, extensions,
additions or modifications of any of the foregoing, whether the same or any
thereof, or any renewals, extensions, additions or modifications thereof,
are now owned or may hereafter be acquired, owned, held or enjoyed by the
Company.
IV. Further Property Conveyed to Trustee
All property which may from time to time after the date of this
Amended and Restated Mortgage Indenture be delivered, or which may by
writing of any kind be conveyed, pledged, assigned or transferred, to the
Trustee by the Company or by any person or corporation to be held as part
of the trust estate, as hereinafter defined; and the Trustee is hereby
authorized to receive any such property, and any such conveyance, pledge,
assignment or transfer, as and for additional security hereunder, and to
hold and apply any and all such property subject to and in accordance with
the terms of this Amended and Restated Mortgage Indenture.
V. Other Property
All other property, real, personal and mixed, whether or not
hereinabove specifically described, which the Company now owns or may
hereafter acquire.
TOGETHER WITH all and singular the tenements, hereditaments and
appurtenances belonging or in any wise appertaining to such property, rights
and franchises or any part thereof, with the reversion and reversions,
remainder and remainders, and, to the extent permitted by law, all tolls,
rents, revenues, issues, income, product and profits thereof, and all the
estate, right, title, interest and claim whatsoever, at law as well as in
equity, which the Company now has or may hereafter acquire in and to such
property, rights and franchises and every part and parcel thereof.
SAVING AND EXCEPTING, HOWEVER, from the property hereby mortgaged and
pledged, all of the following property (whether now owned or hereafter
acquired by the Company): All bills, notes and accounts receivable, cash
on hand and in banks, contracts (other than contracts for the purchase of
water), choses in action and leases to others (as distinct from the property
so leased and without limiting any rights of the Trustee with respect
thereto under any of the provisions of this Amended and Restated Mortgage
Indenture), all bonds, obligations, evidences of indebtedness, shares of
stock and other securities, and certificates or evidences of interest
therein, all office furniture and equipment, motor vehicles and tools, and
all equipment, materials, goods, merchandise and supplies acquired for the
purpose of sale in the ordinary course of business or for consumption in the
operation of any properties of the Company -- other than any of the
foregoing which at any time may be specifically transferred or assigned to
or pledged or deposited with the Trustee hereunder or required by the
provisions of this Amended and Restated Mortgage Indenture so to be;
provided, however, that if, upon the happening of an Event of Default (as
such term is defined in Section 8.01), the Trustee or any receiver appointed
hereunder shall enter upon and take possession of the mortgaged property,
the Trustee or such receiver may, to the extent permitted by law, at the
same time also take possession of any and all of the property described in
this paragraph then on hand which is used or useful in connection with the
utility business of the Company, and use and administer the same, to the
extent permitted by law, to the same extent as if such property were part
of the mortgaged property, unless and until such Event of Default shall be
remedied or waived and possession of the mortgaged property restored to the
Company, its successors or assigns.
SUBJECT, HOWEVER, to the exceptions, reservations and matters recited
hereinabove and in Exhibit B, Exhibit B-1 and Exhibit B-2 hereto; to
existing leases and tenure of any present occupants; and to Permitted
Encumbrances.
TO HAVE AND TO HOLD all such premises, property, assets, rights and
franchises granted, bargained, sold, released, conveyed, transferred,
assigned, mortgaged, pledged, set over or confirmed by the Company as
provided above or intended so to be (such premises, property, assets, rights
and franchises being herein sometimes called the "trust estate", the
"mortgaged property" or the "mortgaged premises"), unto the Trustee and its
successors in the trust, and to them and their assigns forever;
IN TRUST, NEVERTHELESS, upon the terms and trusts herein set forth,
for the equal and proportionate benefit and security of those who shall own
the bonds issued and to be issued hereunder, or any of them, without
preference, priority or distinction of any of such bonds over any others
thereof by reason of priority in the time of the issue or negotiation
thereof or by reason of the date or maturity thereof, or for any other
reason whatsoever, so that all bonds at any time issued and outstanding
under this Amended and Restated Mortgage Indenture shall have the same
right, lien and preference under and by virtue hereof, and shall all be
equally secured hereby, with like effect as if they had all been executed,
authenticated and delivered simultaneously on the date hereof; provided that
the bonds of different series may contain different terms and conditions
than the bonds of other series in the respects set forth in Section 1.03 of
this Amended and Restated Mortgage Indenture; and provided, further, that
the Company may in any indenture supplemental to this Amended and Restated
Mortgage Indenture add to the conditions, limitations, restrictions,
covenants and agreements of this Amended and Restated Mortgage Indenture,
in the manner set forth in clauses (a) and (b) of Section 13.01 hereof, for
the sole benefit of any one or more series of bonds.
IT IS HEREBY COVENANTED, DECLARED AND AGREED, by and between the
parties hereto, that all such bonds are to be issued, authenticated and
delivered, and that all property subject or to become subject hereto is to
be held and applied, subject to the further covenants, conditions, uses and
trusts hereinafter set forth; and the Company, for itself and its
successors, does hereby covenant and agree to and with the Trustee and its
successors in the trust, for the benefit of those who shall own such bonds,
or any of them, as follows:
ARTICLE I.
Form. Terms and Execution of Bonds
SECTION 1.01. The bonds issuable hereunder may, if and when
authorized by the Board of Directors of the Company (hereinafter called the
"Board of Directors"), be issued in one or more series and shall be
designated generally as the "First Mortgage Bonds" of the Company. The
bonds of each series other than the Series B Bonds, Series C Bonds, Series
D Bonds and Series E Bonds shall have such further particular designations
as the Board of Directors may adopt for such series, and each bond issued
hereunder shall bear upon its face the designation so adopted for the
series to which it belongs.
All bonds of any one series at any time simultaneously outstanding
hereunder shall be identical in respect of the date of maturity (unless they
are of serial maturities), the place or places of payment of the principal
thereof and interest thereon, the interest rate (unless they are of serial
maturities) and interest payment dates, the terms and rate or rates of
redemption (unless they are of serial maturities), if redeemable, the
provisions (if any) for a sinking, purchase or analogous fund for the
retirement of bonds of such series, and the provisions (if any) as to the
payment of principal or interest, or both, without deduction for, or as to
the reimbursement of, taxes and (except for necessary or proper variations
between bonds of different denominations) as to conversion, but bonds of
the same series may be of different denominations, and bonds of any series,
other than the Series B Bonds, Series C Bonds, Series D Bonds and Series E
Bonds, may be of serial maturities and, if of serial maturities, may differ
with respect to maturity date, interest rate and price and terms of
redemption or payment prior to maturity.
Except as may be otherwise specifically provided with respect to a
particular series of bonds in an indenture supplemental hereto, all bonds
issued under this Amended and Restated Mortgage Indenture shall be issued
only in the form of registered bonds without coupons and shall be
exchangeable only for registered bonds without coupons of authorized
denominations. Each holder of a registered bond without coupons issued
under this Amended and Restated Mortgage Indenture, by accepting the same,
waives right to receive a coupon bond in exchange therefor.
SECTION 1.02. A series of bonds to be issued hereunder and secured
hereby is hereby created, which shall be designated as, and shall be
distinguished from the bonds of all other series by the title, "First
Mortgage 9.64% Bonds, Series E, due September 1, 2011". The aggregate
principal amount of the Series E Bonds shall be limited to Four Million
Seven Hundred Thousand Dollars ($4,700,000.00). The Series E Bonds shall
mature on September 1, 2011.
The Series E Bonds shall be dated as of the date of authentication
(except that if any Series E Bond shall be authenticated on any interest
payment date, it shall be dated as of the day next following such interest
payment date); and shall bear interest as provided in Section 1.05 until
maturity at the rate of nine and sixty-four one-hundredths percent (9.64%)
per annum, payable semi-annually on the first day of March and the first
day of September in each year (or, if either of such days shall be a
Saturday, Sunday or legal holiday, on the next following business day),
commencing on the first day of March, 1992, and the balance of such interest
at maturity, with interest at a rate of eleven and sixty-four one-hundredths
percent (11.64%) per annum on any overdue principal and, to the extent
permitted by law, on any overdue installment of interest. Every Series E
Bond dated prior to March 1, 1992, the first interest payment date for such
bonds, shall bear interest from the date of such bond. Interest shall be
computed on the basis of a 360-day year composed of twelve 30-day months.
The principal of, the premium (if any) and the interest on the Series
E Bonds shall be payable at the principal office of the Trustee in the City
of Hartford, Connecticut (or, if there is a successor trustee, at its
principal office), in coin or currency of the United States of America which
at the time of payment is legal tender for public and private debts;
provided, however, that payment of interest and principal on any registered
Series E Bond shall be made by the Company or Trustee to the registered
holder in accordance with Section 4.1 of the Bond Purchase Agreement, dated
as of August 13, 1991 between the Company and the original holder of the
Series E Bonds.
The text of the Series E Bonds and of the authentication certificate
of the Trustee upon such bonds shall be, respectively, substantially of the
tenor and effect recited with respect thereto in Exhibit A hereto. The
Series E Bonds shall be issuable to the original purchaser thereof in
denominations of One Hundred Thousand Dollars ($100,000.00), and thereafter
in any multiple of One Thousand Dollars ($1,000.00), shall be numbered
consecutively R-1 and upwards and shall be registered bonds without coupons.
The Series E Bonds shall be redeemable at the price and on the
conditions stated in the form of the Series E Bonds set forth in Exhibit A
hereto, any such redemption (other than a sinking fund redemption) to be
effected in accordance with the provisions of Article IV of this Amended
and Restated Mortgage Indenture. Notwithstanding the foregoing, no Series
E Bonds shall be redeemable on or prior to September 1, 2001. There shall
be a sinking fund for the retirement of Series E Bonds as more particularly
recited in full in Article V hereof.
The Series E Bonds shall not be convertible, and shall be exchangeable
only as provided in this Amended and Restated Mortgage Indenture.
SECTION 1.03. The bonds of any series other than the Series B
Bonds, Series C Bonds, Series D Bonds and Series E Bonds, at the election
of the Board of Directors as expressed from time to time in one or more
indentures supplemental hereto, may contain such terms and conditions, not
inconsistent with the provisions of this Amended and Restated Mortgage
Indenture, as may be prescribed by the Board of Directors, including,
without limitation, terms and conditions with respect to: (a)
denominations, (b) interest rate or rates, (c) time or times and place or
places of payment of principal and interest, (d) payment of principal or
interest, or both, without deduction for, or with respect to reimbursement
of, taxes, (e) redemption and redemption prices, (f) a sinking, purchase or
analogous fund and the retirement of such bonds by the operation thereof or
otherwise, (g) convertibility, and (h) exchangeability.
SECTION 1.04. All the bonds issued hereunder shall be executed on
behalf of the Company by the Chairman of the Board, the President or a Vice
President of the Company and its corporate seal (which may be in facsimile,
if permitted by law) shall be thereunto affixed and attested by its
Secretary or an Assistant Secretary.
In case any of the officers who shall have signed or sealed any bonds
or attested the seal thereon shall cease to be such officers of the Company
before the bonds so signed and sealed shall have been actually authenticated
or delivered by the Trustee or issued by the Company, such bonds
nevertheless may be authenticated, delivered and issued with the same force
and effect as though the person or persons who signed and sealed such bonds
and attested the seal thereon had not ceased to be such officer or officers
of the Company; and also any such bond may be signed and sealed and the seal
thereon attested, on behalf of the Company, by such persons as at the actual
date of the execution of such bond shall be the proper officers of the
Company, although at the nominal date of such bond any such persons shall
not have been officers of the Company.
Any bond issued hereunder may bear such numbers, letters other marks
of identification or designation, and may be endorsed with or have
incorporated in the text thereof such legends or recitals in respect of
transferability and in respect of the bond or bonds for which it is
exchangeable, as may be determined by the Board of Directors, with the
approval of the Trustee, and as may be required to comply with the rules
and regulations of any securities exchange upon which the bonds are listed
or may be listed or to conform to any usage with respect thereto.
SECTION 1.05. Except in the case of bonds issued pursuant to
Section 1.10, every bond shall be dated as of the date of its authentication
(except that if any bond shall be authenticated on any interest payment date
it shall be dated as of the day next following such interest payment date).
Except as otherwise provided in Section 1.02 with respect to the Series E
Bonds or as otherwise provided in any indenture supplemental hereto with
respect to bonds of a particular series issued thereunder, every bond shall
bear interest from the interest payment date next preceding the date of such
bond (or, if the date of such bond is prior to the first interest payment
date for the bonds of such series, then from a date to be prescribed by the
Board of Directors and set forth in the supplemental indenture expressing
the terms of bonds of such series); provided, however, that upon any
transfer of bonds or any issuance (authorized by this Amended and Restated
Mortgage Indenture or any indenture supplemental hereto) of bonds in
exchange or in substitution for one or more bonds, if the Company at the
time shall be in default in the payment of interest on the bond or bonds
surrendered on such transfer, exchange or substitution the Trustee shall
endorse upon any bond or bonds issued upon such transfer, exchange or
substitution a legend to the effect that the same bear interest from a
specified date, which date shall be the last interest payment date to which
interest has been paid on the bond or bonds so surrendered.
SECTION 1.06. The person in whose name any bond shall be
registered on the books of the Company shall be deemed and regarded as the
absolute owner thereof for all purposes of this Amended and Restated
Mortgage Indenture; and payment of or on account of the principal of and
premium (if any) and interest on any such bond shall be made only to or upon
the order in writing, in form satisfactory to the Company and the Trustee,
of such registered owner thereof, but such registration may be changed as
provided herein. All such payments shall be valid and effectual to satisfy
and discharge the liability upon such bonds to the extent of the sum or sums
so paid.
SECTION 1.07. Any bond may be transferred or exchanged upon
surrender thereof for cancellation at the office or agency specified for
such purpose in such bond or in this Amended and Restated Mortgage Indenture
or any indenture supplemental hereto with respect to bonds of the particular
series, accompanied by such duly executed instruments of transfer as may be
required by the Company and the Trustee, and thereupon the Company shall
issue in the name of the transferee or transferees or in the name of the
person making the exchange, as the case may be, and the Trustee shall
authenticate and deliver, a new bond or bonds of the same series and
maturity, in authorized denominations, for a like aggregate principal amount
and bearing interest from the last interest payment date to which interest
has been paid on the bonds surrendered. The Trustee shall forthwith cancel
all bonds so surrendered and, on the written request of the Company, deliver
the same to the Company.
Every exchange or transfer of bonds under the provisions of this
Article I shall be effected in such manner as may be prescribed by the
Company, with the approval of the Trustee, and as may be required to comply
with the rules and regulations of any securities exchange upon which the
bonds are listed or are to be listed or to conform to any usage with respect
thereto. The Company shall not be required to make exchanges or transfers
of any bond under any provision of this Article I during a period of fifteen
(15) days next preceding any interest payment date, or after the
determination by the Trustee pursuant to the provisions of Section 4.02
hereof that such bond or a portion thereof is to be called for redemption,
or after the first mailing of notice of redemption of such bond, anything
in such bond to the contrary notwithstanding.
Upon any such exchange or transfer of bonds, the Company may require
the payment of such reasonable charges therefor as it may deem proper, the
payment of which, together with any taxes or other governmental charges
required to be paid with respect to such exchange or transfer, shall be made
by the party requesting the same as a condition precedent to the exercise
of the privilege of such exchange or transfer.
SECTION 1.08. In case the Company, pursuant to the provisions of
Article XI, shall be consolidated with or merged into any other corporation,
or all or substantially all of the mortgaged property as an entirety or
substantially as an entirety shall be conveyed or transferred, subject to
the lien of this Amended and Restated Mortgage Indenture, and the successor
corporation resulting from such consolidation, or into which the Company
shall have been merged, or which shall have received a conveyance or
transfer as provided above, shall have executed with the Trustee and caused
to be recorded an indenture pursuant to the provisions of Article XI, any
bonds issued under this Amended and Restated Mortgage Indenture prior to
such consolidation, merger, conveyance or transfer may, from time to time,
at the request of the successor corporation, be exchanged for other bonds
of the same series and maturity, executed in the name and under the seal of
the successor corporation, with such changes in phraseology and form as may
be appropriate, but in substance of like tenor as the bonds surrendered for
such exchange, and of like principal amount; and the Trustee, upon the
request of the successor corporation, shall authenticate bonds as specified
in such request for the purpose of such exchange and shall deliver such
bonds upon surrender of the bonds so to be exchanged therefor. All bonds
so surrendered shall be accompanied by written instruments of transfer duly
executed by the registered owner or his duly authorized attorney, if deemed
necessary by the Trustee. The Trustee shall forthwith cancel all bonds so
surrendered and deliver the same to the successor corporation on its written
request. All bonds so executed in the name and under the seal of the
successor corporation and authenticated and delivered shall in all respects
have the same legal rank and security as the bonds executed in the name of
the Company and surrendered upon such exchange, with like effect as if the
bonds so executed in the name of the successor corporation had been issued,
authenticated and delivered hereunder on the date hereof.
The Company covenants and agrees that, if additional bonds of any
particular series of which bonds are at the time outstanding shall at any
time be issued in any new name, the Company will provide for the exchange
of any bonds of such series previously issued, at the option of and without
expense to the registered owners thereof, for bonds issued in such new name.
SECTION 1.09. Until definitive bonds of any series are ready for
delivery, the Company may execute and, upon request of the Company in
writing, the Trustee shall authenticate and deliver in lieu of any thereof,
and subject to the same provisions, limitations and conditions, one or more
temporary lithographed, typewritten, mimeographed or printed bonds,
substantially of the tenor of the definitive bonds in lieu of which such
temporary bond or bonds are issued, with such privileges of exchangeability,
in such denomination or denominations (whether or not of denominations
authorized for definitive bonds), with appropriate omissions, variations and
insertions, and in such form (not inconsistent with the provisions of this
Amended and Restated Mortgage Indenture or of any indenture supplemental
hereto) as the Board of Directors may determine.
The Company shall, without unnecessary delay and at its own expense,
prepare, execute and deliver to the Trustee, and upon the presentation and
surrender of any such temporary bond or bonds, the Trustee shall
authenticate and deliver in exchange therefor, definitive bonds of the same
series and maturity, for the same aggregate principal amount as, and in the
authorized denominations indicated by the registered owners of, the
temporary bond or bonds so surrendered. Until exchanged for definitive
bonds, such temporary bond or bonds shall be entitled to the lien and
benefit of this Amended and Restated Mortgage Indenture. The Trustee shall
forthwith cancel all temporary bonds so surrendered and, on the written
request of the Company, deliver the same to the Company.
Until definitive bonds are ready for delivery, the registered owner
of any temporary bond or bonds may, with the consent of the Company,
exchange the same, upon the surrender thereof to the Trustee for
cancellation, for a like aggregate principal amount of temporary bonds of
the same series and maturity, in any other authorized denomination or
denominations indicated by him. The definitive bonds of each series shall
be engraved, lithographed, typewritten, mimeographed or printed, as the
Board of Directors may determine.
SECTION 1.10. Upon receipt by the Company and the Trustee of
evidence satisfactory to them of the ownership of and the loss, theft,
destruction or mutilation of any bond hereby secured and of indemnity
satisfactory to them, and upon surrender and cancellation thereof if
mutilated, the Company may execute, and the Trustee may authenticate and
deliver, a new bond of the same series and maturity of like tenor in lieu
of such lost, stolen, destroyed or mutilated bond. Such new bond, in the
discretion of the Company, may bear the same serial number as the lost,
stolen, destroyed or mutilated bond in lieu of which it is issued (in which
case the new bond may be marked "Duplicate" or be otherwise distinguished)
or a different serial number, and may bear such endorsement as may be
prescribed by the Company, with the approval of the Trustee, and as may be
required to comply with the rules and regulations of any securities exchange
upon which the bonds are listed or may be listed or to conform to any usage
with respect thereto. The indemnity of an institutional holder of the
Series E Bonds whose credit is rated investment grade or better by Moody's
Investor Services, Inc. or Standard & Poor's Corporation shall constitute
indemnity satisfactory to the Company and the Trustee for purposes of this
Section 1.10. The Company may require the payment of a sum sufficient to
reimburse it and the Trustee for all expenses in connection with the issue
of each new bond under this Section 1.10.
SECTION 1.11. Subject to the qualifications set forth above, the
bonds to be issued hereunder and the Trustee's authentication certificate
upon such bonds shall be substantially of the tenor and effect recited
above, and no bond shall be secured hereby or entitled to the benefit
hereof, or shall be or become valid or obligatory for any purpose, unless
there shall be endorsed thereon an authentication certificate, substantially
in such form, duly executed by the Trustee; and such authentication
certificate of the Trustee upon any bond shall be conclusive evidence and
the only competent evidence that such bond has been duly issued hereunder
and that the registered owner thereof is entitled to the benefit of the
trust and lien hereby created.
SECTION 1.12. Notwithstanding any contrary provisions in this
Amended and Restated Mortgage Indenture, the Company may enter into a
written agreement with any owner of any bond of any series, so long as all
of the bonds of that series may be issued only in the form of registered
bonds without coupons, providing for the payment to such owner of portions
(but not all) of the principal of, the premium, if any, and interest on such
bond at a place other than the place specified in such bond as the place for
such payment without the necessity of presenting the bond for notation
thereon or surrendering the bond for a new bond; provided that (a) if such
agreement permits any such payments to be made by the Company directly to
the owner of such bond, such agreement must be satisfactory to the Trustee
in form and substance, (b) there shall be filed with the Trustee a duplicate
original of such agreement, and (c) such agreement shall provide that in
each case in which payment of principal is so made, such owner shall not
sell, transfer or otherwise dispose of such bond unless he shall have caused
notation to be made thereon of all payments on such bond and the last
interest payment date to which interest has been paid on such bond and prior
to delivery thereof such bond shall have been presented to the Trustee for
inspection or surrendered in exchange for a new bond or bonds for the unpaid
balance of the principal amount thereof. The Trustee is authorized to
approve, and to act in accordance with, any such agreement and shall not be
liable or responsible to any such owner or to the Company or to any other
person for any act or omission to act on the part of the Company or any such
owner in connection with any such agreement. For the purpose of this
Section 1.12, the term "owner" shall include, in addition to the registered
owner of any bond or bonds, the purchaser named in any contract with the
Company for the purchase of such bond or bonds or the person or entity for
whom such owner is a nominee.
ARTICLE II.
Issue of Bonds
SECTION 2.01. This Amended and Restated Mortgage Indenture creates
a continuing lien to secure the full and final payment of the principal of,
any premium which may be due and payable on and the interest on all bonds
which may, from time to time, be executed, authenticated and delivered
hereunder. The aggregate principal amount of bonds which may be so
executed, authenticated and delivered hereunder is not limited hereby except
as specifically set forth in this Amended and Restated Mortgage Indenture.
SECTION 2.02. At any time after the execution and delivery of this
Amended and Restated Mortgage Indenture, and upon satisfaction of the
requirements contained in Sections 2.03 and 2.04 hereof and the delivery to
the Trustee of an Opinion of Counsel stating in substance that all such
action in the nature of recording, registering or filing this Amended and
Restated Mortgage Indenture, financing statements under the Uniform
Commercial Code, or any other documents or instruments, in such manner and
in such places as may be required by law in order to establish, preserve
and protect the lien hereof, has been taken, and specifying the details of
such action, the Series E Bonds may be executed by the Company and delivered
to the Trustee, and the Trustee shall thereupon authenticate and deliver the
Series E Bonds to or upon the written order of the Company.
SECTION 2.03. Whenever requesting the authentication and delivery
under this Article II of any bonds issuable hereunder, the Company shall
furnish the Trustee, in addition to any other instruments required elsewhere
in this Article II, the following:
1. A Certified Resolution requesting the Trustee to authenticate
and deliver bonds, specifying the series, maturity or (if bonds
of such series are of serial maturities) maturities and
principal amount of such bonds to be authenticated and
delivered, and naming the person or persons to whom or upon
whose order such bonds shall be delivered.
2. In case the bonds to be authenticated and delivered are of any
series not theretofore created, an indenture supplemental
hereto (accompanied by a Certified Resolution authorizing such
supplemental indenture) designating the new series to be
created and prescribing, with respect to the bonds of such
series:
(a) the date from which bonds dated prior to the first
interest payment date for the bonds of such series shall
bear interest;
(b) the amount thereof, if limited;
(c) to the extent determined by the Board of Directors, the
form or forms and the authorized denominations thereof;
(d) the date or (if of serial maturities) dates of maturity
thereof;
(e) the place or places where principal and interest are to
be paid;
(f) the rate or (if of serial maturities) rates of interest
and the date from which, and the date or dates on which,
interest is payable;
(g) provisions (if any) as to payment of principal or
interest, or both, without deduction for, or as to
reimbursement of, taxes;
(h) provisions (if any) as to redemption and the terms,
conditions and manner thereof, which may differ from
those set forth in Article IV of this Amended and
Restated Mortgage Indenture;
(i) provisions (if any) for a sinking, purchase or analogous
fund for the retirement of bonds of such series and the
terms, conditions and manner thereof, which may differ
from those set forth in Article IV, of this Amended: and
Restated Mortgage Indenture;
(j) provisions (if any) as to convertibility;
(k) provisions (if any) as to exchangeability;
(l) any other particulars necessary to describe and define
such series within the provisions and limitations of this
Amended and Restated Mortgage Indenture;
(m) any other provisions and agreements in respect thereof
which may be for the sole benefit thereof, as provided or
permitted in this Amended and Restated Mortgage
Indenture; and
(n) the text of the bonds of such series.
All bonds of any such series which may be executed, authenticated and
delivered hereunder shall substantially conform to the provisions of such
supplemental indenture,
3. Either (a) a certificate or other official document
constituting evidence of the authorization, approval or consent
of any governmental body or bodies at the tine having
jurisdiction in the premises to the issue of the bonds applied
for, together with an Opinion of Counsel that the same
constitutes sufficient evidence thereof and that the
authorization, approval or consent of no other governmental
body is required, or (b) an Opinion of Counsel that no
authorization, approval or consent of any governmental body is
required.
4. An Opinion of Counsel that all instruments furnished the
Trustee conform to the requirements of this Amended and
Restated Mortgage Indenture and constitute sufficient authority
hereunder for it to authenticate and deliver the bonds applied
for; that all laws and requirements in respect of the form and
execution of the supplemental indenture, if any is required,
and the authentication and delivery by the Trustee of the bonds
applied for have been complied with; that the Company has
corporate power to issue such bonds and has taken all necessary
corporate action for that purpose; and that the authentication
and delivery of the bonds applied for will not make the total
amount of indebtedness of the Company, as stated in the
accompanying certificate provided for in paragraph 5 of this
Section 2.03, exceed the limit of indebtedness of the Company
fixed by its stockholders or by law, or that there is no limit
of indebtedness of the Company then fixed by stockholders or by
law.
5. Unless the Opinion of Counsel provided for in the foregoing
paragraph 4 shall state that there is no limit of indebtedness
of the Company then fixed by its stockholders or by law, a
certificate of the Treasurer or an Assistant Treasurer of the
Company stating that the total amount of indebtedness of the
Company, including the principal amount of the bonds
outstanding hereunder and the bonds applied for, does not
exceed a principal amount which shall be specified in such
certificate.
6. Such instruments of conveyance, assignment and transfer (if
any) as may be necessary to subject to the lien of this Amended
and Restated Mortgage Indenture all the right, title and
interest of the Company in and to the properties of the
character described in the Granting Clauses of this Amended and
Restated Mortgage Indenture as subject to the lien hereof and
which have not previously been specifically conveyed, assigned
or transferred to the Trustee.
SECTION 2.04. In addition to the bonds authorized to be issued
pursuant to other provisions of this Article II, the Company may from time
to time hereafter, upon compliance with the provisions of Section 2.03 and
the provisions of this Section 2.04, execute and deliver to the Trustee,
and the Trustee shall thereupon authenticate and deliver to or upon the
written order of the Company, bonds hereby secured for an aggregate
principal amount which, when added to the principal amount of bonds
outstanding under this Amended and Restated Mortgage Indenture and the
principal amount of all other outstanding Long Term Debt of the Company
after giving effect to the application of the proceeds from the sale of such
new bonds, will not (without the consent, as provided in Section 3.19, of
the registered owners of at least a majority in principal amount of bonds
of each series then outstanding) exceed sixty-five percent (65%) of the
Total Capitalization of the Company, all as evidenced by a Capitalization
Certificate prepared and computed in accordance with the following paragraph
1 of this Section 2.04. Bonds shall be authenticated and delivered by the
Trustee pursuant to this Section 2.04 only upon receipt by the Trustee, in
addition to the resolutions, opinions, certificates and instruments provided
for in Section 2.03, of the following:
1. A certificate (hereinafter called a "Capitalization
Certificate"), signed by the Chairman of the Board, the
President or a Vice President and by the Treasurer or as
Assistant Treasurer of the Company, setting forth the following
information on the basis of the balance sheet of the Company as
at the end of its last fiscal quarter ended at least sixty (60)
days before the date on which the Capitalization Certificate is
delivered (provided however, that all calculations in a
Capitalization Certificate (i) shall give effect to any changes
in indebtedness or equity securities of the Company that are
accomplished between the date of such balance sheet and the
time of the action under this Amended and Restated Mortgage
Indenture in connection with which the Capitalization
Certificate is delivered, (ii) shall except from Long Term Debt
of the Company any thereof for the payment or redemption of
which moneys in the necessary amount have been irrevocably set
aside in trust by the Company or deposited with the Trustee or
with the trustee or other holder of a mortgage or other lien
securing any such Long Term Debt, and (iii) in making all
calculations of surplus, shall make no additions for any
credits to surplus made after December 31, 1990, for the write-
up of any asset, and shall make no deductions for any charges
to surplus made after December 31, 1990, for the write-down or
write-off of the excess of the carrying value of any properties
over the original cost of such properties when first devoted to
public use):
(a) the aggregate principal amount of bonds outstanding,
under this Amended and Restated Mortgage Indenture;
(b) the aggregate principal amount of all outstanding Long
Term Debt of the Company other than that issued under
this Amended and Restated Mortgage Indentures;
(c) the aggregate principal amount of the bonds for the
authentication and delivery of which application is being
made;
(d) the total of the sums stated in subparagraphs (a), (b)
and (c);
(e) the total of the par or stated value of all outstanding
capital stock of the Company and all paid-in premiums
thereon;
(f) all paid-in surplus, capital surplus, earned surplus and
any other surplus accounts of the Company, which shall
include the equity of the Company in the undistributed
earnings (to the extent such earnings are available for
distribution) of any subsidiary of the Company since the
date of its acquisition by the Company;
(g) the total of the sums stated in subparagraphs (d), (e)
and (f), which shall be the Total Capitalization of the
Company;
(h) sixty-five percent (65%) of the Total Capitalization of
the Company;
(i) that, after giving effect to the issuance of the bonds
applied for and the application of the proceeds from the
sale of such bonds, the aggregate principal amount of all
outstanding Long Term Debt of the Company (as stated in
subparagraph (d) above) will not exceed sixty-five
percent (65%) of its Total Capitalization; and
(j) that, to the best of the knowledge and belief of the
signers, no default exists on the part of the Company in
the performance of any of the terms or covenants of the
Amended and Restated Mortgage Indenture.
SECTION 2.05. In addition to the bonds authorized to be issued
pursuant to other provisions of this Article II, the Company may from time
to time hereafter, upon compliance with the provisions of Section 2.03,
execute and deliver to the Trustee, and the Trustee shall thereupon
authenticate and deliver to or upon the written order of the Company, bonds
hereby secured, upon the deposit with the Trustee of an amount in cash equal
to the amount of the principal of the bonds so requested to be authenticated
and delivered and upon receipt by the Trustee of a certificate, signed by
the Chairman of the Board, the President or a Vice President and the
Treasurer or an Assistant Treasurer of the Company, stating that, to the
best of the knowledge and belief of the signers, no default exists on the
part of the Company in the performance of any of the terms or covenants of
this Amended and Restated Mortgage Indenture. Moneys so deposited shall be
held by the Trustee as part of the trust estate; and the Trustee shall pay
over to the Company, out of the moneys so deposited, an amount up to the
excess of sixty-five percent (65%) of the Total Capitalization of the
Company over the aggregate principal amount of all outstanding Long Term
Debt of the Company, upon receipt by the Trustee of a written order of the
Company and a Capitalization Certificate prepared and computed in accordance
with paragraph 1 of Section 2.04, except that, in place of the statement
there prescribed for subparagraph (i), the Capitalization Certificate
delivered pursuant to this Section 2.05 shall state the amount to be paid
over to the Company pursuant hereto and that such amount is not more than
the excess of sixty-five percent (65%) of the Total Capitalization of the
Company over the aggregate principal amount of all outstanding Long Term
Debt of the Company. Any moneys deposited with the Trustee under the
provisions of this Section 2.05 and not withdrawn by the Company shall, at
the request of the Company, be applied by the Trustee to the purchase or
redemption of bonds issued hereunder, in the manner and to the extent
provided in Section 7.03 and, if not so applied, shall, upon the happening
of the conditions specified in Section 7.04, be applied by the Trustee to
the purchase or redemption of bonds issued hereunder, in the manner, to the
extent and subject to the conditions provided in Section 7.04.
