<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 or 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended September 30, 1995
Commission File Number 1-6659
PHILADELPHIA SUBURBAN CORPORATION
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Pennsylvania 23-1702594
- ------------------------------- --------------------
(State or other jurisdiction of (I.R.S.Employer
incorporation or organization) Identification No.)
762 Lancaster Avenue, Bryn Mawr, Pennsylvania 19010
- --------------------------------------------- -------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (610)-527-8000
Indicate by check mark whether the registrant (1) 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 the number of shares outstanding of each of the issuer's classes of
common stock, as of September 30, 1995.
12,072,988
- ----------
<PAGE>
PHILADELPHIA SUBURBAN CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands of dollars)
<TABLE>
<CAPTION>
September 30, December 31,
1995 1994
------------- ------------
(Unaudited) (Audited)
<S> <C> <C>
Property, plant and equipment, at cost $514,743 $462,500
Less accumulated depreciation 89,458 76,791
------- -------
Net property, plant and equipment 425,285 385,709
Current assets
Cash 6,359 (636)
Accounts receivable, net 21,917 19,303
Inventory, materials and supplies 1,943 1,696
Prepayments and other current assets 1,001 594
------- -------
Total current assets 31,220 20,957
Regulatory assets 48,515 48,334
Deferred charges and other assets, net 5,429 3,183
------- -------
$510,449 $458,183
======= =======
Common stockholders' equity $153,594 $143,795
Preferred stock of subsidiary with
mandatory redemption requirements 5,714 7,143
Long-term debt, excluding current portion 189,975 152,195
Commitments - -
Current liabilities
Current portion of preferred stock of
subsidiary with mandatory redemption
requirements 1,429 2,857
Current portion of long-term debt 887 887
Loans payable 6,515 4,050
Accounts payable 2,662 5,626
Accrued interest 4,412 3,346
Other accrued liabilities 12,751 9,912
Net reserves related to
discontinued operations 2,544 2,701
------- -------
Total current liabilities 31,200 29,379
Deferred credits and other liabilities
Deferred income taxes and investment credits 70,252 67,721
Customers' advances for construction 25,181 24,713
Other non-current liabilities 10,333 11,028
------- -------
Total deferred credits and other liabilities 105,766 103,462
Contributions in aid of construction 24,200 22,209
------- -------
$510,449 $458,183
======= =======
</TABLE>
See notes to consolidated financial statements on page 5 of this report.
-1-
<PAGE>
PHILADELPHIA SUBURBAN CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
--------------------------------
1995 1994
------- --------
<S> <C> <C>
Earned revenues $86,894 $80,428
Costs and expenses
Operating expenses 37,916 36,568
Depreciation 8,524 7,793
Amortization (43) (150)
Taxes other than income taxes 5,775 5,418
------ ------
52,172 49,629
------ ------
Operating income 34,722 30,799
Interest and debt expenses 10,972 9,633
Dividends on preferred stock 476 649
Allowance for funds used during
construction (168) (80)
------ ------
Income before income taxes 23,442 20,597
Provision for income taxes 9,736 8,716
------ ------
Net income $13,706 $11,881
====== ======
Net income per share $ 1.15 $ 1.03
====== ======
Average common and common equivalent
shares outstanding during the period 11,889 11,522
====== ======
</TABLE>
See notes to consolidated financial statements on page 5 of this report.
-2-
<PAGE>
PHILADELPHIA SUBURBAN CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
September 30,
-----------------------------
1995 1994
---- ----
<S> <C> <C>
Earned revenues $32,355 $28,849
Costs and expenses
Operating expenses 13,793 12,511
Depreciation 2,949 2,628
Amortization (41) 9
Taxes other than income taxes 1,928 1,788
------ ------
18,629 16,936
------ ------
Operating income 13,726 11,913
Interest and debt expenses 3,872 3,239
Dividends on preferred stock 154 216
Allowance for funds used during
construction (79) (37)
------ ------
Income before income taxes 9,779 8,495
Provision for income taxes 4,047 3,598
------ ------
Net income $ 5,732 $ 4,897
====== ======
Net income per share $ .48 $ .42
====== ======
Average common and common equivalent
shares outstanding during the period 12,022 11,620
====== ======
</TABLE>
See notes to consolidated financial statements on page 5 of this report.
-3-
<PAGE>
PHILADELPHIA SUBURBAN CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW
(In thousands of dollars)
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
------------------------
1995 1994
---- ----
<S> <C> <C>
Cash flows from operating activities
Net income $13,706 $11,881
Adjustments to reconcile net income to net
cash flows from operating activities:
Depreciation and amortization 8,481 7,643
Deferred taxes, net of taxes on customers'
advances 2,277 2,582
Net increase in receivables, inventory
and prepayments (2,337) (2,303)
Net decrease in payables and other
accrued liabilities (235) (837)
Net increase in accrued interest 1,066 430
Other (1,439) 126
------ ------
Net cash flows from operating activities 21,519 19,522
------ ------
Cash flows from investing activities
Property, plant and equipment additions,
including allowance for funds used during
construction of $168 and $80 (20,337) (17,023)
Acquisitions of water systems (25,788) -
Other (19) 66
------ ------
Net cash flows from investing activities (46,144) (16,957)
------ ------
Cash flows from financing activities
Customers' advances and contributions in aid of
construction, net of income tax payments 1,575 2,273
Repayments of customers' advances (1,651) (1,785)
Net borrowings of short-term debt 2,465 671
Proceeds of long-term debt 46,015 7,758
Repayments of long-term debt (9,708) (4,850)
Redemption of preferred stock of
subsidiary (2,857) -
Proceeds from issuing common stock 6,546 5,311
Repurchases of common stock (411) (2,056)
Dividends paid (10,042) (9,379)
Other (155) (145)
------ ------
Net cash flows from financing activities 31,777 (2,202)
------ ------
Net cash flows to discontinued operations (157) 234
------ ------
Net increase in cash 6,995 597
Cash deficit beginning of year (636) (868)
------ ------
Cash balance (deficit) at end of period $ 6,359 $ (271)
====== ======
</TABLE>
See notes to consolidated financial statements on page 5 of this report.
-4-
<PAGE>
PHILADELPHIA SUBURBAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands of dollars, except per share amounts)
Note 1 Basis of Presentation
The accompanying consolidated balance sheet of Philadelphia
Suburban Corporation at September 30, 1995, the consolidated
statements of income for the nine months and quarter ended
September 30, 1995 and 1994, and the consolidated cash flow
statements for the nine months ended September 30, 1995 and
1994 are unaudited, but reflect all adjustments, consisting of
only normal recurring accruals, which are, in the opinion of
management, necessary to present fairly the consolidated
financial position at September 30, 1995, the consolidated
results of operations, and the consolidated cash flow for the
periods presented. Because they cover interim periods, the
statements and related notes to the financial statements do
not include all disclosures and notes normally provided in
annual financial statements and, therefore, should be read in
conjunction with the Annual Report on Form 10-K for the year
ended December 31, 1994 and the Quarterly Reports on Form 10-Q
for the quarters ended June 30, 1995 and March 31, 1995.
Note 2 Water Rates
In October 1995, the Pennsylvania Public Utility Commission
("PUC") approved a rate settlement that Philadelphia Suburban
Water Company (PSW) reached with the parties (the Office of
Consumer Advocate, the PUC Office of Trial Staff and the
Office of Small Business Advocate) actively participating in
litigating the rate application PSW filed in April 1995. The
settlement is designed to increase annual water revenues by
$6,150, or approximately 5.3%, effective October 27, 1995. As
a part of the settlement agreement, PSW agreed not to file for
a new general rate increase prior to April 26, 1996, absent
extraordinary circumstances.