SECTION 2.06. In addition to the bonds authorized to be issued
pursuant to other provisions of this Article II, the Company may from time
to time hereafter, upon compliance with the provisions of Section 2.03,
execute and deliver to the Trustee, and the Trustee shall thereupon
authenticate and deliver to or upon the written order of the Company, bonds
hereby secured, upon the satisfaction, discharge and cancellation of, or
for the purpose of paying, redeeming or refunding, any bonds theretofore
issued under any of the provisions of this Amended and Restated Mortgage
Indenture or under the original Indenture (if any); provided, however, that
no bonds shall be authenticated and delivered in excess of the principal
amount of the bonds so satisfied, discharged and canceled or so to be paid,
redeemed or refunded; and provided further that no bonds shall be so
authenticated and delivered on the basis of bonds satisfied, discharged or
canceled prior to the last date on which any bonds have been authenticated
and delivered or moneys withdrawn or property released under any provisions
of this Amended and Restated Mortgage Indenture requiring a Capitalization
Certificate to be delivered to the Trustee in connection therewith, unless
such action could have been taken under such provisions if such bonds had
been outstanding at such date; and provided further that bonds shall be so
authenticated and delivered only upon receipt by the Trustee, in addition
to the resolutions, opinions, certificates and instruments provided for in
Section 2.03, of the following:
1. A Certified Resolution specifying the bonds theretofore
authenticated and delivered hereunder or under the original
Indenture (if any) which have been, or prior to or
simultaneously with the authentication and delivery of such
additional bonds are to be, satisfied, discharged and canceled,
or for the payment, redemption or refunding of which such
additional bonds are to be authenticated and delivered.
2. Either (a) (i) the bonds specified in the resolution mentioned
in paragraph 1 of this Section 2.06, canceled (unless such
bonds shall have been previously cremated by the Trustee), or
(ii) in the case of bonds theretofore authenticated and
delivered under the Original Indenture (if any), a certificate
of the trustee thereunder to the effect that the bonds
specified in the resolution mentioned in paragraph 1 of this
Section 2.06 have been satisfied, discharged and canceled,
which bonds, in each case, shall be equal in principal amount
to the principal amount of the bonds the authentication and
delivery of which is requested on the basis thereof, or (b) in
lieu of any or all of the bonds specified in such resolution,
or in lieu of such certificate, respectively, (i) in the case
of bonds theretofore authenticated and delivered under this
Amended and Restated Mortgage Indenture, an amount in cash
equal to the principal amount, with interest thereon to
maturity, of such bonds or, to the extent that such bonds are
subject to redemption and notice of redemption thereof shall
have been duly given or provision satisfactory to the Trustee
shall have been made therefor, equal to the redemption price of
such bonds, including interest thereon to the date fixed for
redemption, or (ii) in the case of bonds theretofore
authenticated and delivered under the Original Indenture (if
any), a certificate of the trustee thereunder to the effect
that such an amount in cash has been irrevocably deposited with
such trustee to effect their redemption or payment at maturity
and, in the case of redemption, that notice of redemption has
been duly given or provision satisfactory to such trustee has
been made therefor.
3. A certificate, signed by the Chairman of the Board, the
president or a Vice president and the Treasurer or an Assistant
Treasurer of the Company, stating in substance:
(a) that none of such bonds was purchased, paid or redeemed
by or through the operation of any insurance provision
hereof or the Original Indenture (if any), or with the
proceeds of the sale of or insurance upon any property
subject to the lien hereof or of the Original Indenture
(if any), or through the operation of any sinking,
purchase or analogous fund or any other fund established
hereby or by the Original Indenture (if any), or pursuant
to the provisions hereof or of the Original Indenture
(if any), or of any indenture supplemental hereto or
thereto, or by the application of moneys pursuant to the
provisions of Section 2.05, 6.06, 7.03 or 7.04 of this
Amended and Restated Mortgage Indenture, or pursuant to
equivalent provisions of the Original Indenture (if any);
and
(b) that, to the best of the knowledge and belief of the
signers, no default exists on the part of the Company in
the performance of any of the terms or covenants of this
Amended and Restated Mortgage Indenture.
In the event of the deposit with the Trustee of moneys pursuant to
the provisions of this Section 2.06, the Company shall, from time to time,
upon delivery to the Trustee for cancellation of any of the bonds, in
respect of which such deposit shall have been made, be entitled to receive
from the Trustee the moneys held by it in respect of such bonds; and all
such bonds so delivered to the Trustee shall be forthwith canceled by it
and, on the written request of the Company, delivered to the Company. All
moneys deposited with the Trustee under the provisions of this Section 2.06
shall, unless so repaid to the Company, be applied by the Trustee to the
redemption on or after the redemption date or to the payment at or after
maturity, as the case may be, of the bonds in respect of which such moneys
were deposited, but only upon presentation of the same for such redemption
or payment.
SECTION 2.07. Any of the bonds at any time issued under this
Amended and Restated Mortgage Indenture may from time to time, at the
request of the Company, expressed by resolution of the Board of Directors,
and with the consent of the registered owners of such bonds, be exchanged
for bonds of one or more other series issuable hereunder of an equal
aggregate principal amount, and the Trustee, upon the request of the
Company, shall authenticate bonds as specified in such request for the
purpose of such exchange and shall deliver them upon surrender of the bond
or bonds so to be exchanged therefor, but only upon receipt by the Trustee
of the resolutions, opinions, certificates and instruments provided for in
Section 2.03 and of a certificate conforming to the requirements of
paragraph 3 of Section 2.06 with respect to the bonds so surrendered and
stating that, to the best of the knowledge and belief of the signers, no
default exists on the part of the Company in the performance of any of the
terms or covenants of this Amended and Restated Mortgage Indenture. The
Trustee shall forthwith cancel all bonds so surrendered and, on the written
request of the Company, deliver the same to the Company.
SECTION 2.08. The resolutions, certificates, opinions and other
instruments provided for in this Article II may be accepted by the Trustee
as conclusive evidence of the facts and conclusions stated therein and shall
be full warrant, protection and authority to the Trustee for the
authentication and delivery of bonds or the release of moneys hereunder but,
before authenticating and delivering any bonds or releasing any moneys under
any provision of this Article II, the Trustee may, and upon the written
request of the registered owners of not less than twenty-five percent (25%)
in principal amount of the bonds then outstanding hereunder and upon being
furnished with reasonable security and indemnity shall, cause to be made
such independent investigation as it may see fit and, in that event, may
decline to authenticate and deliver such bonds or release such moneys unless
satisfied by such investigation of the truth and accuracy of the matters so
investigated. The expense of such investigation shall be paid by the
Company or, if paid by the Trustee, shall be repaid by the Company upon
demand with interest at a rate per annum (computed on the basis of a year
of 365 or 366 days, as the case may be) for each day equal to the Base Rate
for such day, such interest rate to change automatically from time to time
effective as of the effective date of each change in the Base Rate. The
"Base Rate", as used in this Amended and Restated Mortgage Indenture, shall
mean the interest rate per annum announced from time to time by The
Connecticut National Bank as its prime rate.
ARTICLE III.
Particular Covenants of the Company
The Company hereby covenants and agrees:
SECTION 3.01. That it is lawfully seized and possessed of all real
estate, franchises and other property herein described or referred to as
presently mortgaged hereby, that upon the first issue of any bonds hereunder
such real estate, franchises and other property will be free and clear of
any lien except Permitted Encumbrances and as set forth in the Granting
Clauses hereof, and that it has good right and lawful authority to mortgage
the same as provided in and by this Amended and Restated Mortgage Indenture.
SECTION 3.02. That it will promptly pay or cause to be paid the
principal of, any premium which may be due and payable on and the interest
on all the bonds issued hereunder according to the terms thereof, and that,
if any coupon bonds shall ever be issued under this Amended and Restated
Mortgage Indenture pursuant to a supplemental indenture authorizing the
issuance of such bonds, (a) the coupons attached to such bonds shall be
canceled as they are paid, (b) coupons shall not be kept alive after
maturity by extension thereof or by the purchase thereof by or on behalf of
the Company, and (c) no coupon appertaining to any bond hereby secured which
in any way at or after maturity shall have been transferred or pledged
separate or apart from the bond to which it relates, or which shall in any
manner have been kept alive after maturity by extension or by the purchase
thereof by or on behalf of the Company, shall be entitled, in case of a
default hereunder, to any benefit of or from this Amended and Restated
Mortgage Indenture, except after the prior payment in full of the principal
of, as premium which may be due and payable on the bonds issued hereunder
and of all coupons and interest obligations not so transferred, pledged,
kept alive, extended or purchased, notwithstanding any provisions of this
Amended and Restated Mortgage Indenture regarding the equality of security
hereby afforded to bondholders or any provisions of Article VIII regarding
the application of sale proceeds and other moneys by the Trustee.
SECTION 3.03. That it will maintain an office or agency in the
State of Connecticut, so long as any bonds are outstanding hereunder, where
notices, presentations and demands to or upon it in respect of this Amended
and Restated Mortgage Indenture or such bonds may be given or made; that it
will maintain an office or agency for the payment of the principal of, any
premium which may be due and payable on and the interest on any bonds at
the time outstanding in any place or places where such principal, premium
or interest shall be payable; that it will keep books for the registration
and transfer of bonds at an office or agency in such place or places as are
specified in such bonds, or in any indenture supplemental hereto with
respect thereto, as the place or places where such bonds are registered or
transferable; that such books shall be open to inspection by the Trustee at
all reasonable times; and that it will lodge from time to time with the
Trustee notice of designation and of any change of any such office or
agency.
SECTION 3.04. That it will duly pay and discharge or cause to be
paid and discharged, as the same shall become due and payable, all real
estate and personal property taxes, assessments and other governmental
charges lawfully levied and imposed upon the mortgaged premises, including
the franchises, earnings and business of the Company, and will duly observe
and conform to all valid requirements of any governmental authority relative
to any of the mortgaged property and all covenants, terms and conditions
upon or under which any property, rights or franchises covered hereby are
held; that it will not suffer any mechanic's, laborer's, statutory or other
lien to be hereafter created and remain upon such property, or any part
thereof, or the income therefrom, except Permitted Encumbrances; and that
it will not default in the performance of any of its obligations with
respect to any purchase money mortgage, vendor's lien or other lien on
property of the Company if such default will endanger the security afforded
by this Amended and Restated Mortgage Indenture; provided, however, that
nothing contained in this Section 3.04 shall be deemed to require the
Company to pay or cause to be paid any such tax, assessment or charge or to
satisfy any such lien so long as the Company in good faith shall contest or
cause to be contested the validity thereof, provided the security afforded
by this Amended and Restated Mortgage Indenture shall not be endangered by
any sale or otherwise on account thereof.
SECTION 3.05. That it will keep or cause to be kept all property
which is at any time covered by this Amended and Restated Mortgage
Indenture, and which is not fireproof and is of a character usually insured
by companies similarly situated, insured by reputable insurance companies
or associations against loss or damage by fire, to such amount as such
property is usually insured by companies similarly situated, any one loss
in excess of Four Hundred Thousand Dollars ($400,000.00) to be made payable
to the Trustee or to the trustee or other holder of any lien on such
property prior to the lien of this Amended and Restated Mortgage Indenture
as the interests of the Trustee and of such trustee or other holder may
appear. The proceeds of any insurance on any part of the mortgaged property
which may be received by the Trustee shall be held and applied by it as
hereafter provided in Article VII. The Company shall, however, be at
liberty to appropriate, set aside and maintain out of its earnings or
surplus an insurance reserve fund, in such amount as from time to time shall
be determined by the Board of Directors, to be held and applied in making
good fire losses, and such reserve fund shall be deemed for the purpose of
this Section 3.05 the equivalent of policies of fire insurance aggregating
an amount equal to the principal of the fund.
SECTION 3.06. That it will at all times maintain, preserve and
keep or cause to be maintained, preserved and kept the mortgaged premises,
and every part thereof, with the appurtenances and every part and parcel
thereof, in good repair, working order and condition, and will from time to
time make or cause to be made all needful and proper repairs and renewals,
replacements and substitutions, so that at all times the efficiency of the
property hereby mortgaged shall be preserved and maintained and, subject to
the provisions hereof, will maintain its corporate existence and will use
its best efforts to maintain, preserve and renew all the rights, powers,
privileges and franchises owned by it so long as the same are necessary for
the efficient operation of its utility business.
SECTION 3.07. That it will at all times take or cause to be taken
all such action in the nature of filing, recording, re-filing and re-
recording this Amended and Restated Mortgage Indenture, any supplemental
indenture, financing statements under the Uniform Commercial Code, or any
other documents or instruments, in such manner and in such places as may be
required by law in order to establish, preserve and protect the lien
intended to be created hereby and by any and all supplemental indentures to
the fullest extent possible.
SECTION 3.08. That, if it shall fail to perform or cause to be
performed any of the covenants contained in Sections 3.04, 3.05, 3.06 and
3.07 hereof, the Trustee (or any receiver appointed in any action or
proceeding for the foreclosure hereof or for the enforcement of the rights
of the Trustee or of the bondholders under this Amended and Restated
Mortgage Indenture) may make advances to perform the same on its behalf
(which advances shall be made by the Trustee if requested in writing so to
do by the holders of not less than Twenty-Five percent (25%) in principal
amount of the bonds then outstanding and furnished with funds for the
purpose); and the Company hereby agrees to repay on demand all sums so
advanced on its behalf, with interest at the Base Rate, and all sums so
advanced with interest as provided above shall be secured hereby having the
benefit of the lien hereby created in priority to the indebtedness evidenced
by the bonds; but no such advance shall be deemed to relieve the Company
from any default hereunder.
SECTION 3.09. That it will upon reasonable request execute and
deliver such further instruments and do such further acts as may be
reasonably necessary or proper to carry out more effectually the purposes
of this Amended and Restated Mortgage Indenture, and in particular (without
in any way limiting the generality of the foregoing) to make subject to
the lien hereof any property hereafter acquired by it (except property of
the character herein specifically excepted from the lien hereof), to
transfer to any successor trustee or trustees the estate, powers,
instruments and funds held in trust hereunder and to confirm the lien of
this Amended and Restated Mortgage Indenture with respect to any series of
bonds issued or to be issued hereunder. No failure to request such further
instruments or further acts shall be deemed a waiver of any right to the
execution and delivery of such instruments or the doing of such acts or be
deemed to affect the interpretation of any provisions of this Amended and
Restated Mortgage Indenture.
SECTION 3.10. That it will at all times keep proper books of
record and account in which full, true and correct entries of its
transactions will be made in accordance with the rules and regulations of
the regulatory authority or authorities having jurisdiction over the Company
or, in the absence thereof, in accordance with generally accepted accounting
principles, and that it will at its own expense:
(a) upon the written request of the Trustee, permit the Trustee, by
its agents and attorneys, to examine all of the books of
account, records, reports and other papers of the Company and
to take copies and extracts therefrom and to examine the plans
and properties of the Company; and
(b) within ninety (90) days after the end of each fiscal year of
the Company, furnish to the Trustee and each holder of Series
E Bonds (i) a certificate of an officer of the Company stating
that the Company is not in default in its obligations under
this Amended and Restated Mortgage Indenture, and (ii)
financial statements presenting fairly the financial condition
of the Company as at the end of, and its earnings and expenses
for, such fiscal year, certified by the Treasurer or an
Assistant Treasurer of the Company or, at the election of the
Company, by a firm of independent accountants selected by the
Company.
The Trustee, however, shall be under no duty to make any such
examination unless requested to do so by the registered owners of not less
than ten percent (10%) in principal amount of the outstanding bonds and
furnished with reasonable security and indemnity covering such examinations,
nor shall the Trustee have any duty with respect to any such financial
statements when received except to retain the same in its files and to
exhibit the same to any bondholder requesting an inspection thereof.
SECTION 3.11. That, in case it shall hereafter create any mortgage
upon the property subject to the lien of this Amended and Restated Mortgage
Indenture or any part thereof, such mortgage shall be and shall be expressed
to be subject to the prior lien of this Amended and Restated Mortgage
Indenture for the security of all bonds then issued or thereafter to be
issued hereunder. This provision shall not be deemed, however, to prevent
the creation of purchase money mortgages having liens prior to the lien of
this Amended and Restated Mortgage Indenture on property hereafter acquired
by the Company.
SECTION 3.12. That it will not issue, or permit to be issued, any
bonds hereunder in any manner other than in accordance with the provisions
of this Amended and Restated Mortgage Indenture and the agreements in that
behalf herein contained, and will not suffer or permit any default to occur
under this Amended and Restated Mortgage Indenture, but will faithfully
observe and perform or cause to be observed and performed all the
conditions, covenants and requirements hereof.
SECTION 3.13.
(A) 1. Upon the written request of the registered owners of not
less than a majority in principal amount the bonds at the
time outstanding under this Amended and Restated Mortgage
Indenture, the Company, at its own expense, will promptly
appoint an independent engineer, selected by the Board of
Directors and satisfactory to the Trustee, to make an
inspection of the Company's utility property and, within
a reasonable time after his appointment, to report in
writing to the Company and to the Trustee whether or not
the Company's utility property, as an operating system,
has been maintained in reasonably good repair, working
order and condition; provided that the Company shall not
be obligated to make any such appointment if less than
five (5) years has elapsed since the last previous such
appointment; and provided further that, in lieu of making
such appointment, the Company may furnish to the Trustee
a report in writing, dated within five (5) years prior to
such request, of an independent engineer of recognized
standing to the effect that the Company's utility
property, as an operating system, has been maintained in
reasonably good repair, working order and condition. A
copy of such written request shall be furnished promptly
to the Trustee by the Company. If, while the Company is
required to do so, it shall fail to appoint an
independent engineer within one hundred twenty (120)
days following the receipt of such written request, the
Trustee shall itself select an independent engineer to
make such inspection and report.
2. Upon receipt by the Company of such report of such
independent engineer appointed hereunder, the report
shall be presented to the Trustee. The Trustee shall
mail a copy of such report to each registered owner of
not less than ten percent (10%) in principal amount of
the bonds of any series at the time outstanding and shall
retain one copy on file at its office, open to inspection
by any registered owner at any reasonable time. If such
independent engineer shall report that the Company's
utility property, as an operating system, has not been
maintained in reasonably good repair, working order and
condition, he shall specify in his report the character
and extent of, and the estimated cost of making good the
deficiencies in such maintenance, and, if longer than one
year, the time reasonably necessary to make good such
deficiencies. Such report of such independent engineer
shall be conclusive evidence of the facts and conditions
therein set forth, and the Trustee shall be fully
protected in relying thereon.
3. The Company shall, with all reasonable speed, do such
maintenance work as may be necessary to make good such
maintenance deficiencies, if any, as shall have been
specified in such report.
4. One year from the date of any such report which specified
any maintenance deficiency (or at the end of such longer
period as may be specified in such report to be
reasonably necessary for the purpose of correcting such
maintenance deficiency), such independent engineer (or,
in the case of his refusal or inability to act, another
independent engineer appointed by the Company or the
Trustee in like manner) will report in writing to the
Company and the Trustee whether such maintenance
deficiency has been made good. If and only if he reports
that such maintenance deficiency has not been made good,
the Company shall be deemed to have defaulted in the due
performance of the covenants contained in paragraph 3 of
this subdivision (A) and in Section 3.06. Such report of
such independent engineer shall be conclusive evidence of
the facts and conditions therein set forth, and the
Trustee shall be fully protected in relying thereon.
5. All expenses incurred pursuant to the foregoing
provisions of this subdivision (A) shall be borne by the
Company.
6. The Company shall not at any time be required to do any
maintenance work which shall at the time be contrary to
or in violation of any applicable law, regulation, order
or directive of any governmental authority having
jurisdiction in the premises.
(B) The Company shall accrue upon its books a reserve for
depreciation at a rate or rates fixed by the Company and acceptable to the
regulatory authority having jurisdiction over the Company.
SECTION 3.14. That it will not hereafter issue any debt is secured
by a lien senior to the lien of this Amended Restated Mortgage Indenture
upon the mortgaged property or that is in any other way senior to the bonds
issued under this Amended and Restated Mortgage Indenture, except as
provided in Section 3.11 with respect to purchase money mortgages.
SECTION 3.15. That, as provided in Section 2.04, the Company will
not issue, and the Trustee shall not authenticate, additional bonds under
Sections 2.03, 2.04, 2.05 or 2.06 of this Amended and Restated Mortgage
Indenture if, after giving effect to the issuance thereof and the
application of the proceeds from the sale thereof, the aggregate principal
amount of all outstanding Long Term Debt of the Company would exceed sixty-
five percent (65%) of its Total Capitalization.
SECTION 3.16. That no dividends shall be declared or paid on any
shares of common stock of the Company, nor shall any shares of common stock
of the Company be purchased or redeemed or otherwise acquired or retired by
the Company, if immediately after or as a result of any such declaration,
payment, purchase or redemption or other acquisition or retirement the sum
of the aggregate of all such declarations, payments, purchases or other
acquisitions made subsequent to January 1, 199l exceeds the aggregate of
(a) Two Hundred Fifty Thousand Dollars ($250,000.00), plus (b) ninety
percent (90%) of net earnings of the Company available for dividends
accumulated subsequent to January 1, 1991 but after deducting Direct Income
From the Sale of Real Property (as such term is defined in Article XVII
hereof), plus (c) one hundred percent (100%) of the Direct Income From the
Sale of Real Property accumulated subsequent to January 1, 1991.
In computing the amount of such declarations, payments, purchases or
other acquisitions made subsequent to January 1, 1991, the Company may
credit against such declarations, payments, purchases or other acquisitions
the net cash consideration received upon the sale subsequent to January 1,
1991 of stock of any class of the Company.
The Company may declare and pay dividends payable solely in stock of
the Company or make other distributions in respect of the stock of the
Company if such distributions are made solely in stock of the Company.
For the purposes of this Section 3.16, all determinations of net
earnings shall be made in accordance with the rules and regulations of any
governmental body or agency under the jurisdiction of which the Company may
be operating, or if there be no such agency or no such rules or regulations,
then in accordance with generally accepted accounting principles.
SECTION 3.17. (a) That the Company shall not issue and the Trustee
shall not authenticate additional bonds under Sections 2.03, 2.04, 2.05 or
2.06 of this Amended and Restated Mortgage Indenture unless the net earnings
of the Company, as calculated in accordance with the method described below
for the certificate of Required Net Earnings, has been equal to at least one
hundred seventy-five percent (175%) of the aggregate annual interest charges
on all bonds outstanding under this Amended and Restated Mortgage Indenture
immediately after such bonds are issued. The Company shall meet the
requirements of this Section 3.17 by delivering to the Trustee (together
with the resolutions, opinions, certificates and instruments provided for
in Sections 2.03 and 2.04) a "Certificate of Required Net Earnings" which
shall state in substance that the net earnings of the company, calculated
as hereinafter provided, for a period of twelve (12) consecutive calendar
months within the fifteen (15) calendar months immediately preceding the
first day of the month in which the additional bonds are to be issued by the
Trustee has been equal to at least one hundred seventy-five percent (175%)
of the aggregate annual interest charges on all bonds of the Company to be
outstanding under this Amended and Restated Mortgage Indenture immediately
after such bonds are issued; provided, however, that in all calculations of
such net earnings effect shall be given to the issue or retirement of any
bonds that will be accomplished prior to or on the date of such issue. The
Certificate of Required Net Earnings shall be signed by the Chairman of the
Board, the president or a Vice President and by the Treasurer or an
Assistant Treasurer of the Company, shall set forth the amount of the net
earnings of the Company for such twelve (12) month period, shall itemize by
issue and series the bonds so to be outstanding and state the aggregate
principal amount of each such issue and series and the interest charges
thereon for a period of one year and shall itemize each item to be deducted
from total income of the Company as described below. The Certificate of
Required Net Earnings shall show the method of calculation of such net
earnings to be as follows:
From the total revenues (except amortization of premium
on debt), whether credited to surplus or otherwise, of the
Company, from all sources (which shall not include earnings or
losses from the sale of capital assets other than the Excluded
Real Property but shall include as a credit interest charged to
construction) for the period in question, there shall be
deducted (i) all operating and nonoperating expenses and
charges, including maintenance and depreciation as is
determined by its Board of Directors in accordance with
established practice of the Company; (ii) Direct Income From
the Sale of Real property; (iii) taxes (except as hereinafter
provided) and rentals paid or accrued in respect of the
properties, license fees and franchise taxes paid or accrued;
and (iv) taxes based upon gross income, gross revenues or gross
receipts, but excluding from such deductions from revenues (a)
Federal and State taxes based on net income paid or accrued,
(b) interest charges on indebtedness of the Company, (c)
amortization of debt discount and expense, (d) write-downs of
property or other adjustments, and (e) similar items. Any
increase or decrease in gross revenues of the Company
attributable to higher and lower rates that have been in effect
for less than the full twelve (12) month period on which such
calculation is based shall be annualized, and there shall also
be annualized such related fixed expenses and charges as are
known to the principal officers of the Company.
In case, within or after the period for which the
computation of net earnings of the Company is made, the Company
shall have acquired any property (including an acquisition by
merger), such acquired property may be treated as having been
owned by the Company for the whole of such period of
computation and the net earnings thereof for such period may,
at the option of the Company, be included in the net earnings
of the Company, and there shall be excluded, in computing such
net earnings, an amount equal to the net earnings estimated by
the Company to be applicable to any property sold or disposed
of by the Company after the beginning of such period of
computation.
(b) Except as otherwise provided herein, for the purposes of this
Section 3.17, all determinations of net earnings shall be made
in accordance with the rules and regulations of any
governmental body or agency under the jurisdiction of which the
Company may be operating, or if there be no such agency or no
such rules or regulations, then in accordance with generally
accepted accounting principles.
(c) The provisions of this Section 3.17 shall not limit the power
of the Company to issue, nor the Trustee to authenticate, bonds
under the provisions of Section 1.04 - 1.11, inclusive, of this
Amended and Restated Mortgage Indenture in connection with
exchanges and transfers.
SECTION 3.18. That the recitals of fact and the statements
contained in this Amended and Restated Mortgage Indenture are true in all
material respects.
SECTION 3.19. With the written consent of the registered owners
of not less than a majority in principal amount of the bonds then
outstanding under this Amended and Restated Mortgage Indenture, compliance
with any provision of any covenant, agreement or condition of this Article
III (except for Section 3.02) or any other provision of this Amended and
Restated Mortgage Indenture, may be waived, either generally or in
particular instances, on behalf of the registered owners of all bonds then
outstanding; provided, however, that if such consent shall pertain to
Sections 2.04 or 3.11 through 3.17 no such consent shall be effective unless
also consented to in writing by the registered owners of not less than a
majority in principal amount of bonds of each series then outstanding. Any
act or thing which the Company may do or omit to do in accordance with any
such consent shall not be deemed to constitute a violation or a default
under this Amended and Restated Mortgage Indenture. Any such written
consent may be given either before or after the time for compliance with
such provision of this Amended and Restated Mortgage Indenture, shall be
filed with the Trustee and shall be binding on all registered owners of all
bonds then or at any time thereafter outstanding. Notwithstanding the
foregoing, compliance with any Exclusive Benefit Covenant (as such term is
defined in Article XVII) may also be waived by the registered owners of such
percentage (which, unless otherwise provided in the supplemental indenture
establishing the Exclusive Benefit Covenant, shall be sixty-six and two-
thirds percent (66-2/3%) of any one or more series of the bonds as may be
specified in such supplemental indenture without any requirement for the
waiver by the registered owners of any other series of bonds outstanding
under this Amended and Restated Mortgage Indenture.
ARTICLE IV.
Redemption of Bonds
SECTION 4.01. The Company reserves the right to redeem all or any
part of the Series E Bonds issued hereunder as stated in Section 1.02 at
the price and on the conditions stated in the form of Series E Bonds set
forth in Exhibit A hereto. In the creation of each particular series of
bonds issued hereunder other than the Series E Bonds, the Company may
reserve the right to redeem and pay prior to their fixed maturity all or
any part of the bonds of such series at such time or times, and from time
to time, and on such terms as the Board of Directors may determine and as
shall be appropriately expressed in the bonds of such series and in the
supplemental indenture with respect to the bonds of such series.
SECTION 4.02. In case the Company shall desire to exercise such
right of redemption of all or any part of the bonds in accordance with the
right so reserved by it, it shall obtain such authorization, approval or
consent of any governmental bodies at the time having jurisdiction in the
premises as may at the time be required, and shall, at least Twenty-Five
(25) days prior to the date fixed for redemption, by first-class mail,
postage prepaid, to the registered owners of the bonds to be redeemed, at
their addresses as the same shall appear, if at all, upon the registry books
of the Company, a notice to the effect that the Company has elected to
redeem all the bonds or a part thereof, as the case may be, on a date
therein designated, specifying, in the case of the redemption of less than
all series, the series designations of the bonds to be redeemed and, in the
case of the redemption of less than all of the outstanding bonds of a
series, the distinctive numbers of the bonds to be redeemed, and in every
case stating that on such date there will become and be due and payable upon
each bond so to be redeemed, at the principal office of the Trustee, the
principal thereof, together with the accrued interest to such date, with
such premium, if any, as is due payable on such bond upon such redemption,
and that from and after such date interest thereon will cease to accrue.
If provision shall be made in respect of any series for any additional
condition to the redemption of bonds of such series, compliance shall be
made with such provision in case bonds of such series shall be redeemed.
In case the Company shall. have elected to redeem all of its
outstanding bonds or all of the outstanding bonds of any series, it shall
in each such instance, at least fifteen (15) business days before the first
date upon which the notice of redemption mentioned above is required to be
given, notify the Trustee in writing of such election and of the aggregate
principal amount of bonds to be redeemed. The Trustee shall notify the
Company in writing of the numbers of the bonds to be redeemed in ample time
to permit the notice of redemption to be given as herein provided.
In case the Company shall have elected to redeem less than all of the
outstanding bonds of any series, it shall in each such instance, at least
fifteen (15) business days before the first date upon which the notice of
redemption mentioned above is required to be given, notify the Trustee in
writing of such election and of the aggregate principal amount of bonds of
such series to be redeemed, and thereupon the principal amount of the bonds
then to be redeemed shall be prorated by the Trustee in units of One Hundred
Thousand Dollars ($100,000) each among the holders of the bonds of such
series as nearly as practicable in the proportion that their respective
holdings bear to the aggregate principal amount of bonds of such series
outstanding on the date of selection. The Trustee shall notify the Company
in writing of the numbers of the bonds to be redeemed in ample time to
permit the notice of redemption to be given as herein provided. In case
any bond shall be redeemed in part only, such notice shall specify the
principal amount thereof to be redeemed and shall state that, at the option
of the registered owner, such bond may be presented for the notation thereon
of the principal amount thereof to be redeemed, or may be surrendered for
redemption, in which case a new bond or bonds of the same series of an
aggregate principal amount equal to the portion of such bond will be issued
in lieu thereof, and unredeemed the Company shall execute and the Trustee
shall authenticate and deliver such new bond or bonds to or upon the written
order of the registered owner of such bond, at the expense of the Company.
On or before the redemption date specified in the notice described
above, the Company shall deposit with the Trustee an amount of cash
sufficient to effect the redemption of the bonds specified in such notice,
except that such amount may be reduced to the extent that moneys then held
by the Trustee under any of the provisions of this Amended and Restated
Mortgage Indenture are available for such redemption. All moneys deposited
by the Company with the Trustee or set apart by the Trustee under the
provisions of this Amended and Restated Mortgage Indenture for the
redemption of bonds shall be held in trust for the account of the respective
registered owners of the bonds to be redeemed and applied in accordance with
the provisions of Section 15.03 hereof.
On the redemption date designated in such notice, the principal amount
of each bond so to be redeemed, together with the accrued interest thereon
to such date, and such premium, if any, as is due and payable on such bond
upon such redemption, shall become due and payable; and from and after such
date (such notice having been given in accordance with the provisions of
this Section 4.02 and such deposit having been made or moneys set apart as
described above), then, notwithstanding that any bonds so called for
redemption shall not have been surrendered, no further interest shall accrue
on any such bond (or on the portion thereof to be redeemed). From and after
such date of redemption (such notice having been given in accordance with
the provisions of this Section 4.02 and such deposit having been made or
moneys set apart as described above), or from and after the date upon which
such notice is mailed, if such notice shall state that moneys to effect such
redemption have been deposited with or set apart by the Trustee, all such
bonds or such portions thereof, as the case may be, insofar as such deposit
shall have been made or moneys set apart as described above, shall be deemed
to have been paid in full as between the Company and the respective
registered owners thereof and shall no longer be deemed to be outstanding
hereunder, and the Company shall be under no further liability in respect
thereof.
SECTION 4.03. All bonds so redeemed shall forthwith be canceled
by the Trustee and, on the written request of the Company, delivered to the
Company.
SECTION 4.04. Anything in this Amended and Restated Mortgage
Indenture to the contrary notwithstandingg no bonds held by the Company,
whether or not theretofore issued, and whether held in its treasury or
pledged to secure any indebtedness, shall be deemed to be outstanding for
the purposes of any redemption of bonds pursuant to the provisions of
subdivision (B) of Section 6.06 or the provisions of Sections 7.03 or 7.04,
so long as any other bonds are outstanding hereunder; and the Company hereby
covenants and agrees that, in case of any such redemption, it will furnish
to the Trustee the numbers of any bonds so held by it of any series of which
any bonds are so to be redeemed.
ARTICLE V.
Covenants with Respect to Series E Bonds
SECTION 5.01. The covenants, agreements and conditions contained
in this Article V are solely for the protection and benefit of the
registered owners of the Series E Bonds and are therefore Exclusive Benefit
Covenants, and the exclusive right to (i) require the Trustee to declare a
default under, (ii) waive, default under, (iii) waive compliance with, or
(iv) amend, any of such Exclusive Benefit Covenants shall be vested solely
in the registered owners of a majority in principal amount of the Series E
Bonds then outstanding. No benefits by reason of such Exclusive Benefit
Covenants shall be deemed to be conferred upon persons other then the
registered owners of the Series E Bonds, the Trustee and the Company.
SECTION 5.02. (a) The Company shall pay to the Trustee as and for
a Sinking Fund for the redemption and retirement of Series E Bonds on
September 1, 1997, and on each September 1 thereafter to and including
September 1, 2011, so long as any Series E Bonds are outstanding (the date
on which any such payment is required is hereinafter referred to as the
"Sinking Fund payment date"), a sum in cash which is sufficient to redeem
and retire Ninety-Four Thousand Dollars ($94,000.00) in principal amount of
the Series E Bonds at the principal amount thereof with interest accrued
thereon to the Sinking Fund payment date.
(b) On or before the thirtieth day prior to each Sinking Fund
payment date the Trustee shall proceed to select for redemption, in the
manner hereinafter provided, Series E Bonds in the aggregate principal
amount redeemable with the cash required to be paid on the next following
Sinking Fund payment date, and in the name of the Company shall give notice
to the persons, in the manner prescribed in Article IV of this Amended and
Restated Mortgage Indenture, of the redemption on the Sinking Fund payment
date of the Series E Bonds so selected.
The particular Series E Bonds (or portion thereof) to be redeemed on
each Sinking Fund payment date shall be selected by the Trustee from the
outstanding Series E Bonds by prorating (in the proportion that the
principal amount of Series E Bonds held by each registered holder bears to
the total principal amount of outstanding Series E Bonds) the principal
amount of Series E Bonds to be redeemed among the registered owners of
Series E Bonds.
(c) All cash received by the Trustee pursuant to this Section shall
be held by the Trustee as security for the payment of the Series E Bonds and
shall be applied by the Trustee to the redemption of outstanding Series E
Bonds, without premium, on the Sinking Fund payment date on which or for
which it was so received.
ARTICLE VI.
Possession Use and Release of Property
SECTION 6.01. Unless and until one or more of the Events of
Default specified in Section 8.01 shall happen and be continuing, the
Company shall be suffered and permitted to possess, use and enjoy all the
property and appurtenances, franchises and rights mortgaged by this Amended
and Restated Mortgage Indenture, except cash and obligations required by
any provision of this Amended and Restated Mortgage Indenture to be
deposited with the Trustee, and to receive and use the tolls, rents,
revenues, issues, income, product and profits thereof, with power in the
ordinary course of business, freely and without let or hindrance on the part
of the Trustee or the bondholders, to use and consume materials and supplies
and, except as herein otherwise expressly provided to the contrary, to deal
with choses in action, easements, leases, leasehold interests and contracts,
and to exercise the rights and powers conferred upon it thereby, to alter,
repair and remove its buildings and structures, to change the position of
its pipes, mains, conduits, or other property, to replace and renew any of
its equipment, machinery or other property, and to make any lease, or grant
or convey any right-of-way, easement or license (but the property so leased
and the property over, through or under which any such right-of-way,
easement or license shall be so granted or conveyed shall remain subject to
the lien of this Amended and Restated Mortgage Indenture to the same extent
and in the same manner as it was prior to such lease, grant or conveyance),
without the consent of or any release by the Trustee, provided that any such
lease, grant, conveyance or other disposition will not be prejudicial to the
security of the bonds issued hereunder, and provided further that any lease
hereafter made by the Company shall be subject to termination by the Trustee
or by any receiver appointed in any action or proceeding for the foreclosure
hereof or for the enforcement of the rights of the Trustee or of the
bondholders hereunder if, upon the happening of an Event of Default
hereunder, the Trustee or such receiver shall have entered upon and taken
possession of the mortgaged property.
SECTION 6.02. Unless and until one or more of the Events of
Default specified in Section 8.01 shall happen and be continuing, the
Company may, at any time and from time to time, without the consent of or
any release by the Trustee:
1. Sell or otherwise dispose of, free from the lien of this
Amended and Restated Mortgage Indenture, any machinery,
equipment or other similar property comprising part of the
mortgaged property, upon replacing the same with or
substituting for the same other machinery, equipment or other
property of a value at least equal to the full value to the
Company of the property so disposed of; or
2. Surrender in whole or in part, or assent to the modification
of, any franchise, license or permit which it may hold, or
under which it may be operating, provided that (a) in the
written opinion, filed with the Trustee, of an engineer (who
may be in the regular employ of the Company), selected by the
Board of Directors and satisfactory to the Trustee, the Company
is exercising the privileges granted thereby without a fair
return to it and such surrender or modification is to the best
interests of the Company, or (b) in the event of any such
modification, the franchise, license or permit as modified
shall in the Opinion of Counsel, filed with the Trustee,
authorize the continuance of the same (or and extended)
business in the same (or an extended) territory during the same
(or an extended, unlimited or indefinite period of time, or (c)
in the event of any such surrender, the Company shall receive
in exchange a new franchise, license or permit which, in the
written opinion, filed with the Trustee, of such counsel, shall
authorize it to do the same (or an extended) business in the
same (or an extended) territory during the same (or an
extended, unlimited or indefinite) period of tine, or (d)
after the surrender or modification of any such franchise,
license or permit, the Company shall still under some other
franchise, license or permit, have the right, in the written
opinion, filed with the Trustee of such counsel, to conduct the
same (or an extended) business in the same (or an extended)
territory during the same (or an extended, unlimited or
indefinite) period of time. For the purposes of this paragraph
2 and of an opinion to be rendered hereunder, any right of any
municipality or other governmental body to terminate a
franchise, license or permit by purchase shall not be deemed to
abridge or affect its duration. The Trustee shall be under no
duty, obligation or responsibility to obtain any such opinion
of an engineer or Opinion of Counsel or other document required
to be filed with it by the provisions of this paragraph 2; and
it shall be under no duty to investigate or verify or make any
inquiry in respect of any statement contained in any such
opinion or other document, and shall have no duty of any
character with respect thereto except to exhibit the same from
time to time to any owner of bonds desiring an inspection
thereof; or
3. Sell or otherwise dispose of, free from the lien of this
Amended and Restated Mortgage Indenture, any Excluded Real
Property.
SECTION 6.03. The Company may sell, exchange or otherwise dispose
of any of its property (in addition to the property referred to in Sections
6.01 and 6.02) at any time subject to the lien hereof, upon compliance with
the requirements and conditions of this Section 6.03, and the Trustee shall
release the same from the lien hereof upon receipt by the Trustee of:
1. A Certified Resolution requesting such release;
2. A certificate, signed by the Chairman of the Board, the
President or a Vice President of the Company and by an engineer
(who may be in the regular employ of the Company) or firm of
engineers (who may be under regular retainer from the Company)
or, if such property consists of securities, by an appraiser or
other competent person (who may be in the regular employ of the
Company) or firm (who may be under regular retainer from the
Company), in each case selected by the Board of Directors and
satisfactory to the Trustee, stating in substance as follows:
(a) that, in the opinion of the signers, such release is in
the best interests of the Company, the property to be
released (if less than all or substantially all of the
property of the Company which is used or useful in
connection with its utility business) is not necessary
for the efficient operation of its remaining property
which is used or useful in connection with its utility
business, and the security hereby afforded will not be
impaired by such release;
(b) either (i) that the Company has sold, exchanged or
otherwise disposed of, or has contracted to sell,
exchange or otherwise dispose of, the property so to be
released for a consideration representing, in the opinion
of the signers, its full value to the Company, which
consideration, in case the property to be released
constitutes all or substantially all of the property at
the time subject to the lien of this Amended and Restated
Mortgage Indenture or all or substantially all of the
property of the Company at the time subject to the lien
of this Amended and Restated Mortgage Indenture which is
used or useful in connection with the utility business of
the Company, shall consist solely of cash, but in other
case hereunder may consist of any one or more of the
following: (x) cash, (y) obligations secure by purchase
money first mortgages upon the Property so to be
released, but in an amount which is not in excess of two-
thirds of the full value to the Company of such property,
and (z) any other property which, upon acquisition
thereof by the Company, would be subject to the lien of
this Amended and Restated Mortgage Indenture, free of any
easements or similar encumbrances except such as do not
materially impair the use of such property for the
purposes for which it was acquired, and subject to no
lien other than Permitted Encumbrances (with the
exclusion hereinafter provided), all of such
consideration to be briefly described in the certificate,
or (ii) that the property so to be released has been or
is to be disposed of without consideration (or for
consideration less than full value to the Company), in
which event such certificate shall state an amount
representing, in the opinion of the signers, its full
value to the Company;
(c) if the consideration includes any property other than
cash or obligations, that such property is property
which, upon acquisition thereof by the Company, would be
subject to the lien of this Amended and Restated Mortgage
Indenture, free of any easements or similar encumbrances
except such as do not materially impair the use of such
property for the purposes for which it was acquired, and
subject to no lien other than Permitted Encumbrances
(excluding therefrom, for purposes of this paragraph,
Permitted Encumbrances of the type described in
subparagraph (k) of paragraph 6 of Article XVII);
(d) that, to the best of the knowledge and belief of the
signers, no default exists on the part of the Company in
the performance of any of the terms or covenants of this
Amended and Restated Mortgage Indenture; and
(e) whether or not the amount at which the property to be
released is at the time carried on the books of the
Company is in excess of Four Hundred Thousand Dollars
($400,000.00).
3. Any money or obligations stated in such certificate to be or to
have been received as consideration for any property so to be
released or, if the property so to be released has been or is
to be disposed of without consideration (or for consideration
less than full value to the Company), money sufficient to meet
any deficiency between the consideration delivered to the
Trustee and the amount stated in such certificate as
representing the full value of the property of the Company (or,
if the property so to be released is subject to a lien prior to
the lien of this Amended and Restated Mortgage Indenture, a
certificate of the Trustee or other holder of such prior lien
that it has received such money or obligations and has been
irrevocably authorized by the Company to pay over to the
Trustee any balance of such money or obligations remaining
after the discharge of such prior lien); and, if any property
other than cash or obligations is included in the consideration
for any property so to be released, such instruments of
conveyance, assignment and transfer, if any, as may be
necessary, in the Opinion of Counsel hereinafter referred to,
to subject to the lien of this Amended and Restated Mortgage
Indenture all the right, title and interest of the Company in
and to such property;
4. An Opinion of Counsel to the effect (a) that any obligations
included in the consideration for any property so to be
released are valid obligations and are effectively pledged
hereunder, (b) that any purchase money mortgage securing the
same is sufficient to afford a first mortgage lien upon the
property to be released, (c) in case the Trustee is requested
to release any franchise, license or permit, that such release
will not impair the then existing right of the Company to
operate any of its remaining property in its utility business,
(d) either (i) that such instruments of conveyance, assignment
and transfer as shall be delivered to the Trustee are
sufficient to subject to the lien of this Amended and Restated
Mortgage Indenture all the right, title and interest of the
Company in and to any property, other than cash or obligations,
which may be included in the consideration for the property so
to be released, subject to no lien other than Permitted
Encumbrances (excluding therefrom, for purposes of this
paragraph, Permitted Encumbrances of the type described
subparagraph (k) of paragraph 6 of Article XVII), or (ii) that
no instruments of conveyance, assignment or transfer are
necessary for such purpose, (e) that the Company has corporate
power to own all property included in the consideration for
such release, and (f) in case any part of the money or
obligations referred to in paragraph 3 of this Section 6.03 has
been deposited with a trustee or other holder of a prior lien,
that such trustee or other holder (specifying the trustee or
other holder and the lien) is entitled to receive the same;
5. Either (a) a certificate constituting evidence of the
authorization, approval or consent of any governmental body or
bodies at the time having jurisdiction in the premises to the
sale, exchange or other disposition of the property so to be
released, the consideration to be received therefor (if any)
and the acquisition of any property constituting any part of
such consideration, together with an Opinion of Counsel that
the same constitutes sufficient evidence thereof and that the
authorization, approval or consent of no other governmental
body is required, or (b) an Opinion of Counsel that no
authorization, approval or consent of any governmental body is
required; and
6. If property so to be released is at the time carried on the
books of the Company in an amount in excess of Five Hundred
Thousand Dollars ($500,000.00), according to the certificate
furnished pursuant to paragraph 2 of this Section 6.03, a
certificate of an engineer (who shall not be in the regular
employ of the Company or any corporation affiliated with the
Company) or firm of engineers (who may be under regular
retainer from the Company or any corporation affiliated with
the Company), selected by the Company and satisfactory to the
Trustee, stating in substance that, in the opinion of the
signer or signers thereof, either (a) the consideration to be
received by the Company for the property so to be released
represents its full value to the Company, and that the sale or
exchange or other disposition of such property for such
consideration will not be prejudicial to the owners of the
bonds then outstanding under this Amended and Restated Mortgage
Indenture, or (b) if the property so to be released has been or
is to be disposed of without consideration (or for
consideration less than full value to the Company), the money
deposited with the Trustee in connection with such release is
at least sufficient to meet any deficiency between the
consideration delivered to the Trustee and the full value of
the property to the Company, and that such disposition will not
be prejudicial to the owners of the bonds then outstanding
under this Amended and Restated Mortgage Indenture.
The requirements and conditions of Section 6.03 shall not apply to
any sale or other disposition of Excluded Real Property.
SECTION 6.04. The Company may sell, exchange or otherwise dispose
of any of its property (in addition to the property referred to in Sections
6.01 and 6.02) at any time subject to the lien hereof, of an aggregate value
not exceeding One Hundred Thousand Dollars ($100,000.00) in any one calendar
year, except cash or obligations required by some other provision hereof to
be deposited with the Trustee hereunder, and the Trustee shall release the
same from the lien hereof upon receipt by it of:
1. A Certified Resolution requesting such release;
2. A Certificate, signed by the Chairman of the Board, the
President or a Vice President of the Company and by an engineer
(who may be in the regular employ of the Company) or firm of
engineers (who may be under regular retainer from the Company)
or, if such property consists of securities, by an appraiser or
other competent person (who may be in the regular employ of the
Company) or firm (who may be under regular retainer from the
Company), in each case selected by the Board of Directors and
satisfactory to the Trustee, stating in substance as follows:
(a) the full value to the Company of the property so to be
released, and that in the opinion of the signers such
release is in the best interests of the Company and the
property to be released is not necessary for the
efficient conduct of its utility business;
(b) that the value to the Company of the property so to be
released, together with the value to the Company of all
property theretofore released by the Trustee pursuant to
the provisions of this Section 6.04 during the calendar
year in which such request is made, does not exceed One
Hundred Thousand Dollars ($100,000.00); and
(c) that, to the best of the knowledge and belief of the
signers, no default exists on the part of the Company in
the performance of any of the terms or covenants of this
Amended and Restated Mortgage Indenture; and
3. Either (a) a certificate constituting evidence of the
authorization, approval or consent of any governmental body or
bodies at the time having jurisdiction in the premises to the
sale, exchange or other disposition of the property so to be
released, together with an Opinion of Counsel that the same
constitutes sufficient evidence thereof and that the
authorization, approval or consent of no other governmental
body is required, or (b) an Opinion of Counsel that no
authorization, approval or consent of any governmental body is
required.
The requirements and conditions of Section 6.04 shall not apply to
any sale or other disposition of Excluded Real Property.
SECTION 6.05. Any new property acquired by the Company by
exchange, purchase or otherwise to take the place of any property released
hereunder (except for Excluded Real Property released pursuant to paragraph
3 of Section 6.02) shall forthwith and without further conveyance become
subject to the lien of and be covered by this Amended and Restated Mortgage
Indenture; but, if requested by the Trustee, the Company shall convey the
same to the Trustee by proper deeds or other instruments upon the trusts
and for the purposes of this Amended and Restated Mortgage Indenture.
SECTION 6.06. (A) In the event that any one or more municipal
corporations or other governmental subdivisions or governmental bodies shall
at any time acquire all or any part of the property of the Company which is
subject to the lien of this Amended and Restated Mortgage Indenture, by the
exercise of the power of eminent domain or by the exercise of a right
reserved to purchase the same, the award or consideration payable therefor
shall be paid to the Trustee, unless the Trustee is furnished an Opinion of
Counsel that the trustee or other holder of some lien prior to the lien of
this Amended and Restated Mortgage Indenture is entitled to receive the
same, and the Trustee may accept such award or consideration, if approved
by the Board of Directors as representing its full value to the Company (or,
without such approval, if the award shall be final and not subject to appeal
or revision) and, if requested by the Company, shall execute and deliver a
release of the property so acquired and shall be fully protected in so doing
upon receipt by the Trustee of:
1. A Certified Resolution requesting such release and, unless the
Opinion of Counsel furnished pursuant to paragraph 3 of this
subdivision (A) shall state that the award is final and not
subject to appeal or revision, approving such award or
consideration' as representing the full value of such property
to the Company;
2. The award or consideration received for such property (or, to
the extent that such award or consideration constitutes an
award or consideration for property subject to a lien prior to
the lien of this Amended and Restated Mortgage Indenture, a
certificate of the trustee or other holder of such prior lien
that it has received such award or consideration and has been
irrevocably authorized by the Company to pay over to the
Trustee any balance of such award or consideration remaining
after the discharge of such prior lien); and
3. An Opinion of Counsel to the effect (a) that such property has
been duly and lawfully acquired by one or more municipal
corporations or other governmental subdivisions or governmental
bodies, by the exercise of the power of eminent domain or by
the exercise of a right reserved to purchase the same, (b) if
any part of the award or consideration received for such
property has been deposited with a trustee or other holder of
a prior lien, that such trustee or other holder (specifying the
trustee or other holder and the lien) is entitled to receive
the same, and (c) unless the resolution furnished pursuant to
paragraph 1 of this subdivision (A) shall approve such award or
consideration as representing the full value of such property
to the Company, that the award is final and not subject to
appeal or revision.
In any such proceeding, the Trustee may be represented by counsel,
who may be of counsel to the Company.
(B) In the event that either (a) all or substantially all of the
property of the Company at the time subject to the lien of this Amended and
Restated Mortgage Indenture or (b) all or substantially all of the property
of the Company at the time subject to the lien of this Amended and Restated
Mortgage Indenture which is used or useful in connection with the utility
business of the Company shall be released from the lien of this Amended and
Restated Mortgage Indenture under the provisions of subdivision (A) of this
Section 6.06 or the provisions of Section 6.03, then the award or
consideration received by the Trustee for such property so released,
together with any other moneys held by the Trustee under this Amended and
Restated Mortgage Indenture, including the proceeds of any sales of
obligations by the Trustee pursuant to Section 7.01 (such award or
consideration and other moneys being hereinafter referred to collectively
as "available moneys"), shall be applied by the Trustee to the redemption
in full of all bonds then outstanding at the price and on the conditions
specifically applicable to each particular series of bonds, any moneys held
for account of any particular bonds being applied to the redemption (or
payment, if matured) of such bonds to the extent that such bonds are
redeemable at such time by their terms, in accordance with the applicable
provisions of Article IV of this Amended and Restated Mortgage Indenture.
If such available moneys shall not be sufficient for such redemption in
full, the Company shall deposit with the Trustee on or before the date fixed
for redemption an amount of cash sufficient to enable the Trustee to pay the
full redemption prices of the bonds at the rate or rates applicable,
together with interest accrued to such date and all expenses in connection
with such redemption.
In case any redemption of all bonds outstanding hereunder is to be
made under the provisions of this subdivision (B), the same shall be done
in accordance with the applicable provisions of this Amended and Restated
Mortgaged Indenture and any indenture supplemental hereto, except that any
notice that such bonds are to be redeemed may state that such notice and
such redemption are conditional upon the actual receipt of the award or
consideration in question on or prior to the redemption date. In any such
case, if the award or consideration shall be received on or prior to such
date the bonds shall be payable, on such date, at their respective
applicable redemption prices together with interest accrued thereon to such
date.
If such notice shall not previously have been given, the Trustee,
within ten (10) days after its receipt of the award or consideration, shall
give notice, in the name and at the expense of the Company and on its
behalf, of the call of such bonds for redemption on a date not later than
thirty (30) days after such receipt, in the manner and with the effect
specified in Article IV of this Amended and Restated Mortgage Indenture and
in any indenture supplemental hereto.
If the available moneys shall not be sufficient for the payment of
the applicable redemption prices of all bonds then outstanding, together
with accrued interest to the redemption date and all expenses in connection
with such redemption, and the Company shall default in its obligation to
pay the balance to the Trustee, then such moneys (together with any moneys
thereafter received) shall be applied by the Trustee to the partial payment
of all bonds then outstanding, pro rata in proportion to the respective
amounts then due and owing thereon for principal, premium (if any) and
interest, but, until the full amount then due and owing on the bonds shall
have been paid, no such partial payment shall discharge the obligation of
the Company on any bonds except to the extent of such partial payment. All
amounts so to be paid on the bonds shall be paid over by the Trustee to the
registered owners of the bonds upon presentation of the bonds at the office
of the Trustee for stamping thereon of a notation as to the amount so paid
thereon or for otherwise providing with respect to such payment in any
manner satisfactory to the Company and the Trustee.
In the event of any such partial pro rata payment, notice thereof
shall be given once by the Trustee, in the manner provided in Article IV of
this Amended and Restated Mortgage Indenture with respect to the redemption
of bonds, within one week after the date for which the bonds were called
for redemption, and from and after a date to be specified in such notice
(to be not earlier than the date upon which such notice is given nor later
than ten (10) days after such redemption date) interest shall cease to
accrue on the obligation of the Company on the bonds so called for
redemption, to the extent of the partial payment so provided. Subsequently,
if any additional moneys applicable to an additional partial payment of the
entire balance then due on the bonds shall be received by the Trustee, the
Trustee shall, with reasonable promptness, give like notice of any such
payment (specifying a date within ten days after the date of such notice)
with like effect.
Before making any payment on any bonds pursuant to the provisions of
this subdivision (B), the Trustee may apply any moneys in its hands to the
payment of taxes and assessments and of the reasonable compensation and
expenses of the Trustee, its agents, attorneys and counsel, and of all other
sums payable or by the Trustee under any provision of this Amended and
Restated Mortgage Indenture.
SECTION 6.07. In no event shall any purchaser in good faith of
any property which the Trustee has purported to release hereunder be bound
to ascertain the authority of the Trustee to execute the release, or to
inquire as to any facts required by the provisions hereof for the exercise
of such authority, or to see to the application of the purchase money; nor
shall any purchaser of machinery or equipment or other similar property
be under obligation to ascertain or inquire into the occurrence of the event
on which any such sale is hereby authorized.
SECTION 6.08. Notwithstanding that any one or more of the Events
of Default specified in Section 8.01 shall have happened and be continuing,
in case the trust estate or any part thereof shall be in the possession of
a receiver of the Company or of the mortgaged property or a trustee in
bankruptcy or on reorganization proceedings (including reorganization
proceedings under any Federal bankruptcy law or similar statutory
provisions), lawfully appointed, or of an assignee for the benefit of
creditors, the powers in and by this Article VI conferred upon the Company
may, with the consent of the Trustee, be exercised by such receiver, trustee
or assignee with respect to such part of the trust estate as may then be in
his or its possession and, if the Trustee shall be in the possession of the
trust estate or any part thereof under any provision of this Amended and
Restated Mortgage Indenture, then all the powers by this Article VI
conferred upon the Company may be exercised by the Trustee in its discretion
with respect to such part of the trust estate as may then be in its
possession. A written request signed by such receiver, trustee or assignee
shall be deemed the equivalent of any resolution of the Board of Directors
required by the provisions of this Article VI, and any certificate required
by such provisions to be signed by any officer of the Company may be signed
by such receiver, trustee or assignee instead of such officer.
Notwithstanding that any one or more of the Events of Default
specified in Section 8.01 shall have happened and be continuing, the
Company, so long as it shall be in possession of the trust estate, may with
the consent of the Trustee, which consent may be given by the Trustee in its
discretion and shall be given upon the written request of the registered
owners of a majority in principal amount of the bonds then outstanding,
exercise any of the powers in and by this Article VI conferred upon it.
In the case of any release made pursuant to the provisions of this
Section 6.08, it shall not be necessary to include in any certificate filed
with the Trustee in connection therewith a statement that, to best of the
knowledge and belief of the signers, no default exists on the part of the
Company in the performance of any of the terms or covenants of this Amended
and Restated Mortgage Indenture.
SECTION 6.09. Whenever the Company shall be required to deposit
with the Trustee any money or obligations under Section 6.03 or any award
or consideration under subdivision (A) of Section 6.06, the amount of such
deposit may be reduced by the amount of taxes and expenses in connection
with the sale, exchange or other disposition of the property to be released
from the lien of the Amended and Restated Mortgage Indenture, and by the
amount of taxes and expenses in connection with the sale or other
disposition of obligations or other property received by the Company as part
of the consideration or award for the property to be so released, upon
receipt by the Trustee of a certificate, signed by the Treasurer or an
Assistant Treasurer of the Company, setting forth the amount of all such
taxes and expenses. In the event that such taxes and expenses shall not at
the time have been fully determined, such certificate shall set forth the
estimated amount thereof, which shall be labeled as "estimated taxes and
expenses."
In the event that a reduction in the amount of any deposit with the
Trustee shall be made, as provided above, on the basis of estimated taxes
and expenses, the Company shall, when such taxes and expenses have been
fully determined, furnish the Trustee with a further certificate, signed by
the Treasurer or an Assistant Treasurer of the Company, setting forth the
amount of such taxes and expenses. If the amount of such taxes and expenses
exceeds the estimated amount thereof (as set forth in the certificate
previously furnished to the Trustee), the Trustee shall, upon the written
order of the Treasurer or an Assistant Treasurer of the Company, pay to the
Company an amount equal to such excess, to the extent that moneys or
obligations then held as part of the trust estate are sufficient therefor.
If the amount of such taxes and expenses is less than the estimated amount
thereof (as set forth in the certificate previously furnished the Trustee)
the Company shall thereupon deposit with the Trustee an amount equal to such
deficiency.
SECTION 6.10. The resolutions, certificates, opinions, statements
and other instruments provided for in this Article VI may be accepted by
the Trustee as conclusive evidence of the facts and conclusions stated
therein and shall be full warrant, protection and authority to the Trustee
for making any release pursuant to this Article VI; but before making any
release the Trustee may, and upon the written request of the registered
owners of not less than twenty-five percent (25%) in principal amount of
the bonds then outstanding hereunder and upon being furnished with
reasonable security and indemnity shall, cause to be made such independent
investigation as it may see fit and, in that event, may decline to make such
release unless satisfied by such investigation of the truth and accuracy of
the matters so investigated. The expense of any such investigation shall
be paid by the Company or, if paid by the Trustee, shall be repaid by the
Company upon demand, with interest at the Base Rate.
ARTICLE VII.
Concerning Obligations and Application of Moneys Received
by the Trustee
SECTION 7.01. All obligations received by the Trustee under the
provisions of Section 6.03, unless released pursuant to the provisions of
Section 6.03, shall be held by the Trustee as part of the trust estate and
collected by it, and the Trustee shall have the right to enforce the payment
thereof and each and every provision thereof by proceedings at law or in
equity, but it shall be under no liability or accountability whatever for
failure to collect the same or to enforce the payment thereof. Interest as
received thereon shall be paid over to the Company, provided the Company is
not then in default hereunder to the knowledge of the Trustee. All such
obligations held by the Trustee may be released pursuant to the provisions
of Section 6.03. In the event that the bonds outstanding shall become
redeemable under the provisions of subdivision (B) of Section 6.06 and the
moneys available in the hands of the Trustee for such redemption shall not
be sufficient to effect such redemption in full as provided in such
subdivision(B), the Trustee shall endeavor to sell, in such manner, upon
such terms, at such times and at such prices as in its discretion it may
determine, such amount of any obligations held by it under this Amended and
Restated Mortgage Indenture as may be necessary to provide funds for or
toward such redemption in full.
SECTION 7.02. (A) Unless and until one or more of the Events of
Default specified in Section 8.01 shall happen and be continuing, any moneys
received by the Trustee (a) on account of the principal of any obligation
received under the provisions of Section 6.03, (b) as proceeds of released
property (except for Excluded Real Property released pursuant to paragraph
3 of Section 6.02 the proceeds from the sale of which need not be deposited
with the Trustee) or of property taken by the power of eminent domain or
otherwise acquired by any municipal corporation or other governmental
subdivision or governmental body, (c) as proceeds of any insurance, or (d)
upon the satisfaction, discharge or other release of any mortgage or other
lien prior to the lien of this Amended and Restated Mortgage Indenture,
shall be held by the Trustee as a part of the security for the bonds issued
and outstanding hereunder and, subject to the provisions of subdivision (B)
of Section 6.06, shall be paid over from time to time by the Trustee to or
upon the written order of the Treasurer or an Assistant Treasurer of the
Company:
1. To reimburse the Company for expenditures made for the
replacement, improvement, restoration or repair of property
destroyed or damaged (to the extent that insurance moneys
arising from such loss or damage are in the hands of the
Trustee), upon receipt by the Trustee of a certificate, signed
by the Chairman of the Board, the President or a Vice President
and by the Treasurer or an Assistant Treasurer of the Company,
describing in reasonable detail such replacement, improvement,
restoration or repair and stating the amount expended therefor
and that such amount is reasonable in the opinion of the
signers; or
2. In an amount up to the excess of sixty-five percent (65%) of
the Total Capitalization of the Company over the aggregate
principal amount of all outstanding Long Term Debt of the
Company, upon receipt by the Trustee of a written order of the
Company and a Capitalization Certificate prepared and computed
in accordance with paragraph 1 of Section 2.04, except that, in
place of the statement there prescribed for subparagraph (i),
the Capitalization Certificate delivered pursuant to this
Section 7.02 shall state the amount to be paid over to the
Company pursuant hereto and that such amount is not more than
the excess of sixty-five percent (65%) of the Total
Capitalization of the Company over the aggregate principal
amount of all outstanding Long Term Debt of the Company.
(B) Notwithstanding that any one or more of the Events of Default
specified in Section 8.01 shall have happened and be continuing, in case
the trust estate or any part thereof shall be in the possession of a
receiver of the Company or of the mortgaged property or of a trustee in
bankruptcy or in reorganization proceedings (including reorganization
proceedings under any Federal bankruptcy law or similar statutory
provisions) lawfully appointed, or of an assignee for the benefit of
creditors, the powers conferred upon the Company by subdivision (A) of this
Section 7.02 may, with the consent of the Trustee, be exercised by such
receiver, trustee or assignee with respect to such part of the trust estate
as may then be in his or its possession; and, if the Trustee shall be in
possession of the trust estate or any part thereof under any provision of
this Amended and Restated Mortgage Indenture, then the powers conferred upon
the Company by subdivision (A) of this Section 7.02 may be exercised by the
Trustee, in its discretion, with respect to such part of the trust estate
as may then be in its possession. Any certificate required by the
provisions of such subdivision (A) to be signed by any officer of the
Company may be signed by such receiver, trustee or assignee instead of such
officer.
Notwithstanding that any one or more of the Events of Default
specified in Section 8.01 shall have happened and be continuing, the
Company, so long as it shall be in possession of the trust estate, may with
the consent of the Trustee exercise the powers conferred upon it by
subdivision (A) of this Section 7.02.