In addition to its base rates, PSW has utilized a credit on
its customers' water bills to reflect certain reductions in
Pennsylvania State taxes until such time as the tax changes
are incorporated into base rates. The credit, 1.04% prior to
the rate settlement, was eliminated with the adoption of new
base rates on October 27, 1995.
-5-
<PAGE>
PHILADELPHIA SUBURBAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENT (continued)
(In thousands of dollars, except per share amounts)
Note 3 Acquisitions
In May 1995, PSW purchased the water utility and related
assets of Media Borough ("Media"). Revenues related to Media
were $1,262 for the quarter and $1,775 since the date of
acquisition.
During the quarter, PSW purchased the water utility assets of
two smaller water systems for a combined purchase price of
$67. These systems serve customers within the boundaries of
PSW's existing service territory and have combined annual
operating revenues of approximate $40. In addition, PSW
continues to hold discussions with the owners of several other
water systems that are near or adjacent to PSW's service
territory. If PSW is successful in acquiring these systems,
the acquisitions would likely be funded primarily through the
issuance of long-term debt and preferred stock of the Company.
Note 4 Long-Term Debt
On August 31, 1995, PSW issued $22,000 in First Mortgage Bonds
6.35% Series due 2025 as security for an equal amount of Bonds
issued by the Delaware County Industrial Development
Authority. The proceeds from these bonds are restricted to
funding the costs of certain capital projects. As of September
30, 1995, the Trustee for this issue held $5.4 million in an
interest bearing account pending completion of the remainder
of the projects financed with this issue. The amount held by
the Trustee is included in the balance sheet as cash. It is
expected that these projects will be completed by the third
quarter of 1996, however funds will be drawn from the trust
during the interim as expenditures are made on these projects.
On August 1, 1995 PSW redeemed $8,000 of First Mortgage Bonds
13% Series due 2005. The premium on the early retirement of
6.1% or $488 was paid and will be deferred and amortized in
accordance with the Uniform System of Accounts prescribed by
the PUC over the life of the First Mortgage Bonds issued
during the second quarter of 1995.
The effect of the redemption on the Company's sinking fund
payments for the next five years is to reduce the total
payments by $800 in each year from 1995 through the year 2000.
-6-
<PAGE>
PHILADELPHIA SUBURBAN CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(In thousands of dollars, except per share amounts)
Philadelphia Suburban Corporation (the Company or PSC) is composed of two
businesses, a regulated water utility (Philadelphia Suburban Water Company or
PSW), and a non-regulated data processing service bureau (Utility & Municipal
Services, Inc. or UMS). The operations of UMS are not significant to the
financial results of the Company and, therefore, are not discussed separately.
Corporate expenses include administrative expenses of a general nature.
Financial Condition
During the first nine months of 1995, the Company acquired the water utility
assets of the Borough of Media ("Media") and two smaller water systems for a
combined price of $25,778 in cash, made $20,337 of expenditures related to
routine utility capital improvements and replacements, repaid $1,651 of customer
advances for construction and redeemed $2,857 of Preferred Stock. In addition,
the Company made $850 in sinking fund payments on long-term debt and, in August,
called $8,000 of First Mortgage Bonds 13% Series at a premium of 6.1% or $488.
During this period, internally generated funds, available working capital, funds
available under the revolving credit facility, and funds obtained from the
proceeds of common stock and long-term debt were sufficient to fund the cash
requirements discussed above, and to pay dividends. Proceeds from the issuance
of common stock, primarily through the Company's Customer Stock Purchase Plan
and the Dividend Reinvestment and Optional Stock Purchase Plan amounted to
approximately $6,546.
In August 1995, PSW issued $22,000 of First Mortgage Bonds 6.35% Series due
2025. These bonds were issued through an Industrial Development Authority and
proceeds from the issue are restricted to the funding of certain capital
projects. As of September 30, 1995, $5,428 of proceeds from this issue are being
held by the trustee in an interest bearing account pending completion of the
projects. It is expected that all projects financed by this issue will be
completed by the third quarter of 1996. Proceeds received at closing were
unrestricted since the Company has already funded an equal amount towards the
completion of the projects, prior to closing.
During the second quarter of 1995, PSW issued $15,000 First Mortgage Bonds 7.72%
Series due 2025 and $10,000 First Mortgage Bonds 6.82% Series
due 2005.
In May 1995, PSW temporarily increased its revolving credit facility from
$30,000 to $40,000 until the end of August 1995. During this period the maximum
amount outstanding was $37,200. At September 30, 1995, PSW had $11,000 available
under its revolving credit facility and the Company and PSW had $2,485 and
$1,000 respectively, available under short-term lines of credit.
-7-
<PAGE>
PHILADELPHIA SUBURBAN CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
(In thousands of dollars, except per share amounts)
Traditionally, PSW has financed its ongoing construction program and other
financial requirements separately from PSC. PSW's ability to finance its future
construction program and pay dividends to the Company depends on its ability to
attract the necessary external financing and to maintain or increase internally
generated funds. Rate increases and regulatory support will continue to be
required to allow PSW to achieve a level of earnings necessary to attract
capital, to maintain satisfactory debt coverage ratios and to provide
shareholders an adequate return on their investment.
Management believes that internally generated funds along with the existing
credit facilities, the issuance of long-term debt and proceeds from the issuance
of common stock, primarily through the Company's Customer Stock Purchase Plan
and the Dividend Reinvestment and Optional Stock Purchase Plan are adequate to
meet the Company's financing requirements for the balance of the year and
beyond.
Results of Operations
Analysis of First Nine Months of 1995 Compared to First Nine Months of 1994
Revenues increased $6,466 or 8.0% primarily due to the 9.05% rate increase
granted PSW in June 1994, additional water revenues associated with the Media
water system, and an increase, during the third quarter, in water sales.
Operating expenses increased by $1,348 or 3.7% due to higher employee benefit
expenses, expenses associated with the recently acquired Media water system and
increased wages, offset partially by a reduction in maintenance and production
costs. Employee benefit expenses increased as a result of the recognition of
$816 of increased costs for Postretirement Benefits Other than Pensions computed
under Statement of Financial Accounting Standards No. 106 in conjunction with
the June 1994 rate increase. The decrease in maintenance and production costs
was a result of the effects of the milder winter weather experienced in 1995.
The effects of the severe winter weather in 1994 caused significant maintenance
and production cost increases estimated at $800 over normal winter costs.
Production costs also decreased as a result of reductions in the quantity of
water purchased from other water utilities due to the completion of certain
water mains that allow more Company-produced water to be distributed to areas
that previously required supplemental sources.
Depreciation increased by $731 or 9.4% reflecting the impact of utility plant
placed in service since June 1994, including the Media acquisition. Depreciation
was approximately 2.3% of average utility plant in service in both the first
nine months of 1995 and 1994.
-8-
<PAGE>
PHILADELPHIA SUBURBAN CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
(In thousands of dollars, except per share amounts)
Amortization was a credit of $43 compared to a credit of $150 in the first nine
months of 1994, a change of $107. The change is primarily due to $211 of
additional negative goodwill amortization associated with the December 1992
acquisitions of two water systems that was recognized in 1994 in conjunction
with the June 1994 rate settlement.
Taxes other than income taxes increased by $357 or 6.6% primarily due to
increases in the Pennsylvania Capital Stock Tax associated with increased
equity, a higher Pennsylvania Public Utility Realty Tax Assessment resulting
from the Media acquisition and increased state regulatory taxes
and employment taxes.
Dividends on preferred stock decreased by $173 or 26.7% as a result of the
redemption of 28,570 preferred shares in January 1995.
Interest expense increased by $1,339 or 13.9% reflecting higher interest rates
on borrowings under the Company's revolving credit facilities and an increase in
the average amount of borrowings outstanding. The increase in borrowings were
used to fund the Media acquisition and ongoing capital projects.
Allowance for funds used during construction ("AFUDC") increased by $88
primarily due to a higher AFUDC rate and an increase in the average balance of
Construction Work in Progress ("CWIP") to which AFUDC is applied. The increase
in CWIP is associated with two projects that have a relatively long construction
duration. The AFUDC rate increased in connection with the higher interest rate
on the revolving credit facility.
The Company's effective income tax rate was 41.5% in 1995 and 42.3% in 1994. The
decrease in the effective tax rate is due primarily to a 1% reduction in the
Pennsylvania Corporate Net Income tax rate.
Net income increased $1,825 or 15.4% primarily due to increased revenues,
partially offset by higher operating and interest expenses, depreciation,
amortization and taxes other than income taxes. On a per share basis, earnings
increased $.12 or 11.7% reflecting the improvement in net income offset by a
3.2% increase in the average number of shares outstanding. The increased number
of shares outstanding reflects shares sold since the third quarter of 1994
through the Customer Stock Purchase Plan and the Dividend Reinvestment and
Optional Stock Purchase Plan.
Analysis of Third Quarter of 1995 Compared to Third Quarter of 1994
Revenues for the quarter increased $3,506 or 12.2% primarily due to an increase
in water sales associated with the hot, dry weather experienced during the
summer of 1995 and to revenues associated with the Media water system.
-9-
<PAGE>
PHILADELPHIA SUBURBAN CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
(In thousands of dollars, except per share amounts)
Operating expenses increased $1,282 or 10.2% primarily as a result of increases
in wages, production costs and expenses associated with the Media water system.
The increase in wages reflects normal merit increases and the impact of the
improved operating results on employee incentive programs. Production costs rose
due to the increase in the volume of water sold and a slight decline in raw
water quality which required additional treatment.
Depreciation increased by $321 or 12.2% reflecting the impact of utility plant
placed in service since the third quarter of 1994, including the Media
acquisition. Depreciation was approximately 2.3% of average utility plant in
service in both the third quarter of 1995 and 1994, respectively.
Amortization was a credit of $41 as compared to a charge of $9 in 1994 primarily
due to the completion in the second quarter of 1995 of the amortization of the
costs associated with the June 1994 rate increase, offset in part by a decrease
in the aforementioned amortization of negative goodwill.
Taxes other than income taxes increased $140 or 7.8% as a result of increases in
the Pennsylvania Capital Stock Tax associated with increased equity, a higher
Pennsylvania Public Utility Realty Tax Assessment resulting from the Media
acquisition and due to increased employment taxes.
Interest expense increased $633 or 19.5% reflecting higher interest rates on the
short-term credit facilities and an increased level of borrowings. The increase
in borrowings were used to fund the Media acquisition and ongoing capital
projects.
Dividends on preferred stock decreased $62 or 28.7% due to the reduced number of
preferred stock shares outstanding for the quarter.
Allowance for funds used during construction ("AFUDC") increased by $42
primarily due to a higher AFUDC rate and to an increase in the average balance
of CWIP to which AFUDC is applied. The AFUDC rate increased due to higher
interest rates on the revolving credit facility in 1995 as compared to the third
quarter of 1994.
The Company's effective income tax rate was 41.4% in 1995 and 42.4% in 1994. The
decrease in the effective tax rate is primarily due to a 1% reduction in the
Pennsylvania Corporate Net Income tax rate.
Net income for the quarter increased by $835 or 17.1% principally due to
increased water revenues, partially offset by higher interest and operating
expenses. Earnings per share, however, increased $.06 per share or 14.3% due to
the higher number of average shares outstanding.
-10-
<PAGE>
PHILADELPHIA SUBURBAN CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
(In thousands of dollars, except per share amounts)
Recent Events
On September 20, 1995 the Governor of Pennsylvania issued a drought emergency
order which mandated certain restrictions on water use, particularly
non-essential uses of water. Because the order was issued toward the end of the
summer when non-essential and recreational use of water has traditionally
decreased, the restrictions are not expected to have a significant impact on
revenues. Recent rainfalls have been well above average, and as a result, the
Governor eased these restrictions in all but three counties in Pennsylvania,
including one county in PSW's service territory. This declaration by the
Governor eased the restriction from a drought emergency order to a drought
watch, which calls for voluntary restrictions on non-essential water uses. While
portions of the Commonwealth of Pennsylvania, particularly those dependant on
ground water, experienced water shortages, PSW's water supplies were and
continue to be adequate.
-11-
<PAGE>
PHILADELPHIA SUBURBAN CORPORATION AND SUBSIDIARIES
Part II. Other Information
Item 1. Legal Proceedings
There are no pending legal proceedings to which the Registrant
or any of its subsidiaries is a party or to which any of their
properties is the subject that present a reasonable likelihood
of a material adverse impact on the Registrant. Reference is
made to Item 3 of the Company's Annual Report on Form 10-K for
the year ended December 31, 1994, which is included by a
reference herein.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit No. Description
----------- -----------
4.18 Thirtieth Supplemental Indenture
dated as of August 15, 1995.
10.13 Bond Purchase Agreement among the
Delaware County Industrial
Development Authority, Philadelphia
Suburban Water Company and Legg
Mason Wood Walker, Incorporated
dated August 24, 1995.
10.14 Construction and Financing
Agreement between the Delaware
County Industrial Development
Authority and Philadelphia
Suburban Water Company dated as
of August 15, 1995.
27 Financial Data Schedule
(b) Report on Form 8-K
None
-12-
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be executed on its behalf by the
undersigned thereunto duly authorized.
November 14, 1995
PHILADELPHIA SUBURBAN CORPORATION
---------------------------------
Registrant
Nicholas DeBenedictis
----------------------------------
Nicholas DeBenedictis
Chairman and President
Michael P. Graham
----------------------------------
Michael P. Graham
Senior Vice President - Finance
and Treasurer
-13-
<PAGE>
EXHIBIT INDEX
Exhibit No. Description Page No.
- ----------- ----------- --------
4.18 Thirtieth Supplemental Indenture, dated
as of August 15, 1995 16
10.13 Bond Purchase Agreement among the
Delaware County Industrial Development
Authority, Philadelphia Suburban Water
Company and Legg Mason Wood Walker,
Incorporated dated August 24, 1995. 52
10.14 Construction and Financing Agreement between
the Delaware County Industrial Development
Authority and Philadelphia Suburban Water
Company dated as of August 15, 1995. 72
27 Financial Data Schedule 110
-14-
<PAGE>
================================================================================
THIRTIETH SUPPLEMENTAL
INDENTURE
DATED AS OF August 15, 1995
TO
INDENTURE OF MORTGAGE
DATED AS OF JANUARY 1, 1941
----------------
PHILADELPHIA SUBURBAN WATER COMPANY
TO
CORESTATES BANK, N.A., as Trustee
----------------
$22,000,000 FIRST MORTGAGE BONDS, 6.35% Series due 2025
<PAGE>
THIRTIETH SUPPLEMENTAL INDENTURE
THIRTIETH SUPPLEMENTAL INDENTURE dated as of the fifteenth day of
August, 1995, by and between PHILADELPHIA SUBURBAN WATER COMPANY, a corporation
duly organized and existing under the laws of the Commonwealth of Pennsylvania
(the "Company"), party of the first part, and CORESTATES BANK, N.A., a national
banking association successor to The Pennsylvania Company for Insurances on
Lives and Granting Annuities, and as The Pennsylvania Company for Banking and
Trusts, and as The First Pennsylvania Banking and Trust Company, and as First
Pennsylvania Bank N.A. (the "Trustee"), party of the second part.