The consent of the Trustee to the exercise, pursuant to this
subdivision (B), by any receiver, trustee or assignee or by the Company of
the powers conferred upon the Company by subdivision (A) of this Section
7.02 may be given by the Trustee in its discretion and shall be given upon
the written request of the registered owners of a majority in principal
amount of the bonds then outstanding hereunder.
In the case of any exercise, pursuant to this subdivision (B), of the
powers conferred upon the Company by subdivision (A) of this Section 7.02,
it shall not be necessary to include in any certificate filed with the
Trustee in connection therewith a statement that, to the best of the
knowledge and belief of the signers, no default exists on the part of the
Company in the performance of any of the terms or covenants of this Amended
and Restated Mortgage Indenture.
(C) The certificates, instruments and opinions provided for in this
Section 7.02 may be accepted by the Trustee as conclusive evidence of the
facts and conclusions stated therein and shall be full warrant, protection
and authority to the Trustee for the payment of any moneys as requested
therein; but before making any such payment the Trustee may, in its
discretion, and upon the written request of the registered owners of not
less than Twenty-Five percent (25%) in principal amount of the bonds then
outstanding hereunder and upon being furnished with reasonable security and
indemnity shall, cause to be made such independent investigation as it may
see fit and, in that event, may decline to make such payment unless
satisfied by such investigation as to the truth and accuracy of the matters
so investigated. The expense of any such investigation shall be paid by
the Company or, if paid by the Trustee, shall be repaid by the Company upon
demand with interest at the Base Rate.
SECTION 7.03. All or any part of any moneys received by the
Trustee as specified in subdivision (A) of Section 7.02 and not theretofore
paid over or requested to be paid over to the Company pursuant to Section
7.02 or applied or required to be applied pursuant to the provisions of
subdivision (B) of Section 6.06, and all or any part of any moneys deposited
with the Trustee under the provisions of Section 2.05 and not theretofore
applied as therein authorized, shall, at the election and in accordance with
the request of the Company, be applied by the Trustee from time to time to
the purchase or to the redemption (at the price and on the conditions
specifically applicable to each particular series of bonds), if redeemable
at such time by their terms, in accordance with the applicable provisions
of Article IV of this Amended and Restated Mortgage Indenture, of bonds
issued hereunder, of such series as may be specified in such request, upon
receipt by the Trustee of (a) a Certified Resolution evidencing such
request, and (b) a certificate signed by the Chairman of the Board, the
President or a Vice President and by the Treasurer or an Assistant Treasurer
of the Company stating that, to the best of the knowledge and belief of the
signers, no default exists on the part of the Company in the performance of
any of the terms or covenants of this Amended and Restated Mortgage
Indenture.
Any such redemption shall be effected in accordance with the
applicable provisions of Article IV of this Amended and Restated Mortgage
Indenture and of any indenture supplemental hereto.
Before making any purchase of bonds of any series pursuant to the
provisions of this Section 7.03, the Trustee may, and if requested by the
Company to do so shall, by notice published once in each of two successive
calendar weeks, on any day of each such week, in one daily newspaper printed
in the English language and of general circulation in Ansonia, Connecticut,
advertise for written proposals to sell to it the bonds which the Company
has requested to be purchased; and the Trustee, to the extent of the funds
then in its hands and requested by the Company to be so applied, shall
purchase the bonds so offered at the lowest price or prices asked therefor,
except as hereinafter provided. If requested by the Company to do so, the
Trustee may also, in its discretion, make such purchases in the open market
or at private sale or upon any securities exchange as it may determine. The
Company may tender bonds to the Trustee, and the Trustee may purchase such
bonds from the Company. Should there be two or more proposals at the same
price aggregating more than the amount which the Trustee has available for
the purchase of bonds after having accepted all proposals at lower prices,
such proposals shall, if possible under their terms, be accepted pro rata(
as nearly as may be; provided, however, that no proposal shall be accepted
and no purchase made by the Trustee at a price in excess of the maximum
price specified by the Company in its request to the Trustee, which maximum
shall not exceed the redemption price then in effect for bonds of such
series or, if the Company shall not have specified any such annual price,
in excess of such redemption price or, if there be no such redemption price
then in effect, in excess of the principal amount thereat, in each case with
accrued interest to the date of delivery, which date shall not be more than
five (5) days after the date of the agreement of the Trustee to purchase
unless the written consent of the Company to a later date shall have been
given; and provided further that the Trustee may, in its discretion,
reject any or all proposals in whole or in part if, in its opinion, such
action is justified.
In every case of the purchase of bonds pursuant to the provisions of
this Section 7.03, the Trustee shall forthwith cancel the purchased bonds
and, on' the written request of the Company, deliver the same to the
Company.
All interest accrued up to but not including the date of delivery or
redemption, as the case may be, of all bonds to be purchased or redeemed by
the Trustee under the provisions of this Section 7.03, together with (a)
the amount (if any) by which the aggregate purchase price to be paid by the
Trustee exceeds the aggregate principal amount of the bonds to be purchased,
and (b) the premiums (if any) payable upon redemption, shall be paid by the
Company as an additional payment to the Trustee prior to the date of
delivery or redemption, as the case may be, and the cost of all advertising
and publishing shall be paid by the Company or, if paid by the Trustee,
shall forthwith be repaid to it by the Company upon demand, with interest
at the Base Rate.
SECTION 7.04. Unless and until one or more of the Events of
Default specified in Section 8.01 shall happen and be continuing, all or
any part of the moneys received by the Trustee as specified in subdivision
(A) of Section 7.02 and not theretofore paid over or requested to be paid
over to the Company pursuant to Section 7.02 or applied or required to be
applied pursuant to the provisions of subdivision (B) of Section 6.06 or of
Section 7.03, and all or any part of any moneys deposited with the Trustee
under the provisions of Section 2.05 and not theretofore applied by the
Company or requested by it to be applied as therein authorized, in each case
within three years after the receipt of such moneys by the Trustee shall,
to the extent practicable, be applied by the Trustee at the expiration of
such three-year period, without any further action on the part of the
Company, to the purchase of bonds of any series in accordance with the
provisions of Section 7.03 and, to the extent that bonds are not so
purchased within six (6) months after the expiration of such three-year
period, shall, but only if the moneys then available for the purpose shall
be at least Ten Thousand Dollars ($10,000.00), forthwith be applied by the
Trustee, to the extent practicable, pro rata on the basis of the respective
principal amounts of bonds of all such series then outstanding, to the
redemption, on a pro rata basis, of bonds of each series then outstanding
hereunder at the price and on the conditions specifically applicable to each
particular series of bonds but only to the extent that such bonds are
redeemable at such time by their terms, in accordance with the applicable
provisions of Article IV of this Amended and Restated Mortgage Indenture
and of any indenture supplemental hereto; and the Company hereby irrevocably
authorizes the Trustee, in the name of and at the expense of the Company and
on its behalf, to give notice of the call of such bonds for redemption, in
the manner and with the effect specified in Article IV of this Amended and
Restated Mortgage Indenture and in such supplemental indentures; provided,
however, that neither the Company nor the Trustee shall be required to make
any such purchase or redemption unless furnished with an Opinion of Counsel
that all authorizations, approvals or consents of any governmental body or
bodies at the time having jurisdiction in the premises to such purchase or
redemption have been obtained or that no authorization, approval or consent
of any governmental body is required; and provided further that the Trustee
shall not be required to take any such action or give any such notice unless
(a) the Company shall have theretofore indemnified it against any and all
costs and expenses in connection therewith, and (b)there shall be paid to
the Trustee an amount equal to all interest accrued up to but not including
the date of delivery or redemption, as the case may be, on all bonds so to
be purchased or redeemed under the provisions of this Section 7.04, together
with the premiums (if any) payable upon redemption. The Company covenants
and agrees that, upon receipt of notice from the Trustee of any such
proposed purchase or redemption, it will make timely application for the
authorization, approval or consent of any governmental body or bodies at
the time having jurisdiction in the premises which may be required, and will
do all other things necessary on its part to be done to effect any such
purchase or redemption.
SECTION 7.05. All or any part of any moneys held by the Trustee
hereunder (except such as may be held for account of any particular bonds)
shall from time to time at the written request of the Company, signed by
the Treasurer or an Assistant Treasurer of the Company, be invested or
reinvested by the Trustee in any bonds or other obligations of the United
States of America designated by the Company, which as to principal and
interest constitute direct obligations of the United States of America and
will mature or become payable at the election of the holder within one year
of acquisition by the Trustee, or in such commercial paper or other
obligations as may be agreed upon by the Company and the Trustee or, with
respect to not more than twenty percent (20%) of such moneys, in shares of
a money market fund registered under the Investment Company Act of 1940,
the sole assets of which are such obligations of the United States of
America. Until one or more of the Events of Default specified in Section
8.01 shall happen and be continuing, any interest or increment on such
investments (in excess of any accrued interest paid at the time of purchase)
which may be received by the Trustee shall be forthwith paid to the Company.
Such investments shall be held by the Trustee as a part of the trust estate,
subject to the same provisions hereof as the cash used by it to purchase
such investments; but upon a like request of the Company, the Trustee shall
sell all or any designated part of the same and the proceeds of such sale
shall be held by the Trustee subject to the same provisions hereof as the
cash used by it to purchase the investments so sold. If under the
provisions of Section 7.04 any moneys held by the Trustee and so invested
or reinvested shall be required to be applied to the redemption of bonds,
the Trustee shall forthwith sell such investments in an amount equivalent
to such moneys. In case the net proceeds (exclusive of interest) realized
upon any such sale shall amount to less than the amount invested by the
Trustee in the purchase of the investments so sold (after appropriate
adjustment on account of any accrued interest paid at the time of purchase),
the Trustee shall within five (5) days after such sale notify the Company
in writing thereof and within five (5) days thereafter the Company shall pay
to the Trustee the amount of the difference between such purchase price and
the amount so realized, and the amount so paid shall be held by the Trustee
in like manner and subject to the same conditions as the proceeds realized
upon such sale.
Whenever application is made by the Company under any provision of
this Amended and Restated Mortgage Indenture to withdraw all or any part of
moneys deposited or held by the Trustee, the Company shall accept
investments held by the Trustee as a part of the trust estate pursuant to
this Section 7.05 to the extent that such investments shall be tendered to
it by the Trustee in lieu of cash; and such investments shall be accepted
in lieu of such cash at the net cost thereof (exclusive of accrued interest)
to the trust estate.
In the event that the bonds outstanding hereunder shall become
redeemable under the provisions of subdivision (B) of Section 6.06 and the
moneys available in the hands of the Trustee for such redemption shall not
be sufficient to effect such redemption in full as provided in such
subdivision (B), the Trustee shall endeavor to sell, in such manner, upon
such terms, at such times and at such prices as in its discretion it may
determine, such amount of any investments held by it under this Section 7.05
as may be necessary to provide funds for or toward such redemption in full.
The Trustee shall not be liable or responsible for any loss resulting
from any investment or reinvestment pursuant to this Section 7.05.
ARTICLE VIII.
Remedies Upon Default
SECTION 8.01. In case one or more of the following events, herein
called "Events of Default", shall occur, that is to say:
(a) default shall be made in the payment of the principal of or any
premium which may be due and payable on any bond hereby
secured, when the same shall become payable, whether at
maturity, upon redemption, by declaration, acceleration or
otherwise; or
(b) default shall be made in the payment of any interest on any
bond hereby secured, when the same shall become payable, and
such default shall continue for ten (10) days, or default shall
be made in any payment required to be made to any sinking,
amortization, purchase or other analogous fund for the benefit
of any bond hereby secured, when the same shall become payable,
and such default shall continue for ten (10) days; or
(c) default shall be made by the Company in the observance or
performance of any of the other covenants, agreements or
conditions on its part in this Amended and Restated Mortgage
Indenture or in any supplemental indenture contained for the
benefit of all of the registered owners of bonds outstanding
and such default shall continue for sixty (60) days after
written notice to the Company by the Trustee electing to treat
such event as an Event of Default, which notice may be given by
the Trustee in its discretion, and shall be given at the
written request of the registered owners of not less than ten
percent (10%) in principal amount of the bonds then
outstanding; or
(d) the Company shall be adjudicated a bankrupt, or shall institute
proceedings for voluntary bankruptcy, or shall make an
assignment for the benefit of its creditors; or
(e) the Company shall admit in writing its inability to pay its
debts generally as they mature, or shall institute proceedings
for reorganization under any Federal bankruptcy law or other
similar law, and the Trustee shall give written notice to the
Company electing to treat such event as an Event of Default,
which notice may be given by the Trustee, in its discretion,
and shall be given at the written request of the registered
owners of not less than ten percent (10%) in principal amount
of the bonds hereby secured and then outstanding; or
(f) a receiver of the Company, or of the mortgaged property as, or
substantially as, an entirety, shall be appointed, or a decree
or order shall be entered equivalent to a determination that
proceedings for the reorganization of the Company have been
properly instituted, otherwise than by the Company, under any
Federal bankruptcy law or other similar law, and such
appointment, decree or order shall not be vacated within sixty
(60) days after written notice to the Company by the Trustee
electing to treat such event as an Event of Default, which
notice may be given by the Trustee in its discretion, and shall
be given at the written request of the registered owners of not
less than ten percent (10%) in principal amount of the bonds
hereby secured and then outstanding; or
(g) default shall be made by the Company in the observance or
performance of any Exclusive Benefit Covenant (other than a
default in the observance or performance of any covenant
requiring payment to any sinking, amortization, purchase or
other analogous fund, which shall continue to be governed by
paragraph (b) of this Section 8.01) and such default shall
continue for a designated number of days (which, unless
otherwise provided in Article V of this Amended and Restated
Mortgage Indenture or in the supplemental indenture
establishing an Exclusive Benefit Covenant, shall be sixty (60)
days) after written notice to the Company by the Trustee
electing to treat such event as an Event of Default, which
notice shall only be given by the Trustee at the written
request of the registered owners of not less than a designated
percentage (which, unless otherwise provided in Article V of
this Amended and Restated Mortgage Indenture or in the
supplemental indenture establishing the Exclusive Benefit
Covenant, shall be ten percent (10%) in principal amount of the
bonds then outstanding) of the series of bonds for the
protection or benefit of which such Exclusive Benefit Covenant
is made;
then and in every such case the Trustee, by notice in writing given to the
Company, may, and upon the written request of the registered owners of not
less than twenty-five percent (25~) in principal amount of the bonds then
outstanding shall, declare the principal amount of all bonds then
outstanding and the interest accrued thereon immediately due and payable,
and such principal and interest shall thereupon become and be immediately
due and payable; subject, however, to the right of the registered owners of
~ majority in principal amount of the bonds then outstanding (or, if such
Event of Default is a default in the payment of any principal of or premium
or interest on the bonds of any particular series, then of the registered
owners of a majority in principal amount of the bonds of such series then
outstanding), by written notice to the Company and the Trustee, to annul
such declaration and destroy its effects and to waive any such default
hereunder at any time before any sale under the power of sale hereby given
or, if proceedings to foreclose this Amended and Restated Mortgage Indenture
are instituted, before any final decree is entered in such proceedings, if,
before any such sale, or before the entry of any such final decree, as the
case may be, all agreements with respect to which default shall have been
made shall be fully performed and the principal of and any premium which at
the time may be payable on any bonds which have theretofore been called for
redemption or which have matured in due course by their terms, all arrears
of interest upon all bonds then outstanding (including interest on overdue
premiums that may be payable upon bonds theretofore called for redemption
and, if and to the extent permitted by law, on all overdue installments of
interest -- in each case at the respective rates of interest payable upon
the principal of the bonds outstanding), the reasonable charges and expenses
of the Trustee, its agents, attorneys and counsel, and all other
indebtedness secured hereby, except the principal of bonds the date of
maturity of which has not yet arrived and interest accrued since the last
interest payment date, shall be paid, or the amount thereof shall be paid
to the Trustee for the benefit of the persons entitled thereto.
Notwithstanding the foregoing, if the Company (i) shall breach any
representation or warranty or default in the observance or performance of
any covenant, agreement or condition contained in this Amended and Restated
Mortgage Indenture (other than a covenant to make any payment referred to
in clause (ii), (iii) or (iv) of this sentence), in the bonds of a
particular series,. or in the agreement to purchase the bonds of a
particular series between the Company and the original holder or holders of
such bonds, and such breach or default continues for sixty (60) days after
written notice shall have been given to the Company by the Trustee (or to
the Company and the Trustee by the registered holder or holders of at least
twenty-five percent (25%) in principal amount of the bonds of such
particular series at the time outstanding), (ii) shall default in the
payment of the principal of or any premium which may be due and payable on
any bonds of a particular series, when the same shall become payable,
whether at maturity, upon redemption, by declaration, acceleration or
otherwise, (iii) shall default in the payment of any interest on any bond
secured hereby of a particular series, when the same shall become due and
payable, and such default shall continue for ten (10) days, (iv) shall
default in the payment to any sinking, amortization, purchase or other
analogous fund for the benefit of any bonds secured hereby of a particular
series, when the same shall become due and payable, or (v) shall default in
the observance or performance of any Exclusive Benefit Covenant and in each
case such default shall continue for ten (10) days; then the Trustee, by
notice in writing given to the Company, or the holders of not less than a
majority in principal amount of bonds of such particular series then
outstanding, by notice in writing delivered to the Company and the Trustee,
may declare the principal amount of all such bonds of a particular series
then outstanding and the interest accrued thereon immediately due and
payable, and such principal and interest shall thereupon become and be
immediately due and payable. The exercise of the right set forth in the
immediately preceding sentence shall not, except as may otherwise be
required by law, affect any other rights or remedies which the Trustee or
any bondholder may have as a result of any breach or default referred to in
such sentence or upon the occurrence of any Event of Default.
SECTION 8.02. The Company agrees, to the extent that it may
lawfully so agree, that if one or more of the Events of Default specified
in Section 8.01 shall occur and be continuing, the Company, upon demand of
the Trustee, shall forthwith surrender to the Trustee the actual possession
and, to the extent permitted by law, the Trustee, by such officers or agents
as it may appoint, may enter and take possession, of all the mortgaged
property, together with all property which by the terms of this Amended and
Restated Mortgage Indenture (or of any indenture supplemental hereto) the
Trustee is permitted to take possession of, use and administer upon entering
upon and taking possession of the mortgaged property (with the books, papers
and accounts of the Company), and may exclude the Company, its agents and
servants wholly therefrom and may hold, operate and manage the same and from
time to time make all needful repairs and such alterations, additions,
advances and improvements as to it shall seem wise, and may receive the
rents, income, issues and profits thereof, and out of the same may pay all
proper costs and expenses of so taking, holding and managing the same,
including reasonable compensation to the Trustee, its agents, attorneys and
counsel, and any charges of the Trustee hereunder, and any taxes and
assessments and other charges prior to the lien of this Amended and Restated
Mortgage Indenture which the Trustee may deem it wise to pay, and all
expenses of such repairs, alterations, additions and improvements, and may
apply the remainder of the moneys so received by it as follows:
(a) In case the principal of none of the bonds then outstanding
shall have become due, to the payment of the interest in
default, in the order of the maturity of the installments of
such interest, with interest, if and to the extent permitted by
law, on all overdue installments of interest at the respective
rates of interest payable upon the principal of the bonds
outstanding; such payments to be made ratably to the persons
entitled thereto, without discrimination or preference; or
(b) In case the principal of any of the bonds then outstanding
shall have become due, by declaration or otherwise, first to
the payment of the interest in default, in the order of the
maturity of the installments of such interest, with interest on
all overdue principal and, if and to the extent permitted by
law, on all overdue installments of interest at the respective
rates of interest payable upon the principal of the bonds
outstanding; and thereafter to the payment of the principal of
all bonds then due; and thereafter to the payment of any
premiums that may be due and payable upon bonds theretofore
called for redemption; and thereafter to the payment of
interest on any overdue premium at the respective rates of
interest payable upon the principal of the bonds as to which
such premium is due; such payments, respectively, to be made
ratably to the persons entitled thereto, without discrimination
or preference.
Whenever the full amount that is due upon such interest installments
and upon the principal of, premium on, and interest on premium on such
bonds, and under any of the terms of this Amended and Restated Mortgage
Indenture, shall have been paid and all defaults made good, the Trustee
shall surrender possession to the Company, its successors or assigns. The
same right of entry, however, shall exist in the event any subsequent
default shall occur and be continuing.
SECTION 8.03. If one or more of the Event of Default specified in
Section 8.01 hereof shall occur and be continuing, the Trustee may, if and
to the extent and in the manner permitted by law, and upon obtaining such
authorization, approval or consent of any governmental body or bodies at
the time having jurisdiction in the premises as may at the time be required,
by such officers or agents as it may appoint, with or without entry, sell
the mortgaged property, together with all property which by the terms of
this Amended and Restated Mortgage Indenture (or any indenture supplemental
hereto) the Trustee is permitted to take possession of, use and administer
upon entering upon and taking possession of the mortgaged property, as an
entirety or, if permitted by law, in such parcels as registered owners of
a majority in principal amount of the bonds then outstanding shall in
writing request or, in the absence of such request, as the Trustee may
determine, at public auction at some convenient place in the county or
counties where the mortgaged property is located, or in Ansonia,
Connecticut, as the Trustee shall elect, or in such other place or places
as may be required by law, having first given notice of such sale by
publication in at least one newspaper printed in the English language and
of general circulation in the place or places where such sale is to take
place, at least once a week for four successive calendar weeks, on any day
of each such week, next preceding such sale, and any other or further or
additional notice which may be required by law, and from time to time may
adjourn such sale in its discretion by announcement at the time and place
appointed for such sale or for such adjourned sale or sales without further
notice except such as may be required by law, and upon such sale may make
and deliver to the purchaser or purchasers a good and sufficient deed or
deeds for the same, which sale, as likewise any sale made under this Amended
and Restated Mortgage Indenture by virtue of any judicial proceedings shall,
to the extent permitted by law, be a perpetual bar both in law and in equity
against the Company and all persons and corporations lawfully claiming or
to claim by, or through or under it. The Trustee and its successors are
further hereby irrevocably appointed the true and lawful attorneys of the
Company, in its name and stead, for the purpose of effectuating any such 5
e to execute and deliver all necessary deeds, bills of sale, assignments and
transfers, and to substitute one or more persons or corporations with like
power, the Company hereby ratifying and confirming all that its attorneys,
or such substitute or substitutes, shall lawfully do by virtue hereof.
Nevertheless, if so requested by the Trustee or by any purchaser, the
Company shall ratify and confirm any such sale or transfer by executing and
delivering to the Trustee or to such purchaser or purchasers all proper
conveyances, assignments, instruments of transfer and releases as may be
designated in any such request.
SECTION 8.04. If one or more of the Events of Default specified
in Section 8.01 shall occur and be continuing, the Trustee may, either after
entry as provided above or other entry or without entry, proceed by suit or
suits at law or in equity or by any other appropriate remedy to enforce
payment of the bonds hereby secured and to foreclose this Amended and
Restated Mortgage Indenture and to sell, as an entirety or, if permitted by
law, in separate parcels, the mortgaged property, together with all
property which by the terms of this Amended and Restated Mortgage Indenture
(or any indenture supplemental hereto) the Trustee is permitted to take
possession of, use and administer upon entering upon and taking possession
of the mortgaged property, under the judgment or decree of a court or courts
of competent jurisdiction, and it shall be obligatory upon the Trustee to
take action either by such proceedings or by the exercise of its powers with
respect to entry or sale as the Trustee may determine, upon being requested
in writing so to do by the registered owners of not less than twenty-five
percent (25%) in principal amount of the bonds then outstanding, and upon
being indemnified as hereinafter provided in Section 12.01.
No owner or owners of bonds shall be entitled to take any proceedings
under this Amended and Restated Mortgage Indenture or upon or in respect of
any of the bonds hereby secured, except in case of refusal or neglect of
the Trustee to act after such continued default and such request and tender
of indemnity as provided above; provided, however, that nothing in this
Amended and Restated Mortgage Indenture or in any of the bonds contained
shall affect or impair the right, which is unconditional and absolute, of
the registered owner of any bond to enforce payment of the principal of and
any premium which may be due and payable on and the interest on the bond at
or after the date when the same shall respectively become due, or the
obligation of the Company, which is also unconditional and absolute, to pay
the principal of and any premium which may be due and payable on and the
interest on the bonds to the respective registered owners thereof at the
respective times and places therein expressed.
SECTION 8.05. No remedy which by the terms of this Amended and
Restated Mortgage Indenture is conferred upon or reserved to the Trustee or
to the owners of bonds is intended to be exclusive of any other remedy, but
each and every such remedy shall be cumulative and shall be in addition to
any other remedy given hereunder or now or hereafter existing at law or in
equity or by statute.
SECTION 8.06. Anything in this Amended and Restated Indenture to
the contrary notwithstanding, the registered owners of a majority in
principal amount of the bonds then outstanding, from time to time, shall
have the right, to the extent permitted by law, by an instrument in writing
executed and delivered to the Trustee, to direct the method and place of
conducting all proceedings to be taken for any sale of the mortgaged
property or for the foreclosure of this Amended and Restated Mortgage
Indenture or for the appointment of a receiver, and any other proceedings
under this Article VIII; provided that such direction shall not be otherwise
than in accordance with the provisions hereof.
SECTION 8.07. If one or more of the Events of Default specified
in Section 8.01 shall occur and be continuing, then upon the filing of a
bill in equity or other commencement of judicial proceedings to enforce the
rights of the Trustee and of the owners of the bonds, the Trustee, if
permitted by law, shall be entitled as a matter of right to the appointment
of a receiver or receivers of the trust estate, and of the income, rents,
issues and profits thereof, pending such proceedings, with such powers as
the court making such appointment shall confer, but, notwithstanding the
appointment of any receiver, the Trustee shall be entitled as pledged to
the possession and control of any cash, securities or other instruments at
the time held by, or payable or deliverable under the provisions of this
Amended and Restated Mortgage Indenture to, the Trustee.
SECTION 8.08. Upon any sale being made either under the power of
sale hereby given or under judgment or decree in any judicial proceedings
for foreclosure or otherwise for the enforcement of this Amended and
Restated Mortgage Indenture, the principal of all bonds then outstanding,
if not previously due, and the interest accrued thereon, shall at once
become and be immediately due and payable.
SECTION 8.09. Upon any such sale, whether made under the power of
sale hereby given or under judgment or decree of court or otherwise, any
owner or owners of bonds, or the Trustee, may bid for and purchase the
mortgaged property and, upon compliance with the terms of sale, may hold,
retain and possess and dispose of such property in his, their or its own
absolute right without further accountability; and any purchaser at any such
sale may, if permitted by law, after allowing for the proportion of the
total purchase price required to be paid in cash for the costs and expenses
of the sale, compensation and other charges, in paying purchase money, turn
in bonds then outstanding in lieu of cash, to the amount which shall, upon
distribution of the net proceeds of such sale, be payable thereon. Such
bonds, in case the amount so payable thereon shall be less than the amount
due thereon, shall be returned to the registered owners thereof after being
properly stamped to show partial payment.
SECTION 8.10. Upon any such sale, whether made under the power of
sale hereby given or under judgment or decree of court or otherwise, the
receipt of the Trustee or of the officer making a sale under judicial
proceedings shall be sufficient discharge to the purchaser or purchasers
for the purchase money, and such purchasers and their assigns or personal
representatives shall not, after paying such purchase money and receiving
such receipt therefor, be obliged to see to the application of such purchase
money or be in any wise answerable for any loss, misapplication or non-
application thereof.
SECTION 8.11. The proceeds of any such sale, whether made under
the power of sale hereby conferred upon the Trustee or under judgment or
decree of court or otherwise, together with any other moneys then held by
the Trustee under this Amended and Restated Mortgage Indenture as part of
the mortgaged property or the proceeds thereof, except any moneys held for
the benefit and security or payment of any particular bonds, shall be
applied as follows:
FIRST: To the payment of all lawful taxes, assessments or
liens prior to the lien of this Amended and Restated Mortgage
Indenture, except those subject to which such sale shall have been
made, and of all costs and expenses of such sale, including
reasonable compensation to the Trustee, its agents, attorneys and
counsel, and of all other sums payable to the Trustee hereunder by
reason of any expenses or liabilities incurred or advances made by it
in connection with the management or administration of the trusts
hereby created;
SECOND: To the payment of the whole amount then owing and
unpaid upon the bonds then outstanding for principal, premium (if
any) and interest, with interest on overdue principal, premium (if
any) and, if and to the extent permitted by law, installments of
interest, at the respective rates of interest payable upon the
principal of the bonds outstanding; and, in case such proceeds shall
be insufficient to pay in full the whole amount so due and unpaid,
then to the payment ratably of such principal, interest thereon, and
interest on overdue interest as aforesaid, without preference or
priority of principal over interest, or of interest over principal,
or of any installment of interest over any other installment of
interest: and thereafter to the payment ratably of any premiums that
may be due and payable upon bonds theretofore called for redemption;
and thereafter to the payment ratably of interest on overdue premiums
as aforesaid; but only upon presentation of the bonds and upon
stamping payment thereon if partly paid and upon surrender thereof if
fully paid; and
THIRD: Any surplus then remaining, to the Company, its
successors or assigns, or to whoever may be lawfully entitled to
receive the same.
SECTION 8.12. The Company agrees, to the full extent that it may
lawfully so agree, that in case of default on its part, as provided above,
neither the Company nor any one claiming through or under it shall or will
set up, claim or seek to take advantage of any appraisement, valuation,
stay, extension or redemption laws now or hereafter in force in any locality
where any property subject to the lien hereof may be situated, in order to
prevent or hinder the enforcement or foreclosure of this Amended and
Restated Mortgage Indenture, or the absolute sale of the property hereby
conveyed, or the final and absolute putting into possession thereof,
immediately after such sale, of the purchasers at such sale; and the
Company, for itself and all who may at any time claim through or under it,
hereby waives, to the full extent that it may lawfully so do, the benefit
of all such laws and any and all right to have the estates comprised in the
security intended to be created hereby marshaled upon any foreclosure of
the lien hereof, and agrees that the Trustee or any court having
jurisdiction to foreclose such lien may sell the mortgaged property as an
entirety.
SECTION 8.13. No waiver of any default hereunder, whether by the
Trustee or the owners of bonds, shall extend to or shall affect any
subsequent or any other then existing default or shall impair any rights or
remedies consequent thereon.
SECTION 8.14. In case the Trustee shall have proceeded to enforce
any right under this' Amended and Restated Mortgage Indenture by
foreclosure, entry or otherwise, and such proceedings shall have been
discontinued or abandoned for any reason, or shall have been determined
adversely to the Trustee, then and in every such case the Company and the
Trustee shall be restored to their former positions and rights hereunder
with respect to the mortgaged property, and all rights, remedies and powers
of the Trustee shall continue as if no such proceedings had been taken.
SECTION 8.15. The Trustee shall, to the extent permitted by law,
be entitled and empowered either in its own name or as trustee of an express
trust, or as attorney-in-fact for the owners of the bonds, or in any one or
more of such capacities, to file such proofs of debt, amendment of proof of
debt, claims, petitions or other documents as may be necessary or advisable
in order to have the claims of the Trustee and of the owners of the bonds
allowed in any equity receivership, insolvency, bankruptcy, liquidation,
readjustment, reorganization or other similar proceedings relative to the
Company or its creditors or affecting its property. The Trustee is hereby
irrevocably appointed (and the successive respective owners of the bonds
by taking and holding the same shall be conclusively deemed to have so
appointed the Trustee) the true and lawful attorney-in-fact of the
respective owners ~f the bonds, with authority to make and file in the
respective names of the owners of the bonds, or on behalf of the owners of
the bonds as a class, subject to deduction from any such claims of the
amounts of any claims filed by any of the owners of the bonds themselves,
any proofs of debt, amendments of proof of debt, claims, petitions or other
documents in any such proceedings and to receive payment of any sums
becoming distributable on account thereof, and to execute any other papers
and documents and to do and perform any and all acts and things for and on
behalf of such owners of the bonds, as may be necessary or advisable in the
opinion of the Trustee in order to have the respective claims of the Trustee
and of the owners of the bonds against the Company or its property allowed
in any such proceeding, and to receive payment of or on account of such
claims; provided, however, that nothing contained in this Amended and
Restated Mortgage Indenture shall be deemed to give the Trustee any right
to accept or consent to any plan of reorganization or otherwise by action
of any character in any such proceeding to waive or change in any way any
right of any of the owners of the bonds; and provided further that nothing
contained in this Section 8.15 shall be deemed to constitute a waiver by the
Company of its right to contest the validity of any claim made against it.