WHEREAS, the Company heretofore duly executed and delivered to
The Pennsylvania Company for Insurances on Lives and Granting Annuities, as
Trustee, an Indenture of Mortgage dated as of January 1, 1941 (the "Original
Indenture"), which by reference is hereby made a part hereof, and in and by the
Original Indenture the Company conveyed and mortgaged to the Trustee certain
property therein described, to secure the payment of its bonds to be generally
known as its "First Mortgage Bonds" and to be issued under the Original
Indenture in one or more series as therein provided; and
WHEREAS, on March 29, 1947, concurrently with a merger of
Germantown Trust Company into The Pennsylvania Company for Insurances on Lives
and Granting Annuities, the name of the surviving corporation was changed to The
Pennsylvania Company for Banking and Trusts, on September 30, 1955, concurrently
with a merger of The First National Bank of Philadelphia into The Pennsylvania
Company for Banking and Trusts, the name of the surviving corporation was
changed to The First Pennsylvania Banking and Trust Company, and on June 3,
1974, by amendment to its Articles of Association, The First Pennsylvania
Banking and Trust Company was changed and converted into a national bank and
concurrently therewith changed its name to First Pennsylvania Bank N.A., and on
October 1, 1991, First Pennsylvania Bank N.A. merged with and into The
Philadelphia National Bank, which changed its name to CoreStates Bank, N.A.,
such mergers and changes of name not involving any change in the title, powers,
rights or duties of the Trustee, as trustee under the Original Indenture as
supplemented at the respective dates thereof; and
WHEREAS, the Company duly executed and delivered to the Trustee a First
Supplemental Indenture dated as of July 1, 1948, a Second Supplemental Indenture
dated as of July 1, 1952, a Third Supplemental Indenture dated as of November 1,
1953, a Fourth Supplemental Indenture dated as of January 1, 1956, a Fifth
Supplemental Indenture dated as of March 1, 1957, a Sixth Supplemental Indenture
dated as of May 1, 1958, a Seventh Supplemental Indenture dated as of September
1, 1959, an Eighth Supplemental Indenture dated as of May 1, 1961, a Ninth
Supplemental Indenture dated as of April 1, 1962, a Tenth Supplemental Indenture
<PAGE>
dated as of March 1, 1964, an Eleventh Supplemental Indenture dated as of
November 1, 1966, a Twelfth Supplemental Indenture dated as of January 1, 1968,
a Thirteenth Supplemental Indenture dated as of June 15, 1970, a Fourteenth
Supplemental Indenture dated as of November 1, 1970, a Fifteenth Supplemental
Indenture dated as of December 1, 1972, a Sixteenth Supplemental Indenture dated
as of May 15, 1975, a Seventeenth Supplemental Indenture dated as of December
15, 1976, an Eighteenth Supplemental Indenture dated as of May 1, 1977, a
Nineteenth Supplemental Indenture dated as of June 1, 1980, a Twentieth
Supplemental Indenture dated as of August 1, 1983, a Twenty-First Supplemental
Indenture dated as of August 1, 1985, a Twenty-Second Supplemental Indenture
dated as of April 1, 1986, a Twenty-Third Supplemental Indenture dated as of
April 1, 1987, a Twenty-Fourth Supplemental Indenture dated as of June 1, 1988,
a Twenty-Fifth Supplemental Indenture dated as of January 1, 1990, a
Twenty-Sixth Supplemental Indenture dated as of November 1, 1991, a Twenty-
Seventh Supplemental Indenture dated as of June 1, 1992, a Twenty- Eighth
Supplemental Indenture dated as of April 1, 1993, and a Twenty-Ninth
Supplemental Indenture dated as of March 1, 1995, to subject certain additional
property to the lien of the Original Indenture and to provide for the creation
of additional series of bonds; and
WHEREAS, the Company has issued under the Original Indenture,
as supplemented at the respective dates of issue, thirty-five series of First
Mortgage Bonds designated, respectively, as set forth in the following table,
the Indenture creating each series and the principal amount of bonds thereof
issued being indicated opposite the designation of such series:
<TABLE>
<CAPTION>
Designation Indenture Amount
----------- --------- ------
<S> <C> <C>
3 1/4% Series due 1971 Original $16,375,000
9 5/8% Series due 1975 Thirteenth Supplemental 10,000,000
9.15% Series due 1977 Fourteenth Supplemental 10,000,000
3% Series due 1978 First Supplemental 2,000,000
3 3/8% Series due 1982 Second Supplemental 4,000,000
3.90% Series due 1983 Third Supplemental 5,000,000
3 1/2% Series due 1986 Fourth Supplemental 6,000,000
4 1/2% Series due 1987 Fifth Supplemental 4,000,000
4 1/8% Series due 1988 Sixth Supplemental 4,000,000
5% Series due 1989 Seventh Supplemental 4,000,000
4 5/8% Series due 1991 Eighth Supplemental 3,000,000
4.70% Series due 1992 Ninth Supplemental 3,000,000
6 7/8% Series due 1993 Twelfth Supplemental 4,500,000
4.55% Series due 1994 Tenth Supplemental 4,000,000
10 1/8% Series due 1995 Sixteenth Supplemental 10,000,000
5 1/2% Series due 1996 Eleventh Supplemental 4,000,000
7 7/8% Series due 1997 Fifteenth Supplemental 5,000,000
8.44% Series due 1997 Twenty-Third Supplemental 12,000,000
9.20% Series due 2001 Seventeenth Supplemental 7,000,000
-2-
<PAGE>
8.40% Series due 2002 Eighteenth Supplemental 10,000,000
5.95% Series due 2002 Twenty-Seventh Supplemental 4,000,000
12.45% Series due 2003 Twentieth Supplemental 10,000,000
13% Series due 2005 Twenty-First Supplemental 8,000,000
10.65% Series due 2006 Twenty-Second Supplemental 10,000,000
9.89% Series due 2008 Twenty-Fourth Supplemental 5,000,000
7.15% Series due 2008 Twenty-Eighth Supplemental 22,000,000
9.12% Series due 2010 Twenty-Fifth Supplemental 20,000,000
8 7/8% Series due 2010 Nineteenth Supplemental 8,000,000
6.50% Series due 2010 Twenty-Seventh Supplemental 3,200,000
9.17% Series due 2011 Twenty-Sixth Supplemental 5,000,000
9.93% Series due 2013 Twenty-Fourth Supplemental 5,000,000
9.97% Series due 2018 Twenty-Fourth Supplemental 5,000,000
9.17% Series due 2021 Twenty-Sixth Supplemental 8,000,000
9.29% Series due 2026 Twenty-Sixth Supplemental 12,000,000
Medium Term Note Series Twenty-Ninth Supplemental 100,000,000(1);
and
</TABLE>
WHEREAS, the Original Indenture and said Supplemental
Indentures were duly recorded in the Commonwealth of Pennsylvania on the dates
and in the office for the Recording of Deeds for the following counties in the
Mortgage Books and at the pages indicated in the following table:
[Continued on Next Page]
- --------
1 $100,000,000 in aggregate principal amount of bonds is authorized for
issuance under the Twenty-Ninth Supplemental Indenture, in one or more
subseries, each constituting a separate series under the Indenture. As of
the date of execution and delivery of this Thirtieth Supplemental
Indenture, $15,000,000 in aggregate principal amount of bonds has been
issued and is outstanding under the Twenty-Ninth Supplemental Indenture.