SECTION 8.16. The Company covenants that if default shall be made
in the payment of any principal or premium hereby secured when the same
shall become due and payable, whether by the maturity of such bonds (as
originally fixed or as accelerated as provided in this Amended and Restated
Mortgage Indenture) or upon redemption or otherwise, then, upon demand of
the Trustee, the Company will pay to the Trustee, for the benefit of the
owners of the bonds then outstanding hereunder, the whole amount due and
payable on all such bonds for principal, premium and interest, with interest
on the overdue principal, premium, and if and to the extent permitted by
law, installments of interest, at the respective rates of interest payable
upon the principal of the bonds outstanding; and, in case the Company shall
fail to pay the same forthwith upon such demand, the Trustee, in its own
name' and as trustee of an express trust, shall be entitled to sue for and
recover judgment for the whole amount so due and unpaid.
The Trustee shall be entitled to sue and recover judgment as provided
above either before, after or during the pendency of any proceedings for
the enforcement of the lien of this Amended and Restated Mortgage Indenture,
and the right of the Trustee to recover such judgment shall not be affected
by any entry or sale hereunder, or by the exercise of any other right, power
or remedy for the enforcement of the provisions of this Amended and Restated
Mortgage Indenture or the foreclosure of the lien hereof. In case of a sale
of any of the mortgaged property and of the application of the proceeds of
sale to the payment of the debt hereby secured, the Trustee, in its own name
and as trustee of an express trust, shall be entitled to enforce payment of
and to receive all amounts then remaining due and unpaid upon any and all
of the bonds then outstanding hereunder, for the benefit of the holders
thereof, and the Trustee shall be entitled to recover judgment for any
portion of the debt remaining unpaid, with interest. No recovery of any
such judgment by the Trustee and no attachment or levy of any execution upon
any such judgment upon any of the mortgaged property or upon any other
property shall in any manner or to any extent affect the lien of this
Amended and Restated Mortgage Indenture upon the mortgaged property or any
part thereof or any lien, rights, powers or remedies of the Trustee
hereunder, or any lien, rights, powers or remedies of the holders of the
bonds, but such lien, rights, powers and remedies of the Trustee and of the
bondholders shall continue unimpaired as before.
Any monies thus collected by the Trustee or received by the Trustee
under this Section 8.16 shall be applied by the Trustee, first, to the
payment of the expenses, disbursements and compensation of the Trustee, its
agents, attorneys and counsel, and second, toward payment of the amounts
then due and unpaid upon such bonds in respect of which such money shall
have been collected, ratably and without any preference or priority of any
kind, according to the amount due and payable upon such bonds respectively
at the date fixed by the Trustee for the distribution of such moneys, but
only upon presentation of the several bonds and upon stamping such payment
thereon if partly paid and upon surrender thereof if fully paid.
SECTION 8.17. All rights of action and claims under this Amended
and Restated Mortgage Indenture or any of the bonds outstanding hereunder,
enforceable by the Trustee, may be enforced by the Trustee without the
possession of any of such bonds or the production thereof on the trial or
other proceedings relative thereto; and any such suit or proceedings
instituted by the Trustee shall be brought in its own name for the ratable
benefit of the registered owners of such bonds, subject to the provisions
of this Amended and Restated Mortgage Indenture.
SECTION 8.18. No delay or omission of the Trustee or of any owner
of bonds outstanding hereunder to exercise any right or power accruing upon
any default shall exhaust or impair any such right or power or shall be
construed to be a waiver of any such default, or acquiescence therein; and
every power and remedy given by this Amended and Restated Mortgage Indenture
to the Trustee or to the owners of bonds may be exercised from time to time
and as often as may be deemed expedient by the Trustee or by such owners.
SECTION 8.19. All rights, remedies and powers provided by this
Article VIII may be exercised only to the extent that the exercise thereof
does not violate any applicable provision of law in the premises, and all
the provisions of this Article VIII are intended to be subject to all
applicable mandatory provisions of law that may be controlling in the
premises and to be limited to the extent necessary so that they will not
render this Amended and Restated Mortgage Indenture invalid, unenforceable
or not entitled to be recorded or filed under the provisions of any
applicable law.
ARTICLE IX.
Evidence Of Rights Of Bondholders
Any request or other instrument which this Amended and Restated
Mortgage Indenture may require or permit to be signed and executed by the
owners of bonds may be in any number of concurrent instruments of similar
tenor and may be signed and executed by such owners in person or by attorney
appointed in writing. The fact and date of the execution by any person of
any such request or other instrument, or of a writing appointing any such
attorney, shall be sufficiently proved for any purpose of this Amended and
Restated Mortgage Indenture by the certificate of any notary public, or
other officer authorized to take acknowledgments of deeds to be recorded in
the State of Connecticut that the person signing such request or other
instrument acknowledged to him the execution thereof, or by an affidavit of
a witness to such execution.
The ownership of bonds shall be proved by the registry books of the
Company herein provided for or by a certificate of the custodian thereof.
The Trustee may nevertheless in its discretion require further proof
in cases where it deems further proof desirable, and may require the
production of any bond or bonds, and shall not be bound to recognize any
person as the owner thereof unless and until his title to the bonds held by
him is proved in a manner satisfactory to the Trustee.
Any request, consent or assent of the registered owner of any bond
shall bind all future owners of the same bond, or any bond or bonds issued
in lieu thereof or in exchange therefor, in respect of anything done,
omitted or suffered by the Trustee in pursuance thereof.
ARTICLE X.
Immunity of Incorporators, Stockholders, Officers and Directors
No recourse under or upon any obligation, covenant or agreement
contained in this Amended and Restated Mortgage Indenture or in any
indenture supplemental hereto, or in any bond hereby secured, or because of
any indebtedness hereby secured, shall be had against any incorporator, or
against any past, present or future stockholder, officer or directors as
such, of the Company or of any successor corporation, either directly or
through the Company or any successor corporation under any constitution,
statute, or rule of law or equity, or by the enforcement of any assessment
or by any legal or equitable proceeding or otherwise; it being expressly
agreed and understood that this Amended and Restated Mortgage Indenture,
any indenture supplemental hereto and the obligations hereby and thereby
secured are solely corporate Obligations, and that no personal liability
whatever shall attach to, or be incurred by, such incorporators,
stockholders, officers or directors, as such, of the Company, or of any
successor corporation, or any of them, because of the incurring of the
indebtedness hereby authorized, or under or by reason of any of the
obligations, covenants or agreements contained in this Amended and Restated
Mortgage Indenture or in any indenture supplemental hereto or in any of the
bonds hereby secured, or implied therefrom.
ARTICLE XI.
Effect of Merger, Consolidation or Sale: Right of Successor
Corporation to Exchange Bonds
SECTION 11.01. Nothing contained in this Amended and Restated
Mortgage Indenture shall prevent any consolidation or merger of the Company
with or into, or any conveyance or transfer, subject to the lien of this
Amended and Restated Mortgage Indenture, of all or substantially all of the
mortgaged property as an entirety or substantially as an entirety, or any
lease of all or substantially all of the mortgaged property as an entirety
or substantially as an entirety, to any corporation lawfully entitled to
acquire or lease and operate the same, provided, however, and the Company
covenants and agrees, that (a) any such consolidation, merger, conveyance,
transfer or lease shall be upon such terms as shall in no respect impair
the lien of this Amended and Restated Mortgage Indenture or any of the
rights or powers of the Trustee or the owners of bonds issued hereunder,
(b) any such lease shall be made expressly subject to immediate termination
by the Company and also by the Trustee or by any receiver appointed
hereunder at any time during the continuance of a default hereunder and also
by the purchaser of the property so leased at any sale thereof hereunder,
whether such sale be made under the power of sale hereby conferred or under
judicial proceedings, and (c) upon any such consolidation, merger,
conveyance or transfer, the corporation formed by such consolidation or into
which such merger shall have been made or acquiring such property shall
assume and agree to say, duly and punctually, the principal of, any premium
which may be due and payable on and the interest on the bonds then
outstanding hereunder, in accordance with the provisions of such bonds and
of this Indenture and all indentures supplemental hereto, and shall agree
to perform, observe and fulfill, duly and punctually, all the terms,
covenants and conditions of this Amended and Restated Mortgage Indenture and
of all indentures supplemental hereto to be performed, observed or fulfilled
by the Company, subject to the provisions of Section 11.03.
SECTION 11.02. In case the Company, pursuant to Section 11.01,
shall be consolidated with or merged into any other corporation, or all or
substantially all of the mortgaged Property as an entirety or substantially
as an entirety shall be conveyed or transferred, subject to the lien of this
Amended and Restated Mortgage Indenture, the corporation resulting from such
consolidation, or into which the Company shall have been merged or which
shall have received a conveyance or transfer (such corporation being
hereinafter called the "successor corporation") -- upon executing, and
causing to be recorded, an indenture with the Trustee, satisfactory to the
Trustee, whereby the successor corporation shall assume and agree to pay,
duly and punctually, the principal of, any premium which may be due and
payable on and the interest on the bonds issued hereunder and secured hereby
in accordance with the provisions of such bonds and of this Amended and
Restated Mortgage Indenture and all indentures supplemental hereto, and
shall agree to perform, observe and fulfill, duly and punctually, all the
terms, covenants and conditions of this Amended and Restated Mortgage
Indenture and any indentures supplemental hereto to be performed, observed
or fulfilled by the Company, subject to the provisions of Section 11.03 --
shall succeed to and be substituted for the Company, with the same effect
as if it had been named herein as the mortgagor company, and the successor
corporation thereupon may cause to be signed, issued and delivered either
in its own name, or in the name of the Company unless the Company shall have
received a release pursuant to Section 11.07, any or all of such bonds which
shall not theretofore have been signed by the Company and authenticated by
the Trustee; and, upon the order of the successor corporation in lieu of the
Company, and subject to all the terms, conditions and restrictions contained
in this Amended and Restated Mortgage Indenture with respect to the
authentication and issue of bonds, the Trustee shall authenticate and
deliver any of such bonds which shall have been previously signed and
delivered by the officers of the Company to the Trustee for authentication,
unless the Company shall have received a release pursuant to Section 11.07,
and any of such bonds which the successor Corporation shall thereafter, in
accordance with the provisions of this Amended and Restated Mortgage
Indenture, cause to be signed and delivered to the Trustee for such purpose.
All the bonds so issued shall in all respects have the same legal rank and
security as the bonds theretofore or thereafter issued in accordance with
the terms of this Amended and Restated Mortgage Indenture, as though all of
such bonds had been issued at the date of the execution hereof; provided,
however, that as a condition precedent to the execution by the successor
corporation and the authentication and delivery by the Trustee of any such
additional bonds, or the exercise by the successor corporation of any other
privilege conferred upon the Company by this Amended and Restated Mortgage
Indenture or any indenture supplemental hereto which requires the delivery
of a Capitalization Certificate, the indenture with the Trustee to be
executed by the successor corporation as provided in this Section 11.02, or
one or more subsequently executed supplemental indentures, shall contain a
conveyance, assignment or transfer in terms sufficient to subject to the
lien of this Amended and Restated Mortgage Indenture all properties of the
character described in the Granting Clauses of this Amended and Restated
Mortgage Indenture as subject to the lien hereof which have not previously
been conveyed, assigned or transferred to the Trustee and which are within
one of the categories described in clauses (a), (b), (C) and (d) of Section
11.03; and provided further that the lien created thereby shall have similar
force, effect and standing, subject to the provisions of Section 11.03, as
the lien of this Amended and Restated Mortgage Indenture would have if the
Company had not been consolidated with or merged into such other corporation
or had not conveyed or transferred, subject to the lien of this Amended and
Restated Mortgage Indenture, all or substantially all of the mortgaged
property as an entirety or substantially as an entirety, as provided above,
to the successor corporation, and had itself purchased, constructed, erected
or otherwise acquired such properties and requested the authentication and
delivery of bonds, or the exercise of such other privilege, under the
provisions of this Amended and Restated Mortgage Indenture.
The Trustee may receive an Opinion of Counsel as conclusive evidence
that any such indenture executed by the successor corporation complies with
the foregoing conditions and provisions of this Section 11.02, and that any
such corporation is lawfully entitled to acquire the mortgaged property as
an entirety or substantially as an entirety and to operate the same, and
that all other pertinent provisions of this Article XI have been complied
with.
SECTION 11.03. In case the Company, pursuant to Section 11.01,
shall be consolidated with or merged into any other corporation, or shall
convey or transfer, subject to the lien of this Amended and Restated
Mortgage Indenture, all or substantially all of the mortgaged property as
an entirety or substantially as an entirety, as provided above, neither this
Amended and Restated Mortgage Indenture nor the indenture with the Trustee
to be executed and caused to be recorded by the successor corporation as
provided in Section 11.02 shall, unless such indenture shall otherwise
expressly provide, become or be a lien upon any of the properties or
franchises of the successor corporation except (a) those acquired by it from
the Company, (b) property received in exchange for property released from
the lien hereof, (c) such franchises, replacements and additional property
as may be acquired by the successor corporation in pursuance of the
covenants herein contained to maintain, preserve and renew the franchises
covered by this Amended and Restated Mortgage Indenture and to keep and
maintain the property covered by this Amended and Restated Mortgage
Indenture in good repair, working order and condition or in pursuance of
some other covenant or agreement hereof to be kept or performed by the
Company, and (d) permanent improvements, extensions and additions
appurtenant to any property described in clauses (a), (b) and (c) of this
Section 11.03.
SECTION 11.04. In case the Company, pursuant to Section 11.01,
shall be consolidated with or merged into any other corporation, or shall
convey or transfer, subject to the lien of this Amended and Restated
Mortgage Indenture, all or substantially all of the mortgaged property as
an entirety or substantially as an entirety, as provided above, and the
successor corporation shall be a corporation which conducts substantially
all of its business in the State of Connecticut and which is authorized to
conduct the utility business of the Company in the State of Connecticut,
such successor corporation may elect to exchange its bonds for the bonds
outstanding under this Amended and Restated Mortgage Indenture (hereinafter
in this Article XI called the "Company bonds") in the manner hereinafter
described.
The successor Corporation shall, at least ten (10) days prior to the
date fixed for such exchange (hereinafter Called the "exchange date"), mail
by registered mail, postage prepaid, to the registered owners of the Company
bonds, at their addresses as the same shall appear, if at all, upon the
registry books of the Company, a notice to the effect that the successor
corporation has elected to exchange the Company bonds pursuant to the
provisions of this Section 11.04, specifying the exchange date, and stating
that upon the surrender of the Company bonds at the office of the Trustee
such bonds will be exchanged for bonds of the successor corporation in
accordance with the provisions of this Section 11.04.
When such notice shall have been given and when the Trustee shall have
received all of the items described below in paragraphs 1, 2, 3 and 4 of
this Section 11.04, then, notwithstanding that any Company bond shall not
have been surrendered for exchange, upon the exchange date (a) no further
interest shall accrue on any of such bonds and all such bonds shall be
deemed to have been paid in full as between the successor corporation and
the respective owners thereof and shall no longer be deemed to be
outstanding hereunder, and the successor corporation shall be under no
further liability in respect thereof, and (b) this Amended and Restated
Mortgage Indenture and the estate and rights hereby granted shall cease,
determine and be void and the Trustee shall, upon the request of the
successor corporation and at its expense, cancel and discharge the lien of
this Amended and Restated Mortgage Indenture and execute and deliver to the
successor corporation such deeds or other instruments as shall be requisite
to satisfy the lien hereof, and shall convey to the successor corporation
the estate and title hereby conveyed, and shall assign and deliver to the
successor Corporation any property hereby conveyed and subject to the lien
of this Amended and Restated Mortgage Indenture which may then be in its
possession.
The items to be received by the Trustee as provided above are the
following:
1. Bonds of the successor corporation (hereinafter called the
"successor corporation bonds") issued under a mortgage
(hereinafter called the "successor corporation mortgage"),
constituting a lien on the mortgaged property and all other
property of the successor corporation of the same character as
the mortgaged property, subject to no lien except Permitted
Encumbrances, which successor corporation mortgage shall be
executed and delivered to a bank or trust company (hereinafter
called the "successor corporate trustee") of recognized
standing in the corporate trust business, as trustee, and which
bonds shall be equal in principal amount to the Company bonds
and shall be authenticated on, and bear interest from, the
exchange date: together with an amount in cash equal to accrued
interest to the exchange date on such Company bonds.
2. A copy of a resolution, certified to have been adopted by the
Board of Directors of the successor corporation, requesting the
Trustee to accept the successor corporation bonds and to
deliver the same to the registered owners of the Company bonds
upon surrender thereof and to cancel and discharge the lien of
this Amended and Restated Mortgage Indenture on the exchange
date.
3. Copies of such documents as would be required to be filed with
the Trustee in connection with the issuance of bonds under
the provisions of Section 2.04, from which documents it shall
appear that bonds equal in principal amount to the bonds to be
outstanding under the successor corporation mortgage, after
giving effect to such exchange, could have been issued under
this Amended and Restated Mortgage Indenture had there been no
bonds outstanding thereunder at the time, and which documents
shall contain variations appropriate to an application by the
successor corporation (rather than the Company) for the
authentication and delivery of bonds by the successor corporate
trustee (rather than the Trustee) under the successor
corporation mortgage (rather than this Amended and Restated
Mortgage Indenture), and such other variations in form as shall
be appropriate for such purpose.
4. An Opinion of Counsel to the effect that the successor
corporation bonds are identical with the Company bonds in
respect of maturity date, principal amount, rate of interest,
redemption prices and restrictions on redemption, and that
otherwise the successor Corporation bonds and the successor
corporation mortgage contain provisions, in respect of the
protection afforded the registered owners of the bonds,
comparable to the provisions of the Company bonds and this
Amended and Restated Mortgage Indenture, allowing for
differences of form and minor substance (which opinion as to
comparability may rely upon appropriate certificates of
officers of the Company, the successor corporation, and their
accountants), and the successor corporation mortgage
constitutes a lien on the mortgaged property and all other
property of the successor corporation of the same character as
the mortgaged property, subject to no lien except Permitted
Encumbrances.
Upon surrender of the Company bonds by the registered owners thereof,
the Trustee shall deliver to such registered owners successor corporation
bonds, issued as provided above, together with an amount in cash equal to
accrued interest to the exchange date on such Company bonds, and shall
cancel the Company bonds and, on the written request of the successor
corporation, deliver the same to the successor corporation.
SECTION 11.05. The word "Company," wherever contained in this
Amended and Restated Mortgage Indenture, shall include any successor
corporation as defined in this Article XI, and the word "seal," wherever
contained in this Amended and Restated Mortgage Indenture, shall include
the seal of the successor corporation, and any order, request, certificate
or other instrument of any officer or officers of the Company provided for
in this Amended and Restated Mortgage Indenture may be made by like
officials of the successor corporation, and any resolution provided to be
adopted by the Board of Directors of the Company may be adopted by the board
of directors or board of trustees, as the case may be, of the successor
corporation.
SECTION 11.06. At any time prior to the exercise of any power
reserved to the Company or to such successor corporation by this Article
XI, the Company or such successor corporation may surrender any power so
reserved by delivering to the Trustee an instrument in writing, executed by
its Chairman of the Board, President or a Vice President under its corporate
seal, attested by its Secretary or an Assistant Secretary, accompanied by
the affidavit of its Secretary or an Assistant Secretary that the execution
of such instrument was duly authorized by the vote of two-thirds of the
entire Board of Directors of the Company or board of directors or board of
trustees, as the case may be, of such successor corporation, given at a
meeting duly called and held, and thereupon the power so surrendered shall
cease.
SECTION 11.07. In case the Company shall convey or transfer,
subject to the lien of this Amended and Restated Mortgage Indenture, all or
substantially all of the mortgaged property as an entirety or substantially
as an entirety and the successor corporation to which such conveyance or
transfer is made shall have complied with the provisions of Section 11.02
or Section 11.04, the Trustee shall execute, acknowledge and deliver to the
Company a complete release and discharge from all of the Company's
obligations under this Amended and Restated Mortgage Indenture, all
indentures supplemental hereto and all of the bonds then outstanding under
this Amended and Restated Mortgage Indenture, provided there has been
delivered to the Trustee a written request of the Company for such release
and a certificate, signed by the Chairman of the Board, the President or a
Vice President and by the Secretary or an Assistant Secretary or the
Treasurer or an Assistant Treasurer of the Company, stating that such
release is not contrary to the terms and conditions of such conveyance or
transfer to the successor corporation.
ARTICLE XII.
Concerning the Trustee
The Trustee accepts the trusts hereunder and agrees to perform the
same, but only upon the terms and conditions hereof, including the
following, to all of which the Company and the respective owners of the
bonds at any time outstanding by their acceptance thereof agree:
SECTION 12.01. The Trustee undertakes, except while an Event of
Default shall have occurred and be continuing, to exercise such duties and
only such duties as are specifically set forth in this Amended and Restated
Mortgage Indenture and, while such an Event of Default shall have occurred
and be continuing, to exercise such of the rights and powers vested in it
by this Amended and Restated Mortgage Indenture, and to use the same degree
of care and skill in their exercise, as an ordinary prudent person would do
or use under the circumstances in the conduct of his own affairs.
Except as otherwise expressly provided in this Amended and Restated
Mortgage Indenture or any indenture supplemental hereto:
1. unless an Event of Default shall have occurred and be
continuing, the Trustee shall not be under any obligation to
take any action or make any investigation in respect of the
subject matter of this Amended and Restated Mortgage Indenture
or any indenture supplemental hereto unless requested in
writing so to do by the registered owners of not less than
twenty-five percent (25%) in principal amount of the bonds then
outstanding; and
2. whether or not an Event of Default shall have occurred, the
Trustee shall not be under any obligation to take any action
under this Amended and Restated Mortgage Indenture or any
indenture supplemental hereto which in its opinion may tend to
involve it in any expense or liability, the payment of which is
not, in the opinion of the Trustee, assured to it by the
security afforded it by the terms of this Amended and Restated
Mortgage Indenture, unless and until requested in writing so to
do by one or more registered owners of bonds outstanding
hereunder and furnished, from time to time as it may require,
with reasonable security and indemnity satisfactory to it;
provided, however, that no security or indemnity so furnished
to the Trustee shall be applicable to any liability (a) which
is incurred by the Trustee as a result of any action taken by
the Trustee not reasonably in accordance with the request or
requests delivered to the Trustee by those furnishing such
security, or (b) which is finally determined by a court of
competent jurisdiction to be a liability imposed upon the
Trustee as a result of its default or negligence in the
performance of the duties imposed upon or undertaken by the
Trustee by the terms of this Amended and Restated Mortgage
Indenture or any indenture supplemental hereto.
The Trustee may accept and rely conclusively upon any notice, request,
consent, certificate, bond, or other document or paper reasonably believed
by it to be genuine and to have been signed and presented by the proper
person and duly authorized and properly made.
The recitals and statements contained herein and in the bonds issued
hereunder shall not be considered as made by or as imposing any obligation
or liability upon the Trustee. The Trustee makes no representation as to
the validity of this Amended and Restated Mortgage Indenture or of any
indenture supplemental hereto, or of any bonds issued hereunder, or as to
the security hereby or thereby afforded, or as to the title of the Company
to the mortgaged property or as to the descriptions thereof. The Trustee
shall be under no obligation to see to the recording, re-recording,
registration, re-registration, filing or re-filing of this Amended and
Restated Mortgage Indenture or of any indenture supplemental hereto or of
any instrument of further assurance, or to the giving of any notice thereof,
or to see to the delivery to it of any property intended to be mortgaged or
pledged hereunder, or generally to see that any of the property intended now
or hereafter to be conveyed in trust hereunder is subject to the lien
hereof. The Trustee shall not be accountable for the use of any bond
delivered hereunder or the application of the proceeds of the same, or for
the application of any moneys paid to the Company under any of the
provisions hereof.
It shall not be any part of the duties of the Trustee to keep itself
informed or advised in respect of the payment of any taxes or assessments
or to require payment thereof to be made. Any law of the United States or
of any State, whether now in force or hereafter enacted, to the contrary
notwithstanding, the Trustee shall be under no obligation to pay any taxes
or assessments of any kind or character upon or in respect of the mortgaged
property or the mortgage debt or the lien created or evidenced by this
Amended and Restated Mortgage Indenture or of any other tax or assessment
of any kind or character levied or imposed by reason of this Amended and
Restated Mortgage Indenture or of the indebtedness secured hereby, nor shall
the Trustee be liable because of the non-payment of any such tax or
assessment.
The Trustee shall have no duty to effect, renew or maintain, or to
see to the maintenance by the company of, insurance on any property at any
time subject to the lien hereof, or to see to the reputability of any
insurance company or association, or to supervise the collection or
application of the proceeds of any insurance policy, or to keep itself
advised or informed as to the payment of insurance premiums or the
maintenance or application of any insurance reserve fund.
Except as expressly provided in this Amended and Restated Mortgage
Indenture, it shall not be any part of the duties of the Trustee to keep
itself informed or advised in respect to the payment of any mechanics,
laborer's, statutory or other lien which may hereafter be created or remain
upon property subject to the lien of this Amended and Restated Mortgage
Indenture, or any part thereof, or the income therefrom.
Except as otherwise expressly provided in this Amended and Restated
Mortgage Indenture, the Trustee shall be under no duty to see to the
expenditure for maintenance or reserve for depreciation provided for in
Section 3.13 or to compliance by the Company with the provisions of Section
3.06.
The Trustee may select and employ hereunder suitable appraisers,
accountants, surveyors, engineers, agents and attorneys-in-fact, either
corporate or individual, and the Trustee shall not be responsible for their
default and misconduct, will be selected with reasonable care (unless such
persons are officers, directors or persons in the regular employ of the
Trustee). The Trustee shall not be liable for any error in judgment in the
exercise of its discretion hereunder; but the Trustee may in its discretion
consult legal counsel (who may be of counsel to the Company), to be selected
and employed by it at the expense of the Company, and shall be fully
protected in any action under this Amended and Restated Mortgage Indenture
taken, suffered or omitted by it in good faith in accordance with the
opinion of such counsel. Finally and generally, the Trustee shall not be
personally liable except for its own default or negligence.
The Company agrees that it will from time to time, on demand, pay to
the Trustee reasonable compensation for its services, reimburse the Trustee
for all of its expenditures, including fees and expenses of independent
appraisers, accountants, surveyors, engineers, counsel, agents and
attorneys-in-fact or other experts employed by it in the exercise and
performance of its powers and duties hereunder, and indemnify and save the
Trustee harmless against any liabilities, not arising from its own default
or negligence, which it may incur in the exercise and performance of its
powers and duties hereunder; and, as security for such indemnification,
reimbursement and compensation, the Trustee shall have the benefit of the
lien hereby created in priority to the indebtedness evidenced by the bonds
issued hereunder.
Whenever, in the administration of the trusts created by this Amended
and Restated Mortgage Indenture, the Trustee shall deem it necessary or
desirable that any matter be proved or established prior to its taking or
suffering or omitting any action hereunder, such matter (unless other
evidence in respect thereof be herein specifically prescribed) may be deemed
to be conclusively proved and established by a certificate signed by the
Chairman of the Board, the President or a Vice President and the Treasurer
or an Assistant Treasurer of the Company and delivered to the Trustee, and
such certificate shall be full warrant and authority to the Trustee for any
action taken, suffered or omitted by it under the provisions of this Amended
and Restated Mortgage Indenture in reliance thereon; but the Trustee in its
discretion may, and if requested in writing so to do by the registered
owners of not less than twenty-five percent (25%) in principal amount of the
bonds then outstanding and furnished with reasonable security and indemnity
satisfactory to it against the costs and expenses of such examination shall,
require such further and additional evidence and make such further
investigation as to it may seem reasonable. The agents and representatives
of the Trustee and any experts or counsel whose opinions are required by the
Trustee for any purpose hereunder or are deliverable to the Trustee under
any provision hereof shall likewise be fully warranted in relying and acting
upon the existence of any matters proved or established by any such
certificate, unless other evidence establishing such fact or facts be
specifically required by this Amended and Restated Mortgage Indenture.
The Trustee shall, subject to the provisions of Section 7.05, allow
and (so long as the Company is not in default under this Amended and
Restated Mortgage Indenture to the knowledge of the Trustee) shall pay over
to the Company interest upon any moneys which it may at any time receive or
hold as part of the trust estate under any of the provisions of this Amended
and Restated Mortgage Indenture at such rates as shall at the time be
customarily allowed by it upon other funds of similar character or as shall
be agreed upon from time to time between the Company and the Trustee.
To the extent permitted by applicable law, the Trustee or any
corporation in or with which the Trustee or its stockholders may be
interested or affiliated, or any officer or director of the Trustee or of
any other such corporation, may acquire and hold bonds issued hereunder and
otherwise deal with the Company or with any other corporation having
relations with the Company, in the same manner and to the same extent and
with like effect as though it were not the Trustee.
Except as otherwise provided herein, any notice or demand which by
any provision of this Amended and Restated Mortgage Indenture is required
or permitted to be given or served by the Trustee on the Company shall be
deemed to have been sufficiently given and served for all purposes by being
deposited, postage prepaid, in a post office letter box in the city in which
the principal office of the Trustee is located, addressed to the Company at
its mailing address stated in Article XVII.
No implied Covenant shall be read into this Amended and Restated
Mortgage Indenture against the Trustee, but the duties and obligations of
the Trustee to the Company and to all others shall be determined solely by
the express provisions of this Amended and Restated Mortgage Indenture.
Except when otherwise expressly provided in this Amended and Restated
Mortgage Indenture, any order, request, notice, consent or other instrument
in writing to be delivered or furnished by the Company to the Trustee shall
be sufficiently executed if signed, whether in the name of the Company or
not, by its Chairman of the Board, President or a Vice President and by its
Secretary or an Assistant Secretary or its Treasurer or an Assistant
Treasurer, or by such officer or officers as the Board of Directors of the
Company may by resolution direct. A copy of any resolution of the Board of
Directors to be delivered or furnished by the Company to the Trustee shall
be sufficiently certified if certified by the Secretary or an Assistant
Secretary of the Company under its corporate seal.
SECTION 12.02. The Trustee may resign and be discharged from the
trusts created by this Amended and Restated Mortgage Indenture by giving
notice of resignation to the Company in writing, and to the owners of the
bonds outstanding hereunder in the manner hereinafter stated, specifying a
date when such resignation shall take effect, and the resignation shall take
effect on the day so specified unless prior thereto a successor trustee
shall have been appointed as provided in Section 12.03, in which event the
resignation shall take effect immediately upon the appointment of such
successor trustee. The Trustee shall give notice of resignation to the
owners of the bonds by mailing the notice by registered mail, postage
prepaid, to the registered owners of the bonds at their addresses as the
same shall appear, if at all, upon the registry books of the Company.
The Trustee may be removed at any time by an instrument or instruments
in writing, executed by the registered owners of a majority in principal
amount of the bonds then outstanding and filed with the Trustee.
SECTION 12.03. In case at any time the Trustee shall resign or
shall be removed or otherwise shall become incapable of acting, a successor
may be appointed by the registered owners of a majority in principal amount
of the bonds then outstanding, by an instrument or instruments in writing
executed by such owners and filed with the successor trustee; but, until a
new trustee shall be appointed by the owners of bonds as herein authorized,
the Company, by an instrument in writing executed by order of its Board of
Directors and filed with the successor trustee, shall appoint a trustee to
fill such vacancy. After any such appointment by the Company, it shall mail
notice thereof by registered mail, postage prepaid, to the registered owners
of such bonds at their addresses as the same shall appear, if at all, upon
the registry books of the Company. Any new trustee so appointed by the
Company shall immediately and without further act be superseded by a trustee
appointed by the registered owners of a majority in principal amount of such
bonds in the manner hereinabove provided.
If in a proper case no appointment of a successor trustee shall be
made pursuant to the foregoing provisions of this Article XII within six
(6) months after a vacancy shall have occurred in the office of Trustee,
the registered owner of any bond hereby secured or the retiring trustee may
apply to any court of competent jurisdiction to appoint a successor trustee,
and such court may thereupon, after such notice, if any, as it may deem
proper, appoint a successor trustee.
Any successor trustee appointed hereunder shall execute, acknowledge
and deliver to the Company and the retiring trustee an instrument accepting
such appointment, and thereupon such successor trustee, without any further
act, deed, conveyance or transfer, shall become vested with the title to
the mortgaged property, with all the rights, powers, trusts, duties and
obligations of its predecessor in the trust hereunder, with like effect as
if originally named as Trustee herein. Upon the request of such successor
trustee, however, the Company and the trustee ceasing to act shall execute
and deliver such instruments of conveyance and further assurance and do such
other things as may reasonably be required for more fully and certainly
vesting and confirming in such successor trustee all the right, title and
interest of the trustee ceasing to act in and to the mortgaged property and
all such rights, powers, trusts, duties and obligations, and the trustee
ceasing to act shall also assign and deliver to the successor trustee any
property subject to the lien of this Amended and Restated Mortgage Indenture
which may then be in its possession.