-3-
<PAGE>
<TABLE>
<CAPTION>
COUNTY
====================================================================================================================================
Bucks Chester Delaware Montgomery
- ------------------------------------------------------------------------------------------------------------------------------------
Date of
Indenture Recording Book Page Book Page Book Page Book Page
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Original 2/20/41 496 1 H- 20 1034 1 1625 1
13.Vol.30
7
- ------------------------------------------------------------------------------------------------------------------------------------
First Supplemental 8/26/48 632 1 F- 200 1668 169 2031 257
16.Vol.38
0
- ------------------------------------------------------------------------------------------------------------------------------------
Second Supplemental 7/1/52 768 438 18.Vol.42 186 1962 376 2360 517
5
- ------------------------------------------------------------------------------------------------------------------------------------
Third Supplemental 11/25/53 895 1 18.Vol.44 325 2052 1 2493 1
2
- ------------------------------------------------------------------------------------------------------------------------------------
Fourth Supplemental 1/9/56 1089 155 Z- 1 2199 1 2722 425
20.Vol.49
9
- ------------------------------------------------------------------------------------------------------------------------------------
Fifth Supplemental 3/20/57 1181 316 B- 601 2294 50 2850 335
22.Vol.53
6
- ------------------------------------------------------------------------------------------------------------------------------------
Sixth Supplemental 5/9/58 1254 1 G-23 201 2380 039 2952 289
- ------------------------------------------------------------------------------------------------------------------------------------
Seventh Supplemental 9/25/59 1332 509 B-25 109 2442 1 3090 249
- ------------------------------------------------------------------------------------------------------------------------------------
Eighth Supplemental 5/9/61 - - Z-26 17 2526 312 - -
- ------------------------------------------------------------------------------------------------------------------------------------
Eighth Supplemental 5/10/61 1409 225 - - - - 3249 289
- ------------------------------------------------------------------------------------------------------------------------------------
Ninth Supplemental 4/10/62 1458 372 G-28 126 2581 463 3307 169
- ------------------------------------------------------------------------------------------------------------------------------------
Tenth Supplemental 3/19/64 1568 1 M-30 967 2976 1043 3310 237
- ------------------------------------------------------------------------------------------------------------------------------------
Eleventh Supplemental 11/4/66 1655 695 Q-32 6682 762 223 3549 129
- ------------------------------------------------------------------------------------------------------------------------------------
Twelfth Supplemental 1/23/68 1691 531 N-33 219 2792 708 3542 315
- ------------------------------------------------------------------------------------------------------------------------------------
Thirteenth 7/2/70 1763 1167 D-35 80 2850 301 3687 23
Supplemental
- ------------------------------------------------------------------------------------------------------------------------------------
Fourteenth 11/5/70 1774 331 K-35 713 2858 3113 700 548
Supplemental
- ------------------------------------------------------------------------------------------------------------------------------------
Fifteenth 12/11/72 1869 196 O-37 998 2926 550 3786 96
Supplemental
- ------------------------------------------------------------------------------------------------------------------------------------
Sixteenth 5/28/75 1979 14 E-44 77 3005 511 4010 307
Supplemental
- ------------------------------------------------------------------------------------------------------------------------------------
Seventeenth 12/18/77 2072 683 L-51 1 3072 43 5002 436
Supplemental
- ------------------------------------------------------------------------------------------------------------------------------------
Eighteenth 4/29/77 2082 567 B-52 344 3078 728 5003 291
Supplemental
- ------------------------------------------------------------------------------------------------------------------------------------
Nineteenth 6/23/80 2303 714 J-62 92 3261 293 5030 502
Supplemental
- ------------------------------------------------------------------------------------------------------------------------------------
Twentieth 8/2/83 2487 370 D-72 1 96 810 5662 1045
Supplemental
- ------------------------------------------------------------------------------------------------------------------------------------
Twenty-First 8/27/85 2690 806 54 550 - - 5864 1347
Supplemental
- ------------------------------------------------------------------------------------------------------------------------------------
Twenty-First 8/28/85 - - - - 264 159 - -
Supplemental
- ------------------------------------------------------------------------------------------------------------------------------------
Twenty-Second 4/22/86 2774 160 263 275 326 592 5944 360
Supplemental
-4-
<PAGE>
COUNTY
====================================================================================================================================
Bucks Chester Delaware Montgomery
- ------------------------------------------------------------------------------------------------------------------------------------
Date of
Indenture Recording Book Page Book Page Book Page Book Page
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Twenty-Third 4/1/87 2960 693 - - - - - -
Supplemental
- ------------------------------------------------------------------------------------------------------------------------------------
Twenty-Third 4/2/87 - - 680 337 447 1807 6115 602
Supplemental
- ------------------------------------------------------------------------------------------------------------------------------------
Twenty-Fourth 7/25/88 3199 1095 1224 389 0593 0585 6324 143
Supplemental
- ------------------------------------------------------------------------------------------------------------------------------------
Twenty-Fifth 1/12/90 0136 0250 1848 205 731 1571 6538 376
Supplemental
- ------------------------------------------------------------------------------------------------------------------------------------
Twenty-Sixth 11/8/91 369 2190 2660 205 894 2241 6780 891
Supplemental
====================================================================================================================================
Twenty-Seventh 6/29/92 0487 1829 3055 182 0969 2023 6918 302
Supplemental
- ------------------------------------------------------------------------------------------------------------------------------------
Twenty-Eighth 4/22/93 0652 1335 3542 1542 1081 0852 7112 0539
Supplemental
- ------------------------------------------------------------------------------------------------------------------------------------
Twenty-Ninth 3/30/95 1045 1872 3875 1368 1349 0829 7561 1155
Supplemental
====================================================================================================================================
</TABLE>
and
-5-
<PAGE>
WHEREAS, all of the bonds of each of said series are presently
outstanding other than the bonds listed on Exhibit A attached hereto and made a
part hereof; and
WHEREAS, the lien of the Original Indenture as supplemented has been
perfected as a security interest under the Pennsylvania Uniform Commercial Code
by filing a financing statement in the office of the Secretary of the
Commonwealth; and
WHEREAS, the Company proposes to create under the Original Indenture,
as supplemented by this Thirtieth Supplemental Indenture, a new series of bonds
to be designated "First Mortgage Bonds, 6.35% Series due 2025" (herein referred
to as the "Bonds") to be limited in aggregate principal amount to $22,000,000,
to be issued only as registered bonds without coupons, to be dated as provided
in the Original Indenture, to bear interest at the rate of 6.35% per annum, and
to mature on August 15, 2025; and
WHEREAS, in order to finance the cost of acquiring, constructing,
installing and equipping facilities for the furnishing of water, in the counties
of Bucks, Chester, Delaware and Montgomery, which are to be financed under a
Construction and Financing Agreement dated as of August 15, 1995 (the "Financing
Agreement") between the Company and the Delaware County Industrial Development
Authority, a Pennsylvania body politic and corporate (the "Authority"), and
which are described in Exhibit A thereto, less any deletions therefor and
together with any additions, improvements and modifications thereto and
substitutions therefor made in accordance with the provisions of the Financing
Agreement (the "Facilities"), the Company has requested the Authority to issue a
new series of bonds to be known as the Authority's Water Facilities Revenue
Bonds (Philadelphia Suburban Water Company), Series of 1995 in the aggregate
principal amount of $22,000,000 (the "Authority Bonds"); and
WHEREAS, the Authority Bonds are to be issued under a Trust Indenture,
dated as of August 15, 1995 (the "Authority Indenture"), between the Authority
and PNC Bank, National Association, as trustee (the "Authority Trustee"); and
WHEREAS, the Bonds are to be issued by the Company to secure the
obligation of the Company to pay to or for the account of the Authority an
amount equal to the principal of, redemption premium, if any, and interest on
the Authority Bonds pursuant to the Financing Agreement between the Authority
and the Company; and
WHEREAS, the right, title and interest of the Authority in and to the
Financing Agreement and the payments thereunder and the security for such
payments are to be assigned by the Authority to the Authority Trustee, and the
Bonds are to be delivered by the Company on behalf of the Authority directly to
the Authority Trustee, as assignee, as security for the payment of the principal
of, redemption premium, if any, and interest on, the Authority Bonds; and