Except as hereinafter provided in Section 12.05, every successor
trustee hereunder shall always be a state or national bank or trust company
in good standing, organized under the laws of the State of Connecticut or
of the United States of America and doing business in the State of
Connecticut, having a combined capital and surplus aggregating at least
Twenty-Five Million Dollars ($25,000,000.00), if there be such a bank or
trust company willing and able to accept such trust upon reasonable and
customary terms.
SECTION 12.04. Any Corporation into which the Trustee may be merged
or with which it may be consolidated, or any corporation resulting from any
merger or consolidation to which the Trustee shall be a party, or any state
or national bank or trust company in any manner succeeding to the corporate
trust business of the Trustee or of any successor trustee as a whole or
substantially as a whole, shall be the successor of the Trustee hereunder
without the execution or filing of any paper or any further act on the part
of any of the parties hereto, notwithstanding anything to the contrary
contained herein. In case any of the bonds shall have been authenticated
but not delivered, any such successor trustee may adopt the certificate of
the Trustee and deliver the same so authenticated; and in case any of such
bonds shall not have been authenticated, any such successor trustee may
authenticate such bonds in the name of such successor trustee.
SECTION 12.05. At any time or times, for the purpose of conforming
to any legal requirements, restrictions or conditions in any state in which
any part of the trust estate may be located, the Company and the Trustee
shall have power to appoint and, upon the request of the Trustee, the
Company shall for such purpose or with the Trustee in the execution,
delivery and performance of instruments and agreements necessary or proper
to appoint, another corporation or one or more persons, approved by the
Trustee, to act either as separate trustee or trustees or as co-trustee
co-trustees jointly with the Trustee of all or any part of the trust estate.
Such separate trustee or trustees or co-trustee or Co-trustees shall
have such powers and duties as shall be conferred or imposed by the terms
of its or their appointment; but every such separate trustee or co-trustee
shall, to the extent permitted by law, be appointed subject to the following
provisions and conditions, namely:
1. Bonds issued hereunder shall be authenticated and delivered,
and all powers, duties, obligations and rights conferred upon
the Trustee in respect of the custody of all obligations and
other securities and of all cash pledged or deposited hereunder
shall be exercised, Solely by The Connecticut National Bank or
its successor in the trust hereunder, and any moneys at any
time coming into the hands of any such separate trustee or
trustees or co-trustee or co-trustees shall be at once paid
over to The Connecticut National Bank or its Successor in the
trust hereunder;
2. No power shall be exercised hereunder by any such separate
trustee or trustees or co-trustee or co-trustees except jointly
or with the consent in writing of The Connecticut National Bank
or its successor in the trust hereunder;
3. The Company and The Connecticut National Bank or its successor
in the trust hereunder, at any time by an instrument in writing
executed by them jointly, may remove any separate trustee or
co-trustee appointed under this Section 12.05, and may likewise
and in like manner appoint a successor to such separate
trustee or co-trustee so removed or who shall resign or become
incapable of acting, anything herein contained to the contrary
notwithstanding; and
4. Any notice, request or other writing delivered solely to The
Connecticut National Bank or its successor in the trust
hereunder shall be deemed to have been delivered to all of the
trustees as effectually as if delivered to each of them.
ARTICLE XIII.
Supplemental Indentures
SECTION 13.01. In addition to any supplemental indenture otherwise
authorized or permitted by this Amended and Restated Mortgage Indenture,
the Company, pursuant to resolutions adopted by its Board of Directors and
with the formal authorization, approval or consent of any governmental body
or bodies at the time having jurisdiction in the premises as may at the time
be required, may, at any time and from time to time, subject to the
conditions and restrictions contained in this Amended and Restated Mortgage
Indenture, execute an indenture or indentures supplemental hereto, which
thereafter shall form a part hereof, for any one or more or all of the
following purposes:
(a) To add to the conditions, limitations and restrictions of the
authorized amount, terms, provisions, purposes of issue,
authentication and delivery of bonds specified in Article I
and Article II hereof, other conditions, limitations and
restrictions thereafter to be observed with respect to the
bonds or for the sole benefit (subject to the provisions of
Article VIII hereof) of any one or more series thereof;
(b) To add to the covenants and agreements of the Company contained
in this Amended and Restated Mortgage Indenture, Exclusive
Benefit Covenants or further covenants, agreements and
conditions for the protection or benefit of the bonds of all
series, and in respect of any Exclusive Benefit Covenant (other
than any covenant requiring payment to any sinking,
amortization, purchase or other analogous fund, which shall be
governed by paragraph (b) of Section 8.01) such supplemental
indenture may provide for a particular period of grace after
default and may establish the percentage or percentages (which
may differ) of any one or more series of the bonds which may
(i) require the Trustee to declare a default under, (ii) waive
a default under, (iii) waive compliance with, or (iv) amend,
such Exclusive Benefit Covenants;
(c) To provide for the creation of any series of bonds other than
Series B Bonds, Series C Bonds, Series D Bonds and Series E
Bonds, as more fully set forth in paragraph 2 of Section 2.03;
(d) To evidence the succession of another corporation to the
Company, or successive successions, and the assumption by a
successor corporation of the covenants and obligations of the
Company and the acceptance by a successor corporation of the
provisions contained in the bonds issued hereunder and in this
Amended and Restated Mortgage Indenture and in any and every
supplemental indenture;
(e) To convey, transfer and assign to the Trustee, and to subject
to the lien of this Amended and Restated Mortgage Indenture,
with the same force and effect as though included in the
Granting Clauses hereof, additional properties, rights and
franchises hereafter acquired by the Company through
consolidation or merger, or by purchase or in any other manner
whatsoever;
(f) To cure any ambiguity, or to cure, correct or supplement any
defect or inconsistent provision contained in this Amended and
Restated Mortgage Indenture or in any indenture supplemental
hereto;
(g) To add to the powers, duties or obligations of the Trustee, or
to impose requirements, in addition to those set forth in
Section 12.03 hereof, with respect to the qualification or
disqualification of any bank or trust company to act as trustee
under this Amended and Restated Mortgage Indenture, but no such
supplemental indenture shall be made without the consent of the
Trustee;
(h) To authorize the issuance hereunder of coupon bonds of one or
more series, and to make appropriate provision in connection
therewith for notices to the holders of such bonds, transfer of
such bonds by delivery and other matters characteristic of such
bonds; and
(i) To modify, amend or supplement this Amended and Restated
Mortgage Indenture, or any indenture supplemental hereto, in
such manner as to permit the qualification thereof under the
Trust Indenture Act of 1939 or any similar federal statute
hereafter in effect, except that nothing contained herein shall
authorize the inclusion in any indenture supplemental hereto of
the provisions referred to in Section 316(a) (2) of such Act or
any Corresponding provision provided for in any similar federal
statute hereafter in effect.
SECTION 13.02. The Trustee is hereby authorized to join with the
Company in the execution of any supplemental indenture authorized or
permitted by the provisions of this Amended and Restated Mortgage Indenture
and to make the further agreements and stipulations which may be contained
therein, and the Trustee in executing any supplemental indenture shall be
fully protected in relying on the Opinion of Counsel that such supplemental
indenture is authorized or permitted by the provisions of this Amended and
Restated Mortgage Indenture and is not inconsistent therewith.
ARTICLE XIV.
Defeasance
If the Company, or its successors or assigns, shall pay or cause to
be paid unto the registered owners of all bonds the principal and interest
to become due thereon and any premium which may be due and payable thereon
at the times and in the manner stipulated therein, and if the Company shall
keep, perform and observe all and singular the covenants and promises in
such bonds and in this Amended and Restated Mortgage Indenture and in every
indenture supplemental hereto expressed to be kept, performed and observed
by it or on its part, then (at the option of the Company, evidenced by a
Certified Resolution) this Amended and Restated Mortgage Indenture and the
estate and the rights hereby granted shall cease, determine and be void,
and thereupon the Trustee shall, upon the request of the Company and at its
expense, cancel and discharge the lien of this Amended and Restated Mortgage
Indenture, and execute and deliver to the Company such deeds or other
instruments as shall be requisite to satisfy the lien hereof, and shall re-
convey to the Company the estate and title hereby conveyed, and shall assign
and deliver to the Company any property hereby conveyed and subject to the
lien of this Amended and Restated Mortgage Indenture which may then be in
its possession. Bonds for the payment or redemption of which sufficient
moneys shall have been deposited with or paid to or set apart in trust by
the Trustee (whether upon or prior to the maturity or the redemption date
of such bonds) shall, for the purposes of this Article XIV, be deemed to
have been paid; provided, however, that if such bonds are to be redeemed
prior to the maturity thereof the notice of redemption thereof required by
the provisions of this Amended and Restated Mortgage Indenture or of any
indenture supplemental hereto shall have been duly given, or provision
satisfactory to the Trustee shall have been made for the giving of such
notice.
ARTICLE XV.
Miscellaneous Provisions
SECTION 15.01. Nothing in this Amended and Restated Mortgage
Indenture expressed or implied is intended or shall be construed to confer
upon or to give to any person or corporation, other than the parties hereto
and the registered owners of the bonds issued hereunder, any right, remedy
or claim under or by reason of this Amended and Restated Mortgage Indenture
or any indenture supplemental hereto, or any covenant, condition or
stipulation hereof or thereof; and the covenants, stipulations and
agreements contained in this Amended and Restated Mortgage Indenture and i~
any and all indentures supplemental hereto are and shall be for the sole and
exclusive benefit of the parties hereto, their successors and assigns, and
of the registered owners of the bonds issued hereunder.
SECTION 15.02. Whenever in this Amended and Restated Mortgage
Indenture one of the parties hereto is named or referred to, the successors
and assigns of such party shall be deemed to be included, and all the
covenants, promises and agreements contained in this Amended and Restated
Mortgage Indenture by or on behalf of the Company or by or on behalf of the
Trustee shall bind and inure to the benefit of their respective successors
and assigns, whether so expressed or not.
SECTION 15.03. All moneys deposited with or paid to or set apart
in trust by the Trustee for the redemption of bonds or for the payment of
bonds issued hereunder upon the maturity thereof, or otherwise, shall be
held by the Trustee in trust for the account of the respective registered
owners of such bonds and shall be paid, when due, to the respective
registered owners of such bonds, upon presentation and surrender of such
bonds accompanied by such duly executed instruments of transfer as may be
required by the Company or the Trustee. Any such moneys remaining unclaimed
by the registered owners of such bonds for six (6) years after the date of
maturity or the date fixed for redemption, as the case may be, shall, upon
the written request of the Company therefor and if none of the Events of
Default specified in Section 8.01 shall to the knowledge of the Trustee have
happened and be continuing, be paid to the Company against its written
receipt therefor, and the registered owners of such bonds shall thereafter
be entitled to look only to the Company for payment thereof; provided,
however, that the Trustee, before being required to make any such payment
to the Company, may, at the expense of the Company, cause a notice, stating
that such moneys remain unclaimed and that after a date stated therein they
will be returned to the Company, to be published once in one daily newspaper
printed in the English language and of general circulation in Ansonia,
Connecticut.
SECTION 15.04. Any reference to the registered owners of a
particular percentage or proportion of the bonds, or of bonds of a
particular series, shall mean the registered owners at the particular time
of the specified percentage or proportion in aggregate principal amount of
all bonds then outstanding, or of all bonds of the particular series then
outstanding, as the case may be, exclusive of bonds owned or held by, for
the account of, or for the benefit or interest of the Company. The Trustee
(unless written objection is filed by the registered owner of one or more
bonds) shall be entitled conclusively to rely upon a notification in writing
by the Company specifying the principal amount of bonds owned or held by,
for the account of, or for the benefit or interest of the Company, or
stating that no bonds are so owned or held.
SECTION 15.05. Whenever in this Amended and Restated Mortgage
Indenture provision is made for the cancellation by the Trustee and the
delivery to the Company of any bonds, the Trustee may, upon request of the
Company, in lieu of such delivery, destroy or cremate such bonds and deliver
a certificate of such destruction or cremation to the Company.
SECTION 15.06. In case any one or more of the covenants or
agreements contained in this Amended and Restated Mortgage Indenture or in
the bonds shall be invalid, illegal or unenforceable in any respect, the
validity of the remaining covenants or agreements contained herein and in
the bonds shall not be affected, prejudiced or disturbed thereby.
SECTION 15.07. This Amended and Restated Mortgage Indenture may be
simultaneously executed in any number of counterparts, and all such
counterparts executed and delivered, each as an original, shall constitute
but one and the same instrument.
ARTICLE XVI.
Amendment By Consent Of Bondholders
Amendments and modifications of this Amended and Restated Mortgage
Indenture, or of any indenture supplemental hereto, and the rights and
obligations of the Company and of the owners of the bonds issued and to be
issued under this Amended and Restated Mortgage Indenture, may be made with
the written consent of the Company and the written consent of the registered
owners of not less than sixty-six and two-thirds percent (66-2/3%) in
principal amount of the bonds then outstanding under this Amended and
Restated Mortgage Indenture; provided that any amendment or modification
which will affect the rights under this Amended and Restated Mortgage
Indenture or any indenture supplemental hereto of the owners. of one or
more, but less than all, of the series of bonds outstanding under this
Amended and Restated Mortgage Indenture or which will amend or modify any
Exclusive Benefit Covenant may be made only with the consent of the Company
and the written consent of the registered owners of not less than sixty-six
and two-thirds percent (66-2/3%) in total principal amount of the bonds of
the series so affected or the bonds of the series for the protection or
benefit of which such Exclusive Benefit Covenant is made, as the case may
be, then outstanding under this Amended and Restated Mortgage Indenture
(unless in the case of any Exclusive Benefit Covenant some other percentage
of bonds is provided in the supplemental indenture establishing the
Exclusive Benefit Covenant), and may be made with the written consent of the
registered owners of such principal amount of the bonds of such series
without any requirement for the consent of the registered owners of bonds
outstanding under this Amended and Restated Mortgage Indenture which are not
affected by such amendment or modification; provided, however, that except
with the written consent of each registered owner of any bond affected
thereby no amendment or modification shall be made which will (a) permit the
extension of the time or times of payment of the principal of or the
interest on any bond, or a reduction in the principal amount of any bond,
the premium (if any) or the rate of interest thereon, or otherwise affect
the terms of payment of the principal of, premium (if any), or interest on,
any bonds, (b) reduce the percentage of principal amount of bonds required
by this Article XVI for the taking of any action hereunder, (c) permit the
creation by the Company, after the date hereof, of any mortgage or pledge
or lien in the nature thereof , ranking prior to or equal with the lien of
this Amended and Restated Mortgage Indenture, and not otherwise permitted
hereunder, on any material part of the trust estate, or (d) deprive the
holder of any bond outstanding of the lien of this Amended and Restated
Mortgage Indenture on any material part of the trust estate.
For all purposes of this Article XVI, the Trustee shall be entitled
to rely upon an Opinion of Counsel with respect to the extent, if any, to
which any amendment or modification pursuant to the provisions of this
Article XVI affects the rights under this Amended and Restated Mortgage
Indenture or under any indenture supplemental hereto of any owners of bonds
then outstanding.
A true copy of the text of any amendment or modification accomplished
pursuant to this Article XVI shall be mailed by the Trustee, postage
prepaid, to the registered owners of all bonds then outstanding under
this Amended and Restated Mortgage Indenture, at their addresses as the
same shall appear, if at all, upon the registry books of the Company, not
later than thirty (30) days after there shall have been filed with the
Trustee written consents by the registered owners of the percentage of the
principal amount of outstanding bonds required by this Article XVI to
approve such amendment or modification.
Unless a later date shall be specified in the written consents
thereto, any amendment or modification approved by the registered owners of
the percentage of the principal amount of outstanding bonds required by this
Article XVI shall become effective upon completion of the mailing specified
in the next preceding paragraph and the filing with the Trustee of a
Certified Resolution approving such amendment or modification. when
effective in accordance with the next Preceding sentence, such amendment or
modification shall be conclusively binding upon the Company, the Trustee
and the owners of all bonds outstanding under this Amended and Restated
Mortgage Indenture, except as otherwise specifically provided in this
Article XVI; provided, however, that no such amendment or modification, or
resolution of the Board of Directors of the Company, shall in any manner
change or modify any of the rights or obligations of the Trustee without
the Trustee's written assent thereto. Nothing contained in this Article XVI
shall be deemed or construed to authorize or permit any hindrance or delay
in the exercise of any right or rights conferred upon or reserved to the
Trustee or to the owners of bonds under any of the provisions of this
Amended and Restated Mortgage Indenture or of the bonds.
Instruments supplemental to this Amended and Restated Mortgage
Indenture embodying any amendment or modification of this Amended and
Restated Mortgage Indenture, of any indenture supplemental hereto or of the
rights and obligations of the Company or of the owners of the bonds
outstanding under this Amended and Restated Mortgage Indenture may be
executed by the Trustee and the Company and, upon demand of the Trustee or
if so specified in the written consents to the amendment or modification,
shall be executed by the Company and the Trustee.
ARTICLE XVII.
Definitions
Wherever used in this Amended and Restated Mortgage Indenture or any
indenture supplemental hereto, the following terms shall have the respective
meanings set forth below, unless the context otherwise requires:
1. The term "Certified Resolution" shall mean a resolution or
resolutions certified by the Secretary or an Assistant
Secretary of the Company to have been duly adopted by its Board
of Directors.
2. The term "Long Term Debt" shall mean the principal amount of
all outstanding indebtedness maturing more than one year from
the date incurred or assumed, or renewable or extendible by its
terms beyond such one year, without reduction for any serial,
sinking fund or other required payment due on or in respect of
any such indebtedness, even though due within such year.
3. The term "mailing address," when used with reference to the
Company, shall mean the address set forth beneath the
signatures of the officers of the Company and the Trustee to
this Amended and Restated Mortgage Indenture, or such other
address as the Company may have furnished in writing to the
Trustee.
4. The term "Opinion of Counsel" shall mean an opinion of counsel
(who may be in the regular employ of, or of counsel to, the
Company or a corporation affiliated with the Company), selected
by the Board of Directors and satisfactory to the Trustee. Any
Opinion of Counsel may rely upon statements of fact contained
in an accompanying certificate of an officer or officers of the
Company; and any Opinion of Counsel may rely, insofar as it
relates to titles to property or liens, charges or encumbrances
thereon, upon any certified abstract of title, torrens
certificate, guaranty policy or certificate issued by a
reputable person, firm or corporation engaged in the business
of insuring or guaranteeing titles to property, or opinion or
certificate of other counsel, provided that the Opinion of
Counsel shall state that such reliance is reasonable and proper
and provided that a copy of such other document so relied upon
is furnished with such Opinion.
5. The terms "outstanding" or "issued and outstanding," when used
with reference to bonds issued under this Amended and Restated
Mortgage Indenture, shall mean, as of any particular time, all
bonds authenticated and delivered by the Trustee under this
Amended and Restated Mortgage Indenture, except
(a) bonds which have been satisfied, discharged and canceled
or delivered to the Trustee for cancellation;
(b) bonds or portions thereof for the payment or redemption
of which moneys in the necessary amount shall have been
deposited in trust with the Trustee or with any paying
agent (other than the Company) or shall have been set
aside and segregated in trust by the Company (if the
Company shall act as its own paying agent), provided
that, if such bonds are to be redeemed, notice of such
redemption shall have been given as provided in this
Amended and Restated Mortgage Indenture or provision
satisfactory to the Trustee shall have been made for
giving such notice;
(c) bonds for the exchange of which bonds of the successor
corporation have been delivered to the Trustee, and
notice of such exchange given, as provided in Section
11.04;
(d) bonds in lieu of which other bonds shall have been
authenticated and delivered pursuant to the terms of
Section 1.10; and
(e) bonds deposited with or held by the Trustee under any of
the provisions of this Amended and Restated Mortgage
Indenture, including any so held under a sinking fund or
similar fund.
6. The term "Permitted Encumbrances" shall mean:
(a) any lien, charge or other encumbrance for the
satisfaction of which money in the necessary amount has
been deposited with the Trustee, or with the trustee or
other holder of such lien, charge or encumbrance, or
which will be retired prior to or simultaneously with the
taking of the action applied for under this Amended and
Restated Mortgage Indenture in connection with which
reference is made to Permitted Encumbrances;
(b) liens of taxes or assessments for the current year and
taxes or assessments not yet due and payable;
(c) liens, securing indebtedness which has neither been
assumed by the Company nor upon which it customarily pays
interest charges, existing upon real property, or rights
in or relating thereto, which real property or rights
were acquired for right-of-way purposes;
(d) workmen's, materialmen's, carriers', warehousemen's,
landlords' and other similar liens incidental to
construction or current operations and in respect of
obligations which are not overdue;
(e) the lien of judgments covered by insurance, or on appeal
and covered by supersedes bond or, if not covered by such
insurance or bond, not exceeding at any one time One
Hundred Thousand Dollars ($100,000) in aggregate amount;
(f) zoning laws and ordinances;
(g) leases permitted by Section 6.01;
(h) easements, rights of way, restrictions, conditions and
other similar encumbrances, minor defects or
irregularities of title, and alleys, streets and highways
that may run across or encroach upon property subject to
the lien of this Amended and Restated Mortgage Indenture,
which in the aggregate do not materially impair the
usefulness of the mortgaged property in the present
business of the Company;
(i) in the case of easements and rights of way owned the
Company, and rights to use or appropriate water or to
overflow the lands of others, such defects therein as the
Company itself shall have power to cure by appropriate
legal proceedings;
(j) liens, charges or encumbrances which are being contested
in good faith and by appropriate proceedings and, in the
aggregate, do not materially and adversely affect the
financial condition of the Company;
(k) liens of purchase money obligations and liens existing on
property at the time of its acquisition by the Company or
a successor corporation as defined in Article XI; and
(l) liens junior to this Amended and Restated Mortgage
Indenture.
7. The term "Original Indenture" shall mean the Trust Indenture,
dated as of July 15, 1954, from the Company to The First
National Bank and Trust Company of New Haven (now The
Connecticut National Bank), as Trustee, and such mortgage as
heretofore supplemented and amended.
8. The term "Total Capitalization" shall mean the total of the
sums stated in subparagraphs (d), (e) and (f) of paragraph 1 of
Section 2.04.
9. The term "utility business" shall mean the business of a water
company as described in Section 16-1 of the Connecticut General
Statutes.
10. The term "utility property" shall mean property used or useful
in connection with the Company's utility business.
11. The term "Exclusive Benefit Covenant" shall mean any covenant,
agreement or condition that is expressly stated to be solely
for the protection or benefit of the registered owners of the
bonds of one or more but less than all series of bonds.
12. "Direct Income From the Sale of Real Property" shall mean the
income recognized by the Company, net of taxes, from the sale
or other disposition of real property in the year of such
disposition in accordance with generally accepted accounting
principles; such term shall not include amortization of income
from such dispositions in years subsequent to the
applicable dispositions, reflecting the sharing of gains from
such dispositions between the Company's ratepayers and
shareholders ordered by the DPUC.
13. The term "Base Rate" shall have the meaning ascribed to such
term in Section 2.08.
14. The term "Excluded Real Property" shall have the meaning
ascribed to such term in Granting Clause I.
ARTICLE XVIII.
Applicable Law
This Amended and Restated Mortgage Indenture is made under, and shall
be governed by, the laws of the State of Connecticut.
IN WITNESS WHEREOF, The Ansonia Derby Water Company has caused these
presents to be signed in its corporate name by its Chairman of the Board,
its President or one of its Vice Presidents and sealed with its corporate
seal attested by its Secretary or one of its Assistant Secretaries, and The
Connecticut National Bank has caused these presents to be signed in its
corporate name by one of its Vice Presidents or one of its duly authorized
officers and sealed with its corporate seal attested by its duly authorized
officer or person, all as of the day and year first above written.
THE ANSONIA DERBY WATER COMPANY
By_______________________________
Its
[SEAL]
Attest:____________________________
By:________________________________
Signed, sealed and delivered by
The Ansonia Derby Water Company
in the presence of:
____________________________________
____________________________________
THE CONNECTICUT NATIONAL BANK
By_____________________________
Its
[SEAL]
Attest:______________________________
Signed, sealed and delivered by
The Connecticut National Bank
in the presence of:
_________________________________
_________________________________
The mailing address of the Company referred to in Article XVII of the
foregoing Amended and Restated Mortgage Indenture is 230 Beaver Street,
Ansonia, Connecticut 06401.
STATE OF CONNECTICUT )
) ss: Ansonia; August 9, 1991
COUNTY OF NEW HAVEN )
Personally appeared Leroy A. DeFrances and Anne A. Renkert, of The
Ansonia Derby Water Company, signer and sealer, respectively, of the
foregoing instrument, to me personally known, who being by me duly sworn
did say that they are the Vice President and Treasurer and Secretary,
respectively, of The Ansonia Derby Water Company, one of the corporations
described herein, and that they executed said instrument and severally
acknowledged the same to be their free act and deed as such Vice President
and Treasurer and Secretary, respectively, and the free act and deed of The
Ansonia Derby Water Company and on oath stated that they were duly
authorized to sign and seal, respectively, said instrument and that the seal
affixed thereto is the corporate seal of The Ansonia Derby Water Company,
before me.
_________________________________
Notary Public
My Commission Expires:
(NOTARY SEAL)
STATE OF CONNECTICUT )
) ss: Hartford; August 8, 1991
COUNTY OF HARTFORD )
Personally appeared Mark A. Forgetta and Kathy A. Larimore of The
Connecticut National Bank, signer and sealer, respectively, of the foregoing
instrument, to me personally known, who being by me duly sworn did say that
they are a Vice President, respectively, of The Connecticut National Bank,
one of the corporations described herein, and that they executed said
instrument and severally acknowledged the same to be their free act and deed
as such Vice President and Corporate Trust Officers respectively, and the
free act and deed of The Connecticut National Bank and on oath stated that
they were duly authorized to sign and seal, respectively, said instrument
and that the seal affixed thereto is the corporate seal of The Connecticut
National Bank, before me.
__________________________________
Notary Public
My Commission Expires:
(NOTARY PUBLIC)
EXHIBIT A
(FORM OF SERIES E BOND)
No. R-
THE ANSONIA DERBY WATER COMPANY
FIRST MORTGAGE 9.64% BOND, SERIES E,
DUE SEPTEMBER 1, 2011
The Ansonia Derby Water Company, a corporation organized and existing
under the laws of the State of Connecticut (hereinafter called the
"Company," which term shall include any successor corporation as defined in
the Amended and Restated Mortgage Indenture hereinafter referred to), for
value received, hereby promises to pay to __________________________________
or registered assigns, on the first day of September 2011, at the principal
office of the Trustee hereinafter named in the City of Hartford, Connecticut
(or, if there be a successor trustee, at its principal office), the sum of
_______________________ Dollars in coin or currency of the United States of
America which at the time of payment is legal tender for public and private
debts, and to pay interest thereon to the registered owner hereof, at such
office (or as provided in the Amended and Restated Mortgage Indenture
hereinafter referred to or in Section 4.1 of the Bond Purchase Agreement
dated as of August 13, 1991 between the Company and the original holder of
the Series E Bonds hereinafter referred to), from the interest payment date
next preceding the date of this bond (or, if this bond is dated prior to
March 1, 1992, from the date hereof) until maturity, at the rate of nine
and sixty-four one-hundredths percent (9.64%) per annum, in like coin or
currency, semi-annually on the first day of March and the first day of
September in each year (or, if either of such days shall be a Saturday,
Sunday or legal holiday, on the next following business day), commencing on
the first day of March, 1992, and the balance of such interest at maturity,
and to pay interest at the rate of eleven and sixty-four one-hundredths
percent (11.64%) per annum on any overdue principal and, to the extent
permitted by law, on any overdue installment of interest, from the due date
until the date of payment.
This bond is one of a duly authorized issue of bonds of the Company
known as its First Mortgage Bonds, not limited in aggregate principal amount
except as provided in the Amended and Restated Mortgage Indenture
hereinafter referred to, all issued and to be issued in one or more series
under and equally and ratably secured (except insofar as any sinking or
other fund, established in accordance with the provisions of the Amended
and Restated Mortgage Indenture hereinafter referred to, may afford
additional security for the bonds of any particular series) by an Amended
and Restated Mortgage Indenture (hereinafter called the "Amended and
Restated Mortgage Indenture"), executed by the Company to The Connecticut
National Bank, as Trustee, dated as of August 9, 1991, to which Amended and
Restated Mortgage Indenture and to all indentures supplemental thereto
reference is hereby made for a description of the property mortgaged and
pledged, the nature and extent of the security, the terms and conditions
upon which the bonds are and are to be secured, and the rights of the
holders or registered owners thereof and of the Trustee in respect of such
security. As provided in the Amended and Restated Mortgage Indenture, such
bonds may be issued in series for various principal sums, may bear different
dates and mature at different times, may bear interest at different rates,
and may otherwise vary as provided or permitted in the Amended and Restated
Mortgage Indenture. This bond is one of the bonds described in the Amended
and Restated Mortgage Indenture and designated therein as "First Mortgage
9.64% Bonds, Series E, due September 1, 2011" Hereinafter referred to as the
"Series E Bonds").
The Series E Bonds are subject to redemption, in whole or in part, at
any time and from time to time, at the option of the Company or pursuant to
certain requirements of the Amended and Restated Mortgage Indenture, upon
notice mailed by first-class mail to the registered owners thereof, at least
twenty-five (25) days before the redemption date, all on the conditions and
in the manner provided in the Amended and Restated Mortgage Indenture;
provided, however, that no Series E Bonds may be redeemed on or prior to
September 1, 2001.
Series E Bonds shall be redeemable (a) if redeemed through the
operation of the Sinking Fund referred to in Section 5.02 of Article V of
the Amended and Restated Mortgage Indenture, or by the use, or in
anticipation of the receipt, of moneys derived from the sale to, or other
acquisition by or on behalf of, one or more governments or municipal
corporations or other governmental subdivisions, bodies, authorities or
agencies of all or substantially all of the property of the Company as
described in Section 6.06 of the Amended and Restated Mortgage Indenture
(including any such sale to or acquisition by an intermediary or
intermediaries acquiring such assets or stock under an arrangement for the
resale or other disposition thereof to one or more government or municipal
corporations or other governmental subdivisions, bodies, authorities or
agencies), at a redemption price of one hundred percent (100%) of the
principal amount thereof, or (b) if redeemed otherwise than as described in
the preceding clause (a), at the redemption price at the time applicable as
set forth in the following schedule, in each case together with interest
accrued on such bonds to the date fixed for their redemption:
Redemption Price
Redemption Period (Percentage of
(Both Dates Inclusive) Principal
Amount)
September 2, 2001 to September 1, 2002 105
September 2, 2002 to September 1, 2003 104
September 2, 2003 to September 1, 2004 103
September 2, 2004 to September 1, 2005 102
September 2, 2005 to September 1, 2006 101
September 2, 2006 to Maturity 100
If this bond, or any portion hereof, is called for redemption and
payment thereof is duly provided for as specified in the Amended and
Restated Mortgage Indenture, interest shall cease to accrue hereon or on
such portion, as the case may be, from and after the date fixed for
redemption.
In the event that all or substantially all of the property of the
Company at the time subject' to the lien of the Amended and Restated
Mortgage Indenture, or all or substantially all of the property of the
Company at the time so subject to such lien which is used or useful in
connection with its utility business (as defined in the Amended and Restated
Mortgage Indenture), shall be released from the lien of the Amended and
Restated Mortgage Indenture under the provisions of Section 6.03 or Section
6.06 thereof, the award or consideration received by the Trustee for such
property (together with any other moneys held by the Trustee under the
Amended and Restated Mortgage Indenture) shall be applied by the Trustee to
the redemption in full of all bonds then outstanding under the Amended and
Restated Mortgage Indenture, any moneys held for the account for any
particular bonds being applied to the redemption (or payment, if matured)
of such bonds to the extent that such bonds are redeemable at such time by
their terms, in accordance with the applicable provisions of Article IV of
the Amended and Restated Mortgage Indenture. If the moneys then in the hands
of the Trustee available for such purpose shall not be sufficient for such
redemption in full, the Company shall deposit with the Trustee on or before
the date fixed for redemption an amount sufficient to enable the Trustee to
pay the full redemption prices of the bonds at the rate or rates applicable,
together with interest accrued to such date and premiums, if any, and all
expenses in connection with such redemption. If the Company shall default
in its obligation to deposit any such amount with the Trustee, the moneys
in the hands of the Trustee available for such purpose (together with any
moneys thereafter received) shall be applied by the Trustee to the partial
payment of all bonds then outstanding under the Amended and Restated
Mortgage Indenture, pro rata in proportion to the respective amounts then
due and owing thereon for principal, premium (if any) and interest but,
until the full amount then due and owing on the bonds shall have been paid,
no such partial payment shall discharge the obligation of the Company on any
bond except to the extent of such partial payment Notice of any such partial
pro rata payment shall be given once the Trustee to the registered owners
of the bonds in the manner provided above with respect to the redemption of
bonds within one week after the date for which the bonds were called for
redemption, and from and after a date to be specified in such notice (to be
not earlier than the date upon which such notice is given nor later than
ten (10) days after such redemption date) interest shall cease to accrue on
the obligation of the Company on the bonds so called for redemption to the
extent of the partial payment so provided. Subsequently, if any additional
moneys applicable to an additional partial payment or to the payment of the
entire balance then due on the bonds shall be received by the Trustee, the
Trustee shall, with reasonable promptness, give like notice of any such
payment (specifying a date within ten (10) days after the date of such
notice) with like effect.