-6-
<PAGE>
WHEREAS, Article XVIII of the Original Indenture provides that the
Company, when authorized by resolution of its Board of Directors, may with the
Trustee enter into an indenture supplemental to the Original Indenture, which
thereafter shall form a part of the Original Indenture, for the purposes, inter
alia, of subjecting to the lien of the Original Indenture additional property,
of defining the covenants and provisions applicable to any bonds of any series
other than the 3 1/4% Series due 1971, of adding to the covenants and agreements
of the Company contained in the Original Indenture other covenants and
agreements thereafter to be observed by the Company, of surrendering any right
or power in the Original Indenture reserved to or conferred upon the Company,
and of making such provisions in regard to matters or questions arising under
the Original Indenture as may be necessary or desirable and not inconsistent
therewith; and
WHEREAS, in addition to the property described in the Original
Indenture and the First, Second, Third, Fourth, Fifth, Sixth, Seventh, Eighth,
Ninth, Tenth, Eleventh, Twelfth, Thirteenth, Fourteenth, Fifteenth, Sixteenth,
Seventeenth, Eighteenth, Nineteenth, Twentieth, Twenty-First, Twenty-Second,
Twenty-Third, Twenty-Fourth, Twenty-Fifth, Twenty-Sixth, Twenty-Seventh, Twenty-
Eighth and Twenty-Ninth Supplemental Indentures, the Company has acquired
certain other property and desires to confirm the lien of the Original Indenture
thereon; and
WHEREAS, the Company, by proper corporate action, has duly authorized
the creation of said new series of Bonds (to be issued in accordance with the
terms and provisions of the Original Indenture and indentures supplemental
thereto, including this Thirtieth Supplemental Indenture, and to be secured by
said Original Indenture and indentures supplemental thereto, including this
Thirtieth Supplemental Indenture) and has further duly authorized the execution,
delivery and recording of this Thirtieth Supplemental Indenture setting forth
the terms and provisions of the Bonds insofar as said terms and provisions are
not set forth in said Original Indenture; and
WHEREAS, the Bonds and the Trustee's certificate upon said Bonds are to
be substantially in the forms following - the proper amount, names of registered
owners and numbers to be inserted therein, and such appropriate insertions,
omissions and changes to be made therein as may be required or permitted by this
Indenture to conform to any pertinent law or usage:
-7-
<PAGE>
No. R- $___________________
PHILADELPHIA SUBURBAN WATER
COMPANY
(Incorporated under the Laws of the Commonwealth
of Pennsylvania)
First Mortgage Bond, ____% Series Due 2025
Philadelphia Suburban Water Company, a corporation organized and
existing under the laws of the Commonwealth of Pennsylvania (hereinafter called
the "Company", which term shall include any successor corporation as defined in
the Indenture hereinafter referred to), for value received, hereby promises to
pay to _______________________ or its registered assigns, on the fifteenth day
of August, 2025, at the corporate trust office of CoreStates Bank, N.A. in the
City of Philadelphia, Pennsylvania, the sum of ___________________ in such coin
or currency of the United States of America as at the time of payment is legal
tender for the payment of public and private debts and to pay interest thereon
at said office to the registered owner hereof by draft or check of the Trustee
mailed to such registered owner from the interest payment date next preceding
the date of this Bond (or if this Bond be dated prior to February 15, 1996, from
the date hereof) until the principal hereof shall become due and payable, at the
rate of ______________ percent (_____%) per annum, payable semiannually in like
coin or currency on the fifteenth day of August and the fifteenth day of
February in each year, commencing February 15, 1996 and to pay interest on
overdue principal (including any overdue required or optional prepayment of
principal) and premium, if any, and, to the extent legally enforceable, on any
overdue installment of interest at a rate of ___ per annum after maturity
whether by acceleration or otherwise until paid.
The interest so payable will (except as otherwise provided in the
Thirtieth Supplemental Indenture referred to herein) be calculated on the basis
of a 360-day year of twelve 30- day months and be paid to the person in whose
name this Bond (or a Bond or Bonds in exchange for which this Bond was issued)
is registered at the close of business on the last day of the calendar month
next preceding the month in which the interest payment date occurs or, if such
day is not a business day, on the next preceding business day (a "record date")
and principal, premium, if any, and interest on this Bond shall be paid in
accordance with written payment instructions of the registered owner
delivered to the Trustee (defined below) on or before such record date.
-8-
<PAGE>
The provisions of the Bond are continued on the reverse hereof
and such continued provisions shall for all purposes have the same effect as if
fully set forth at this place.
IN WITNESS WHEREOF, Philadelphia Suburban Water Company has
caused this Bond to be signed by its President or a Vice President and its
corporate seal to be hereto affixed and attested by its Secretary or an
Assistant Secretary, and this Bond to be dated ___________.
PHILADELPHIA SUBURBAN WATER COMPANY
Attest:
_______________________________ By: ____________________________________
(Assistant) Secretary Title: ___________________________
(Form of Reverse of Bond)
This Bond is one of a duly authorized issue of bonds of the Company
known as its First Mortgage Bonds, issued and to be issued without limitation as
to aggregate principal amount except as set forth in the Indenture hereinafter
mentioned in one or more series and equally secured (except insofar as a sinking
fund or other similar fund established in accordance with the provisions of the
Indenture may afford additional security for the bonds of any specific series)
by an Indenture of Mortgage (herein called the "Indenture") dated as of January
1, 1941, executed by the Company to The Pennsylvania Company for Insurances on
Lives and Granting Annuities (now CoreStates Bank, N.A.), as Trustee
(hereinafter called the "Trustee"), to which Indenture and 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 rights of the
holders and registered owners of the bonds and of the Trustee in respect of such
security, and the terms and conditions under which the bonds are and are to be
secured and may be issued under the Indenture; but neither the foregoing
reference to the Indenture nor any provision of this Bond or of the Indenture or
of any indenture supplemental thereto shall affect or impair the obligation of
the Company, which is absolute and unconditional, to pay at the stated or
accelerated maturity herein and in the Indenture provided, the principal of and
interest on this Bond as herein provided. As provided in the Indenture, the
-9-
<PAGE>
bonds may be issued in series for various principal amounts, may bear different
dates and mature at different times, may bear interest at different rates and
may otherwise vary as in the Indenture provided or permitted. This Bond is one
of the Bonds described in an indenture supplemental to said Indenture known as
the "Thirtieth Supplemental Indenture" dated as of August 15, 1995, and
designated therein as "First Mortgage Bonds, ____% Series due 2025 (the
"Bonds").
To the extent permitted by and as provided in the Indenture,
modifications or alterations of the Indenture, or of any indenture supplemental
thereto, and of the rights and obligations of the Company and of the holders and
registered owners of bonds issued and to be issued thereunder may be made with
the consent of the Company by an affirmative vote of the holders and registered
owners of not less than 75% in principal amount of bonds then outstanding under
the Indenture and entitled to vote, at a meeting of the bondholders called and
held as provided in the Indenture, and, in case one or more but less than all of
the series of bonds then outstanding under the Indenture are so affected, by an
affirmative vote of the holders and registered owners of not less than 75% in
principal amount of bonds of any series then outstanding under the Indenture and
entitled to vote on and affected by such modification or alteration, or by the
written consent of the holders and registered owners of such percentages of
bonds; provided, however, that no such modification or alteration shall be made
which shall reduce the percentage of bonds the consent of the holders or
registered owners of which is required for any such modification or alteration
or which shall affect the terms of payment of the principal of or interest on
the bonds, or permit the creation by the Company of any lien prior to or on a
parity with the lien of the Indenture with respect to any property subject to
the lien of the Indenture as a first mortgage lien thereon, or which shall
affect the rights of the holders or registered owners of less than all of the
bonds of any series affected thereby.
The Bonds have been issued by the Company to secure the obligation of
the Company to pay to or for the account of the Authority (defined below) an
amount equal to the principal of, and interest on, the Authority Bonds (defined
below) pursuant to the Construction and Financing Agreement (the "Financing
Agreement"), between the Delaware County Industrial Development Authority, a
Pennsylvania body politic and corporate (the "Authority"), and the Company,
which Authority Bonds are being issued to finance the cost of acquiring,
constructing, installing and equipping facilities for the furnishing of water,
in the counties of Bucks, Chester, Delaware and Montgomery, which are to be
financed under the Financing Agreement and which are described in Exhibit A
thereto, less any deletions therefor and together with any additions,
improvements and modifications thereto and substitutions therefor made in
-10-
<PAGE>
accordance with the provisions of the Financing Agreement (the "Facilities").
The Facilities are to be financed through the sale of the Authority's Water
Facilities Revenue Bonds (Philadelphia Suburban Water Company), Series of 1995,
in the aggregate principal amount of $22,000,000 due August 15, 2025 (the
"Authority Bonds").
The Authority Bonds are to be issued under a Trust Indenture,
dated as of August 15, 1995 (the "Authority Indenture"), between the Authority
and PNC Bank, National Association, as trustee (the "Authority Trustee"). The
right, title and interest of the Authority in and to the Financing Agreement and
the payments thereunder and the security for such payments have been assigned by
the Authority to the Authority Trustee, and the Bonds have been delivered by the
Company on behalf of the Authority directly to the Authority Trustee, as
assignee, as security for the payment of the principal of, and interest on, the
Authority Bonds. The Authority Trustee may not sell, assign or otherwise
transfer the Bonds except for a transfer of the entire outstanding principal
amount thereof to its successor as Trustee under the Authority Indenture, which
successor and each subsequent successor shall hold such Bonds subject to the
same restriction on transfer.
In the event any Authority Bonds shall be purchased by the
Company and cancelled pursuant to the Authority Indenture, Bonds corresponding
in principal amount to the Authority Bonds so purchased and cancelled shall be
deemed to be paid in full, and in the event and to the extent the principal of,
or interest on, any Authority Bonds is paid out of funds held by the Authority
Trustee other than payments on Bonds, the corresponding payment of the principal
of, or interest on, an aggregate principal amount of such Authority Bonds shall
be deemed to have been satisfied.
In the event this Bond shall be deemed to have been paid in
full, this Bond shall be surrendered to the Trustee for cancellation. In the
event this Bond shall be deemed to have been paid in part, this Bond shall be
presented to the Trustee for notation hereon of the payment of the portion of
the principal hereof so deemed to have been paid.
The Bonds are redeemable only as follows:
(a) The Bonds are subject to redemption prior to maturity on or after
August 15, 2005, at the option of the Authority, as directed by the Company, out
of moneys deposited with or held by the Trustee for such purpose, as a whole or
in part, at any time in the manner described below, at the redemption prices
(stated as a percentage of the principal amount), as set forth below, of the
Bonds to be redeemed , plus interest accrued thereon to the date fixed for
redemption:
-11-
<PAGE>
Optional Redemption Periods (inclusive) Redemption Prices
- --------------------------------------- -----------------
August 15, 2005 through August 14, 2006 102%
August 15, 2006 through August 14, 2007 101%
August 15, 2007 and thereafter 100%
(a) The Bonds are subject to mandatory redemption as a whole
at any time prior to maturity should the Company be required to accelerate the
payments of the Authority Bonds pursuant to the provisions of Section 7.02 (a)
of the Financing Agreement and 7.01(b)(c) and (d) of the Authority Indenture, if
the Trustee shall receive a notice from the Authority or the Authority Trustee
that the Bonds are subject to mandatory redemption in accordance with any of
such provisions.
(b) The Bonds are also subject to redemption at the option of
the Company as a whole at any time or in part from time to time by the
application of moneys from the Maintenance or Improvement Deposit provided for
in this Thirtieth Supplemental Indenture upon payment of the principal amount
thereof, together with, in each such case, unpaid interest accrued to the date
fixed for redemption.
(c) The Bonds are also subject to mandatory redemption by the
Company in whole if the Trustee shall receive a written demand from the
Authority Trustee for redemption of all such Bonds held by the Authority Trustee
stating that an "Event of Default" as defined in Section 9.01 of the Authority
Indenture has occurred and is continuing and that payment of the principal of
the Authority Bonds has been accelerated pursuant to Section 9.01 of the
Authority Indenture, provided that at the time of notice of such redemption as
provided in Section 2 of Article V of the Original Indenture (i) said written
demand shall not have been withdrawn by the Authority Trustee, and (ii) no event
of default under Section 1 of Article XI of the Original Indenture shall have
occurred and be continuing.
If this Bond or any portion hereof is called for redemption
and payment thereof is duly provided for as specified in the Indenture, interest
shall cease to accrue hereon or on such portion, as the case may be, from and
after the date fixed for redemption.
The principal hereof may be declared or may become due prior
to its maturity date on the conditions, in the manner and with the effect set
forth in the Indenture upon the happening of an event of default, as in the
Indenture provided; subject, however, to the right, under certain circumstances,
of the registered owners of a majority in principal amount of Bonds outstanding
to annul such declaration.
-12-
<PAGE>
This Bond is transferable by the registered owner hereof in
person or by attorney duly authorized in writing, on books of the Company to be
kept for that purpose at the principal corporate trust office of the Trustee in
the City of Philadelphia, Pennsylvania, upon surrender hereof for cancellation
at such office 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 Bond or Bonds
in authorized denominations, of equal aggregate unpaid principal amount. Any
such transfer or exchange shall be subject to the terms and conditions and to
the payment of the charges specified in the Indenture.
The Company and the Trustee may deem and treat the registered
owner of this Bond as the absolute owner hereof for the purpose of receiving
payment of or on account of the principal hereof and the interest hereon, and
for all other purposes, and shall not be affected by any notice to the contrary.
No recourse shall be had for the payment of the principal of
or interest on this Bond or for any claim based hereon or otherwise in respect
hereof or of the Indenture or of any indenture supplemental thereto against any
incorporator or any past, present or future stockholder, officer or director of
the Company or of any predecessor or successor corporation, as such, either
directly or through the Company, or through any such predecessor or successor
corporation or through any receiver or trustee in bankruptcy, by virtue of any
constitutional provision, statute or rule of law or equity, or by the
enforcement of any assessment or penalty or otherwise; all such liability being,
by the acceptance hereof and as part of the consideration for the issue hereof,
expressly waived and released by every holder or registered owner hereof, as
more fully provided in the Indenture.
This Bond shall not be entitled to any benefit under the
Indenture or any indenture supplemental thereto, or become valid or obligatory
for any purpose, until CoreStates Bank, N.A., as Trustee under the Indenture, or
a successor trustee thereunder, shall have signed the certificate of
authentication endorsed hereon.
(Form of Trustee's Certificate)
This Bond is one of the Bonds, of the series designated
therein, referred to in the within-mentioned Thirtieth Supplemental Indenture.
CORESTATES BANK, N.A., TRUSTEE
By:__________________________
Authorized Signer
-13-
<PAGE>
and;
WHEREAS, all acts and things necessary to make the Bonds, when
executed by the Company and authenticated and delivered by the Trustee as in
this Thirtieth Supplemental Indenture provided and issued by the Company, valid,
binding and legal obligations of the Company, and this Thirtieth Supplemental
Indenture a valid and enforceable supplement to said Original Indenture, have
been done, performed and fulfilled, and the execution of this Thirtieth
Supplemental Indenture has been in all respects duly authorized:
NOW, THEREFORE, THIS THIRTIETH SUPPLEMENTAL INDENTURE
WITNESSETH: That, in order to secure the payment of the principal and interest
of all bonds issued under the Original Indenture and all indentures supplemental
thereto, according to their tenor and effect, and according to the terms of the
Original Indenture and of any indenture supplemental thereto, and to secure the
performance of the covenants and obligations in said bonds and in the Original
Indenture and any indenture supplemental thereto respectively contained, and to
provide for the proper issuing, conveying and confirming unto the Trustee, its
successors in said trust and its and their assigns forever, upon the trusts and
for the purposes expressed in the Original Indenture and in any indenture
supplemental thereto, all and singular the estates, property and franchises of
the Company thereby mortgaged or intended so to be, the Company, for and in
consideration of the premises and of the sum of One Dollar ($1.00) in hand paid
by the Trustee to the Company upon the execution and delivery of this Thirtieth
Supplemental Indenture, receipt whereof is hereby acknowledged, and of other
good and valuable consideration, has granted, bargained, sold, aliened,
enfeoffed, released and confirmed and by these presents does grant, bargain,
sell, alien, enfeoff, release and confirm unto CoreStates Bank, N.A., as
Trustee, and to its successors in said trust and its 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 situated (except as herein
expressly excepted), including among other things the following, 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 the Original Indenture
or any indenture supplemental thereto any kind, class or item not so referred to
or enumerated:
I.