The principal of this bond may be declared or may become due prior to
its maturity date, in the manner and with the effect and subject to the
conditions provided in the Amended and Restated Mortgage Indenture, upon
the happening of an Event of Default as in the Amended and Restated Mortgage
Indenture provided; subject, however, to the right, under certain
circumstances, of the registered owners of a majority in principal amount
of the bonds outstanding (or, if such Event of Default be a default in the
payment of any principal of or premium or interest on the bonds of any
particular series, the registered owners of a majority in principal amount
of the bonds of such series outstanding) to annul such declaration.
In case the Company shall be consolidated with or merged into any
other corporation, or all or substantially all of the mortgaged property as
an entirety or substantially as an entirety shall be conveyed or
transferred, subject to the lien of the Amended or Restated Mortgage
Indenture, the corporation resulting from such consolidation, or into which
the Company shall have been merged, or which shall have received such
conveyance or transfer, may elect to exchange its bonds for bonds
outstanding under the Amended and Restated Mortgage Indenture, including
the Series E Bonds.
To the extent permitted by, and as provided in, the Amended and
Restated Mortgage Indenture, amendments or modifications of the Amended and
Restated Mortgage Indenture, or of any indenture supplemental thereto, and
of the rights and obligations of the Company and of the owners of the bonds
issued and to be issued thereunder, may be made with the consent of the
Company by the written consent of the registered owners of not less than
sixty-six and two-thirds percent (66-2/3%) in principal amount of the bonds
then outstanding under the Amended and Restated Mortgage Indenture and
entitled to vote; provided that any amendment or modification which will
affect the rights under the Amended and Restated Mortgage Indenture or any
indenture supplemental thereto of the owners of one or more, but less than
all, of the series of bonds outstanding under the Amended and Restated
Mortgage Indenture or any indenture supplemental thereto or which will amend
or modify any Exclusive Benefit Covenant (as defined in the Amended and
Restated Mortgage Indenture) may be made only with the consent of the
Company and the written consent of the registered owners of not less than
sixty-six and two-thirds percent (66 2/3%) in principal amount of the bonds
of the series so affected or the bonds of the series for the protection or
benefit of which such Exclusive Benefit Covenant is made, as the case may
be, then outstanding under the Amended and Restated Mortgage Indenture
(unless in the case of an Exclusive Benefit Covenant some other percentage
of bonds is provided in the supplemental indenture establishing the
Exclusive Benefit Covenant), and may be made with the written consent of
the registered owners of such principal amount of the bonds of such series
without any requirement for the consent of owners of bonds outstanding under
the Amended and Restated Mortgage Indenture which are not affected by such
amendment or modification; provided, however, that, except with the written
consent of each registered owner of any bond affected thereby, no amendment
or modification shall be made which will (a) permit the extension of the
time or times of payment of the principal of or the interest on this bond,
or a reduction in the principal amount hereof, the premium (if any) or the
rate of interest hereon, or otherwise affect the terms of payment of the
principal of, premium (if any) or interest on, this bond, (b) reduce the
percentage of principal amount of bonds the consent of the owners of which
is required for the modification or alteration of the Amended and Restated
Mortgage Indenture, or of any indenture supplemental thereto, (c) permit the
creation by the Company, after the date hereof, of any mortgage or pledge
or lien in the nature thereof, ranking prior to or equal with the lien of
the Amended and Restated Mortgage Indenture, and not otherwise permitted
thereunder, on any material part of the mortgaged and pledged property, or
(d) deprive the holder of any outstanding bond of the lien of the Amended
and Restated Mortgage Indenture on any material part of the mortgaged and
pledged property.
This bond is transferable by the registered owner hereof, in person
or by duly authorized attorney, on books of the Company to be kept for that
purpose at the principal office of the Trustee in the City of Hartford,
Connecticut (or, if there is a successor trustee, at its principal office),
upon surrender hereof at such office for cancellation and upon presentation
of a written instrument of transfer duly executed, and thereupon the Company
shall issue in the name of the transferee or transferees, and the Trustee
shall authenticate and deliver, a new registered Series E Bond or Bonds, in
authorized denominations, of a like aggregate principal amount; and the
owner of any Series E Bond or Bonds may surrender the same as provided above
at such office in exchange for a like aggregate principal amount of bonds
of like form, in authorized denominations; all subject to the terms and
conditions specified in the Amended and Restated Mortgage Indenture.
The Company and the Trustee may treat the registered owner of this
bond as the absolute owner hereof, whether or not this bond shall be
overdue, for the purpose of receiving payment, or account of the principal
and interest of this bond, and for all other purposes; and neither the
Company nor the Trustee shall be affected by any notice to the contrary;
and interest and principal may be paid by the Company or Trustee to the
registered holder in accordance with Section 4.1 of the Bond Purchase
Agreement, dated as of August 13, 1991, between the Company and the original
holder of the bond.
No recourse under or upon any obligation, covenant or agreement
contained in the Amended and Restated Mortgage Indenture or in any indenture
supplemental thereto, or in any bond thereby secured, or because of any
indebtedness thereby secured, shall be had against any incorporator, or
against any past, present or future stockholder, officer or director, as
such, of the Company or of any successor corporation, either directly or
through the Company or any successor corporation, under any constitution,
statute, or rule of law or equity, or by the enforcement of any assessment
or by any legal or equitable proceeding or otherwise; it being expressly
agreed and understood that the Amended and Restated Mortgage Indenture, any
indenture supplemental thereto and the obligations thereby secured are
solely corporate obligations, and that no personal liability whatever shall
attach to, or be incurred by, such incorporators, stockholders, officers or
directors, as such, of the Company, or of any successor corporation, or any
of them, because of the incurring of the indebtedness thereby authorized,
or under or by reason of any of the obligations, covenants or agreements
contained in the Amended and Restated Mortgage Indenture or in any indenture
supplemental thereto or in any of the bonds or coupons thereby secured, or
implied therefrom.
This bond shall not be entitled to any benefit under the Amended and
Restated Mortgage Indenture or any indenture supplemental thereto, and shall
not become valid or obligatory for any purpose, until The Connecticut
National Bank, as the Trustee under the Amended and Restated Mortgage
Indenture, or a successor trustee thereunder, shall have signed the form of
authentication certificate endorsed hereon.
IN WITNESS WHEREOF, The Ansonia Derby Water Company has caused this
bond to be signed in its name by its Chairman of the Board, its President
or a Vice President and its corporate meal to be hereto affixed and attested
by its Secretary or an Assistant Secretary, and this bond to be dated August
13, 1991.
THE ANSONIA DERBY WATER COMPANY
By______________________________
Its
ATTEST:
___________________________________
(FORM OF TRUSTEE'S AUTHENTICATION CERTIFICATE FOR SERIES E BONDS)
TRUSTEE'S AUTHENTICATION CERTIFICATE
This bond is one of the bonds, of the series designated therein,
described in the within-mentioned Amended and Restated Mortgage Indenture.
THE CONNECTICUT NATIONAL BANK,
as Trustee
By______________________________
Its Authorized Officer
1/27/98
PURCHASE AND SALE AGREEMENT
RECITALS
A. Seller is the owner of certain real property located
in the Town of Oxford, County of New Haven, State of
Connecticut described in Exhibit A attached hereto and
incorporated herein by this reference.
Said real property, together with any and all
improvements, fixtures, timber, water and/or minerals located
thereon and any and all rights appurtenant thereto including
but not limited to timber rights, water rights, grazing rights,
access rights and mineral rights, shall be referred to in this
Agreement as the "Subject Property".
B. Seller acknowledges that Buyer is entering into this
Agreement in its own right and that Buyer is not an agent of
any governmental agency or entity.
C. Buyer is a conservation organization having among its
purposes the acquisition on behalf of the public of open space,
scenic and recreational lands. Buyer is exempt from taxation
under Section 501(c)(3) of the Internal Revenue Code and is
included in the "Cumulative List of Organizations described in
Section 170 (c) of the Internal Revenue Code" published by the
Internal Revenue Service. Buyer is a nonprofit organization
organized for the purpose of holding undeveloped land in trust
for conservation or recreation purposes within the meaning of
Connecticut General Statutes Section 12-498(a)(16). Buyer is
not a private foundation within the meaning of Section 509(a)
of the Internal Revenue Code.
D. Seller believes that the purchase price for the
Subject Property which is specified in this Agreement is below
fair market value. Seller intends that the difference between
the purchase price and fair market value shall be a charitable
contribution to Buyer. However, Buyer makes no representation
as to the tax consequences of the transaction contemplated by
this Agreement. Seller will obtain independent tax counsel and
be solely responsible for compliance with the gift value
substantiation requirements of the Internal Revenue Code. To
the extent that the purchase price is below the fair market
value, the parties agree that it does not reflect the existence
of defects in the Subject Property, such as environmental
conditions requiring remediation, known to Seller or Buyer.
THE PARTIES AGREE AS FOLLOWS:
1. Parties and Premises. Birmingham Utilities, Inc., a
public service company, having a place of business in Ansonia,
County of New Haven, State of Connecticut which shall be
referred to as "Seller", agrees to SELL, and The Trust for
Public Land ('nc.), a nonprofit California public benefit
corporation, with a place of business in New Haven,
Connecticut, which shall be referred to as "Buyer", agrees to
BUY, upon the terms hereinafter set forth, certain real
property located in the Town of Oxford, County of New Haven,
State of Connecticut described in Exhibit A attached hereto and
incorporated herein by this reference. Said real property,
together with any water, timber or minerals located thereon and
any and all rights appurtenant thereto, including but not
limited to water, timber, mineral and access rights, shall be
referred to as the "Subject Property". The Subject Property is
being sold "As Is", subject to the terms and conditions of this
purchase and sale agreement (the "Agreement").
2. Deed and Title. Seller shall convey to Buyer (or its
nominee or assignee, as permitted under Paragraph 21 herein,
designated in writing five (5) days prior to closing) a good
and sufficient marketable title to an indefeasible estate in
fee simple, by Connecticut-form Warranty Deed containing the
usual covenants warranting good title in fee simple free from
all encumbrances (subject only to the exceptions hereinafter
set forth), in or to the Subject Property, as applicable.
Said premises shall be conveyed subject only to the
following:
(a) Real estate taxes of the Town of Oxford on the
current list, which taxes the Buyer will assume and
agree to pay, subject to a proration of current
taxes as hereinafter provided.
(b) Building and building line restrictions and zoning,
planning and other municipal regulations of the Town
of Oxford as in effect on the date hereof.
(c) Any state of facts which a physical inspection or
survey might disclose, provided same do not render
title unmarketable.
(d) Any balance, not delinquent as of closing, on any
sewer, water, sidewalk or other municipal
improvement lien or caveat.
(e) Any and all provisions of any ordinance, municipal
regulation or public and private law.
(f) Easements in favor of the Seller as more
particularly shown on a recordable plan provided by
Seller for (i) the installation, use, operation,
maintenance, repair, and replacement of water meter
pits on the Subject Property.
(g) A covenant running with the land restricting the use
of 75% of the Subject Property to open space as
defined by Connecticut statute.
If Seller shall be unable to convey good clear record and
marketable title to Buyer at closing, Buyer shall have the
option to (a) close the transaction and accept such title as
Seller can convey; or (b) cancel this Agreement, in which event
all sums paid hereunder shall be returned to the Buyer and
neither party shall have any further liabilities or obligations
to the other; provided, however, before Buyer may exercise this
option, it must afford the Seller the opportunity to postpone
the closing for a period of time up to thirty (30) days in
order that Seller may, if it so desires, attempt to remedy the
alleged title defect.
Nothing shall constitute an "unmarketable" encumbrance,
lien, or exception to title for purposes of this Agreement if
the Standards of Title of the Connecticut Bar Association
recommends that no corrective or curative action is necessary
in circumstances substantially similar to those presented by
such encumbrance, lien, or exception to title. Violations, at
the time of closing of title, of any governmental (including
zoning and planning) rules, regulations or limitations shall
constitute exceptions to title for the purposes of this
Agreement only if such violations substantially impair the use
of the Subject Property (as applicable) for open-space land or
other municipal uses within the unrestricted portion of the
Subject Property, or if the Buyer has been unable to obtain
title insurance without additional premium from a title
insurance company licensed in the State of Connecticut.
Buyer shall complete its review of title, and provide
Seller with a list of any objectionable title exceptions,
within 90 days of the signing of this Agreement (the "Due
Diligence Period"). Seller shall provide Buyer with a current
survey of the Subject Property, and Buyer shall have 30 days
from the date of receipt to review said survey and provide
Seller with a list of any survey objections.
3. Purchase Price. The agreed purchase price (the
"Purchase Price") for the Subject Property is Three Million Two
Hundred Twenty Thousand Dollars ($3,220,000), of which
$ 1,000 have been paid as a deposit this day,
$ 10,000 are to be paid within 15 days after
the completion of the Due Diligence
Period (the "Deposits"), and
$3,209,000 are to be paid in certified funds at
the Time of Closing (as hereinafter
defined).
$3,220,000 Total
4. Date and Place of Closing. Final settlement of the
obligations of the parties hereto at closing ("Closing") shall
occur at such date, place and time as Buyer designates;
provided, however, said date shall occur within forty-five (45)
days after the later to occur of (1) the successful completion
of all votes needed by the Town of Oxford in order for the Town
to acquire the Subject Property, and (2) approval by the
Connecticut Department of Public Utility Control (DPUC), in
each case as provided for in Paragraph 30 herein, or as
otherwise agreed to by the parties, at such date, place and
time as the parties shall mutually agree. Notwithstanding the
foregoing, however, in no event shall any Closing hereunder
occur after December 31, 1998. If Buyer has performed in
conformance with the terms of this Agreement, and this
Agreement is terminated because Closing cannot occur prior to
December 31, 1998 because of circumstances over which Seller
has control, then Seller shall reimburse Buyer for its
documented out of pocket expenses incurred in connection with
Buyer's due diligence and efforts to win approval of the Town
of Oxford, excluding staff time and overhead. Buyer and Seller
hereby acknowledge and agree that time is of the essence for
each and every term of this Agreement. The parties agree that
Buyer may arrange a simultaneous closing with a public agency
or municipality and Seller will cooperate in coordinating such
a simultaneous closing.
5. Title Insurance. Buyer may, at Buyer's sole cost and
expense, purchase an ALTA owner's policy of title insurance
(Owner's Form B-1970) in the full amount of the Purchase Price
insuring that title to the Subject Property is vested in Buyer
at Closing subject only to the exceptions noted in Section 2.
6. Seller's Covenants.
Seller covenants that, from and after the date hereof
until the Closing, Seller will not:
(a) make or suffer to be made any leases, contracts,
options or agreements whatsoever affecting the Subject
Property, nor shall Seller cause or permit any lien,
encumbrance, mortgage, deed of trust, right, restriction or
easement to be placed upon or created with respect to the
Subject Property, except with the written consent of Buyer,
which consent shall not be unreasonably withheld, conditioned
or delayed;
(b) remove or permit the removal of any vegetation,
soil or minerals from the Subject Property or disturb or suffer
the disturbance of the existing contours and/or other natural
features of the land in any way whatsoever;
(c) cause or permit any dumping or depositing of any
materials on the Subject Property, including, without
limitation, garbage, construction debris or solid or liquid
wastes of any kind; or,
(d) cause or permit any default beyond the
applicable cure period under any mortgage or deed of trust
covering the Subject Property, or cause or permit the
foreclosure of any other lien affecting the Subject Property.
Seller shall promptly cure, at Seller's sole cost and
expense, each and every breach or default of any covenant set
forth in this paragraph upon receipt of notice thereof by
Buyer. Buyer shall have the right, but no obligation, to cure
or cause to be cured any such breach or default, at Seller's
sole cost and expense if, in Buyer's reasonable judgment,
Seller has failed to promptly or completely cure the same or if
such action on Buyer's part is reasonably necessary to preserve
and protect the natural, scenic or other open space values of
the Subject Property. The reasonable costs of such cure
attempted or effected by Buyer may, at Buyer's election, be
credited against the balance of the purchase price due and
payable at Closing.
7. Seller's Representations and Warranties. Seller
makes the following representation and warranty:
a. Seller has full power and authority to enter
into this Agreement (and the persons signing this Agreement for
Seller if Seller is not an individual have full power and
authority to sign for Seller and to bind it to this Agreement)
and to sell, transfer and convey all right, title and interest
in and to the Subject Property, subject to the prior approval
of the DPUC, and subject to any and all statutory rights of
purchase in favor of third parties.
8. Deposits and Remedies upon Default. All Deposits
made hereunder shall be held by Seller as earnest money for the
proper performance on the part of Buyer subject to the terms of
this Agreement and shall be duly accounted for at Closing. In
the event Seller defaults in the performance of any of Seller's
obligations under this Agreement, Buyer shall, in addition to
any and all other remedies provided in this Agreement or at law
or in equity, have the right of specific performance against
Seller. The parties acknowledge that Seller has no adequate
remedy at law in the event of Buyer's failure to fulfill its
obligations hereunder to purchase the Subject Property because
it is impossible to compute exactly the damages that would
accrue to Seller in such event. The parties have therefore
taken these facts into account in setting the amounts of the
Deposits and hereby agree that: (i) such $11,000.00 amount is
the best pre-estimate of such damages which would accrue to
Seller; (ii) said $11,000.00 amount represents damages and not
any penalty against Buyer; and (iii) if Buyer shall fail to
fulfill Buyer's obligations hereunder, said $11,000.00 amount
paid hereunder by Buyer shall be retained by Seller as its full
and liquidated damages in lieu of all other rights and remedies
which Seller may have against Buyer at law or in equity for
such failure.
9. Environmental Assessment. Buyer's obligation to
purchase the Subject Property pursuant to this Agreement shall
be contingent upon a determination by Buyer that the
environmental conditions at the Subject Property are acceptable
to Buyer.
a. On or before the expiration of the Due Diligence
Period, Buyer, through its employees and agents, may enter
upon the Subject Property for the purpose of accomplishing
an environmental assessment of the soils, water and
improvements (the "Environmental Assessment") at Buyer's
sole cost and expense. Should Buyer determine, in its sole
discretion, based on its investigations of the Subject
Property, that the environmental conditions at the Subject
Property or adjacent property are unacceptable on or
before the end of the 90 day Due Diligence Period, Buyer
shall so notify Seller, and Seller shall use its best
efforts, up to an expenditure of $5,000, to remove such
unacceptable condition by Closing. In no event shall
Seller be required to expend more than $5,000 to cure such
unacceptable condition. In such case where the cost of
curing an unacceptable condition exceeds $5,000, and
Seller elects not to cure said condition, Buyer may elect
to terminate this Agreement, in which case Buyer shall
have no obligation to purchase the Subject Property, and
all Deposits paid under the terms of this Agreement shall
promptly be refunded. Buyer shall restore Subject Property
to its original condition if it is disturbed as a result
of the environmental inspections.
10. Risk of Loss. All risk of loss shall remain with
Seller until Closing. In the event the Subject Property is
destroyed or damaged prior to Closing, Buyer shall have the
right at its option to terminate this Agreement by written
notice to Seller, and thereupon Seller shall refund to Buyer
the full amount of the Deposits. Seller shall notify Buyer in
writing of any damage to or destruction of the Subject Property
within five (5) days after Seller learns of such damage or
destruction.
11. Condemnation. In the event of the taking of all or
any part of the Subject Property by eminent domain proceedings,
or the commencement of such proceedings prior to Closing, Buyer
shall have the right, at its option, to terminate this
Agreement by written notice to Seller, in which case Seller
shall promptly refund to Buyer the Deposits. If Buyer does not
so terminate the Agreement, then Buyer may, at its option,
either (i) proceed to Closing with the Purchase Price reduced
by the total of any awards or other proceeds received or to be
received by Seller as a result of such proceedings, or (ii)
proceed to Closing with an assignment by Seller of all Seller's
right, title and interest in and to any and all such awards and
proceeds. Seller shall notify Buyer in writing of any eminent
domain proceedings affecting the Subject Property within five
(5) days after Seller learns of such proceedings.
12. Adjustments. Adjustments for taxes and the like
shall be made to the date of the Closing in accordance with the
closing customs of the bar of the County of New Haven. The
parties acknowledge that the conveyance of the Subject Property
from Seller to Buyer, or to Buyer's permitted nominee or
assignee under Paragraph 21 herein, is exempt from real estate
conveyance taxes.
13. Notices. All notices pertaining to this Agreement
shall be in writing delivered to the parties personally, by
fax, commercial express courier service or by first class
United States mail, postage prepaid, addressed to the parties
at the addresses set forth below. All notices given personally,
by fax or by commercial express courier service shall be deemed
given when received. All notices given by mail shall be deemed
given when deposited in the mail, first class postage prepaid,
addressed to the party to be notified. The parties may, by
notice as provided above, designate a different address to
which notice shall be given.
SELLER: BUYER:
Birmingham Utilities, Inc. The Trust for Public Land (Inc.)
230 Beaver Street 33 Union Street
P.O. Box 426 Boston, MA 02108
Ansonia, CT 06401 Attn: Arthur Badger Blackett, Jr.
Attn: Betsy Henley-Cohn, Chairwoman Senior Project Manager
Tel: (860) Tel: (617) 367-6200
Fax: (860) Fax: (617) 367-1616
Copies of any notice to Seller Copies of any notice to Buyer
should also be sent to: should also be sent to:
Robert J. Metzler, II, Esq. The Trust for Public Land (Inc.)
Tyler Cooper & Alcorn, LLP 33 Union Street, 4th Floor
City Place/35th Floor Boston, MA 02108
Hartford, CT 06103-3488 Attn: Donna H. Smith, Esq.
Tel: 860-725-6203 Tel: (617) 367-6200
Fax: 860-278-3802 Fax: (617) 367-1616
14. Attorneys' Fees. If any legal action is brought by
either party to enforce any provisions of this Agreement, the
prevailing party shall be entitled to recover from the other
party reasonable attorneys' fees and court costs in such
amounts as shall be allowed by the court.
15. No Broker's Commission. Each party represents to the
other that it has not used a real estate broker in connection
with this Agreement or the transaction contemplated by this
Agreement. In the event any person asserts a claim for a
broker's commission or finder's fee against one of the parties
to this Agreement, the party on account of whose actions the
claim is asserted will indemnify and hold the other party
harmless from and against said claim and the provisions of this
Paragraph 15 shall survive Closing or any earlier termination
of this Agreement.
16. Binding on Successors. This Agreement shall be
deemed a covenant running with the land and shall be binding
upon the parties and also upon their heirs, personal
representatives, assigns, and other successors in interest.
17. Memorandum of Purchase and Sale Agreement.
Concurrently with the signing of this Agreement, the parties
shall sign a Memorandum of Purchase and Sale Agreement in
recordable form in the form of Exhibit B, which is attached to
this Agreement and incorporated herein by this reference. Buyer
shall cause the Memorandum of Purchase and Sale Agreement to be
recorded. In the event Buyer does not acquire the Subject
Property under the terms of this Agreement, Buyer shall, if
requested to do so by Seller, deliver upon demand a quitclaim
deed or release of purchase and sale in a form suitable for
recordation covering the Subject Property so as to eliminate
any cloud on Seller's title to the Subject Property.
18. Additional Documents. Seller and Buyer agree to
execute affidavits customarily required for the issuing of
title insurance protecting against mechanics' liens and parties
in possession and such additional documents as may be
reasonable and necessary to carry out the provisions of this
Agreement.
19. Non-Foreign Certificate. Concurrently with the
execution of this Agreement, Seller shall execute a Non-Foreign
Certificate pursuant to Section 1445 of the Internal Revenue
Code of 1986, as amended, and shall deliver such certificate to
Buyer. Seller acknowledges that if Seller is unable to certify
that it is not a "foreign person," Buyer may be required to
withhold a portion of the Purchase Price at Closing for federal
income tax purposes.
20. Modification: Waiver. This Agreement shall be
construed without regard to any presumption or other rule
requiring construction against the party causing this Agreement
to be drafted. No supplement, modification, waiver or amendment
of this Agreement shall be binding unless specific and in
writing executed by the party against whom such supplement,
modification, waiver or amendment is sought to be enforced. No
delay, forbearance or neglect in the enforcement of any of the
conditions of this Agreement or any rights or remedies
hereunder shall constitute or be construed as a waiver thereof.
No waiver of any of the provisions of this Agreement shall be
deemed or shall constitute a waiver of any other provision,
whether or not similar, nor shall any waiver constitute a
continuing waiver.
21. Assignment of Buyer's Interest. This Agreement shall
not be assigned by Buyer except as specifically provided
herein. The parties hereto agree that the Buyer may assign its
interest in this Agreement to one or more municipalities or to
an organization or entity that is a qualified tax exempt
organization at the time of transfer under Section 170(h) of
the Internal Revenue Code of 1986, as amended, and the
applicable regulations promulgated thereunder. Upon any such
assignment the assignee shall have all the rights and
obligations of the Buyer hereunder. Buyer also may designate a
nominee to take title to the Subject Property at the Closing.
22. Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original and
which together shall constitute one and the same agreement.
23. Severability. Each provision of this Agreement is
severable from any and all other provisions of this Agreement.
Should any provision(s) of this Agreement be for any reason
unenforceable, the balance shall nonetheless be of full force
and effect.
24. Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the state of
Connecticut, without regard to application of its principles of
conflict of law.
25. Possession. Possession of the Subject Property shall
be delivered on the date of Closing in the same condition as it
is on the date hereof, ordinary wear and tear excepted, free
and clear of the rights or claims of any other party.
26. Seller's Promise to Remove Personal Property. Prior
to Closing, Seller promises to remove or cause to be removed
from the Subject Property at Seller's expense any and all
personal property and/or trash, rubbish or any other unsightly
or offensive materials including but not limited to any
hazardous substance in tanks, barrels, equipment, or containers
on the Subject Property, excluding existing meters and meter
pits, unless otherwise agreed to in writing by Buyer.
Satisfaction of the promises contained herein shall be subject
to Buyer's inspection and approval of the physical condition of
the Subject Property, which approval shall not be unreasonably
conditioned, withheld or delayed. If, on or before the date set
for Closing, Seller has not satisfied the promises contained
herein, Buyer may elect to either (a) defer the Closing until
Seller has satisfied said promises or (b) remove or cause to be
removed said personal property and/or trash, rubbish, or other
offensive materials as described above in which case Buyer
shall be credited at Closing with the amount expended by Buyer
in this regard in order to satisfy Seller's promises contained
herein. Notwithstanding the foregoing, this Paragraph 26 shall
not be construed so as to require Seller to remediate any
hazardous materials identified by Buyer on the Subject
Property, the identification and removal of which are governed
by Paragraph 9 herein.
27. No Merger. The obligations contained in this
Agreement will not survive the Closing unless specifically set
forth herein.
28. Expiration. This Agreement shall be of no force or
effect, and shall be null and void, unless a fully-signed
original of this Agreement, signed by both parties, is
delivered to Buyer and received by Buyer no later than February
15, 1998.
29. Headings. The headings used in this Agreement are
for convenience of reference only and shall not operate or be
construed to alter or affect the meaning of any of the
provisions hereof.
30. Additional Conditions to Closing. Buyer's and
Seller's obligations to perform under the terms of this
Agreement are conditioned upon the following:
Seller's Contingencies:
(a) DPUC Approval. Notwithstanding any provision of
this Agreement to the contrary, Seller's obligation to sell the
Subject Property hereunder is contingent upon Seller obtaining
Final approval from the DPUC (which approval shall become
"Final" only upon the expiration of the applicable appeal
periods without any appeal having been filed or served), for
the sale of the Subject Property to the Buyer pursuant to
Section 16-43 of the Connecticut General Statutes, and upon
final approval by the DPUC, as defined above, of a ratemaking
accounting treatment for the net gain from such sale reasonably
satisfactory to Seller. For the purposes of this Agreement,
"reasonably satisfactory" shall mean comparable to ratemaking
accounting treatments approved by DPUC on comparable pending or
completed sales of other land owned or sold by Seller. Such
satisfaction shall be deemed to have been obtained if the
Seller does not notify the Buyer to the contrary in writing
within five (5) business days after the DPUC's final approval
of the sale and ratemaking accounting treatment. Seller agrees
to submit this Agreement to the DPUC for approval within 35
days after publishing notice of its intention to sell in
accordance with Section 16-50c(b)(2) of the Connecticut General
Statutes, to diligently pursue such application and to supply
to Buyer copies of all appraisals of the fair market value of
the Premises obtained by Seller to be submitted to the DPUC in
connection with Seller's application for approval. If Seller
shall not have received such Final approval by December 15,
1998 Seller shall have the option to terminate this Agreement
and return the Deposits to Buyer in which event the obligations
of the parties hereunder shall terminate and come to an end.
Under such termination, the Deposits shall be retained by
Seller or returned to Buyer in accordance with the provisions
of Paragraph 4, herein.
(b) Buyer acknowledges and agrees that Seller can
not sell the Subject Property until any and all statutory
rights of purchase in favor of third parties have expired or
been waived. If these rights have not expired or been waived by
December 31, 1998, then Seller shall have the right to
terminate this Agreement.
Buyer's Contingencies:
a. Buyer's agreement to purchase the Subject
Property is contingent upon satisfactory results (in Buyer's
sole discretion) from Buyer's title and environmental Due
Diligence as described herein and upon the approval of Buyer's
Board of Directors, which shall be granted or denied before the
end of the Due Diligence Period.
b. Buyer's agreement to purchase the Subject
Property is contingent upon the successful completion of all
municipal votes, including a referendum vote (in whatever
percentage vote is necessary to support a municipal
acquisition) by the Town of Oxford to acquire the Subject
Property, as restricted by the 75% open space requirement in
accordance with Paragraph 2(g) herein, for the Purchase Price.
31. Buyer's Cooperation. The Buyer shall provide, upon
the request from time to time of the Seller, such cooperation
as shall be necessary to enable the Seller to obtain any and
all tax benefits associated with the transactions contemplated
hereunder. The provisions of this Section 34 shall survive the
closing.
IN WITNESS of the foregoing provisions, the parties have
executed and delivered this Agreement as of the date first set
forth above:
SELLER: BUYER:
BIRMINGHAM UTILITIES, INC. THE TRUST FOR PUBLIC LAND (INC.)
By: /s/ Betsy Henley-Cohn By: /s/ Peter Forbes
Name:Betsy Henley-Cohn Name:Peter Forbes
Title:Chairwoman Title:Vice President
Date:1/30/98 Date:2/11/98
EXHIBIT A
DESCRIPTION OF SUBJECT PROPERTY
Set forth on pages 12-I and 12-II
Exhibit A
That portion of the following described real property which is
situated entirely in the Town of Oxford:
PARCEL C, situated in said Towns of Oxford and Seymour, is
bounded:
Southeasterly by Holbrook Road, sometimes known as
Great Hill Road;
Northeasterly, Southeasterly again and Southwesterly
by the Bell School District;
Southeasterly again by Holbrook Road, sometimes
known as Great Hill Road;
Easterly by Moose Hill Road;
Northerly, Easterly again, Northerly again, Easterly
again and Northerly again by land now or formerly of
Albert T. Yarrington;
Easterly again by land now or formerly of Albert T.
Yarrington in part and in part by land now or
formerly of George R. Holbrook Estate;
Northerly again by Perkins Lane;
Westerly, Northerly again, Westerly again and
Northerly again by land now or formerly of Muriel
Francis;
Westerly again by Rock House Hill Road, 200 feet,
more or less;
Southerly 320 feet, Easterly again 76 feet,
Southeasterly again, Southwesterly and Northerly
again by land now or formerly of Muriel Francis;
Westerly again by Rock House Hill Road.
PARCELS D and E, situated in said Towns of Oxford and Seymour,
is bounded:
Southerly by Squantuck Road;
Easterly, Southerly and Westerly by land now or
formerly of Edwin H. Losee or possibly Easterly by
Rock House Hill Road (See NB. below);
Easterly again by Rock House Hill Road;
Northwesterly by land now or formerly of Thomas
Lihou, 356 feet;
Northwesterly again by land now or formerly of
Thomas Lihou, 821 feet;
Northeasterly by land now or formerly of Thomas
Lihou, 318 feet;
Northwesterly again by land now or formerly of
Thomas Lihou, 1758 feet;
Northwesterly again by land now or formerly of
Thomas Lihou, 328 feet;
Northwesterly again by land now or formerly of the
Coe Brass Manufacturing Company, 152 feet;
Northwesterly again by land now or formerly of the
Coe Brass Manufacturing Company, 195 feet;
Northwesterly again by land now or formerly of the
Coe Brass Manufacturing Company, 1240 feet;
Southerly again by land now or formerly of J.R.
Warner, 2004 feet, being an irregular line;
Southwesterly by land now or formerly of J.R.
Warner, 468 feet;
Southeasterly by land now or formerly of J.R.
Warner, 873 feet;
Southeasterly again by land now or formerly of J.R.
Warner, 400 feet;
Southwesterly again by land now or formerly of J.R.
Warner, 283 feet;
Northwesterly again by land now or formerly of J.R.
Warner, 175 feet;
Southwesterly again by land now or formerly of J.R.
Warner, 200 feet, more or less;
Northwesterly again by land of owners unknown, 370
feet, more or less;
Westerly again by land now or formerly of Elizabeth
R. Warner, 212 feet;
Northwesterly again by land now or formerly of
Elizabeth R. Warner, 162 feet;
Northeasterly again by land now or formerly of
Elizabeth R. Warner;
Northerly by land now or formerly of Elizabeth R.
Warner;
Northwesterly again, Westerly again and
Southwesterly again by land now or formerly of Oscar
Becker, in part, and in part by land now or formerly
of Harriet Fleming, and being an irregular line.
PARCEL F, situated in said Town of Oxford and possibly in said
Town of Seymour, is bounded:
Southwesterly by Moose Hill Road;
Southeasterly by Holbrook Road, sometimes known as
Great Hill Road;
Northeasterly by land now or formerly of John H.
Hale;
Northwesterly by land now or formerly of John H.
Hale, in part and in part by land of C. A.
Harrington.
Together with certain spring rights as contained in a deed
to William S. Downs from Martin Lautenschlager, dated February
11, 1901 and recorded in Volume 26 on Page 250 of the Oxford
Land Records.
EXHIBIT B
MEMORANDUM OF PURCHASE AND SALE AGREEMENT
THIS AGREEMENT made this ________ day of_______________
199__ by and between Birmingham Utilities, Inc., a Connecticut
corporation, having an office in Ansonia, CT (the "Seller") and
THE TRUST FOR PUBLIC LAND (INC.), a nonprofit California public
benefit corporation, having an office in New Haven, CT
("Buyer").
W I T N E S S E T H:
1. In consideration of the terms, conditions, covenants
and agreements set forth in the Purchase and Sale Agreement
dated __________________, 199__ , Seller granted to Buyer a
right to purchase the real property of Seller described on
Exhibit A attached hereto and made a part hereof.
2. The closing date for the acquisition is not later
than December 31, 1998.
3. The address of Seller is: 230 Beaver Street
P.O. Box 426
Ansonia, CT 06401
Attn: Betsy Henley-Cohn
Chairwoman
4. The address of Buyer is: 33 Union Street
Boston, MA 02108
Attn: Arthur Badger Blackett, Jr.
5. Copies of the Purchase and Sale Agreement are on file
with Seller and Buyer.
IN WITNESS WHEREOF, the parties have executed this
instrument on the date above written.
WITNESSES: Birmingham Utilities, Inc.
By:
Its: Chairwoman
WITNESSES: The Trust for Public Land (Inc.)
By:
Its:
ACKNOWLEDGEMENT
State of )
) ss.
County of )
On this 30th day of January, 1998, before me appeared
Betsy Henley-Cohn, personally known to me to be the person who
executed the within instrument as Chairwoman of Birmingham
Utilities, Inc., a Connecticut corporation, on behalf of the
corporation.
Notary Public
My commission expires
ACKNOWLEDGEMENT
State of )
) ss.
County of )
On this _______ day of______________________ 199__, before
me appeared _________________________________ personally known
to me to be the person who executed the within instrument as
___________________________________ of The Trust for Public
Land (Inc.), a nonprofit California public benefit corporation,
on behalf of the corporation.
Notary Public
My commission expires
Exhibit A
That portion of the following described real property which is
situated entirely in the Town of Oxford:
PARCEL C, situated in said Towns of Oxford and Seymour, is
bounded:
Southeasterly by Holbrook Road, sometimes known as
Great Hill Road;
Northeasterly, Southeasterly again and Southwesterly
by the Bell School District;
Southeasterly again by Holbrook Road, sometimes
known as Great Hill Road;
Easterly by Moose Hill Road;
Northerly, Easterly again, Northerly again, Easterly
again and Northerly again by land now or formerly of
Albert T. Yarrington;
Easterly again by land now or formerly of Albert T.
Yarrington in part and in part by land now or
formerly of George R. Holbrook Estate;
Northerly again by Perkins Lane;
Westerly, Northerly again, Westerly again and
Northerly again by land now or formerly of Muriel
Francis;
Westerly again by Rock House Hill Road, 200 feet,
more or less;
Southerly 320 feet, Easterly again 76 feet,
Southeasterly again, Southwesterly and Northerly
again by land now or formerly of Muriel Francis;
Westerly again by Rock House Hill Road.
PARCELS D and E, situated in said Towns of Oxford and Seymour,
is bounded:
Southerly by Squantuck Road;
Easterly, Southerly and Westerly by land now or
formerly of Edwin H. Losee or possibly Easterly by
Rock House Hill Road (See NB. below);
Easterly again by Rock House Hill Road;
Northwesterly by land now or formerly of Thomas
Lihou, 356 feet;
Northwesterly again by land now or formerly of
Thomas Lihou, 821 feet;
Northeasterly by land now or formerly of Thomas
Lihou, 318 feet;
Northwesterly again by land now or formerly of
Thomas Lihou, 1758 feet;
Northwesterly again by land now or formerly of
Thomas Lihou, 328 feet;
Northwesterly again by land now or formerly of the
Coe Brass Manufacturing Company, 152 feet;
Northwesterly again by land now or formerly of the
Coe Brass Manufacturing Company, 195 feet;
Northwesterly again by land now or formerly of the
Coe Brass Manufacturing Company, 1240 feet;
Southerly again by land now or formerly of J.R.
Warner, 2004 feet, being an irregular line;
Southwesterly by land now or formerly of J.R.
Warner, 468 feet;
Southeasterly by land now or formerly of J.R.
Warner, 873 feet;
Southeasterly again by land now or formerly of J.R.
Warner, 400 feet;
Southwesterly again by land now or formerly of J.R.
Warner, 283 feet;
Northwesterly again by land now or formerly of J.R.
Warner, 175 feet;
Southwesterly again by land now or formerly of J.R.
Warner, 200 feet, more or less;
Northwesterly again by land of owners unknown, 370
feet, more or less;
Westerly again by land now or formerly of Elizabeth
R. Warner, 212 feet;
Northwesterly again by land now or formerly of
Elizabeth R. Warner, 162 feet;
Northeasterly again by land now or formerly of
Elizabeth R. Warner;
Northerly by land now or formerly of Elizabeth R.
Warner;
Northwesterly again, Westerly again and
Southwesterly again by land now or formerly of Oscar
Becker, in part, and in part by land now or formerly
of Harriet Fleming, and being an irregular line.
PARCEL F, situated in said Town of Oxford and possibly in said
Town of Seymour, is bounded:
Southwesterly by Moose Hill Road;
Southeasterly by Holbrook Road, sometimes known as
Great Hill Road;
Northeasterly by land now or formerly of John H.
Hale;
Northwesterly by land now or formerly of John H.
Hale, in part and in part by land of C. A.
Harrington.
Together with certain spring rights as contained in a deed
to William S. Downs from Martin Lautenschlager, dated February
11, 1901 and recorded in Volume 26 on Page 250 of the Oxford
Land Records.
PURCHASE AND SALE AGREEMENT
AGREEMENT, made as of the 3rd day of March, 1998, by and between
BIRMINGHAM UTILITIES, INC. a Connecticut corporation, having its principal
place of business in Ansonia, Connecticut (hereinafter referred to as the
"Seller"); and THE TOWN OF SEYMOUR a municipal corporation existing within the
County of New Haven and State of Connecticut, (hereinafter referred to as the
"Buyer");
WITNESSETH:
In consideration of the Purchase Price described in Paragraph 1 hereof,
and subject to the further terms and conditions set forth herein, the Seller
hereby agrees to sell and convey, and the Buyer hereby agrees to purchase, the
approximately 233.8 acres of unimproved real property located in the Town of
Seymour and more particularly described in Schedule A attached hereto and made
a part hereof (hereinafter referred to as the "Premises"). Title to the
Premises will be conveyed free and clear of all encumbrances, liens, or
exceptions to title other than those set forth in Schedules A and B or in
Paragraph 7 hereof.
1. CONSIDERATION
The Purchase Price for the Premises shall be ONE MILLION EIGHT HUNDRED
THOUSAND DOLLARS ($1,800,000.00), which the Buyer agrees to pay in cash or by
certified check or bank draft on the date of the closing of title and upon
delivery of the deed as hereinafter provided. The Buyer acknowledges that the
Purchase Price is less than the current fair market value of the Premises and
that the Seller expects to receive a deduction for income tax purposes in the
amount of the difference between the fair market value of the Premises and the
Purchase Price. The Buyer will use reasonable efforts to assist the Seller
to obtain those tax deductions and benefits to which Seller may be entitled
by virtue of the "bargain" nature of the Purchase Price, including
acknowledging on appropriate tax forms and in any related proceedings that the
Buyer has provided no consideration to the Seller for the Premises other than
the Purchase Price.
2. DEED
The deed of conveyance to the Premises shall be in the form of a full
covenant and Warranty Deed in the usual Connecticut form, which shall be duly
executed, acknowledged and delivered, all at the Seller's expense, conveying
the fee simple title in and to the Premises to the Buyer, free and clear of
all encumbrances, liens and exceptions to title other than those set forth in
Schedules A and B hereof or in Paragraph 7 hereof. The Seller shall pay any
conveyance tax due in connection with this transaction imposed on Seller by
applicable law. The Seller agrees to execute, at the time of closing, an
affidavit regarding the non-existence of mechanic's liens, materialmen's liens
or rights of tenants upon the Premises and other conditions of or on the
Premises required by a licensed title insurance company necessary in order to
issue a "clean" title insurance policy.
3. APPORTIONMENTS
The taxes and assessments of the City in which the Premises are situated
will be apportioned, in accord with local custom, as of the date of the
closing of title. Should any tax, assessment, or rate be undetermined on the
date of the closing of title, the last determined tax, assessment, or rate
shall be used for the purpose of the apportionment.
4. CONDITION OF PREMISES
The Buyer further agrees with and represents to the Seller that it has
examined the Premises, that it is fully satisfied with the physical condition
thereof, and that neither the Seller nor any representative of the Seller has
made any representation or promise upon which the Buyer has relied concerning
the physical condition of the Premises or of any property covered by this
Agreement, except as herein may be expressly set forth, provided however, that
the Buyer has reviewed a certain engineering report entitled Great Hill
Reservoir Dam - Annual Dam Inspection 1997, by Roald Haestad, Inc., Consulting
Engineers, Waterbury, Connecticut (the "Haestad Report") and relied upon the
Haestad Report in connection with the condition of the dam on the Premises,
and that if the Closing Date contemplated in Paragraph 9 hereof shall occur
more than one year from the date of such Report, upon the request of the
Buyer, the Seller shall obtain, at its expense, another such report (the "New
Report") prior to the Closing Date. In the event that such New Report shall
reveal any material deterioration in the structural condition of the dam from
that reported in the Haestad Report, the Buyer may, subject to the Seller's
right, as described below, to restore the dam at Seller's expense to its
structural condition reported in the Haestad Report, terminate this Agreement,
but only upon a majority vote of the Buyer's Board of Selectmen. In order to
exercise its right of termination described in this Paragraph 4, the Buyer
shall give the Seller written notice of its intent to terminate the Agreement
in accordance with the provisions of this Paragraph 4 (the "Notice of
Termination") not more than thirty (30) days after Buyer's receipt of the New
Report, which written notice shall describe the structural condition of the
dam that has materially deteriorated. The Seller shall, if it intends to
restore the dam as contemplated above, provide written notice to the Buyer of
such intention (the "Restoration Notice") within thirty (30) days of Seller's
receipt of the Buyer's Notice of Termination. The Restoration Notice shall
contain a proposed timetable for the proposed restoration, which timetable
shall call for completion of the project no later than one year from the date
of the Restoration Notice. At the completion of the restoration work, the
Seller shall, at its expense, provide to the Buyer an engineering report which
shall describe the restoration of the structural condition of the dam to a
structural condition at least as good as that reported in the Haestad Report.
The parties shall set a new Closing Date to occur within thirty (30) days
after completion of the restoration project and submission to the Buyer of the
new engineering report complying with the above provisions. In the event that
the restoration project is not completed, and the new engineering report
complying with the above provisions is not submitted to the Buyer, within one
year from the Restoration Notice, the Buyer may reaffirm its Termination
Notice in writing, at which time this Agreement and the obligations of the
parties hereunder shall, notwithstanding any other provision of this
Agreement, terminate and come to an end.
5. TITLE
(a) The Buyer agrees to obtain a title search of the Premises within
sixty (60) days of the execution hereof. The Buyer shall notify the Seller
within said sixty (60) day period whether the title is clear according to the
Standards of Title of the Connecticut Bar Association, free and clear of
encumbrances, liens or exceptions to title other than those set forth in
Schedules A or B hereof, or in Paragraph 7 hereof, and otherwise conforms to
the terms hereof. In the event that at that time title is in fact not clear
according to such Standards of Title by virtue of encumbrances, liens or
exceptions to title not set forth in Schedules A or B hereof or in Paragraph
7 hereof, the Buyer may elect to (i) accept such title as is revealed in its
title search, upon the payment of the aforesaid Purchase Price, (ii) terminate
this Agreement, in which case this Agreement shall terminate and immediately
become null and void, and the parties hereto shall be released and discharged
of all further claims and obligations, each to the other, hereunder, or (iii)
request that the Seller undertake to perfect title, in which case the Seller
may undertake to do so at its expense or decline to do so and terminate the
Agreement with the same effect as set forth in (ii) above.
(b) In the event that said title is clear as aforesaid as of the date
of the aforesaid title search, and from and after said date the title becomes
encumbered or otherwise clouded such that the Seller is unable to convey clear
title at closing as required hereunder, the Buyer may elect to accept such
title as the Seller can convey, upon the payment of the aforesaid Purchase
Price, or, subject to the provisions of subsections (c) and (d) below, may
reject the deed conveying such title on that ground. Upon such rejection, all
sums paid on account hereof, together with interest thereon, and together with
any reasonable expenses actually incurred by the Buyer in connection with this
Agreement shall be repaid by the Seller to the Buyer. Upon receipt of such
payments by the Buyer, this Agreement shall terminate and become null and void
and the parties hereto shall be released and discharged of all further claims
and obligations, each to the other, hereunder.
(c) It is further understood and agreed that if, on the date herein set
for the closing of title, the Seller shall be unable to convey the title to
the Premises to the Buyer free and clear of encumbrances, liens or exceptions
to title other than those set forth in Schedules A or B hereof, or in
Paragraph 7 hereof, or, if the Buyer shall have accepted title defects in
accordance with the provisions of subsection (a)(i) or (b) above, such defects
as were so accepted by Buyer, then, and in that event, the Seller may elect
to have a further period of thirty (30) days from the date of the notice of
such defects as contemplated in subsection (d) below within which to perfect
title, in which case the Seller shall, if it so elects to attempt to perfect
title, use reasonable efforts to perfect title at its expense. If, at the end
of said period, the Seller is still unable to convey title to the Premises
free and clear of all encumbrances, liens or exceptions to title except as
aforesaid, the Buyer may elect to accept such title as the Seller can convey,
upon the payment of the aforesaid Purchase Price, or may reject the deed
conveying such title on that ground. Upon such rejection, all sums paid on
account hereof, together with interest thereon, and together with any
reasonable expenses actually incurred by the Buyer in connection with this
Agreement, shall be repaid by the Seller to the Buyer. Upon receipt of such
payment by the Buyer, this Agreement shall terminate and become null and void
and the parties hereto shall be released and discharged of all further claims
and obligations, each to the other, hereunder.
(d) The Buyer shall give written notice to the Seller's attorney, not
less than ten (10) business days prior to the Closing Date, of any
encumbrances or defects which the Buyer claims affect title other than those
set forth in this Agreement, and failure to provide such notice shall be
deemed to be an acceptance by the Buyer of any and all defects in title in
existence on or before said date.
Nothing shall constitute an encumbrance, lien or exception to title for
the purposes of this Agreement if the Standards of Title of the Connecticut
Bar Association recommends that no corrective or curative action is necessary
in circumstances substantially similar to those presented by such
encumbrances, liens, or exception to title. No election by the Seller to
attempt to clear the title to the Premises of a defect claimed by the Buyer
to cloud such title shall be deemed an admission by the Seller that such
claimed defect is in fact a cloud on the title.
6. INSURANCE
Throughout the period between the date of this Agreement and the date
of the closing of title, the Seller shall maintain existing liability
insurance on the Premises.
7. ENCUMBRANCES
In addition to the exceptions to title in Schedules A and B, the
Premises will be conveyed subject to:
(a) Any restrictions or limitations imposed or to be imposed by
governmental authority, including the zoning and planning rules and
regulations of the City, and region or district, if any, in which the Premises
are situated but not violations of the same;
(b) Taxes of the City in which the Premises are situated which become
due and payable after the date of delivery of the Deed, which taxes, if any,
the Buyer will assume and agree to pay as part of the consideration for the
deed;
(c) Public improvement assessments, and/or any installments thereof,
which assessments and/or installments become due and payable after the date
of the delivery of the deed, which assessments and/or installments, if any,
the Buyer will assume and agree to pay as part of the consideration for the
deed; and
(d) The following restriction, which shall run with the land and shall
be included in the Warranty Deed: "The Grantee covenants and agrees that not
less than 85% of the Premises conveyed hereunder shall be perpetually used for
`open space or recreational purposes' as said terms are defined in subsection
(f) of Section 16-50d of the Connecticut General Statutes."
8. ENTIRE AGREEMENT
It is understood and agreed that this written Agreement (including
Schedules A and B and any other schedules or any riders referred to in the
body of this Agreement and attached hereto) constitutes the entire agreement
between the parties hereto, and that no oral statements or promises, and no
understandings not embodied in this writing, shall be valid or binding.
Neither the Seller nor the Buyer shall record this Agreement in the Seymour
Land Records.
9. CLOSING
It is agreed by the parties hereto that time is of the essence with
respect to the Closing of Title (hereinafter referred to as the "Closing") and
that such Closing shall take place at the Town Hall in the Town of Seymour,
Connecticut on or before December 31, 1998 (the "Closing Date"), at a time to
be determined, or such other place and date as may be mutually agreed upon by
the parties hereto, at which time the deed shall be delivered upon receipt of
the Purchase Price provided, however, that the above date is designed to allow
the Seller to meet the Seller's contingencies described in Paragraph 12
hereof, and the parties agree that the Closing shall take place promptly but,
subject to the requirement that the Closing occur on or before December 31,
1998, in any event within 60 days of the Seller notifying the Buyer that it
has obtained final approval of the DPUC pursuant to Paragraph 12(b) hereof and
of Seller notifying the Buyer of the expiration or waiver of the third party
statutory purchase rights described in Paragraph 12(a) hereof, should such
approval and such expiration or waiver occur prior to the times contemplated
in said Paragraph 12 hereof.
10. BROKER
The parties hereto recognize that there was no agent or broker who
negotiated the sale of the Premises. This Agreement is consummated by the
Seller in reliance on the representation of the Buyer that no broker or agent
brought the Premises to the Buyer's attention or was, in any way, a procuring
cause of this sale and purchase. The Seller represents to the Buyer that no
broker or agent represented the Seller in the sale of the Premises to the
Buyer or has any exclusive sale or exclusive agency listing on the Premises,
and the Seller hereby agrees to indemnify and hold harmless the Buyer against
the claim of any broker or agent for a commission due by reason of this sale
where it is judicially determined that said broker or agent had such a sale
or agency listing applicable to such sale of the Premises. The Buyer hereby
agrees to indemnify and hold harmless the Seller against the claim of any
broker or agent for a commission due by reason of this sale, where it is
judicially determined that said broker or agent called the Premises to the
Buyer's attention or interested Buyer therein. Any indemnity contemplated
within this Section 10 shall include without limitation, all reasonable costs
of defending any such claim, including reasonable attorney's fees. The
provisions of this paragraph shall survive the delivery of the deed hereunder.
11. DEFAULT
If the Buyer shall fail to tender the Purchase Price and close title in
accordance with the provisions of this Agreement by the Closing Date, the
Buyer shall reimburse the Seller its costs and expenses incurred in connection
with the transactions contemplated in this Purchase and Sale Agreement,
including without limitation its costs involved in obtaining the regulatory
approvals required therefor, it being agreed that neither party desires to
incur the additional expense, or to require the other party to incur the
additional expense, to prove the precise amount of such expenses in the event
of such a failure to comply, and it being further agreed that such expenses
will, subject to the provisions of Paragraph 12(c) below, be $60,000.00 (the
"Cost Reimbursement Amount"), whereupon all other rights and remedies of the
Seller hereunder shall cease and be at an end. In the above event, the Buyer
shall immediately return its copy of this Agreement to the Seller for
cancellation. If the Seller shall fail to comply with any term of this
Agreement, the Buyer shall have all rights available at law or in equity.
12. SELLER AND BUYER CONTINGENCIES
(a) Purchase Rights. The Premises are subject to statutory purchase
rights in favor of the State of Connecticut, certain water companies, and
certain non-profit organizations as contemplated in the applicable provisions
of the Connecticut General Statutes (Sections 16-50c, 16-50d, and 25-33l).
If any of said rights are exercised, Seller shall return to Buyer all sums
paid hereunder, together with interest thereon, within seven (7) days after
such exercise and, upon such return of said sums, this Agreement and the
obligations of the parties hereunder shall terminate and come to an end.
(b) DPUC Approval. This Agreement is contingent upon the Seller
obtaining final approval from the DPUC (which approval shall become "final"
only upon the expiration of the applicable appeal periods without any appeal
having been filed, served and pending on the applicable date below), for the
sale of the Premises to the Buyer pursuant to Section 16-43 of the Connecticut
General Statutes, and upon final approval by the DPUC, as defined above, of
a ratemaking accounting treatment for the net gain from such sale reasonably
satisfactory to the Seller. Such satisfaction shall be deemed to have been
obtained if the Seller does not notify the Buyer to the contrary in writing
within five (5) business days after having notified the Buyer of such final
approval as contemplated in Paragraph 9 hereof. Seller agrees (i) to publish
notice of its intention to sell in accordance with Section 16-50c(b)(2) of the
Connecticut General Statutes within 5 business days from the first date on
which this Agreement has been executed by both the Seller and the Buyer, (ii)
to submit this Agreement to the DPUC for approval within 35 days after such
publication, and (iii) to pursue its application for approval with reasonable
diligence.
If the Seller shall not have received final approval (as described in
Subparagraph (b) above) by October 30, 1998, or if all purchase rights (as
described in Subparagraph (a) above) shall not have expired or been waived in
accordance with their statutory terms by December 24, 1998, this Agreement
shall be terminable by the Seller so notifying the Buyer in writing within
five (5) days of either of said conditions not having been met, and, upon such
notification, Seller shall return to Buyer all sums paid hereunder, together
with interest thereon. Upon such payment, this Agreement shall terminate and
be of no further force or effect, and the parties shall be relieved of all
liability each to the other, hereunder. The Seller shall also notify the
Buyer in writing within five (5) days of each of said conditions having been
successfully met.
(c) Approval Pursuant to Section 8-24 of the General Statutes. This
Agreement is contingent upon the Buyer receiving approval pursuant to Section
8-24 of the Connecticut General Statutes on or before April 30, 1998. The
Buyer agrees to refer this transaction to the Seymour Planning and Zoning
Commission upon the signing of this Agreement. If the Buyer is unable to
obtain approval of the acquisition of the Premises by, and notifies the Seller
on writing of such inability on or before April 30, 1998, then this Agreement
shall be terminable by the Buyer and the obligatins of the parties hereunder,
except the obligations set forth in the following sentence, shall cease and
come to an end. In the event of a termination pursuant to this paragraph
12(c), the Buyer shall reimburse the Seller the sum of $30,000 as a cost
reimbursement in lieu of the Cost Reimbursement Amount set forth in paragraph
11 hereof, and upon payment thereof, all other rights and remedies of the
Seller hereunder shall cease and be at an end.
13. EFFECT AND ASSIGNMENT
The covenants and agreements herein are to be binding upon and inure to
the benefit of the parties hereto, their respective heirs, representatives,
successors and assigns and shall survive the delivery of the deed hereunder.
No assignment of this Agreement by the Buyer shall be valid unless the Seller
assents thereto in writing. This Agreement constitutes the entire agreement
between the parties and may not be changed except by a contract in writing
signed by the party or parties against which enforcement of any waiver,
change, modification, extension, estoppel, or discharge is sought. Whenever
used, the singular number shall include the plural, the plural the singular,
and the use of any gender shall be applicable to all genders.
14. NO VIOLATIONS
The Seller represents that to the best of its knowledge, at the time of
the closing of title, there shall exist no violations of government (including
environmental and zoning and planning) rules, regulations or limitations,
unless same have become legally non-conforming, and no violations of any
restrictive covenant, agreement or condition subject to which the title is to
be conveyed in accord with the terms hereof.
15. ENVIRONMENTAL TESTING
The Buyer shall have the right to have a Phase I environmental site
assessment of the Premises conducted during a sixty (60) day period commencing
on the date of this Agreement. If the Buyer is reasonably dissatisfied with
the condition of the Premises as indicated by such site assessment disclosing
any risk of environmental contamination of the Premises, the Buyer may, by
written notice to the Seller or the Seller's attorney describing such risk of
environmental contamination and reasonable dissatisfaction and enclosing a
copy of such Phase I site assessment, terminate this Agreement. If the Buyer
terminates this Agreement as provided in this Section 15, all rights and
liabilities of the parties hereto by reason of this Agreement shall be deemed
at an end. Unless the Buyer shall have given such written notice to the
Seller or the Seller's attorney of the Buyer's termination of this Agreement
on or before the end of the aforesaid sixty (60) day period, the Buyer shall
have no further right to terminate this Agreement pursuant to this Section 15.
The cost of such testing shall be paid by the Buyer.
16. OWNERSHIP
Seller represents that at the signing of this Contract, the Seller is
the record owner in fee simple of the Premises being conveyed herein and is
not under any incapacity, other than the statutory provisions set forth in
Section 12 hereof, which prevents it from entering into this Agreement or
complying with the terms thereof.
17. BINDING OBLIGATION OF THE BUYER
Buyer warrants and represents (a) that it is fully authorized to enter
into this Agreement and to perform the obligations of the Buyer herein,
subject to the provisions of Section 12 hereof, and (b) that this Agreement
is fully enforceable against the Buyer in accordance with all of the terms
hereof.
18. NOTICES
Any notice provided for by this Agreement and any other notice or
communication which either party may wish to send to the other (collectively
"Notices") shall be in writing and given by personal delivery or sent by
United States registered or certified mail, return receipt requested, in a
properly sealed envelope, postage-prepaid, addressed to the party for which
such notice is intended, at such party's address set forth below or at any
other address provided in writing by such party to the other by notice
complying with this Section 18:
If to Buyer, to:
John A. O'Toole, First Selectman
Town of Seymour
Seymour Town Hall
One First Street
Seymour, Connecticut 06483
With a copy to:
Colleen D. Fries, Esquire
Bai, Pollack and Coyne, P.C.
Park City Plaza
10 Middle Street
Bridgeport, Connecticut 06604
If to the Seller, to:
Birmingham Utilities, Inc.
230 Beaver Street
P.O. Box 426
Ansonia, Connecticut 06401
Attention: Betsy Henley-Cohn
With a copy to:
Robert J. Metzler, II, Esquire
Tyler Cooper & Alcorn, LLP
185 Asylum Street, CityPlace I
Hartford, Connecticut 06103
19. RETENTION OF PARCEL BY SELLER
The Buyer acknowledges that the Seller is retaining ownership of a
parcel of land, approximately 4.9 acres together with easement rights with
respect to ingress and egress and water mains to and from the parcel within
the Premises off Squantuck Road as shown on the maps included as part of
Schedule A with respect to Parcels D and G. Seller represents that it is
retaining the parcel and easement rights in question for possible future use
in connection with the water supply system and will agree, at the time of the
Closing, to a restrictive covenant with respect to the parcel and easement
rights in question that they will be used only for water utility facilities
or for open space.
IN WITNESS WHEREOF, the parties hereto have hereunto set their
[remainder of page intentionally left blank]
hands and seals as of the day and in the year hereinbefore indicated.
SIGNED, SEALED AND DELIVERED
IN THE PRESENCE OF:
BIRMINGHAM UTILITIES, INC.
ID# 06-0878647
As to Seller:
_____________________ By
Betsy Henley-Cohn
Its Chairwoman
_____________________ Duly Authorized
TOWN OF SEYMOUR
As to Buyer:
_____________________ By
John A. O'Toole
Its First Selectman,
_____________________ Duly Authorized
STATE OF CONNECTICUT)
) ss: New Haven March 3, 1998
COUNTY OF NEW HAVEN )
Personally appeared Betsy Henley-Cohn, Chairwoman of BIRMINGHAM
UTILITIES, INC., signer and sealer of the foregoing Purchase and Sale
Agreement, and acknowledged the same to be her freed act and deed and the free
act and deed of said BIRMINGHAM UTILITIES, INC., before me.
Commissioner of the Superior Court
STATE OF CONNECTICUT)
) ss: Seymour March 3, 1998
COUNTY OF NEW HAVEN )
Personally appeared John A. O'Toole, First Selectman of the TOWN OF
SEYMOUR, signer and sealer of the foregoing Purchase and Sale Agreement, and
acknowledged the same to be his free act and deed and the free act and deed
of said TOWN OF SEYMOUR, before me.
Commissioner of the Superior Court
Dworken, Hillman, LaMorte & Sterczala, P.C.
March 27, 1998
We hereby consent to the incorporation by reference in the Registration
Statements of Birmingham Utilities, Inc. on Form S-8 dated July 25, 1995 and
in the Prospectus constituting part of the Registration Statement of
Birmingham Utilities, Inc. on Form S-3 dated June 12, 1995 of our report
dated February 12, 1997, which appears in the Annual Report on Form 10-K of
Birmingham Utilities, Inc. for the year ended December 31, 1997.
/s/ Dworken, Hillman, LaMorte & Sterczala, P.C.
March 27, 1998
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S DECEMBER 31, 1997 AUDITED BALANCE SHEET, INCOME STATEMENT
AND CASH FLOW STATEMENT, AND NOTES THERETO, AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 13,211,516
<OTHER-PROPERTY-AND-INVEST> 0
<TOTAL-CURRENT-ASSETS> 1,114,697
<TOTAL-DEFERRED-CHARGES> 1,148,510
<OTHER-ASSETS> 1,016,704
<TOTAL-ASSETS> 16,491,427
<COMMON> 2,266,027
<CAPITAL-SURPLUS-PAID-IN> 0
<RETAINED-EARNINGS> 1,831,377
<TOTAL-COMMON-STOCKHOLDERS-EQ> 4,097,404
0
0
<LONG-TERM-DEBT-NET> 5,662,000<F1>
<SHORT-TERM-NOTES> 1,355,000
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 169,000
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 5,208,023
<TOT-CAPITALIZATION-AND-LIAB> 16,491,427
<GROSS-OPERATING-REVENUE> 4,367,357
<INCOME-TAX-EXPENSE> 69,714
<OTHER-OPERATING-EXPENSES> 3,511,682
<TOTAL-OPERATING-EXPENSES> 3,581,396
<OPERATING-INCOME-LOSS> 785,961
<OTHER-INCOME-NET> 521,909
<INCOME-BEFORE-INTEREST-EXPEN> 1,307,870
<TOTAL-INTEREST-EXPENSE> 639,991
<NET-INCOME> 667,879
0
<EARNINGS-AVAILABLE-FOR-COMM> 667,879
<COMMON-STOCK-DIVIDENDS> 455,690
<TOTAL-INTEREST-ON-BONDS> 450,058
<CASH-FLOW-OPERATIONS> 489,361
<EPS-PRIMARY> 0.88
<EPS-DILUTED> 0.87
<FN>
<F1>See Note 4 to financial statements; includes long term note payable.
</FN>
</TABLE>