REAL ESTATE AND WATER RIGHTS.
The real estate described in the deeds from the grantors named in
Exhibit B hereto, dated and recorded as therein set forth, and any other real
estate and water rights acquired since the date of the Twenty-Ninth Supplemental
Indenture.
-14-
<PAGE>
II.
BUILDINGS AND EQUIPMENT.
All mains, pipes, pipe lines, service pipes, buildings,
improvements, standpipes, reservoirs, wells, flumes, sluices, canals, basins,
cribs, machinery, conduits, hydrants, water works, plants and systems, tanks,
shops, structures, purification systems, pumping stations, fixtures, engines,
boilers, pumps, meters and equipment which are now owned or may hereafter be
acquired by the Company (except as herein expressly excepted), including all
improvements, additions and extensions appurtenant to any real or fixed property
now or hereafter subject to the lien of the Original Indenture or any indenture
supplemental thereto which are used or useful in connection with the business of
the Company as a water company or as a water utility, whether any of the
foregoing property is now owned or may hereafter be acquired by the Company.
It is hereby declared by the Company that all property of the
kinds described in the next preceding paragraph, whether now owned or hereafter
acquired, has been or is or will be owned or acquired with the intention of
using the same in carrying on the business or branches of the business of the
Company, and it is hereby declared that it is the intention of the Company that
all thereof (except property hereinafter specifically excepted) shall be subject
to the lien of the Original Indenture.
It is agreed by the Company that so far as may be permitted by
law tangible personal property now owned or hereafter acquired by the Company,
except such as is hereafter expressly excepted from the lien hereof, shall be
deemed to be and construed as fixtures and appurtenances to the real property of
the Company.
III.
FRANCHISES AND RIGHTS OF WAY.
All the corporate and other franchises of the Company, 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.
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IV.
AFTER ACQUIRED PROPERTY.
All real and fixed property and all other property of the
character hereinabove described which the Company may hereafter acquire.
TOGETHER WITH all and singular the tenements, hereditaments
and appurtenances belonging or in any way appertaining to the aforesaid property
or any part thereof, with the reversion and reversions, remainder and
remainders, 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 the
aforesaid premises, property, rights and franchises and every part and parcel
thereof.
EXCEPTING AND RESERVING, HOWEVER, certain premises, not used
or useful in the supplying of water by the Company, expressly excepted and
reserved from the lien of the Original Indenture and not subject to the terms
thereof.
AND ALSO SAVING AND EXCEPTING from the property hereby
mortgaged and pledged, all of the following property (whether now owned by the
Company or hereafter acquired by it): All bills, notes and accounts receivable,
cash on hand and in banks, contracts, chooses in action and leases to others (as
distinct from the property leased and without limiting any rights of the Trustee
with respect thereto under any of the provisions of the Original Indenture or of
any indenture supplemental thereto), all bonds, obligations, evidences of
indebtedness, shares of stock and other securities, and certificates or
evidences of interest therein, all automobiles, motor trucks, and other like
automobile equipment and all furniture, 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 may be specifically transferred or
assigned to or pledged or deposited with the Trustee hereunder or required by
the provisions of the Original Indenture or any indenture supplemental thereto
so to be; provided, however, that if, upon the happening of a completed default,
as specified in Section 1 of Article XI of the Original Indenture, the Trustee
or any receiver appointed hereunder shall enter upon and take possession of the
mortgaged property, the Trustee or any such receiver may, to the extent
permitted by law, at the same time likewise take possession of any and all of
the property described in this paragraph then on hand and any and all other
property of the Company then on hand, not described or referred to in the
foregoing granting clauses, which is used or useful in connection with the
business of the Company as a water company or as a water utility, and use and
administer the same to the same extent as if such property were part of the
mortgaged property, unless and until such completed default shall be remedied or
waived and possession of the mortgaged property restored to the Company, its
successors or assigns.
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SUBJECT, HOWEVER, to the exceptions, reservations and matters
hereinabove and in the Original Indenture recited, to releases executed since
the date of the Original Indenture in accordance with the provisions thereof, to
existing leases, to easements and rights of way for pole lines and electric
transmission lines and other similar encumbrances and restrictions which the
Company hereby certifies, in its judgment, do not impair the use of said
property by the Company in its business, to liens existing on or claims against,
and rights in and relating to, real estate acquired for right-of-way purposes,
to taxes and assessments not delinquent, to alleys, streets and highways that
may run across or encroach upon said lands, to liens, if any, incidental to
construction, and to Permitted Liens, as defined in the Original Indenture; and,
with respect to any property which the Company may hereafter acquire, to all
terms, conditions, agreements, covenants, exceptions and reservations expressed
or provided in such deeds and other instruments, respectively, under and by
virtue of which the Company shall hereafter acquire the same and to any and all
liens existing thereon at the time of such acquisition.
TO HAVE AND TO HOLD, all and singular the property, rights,
privileges and franchises hereby conveyed, transferred or pledged or intended so
to be unto the Trustee and its successors in the trust heretofore and hereby
created, and its and their assigns forever.
IN TRUST NEVERTHELESS, for the equal pro rata benefit and
security of each and every person or corporation who may be or become the
holders of bonds and coupons secured by the Original Indenture or by any
indenture supplemental thereto, or both, without preference, priority or
distinction as to lien or otherwise of any bond or coupon over or from any other
bond or coupon, so that each and every of said bonds and coupons issued or to be
issued, of whatsoever series, shall have the same right, lien and privilege
under the Original Indenture and all indentures supplemental thereto and shall
be equally secured hereby and thereby, with the same effect as if said bonds and
coupons had all been made, issued and negotiated simultaneously on the date
thereof; subject, however, to the provisions with reference to extended,
transferred or pledged coupons and claims for interest contained in the Original
Indenture and subject to any sinking or improvement fund or maintenance deposit
provisions, or both, for the benefit of any particular series of bonds.
IT IS HEREBY COVENANTED, DECLARED AND AGREED, by and between the
parties hereto, that all such bonds and coupons are to be authenticated,
delivered and issued, and that all property subject or to become subject hereto
is to be held subject to the further covenants, conditions, uses and trusts
hereinafter set forth, and the Company, for itself and its successors and
assigns, does hereby covenant and agree to and with the Trustee and its
successor or successors in said trust, for the benefit of those who shall hold
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said bonds and coupons, or any of them, issued under this Indenture or any
indenture supplemental hereto, or both, as follows:
ARTICLE I.
Form, Authentication and Delivery of the Bonds;
Redemption Provisions
SECTION 1. There shall be a thirty-sixth series of bonds, limited in
aggregate principal amount to $22,000,000 designated as "Philadelphia Suburban
Water Company First Mortgage Bonds, ____% Series due 2025".
Interest on the Bonds shall be payable semiannually on August
15 and February 15 of each year (each an "interest payment date"), commencing
February 15, 1996. Each Bond shall be dated the date of its authentication and
shall bear interest from the interest payment date next preceding its date,
unless authenticated on an interest payment date, in which case it shall bear
interest from such interest payment date, or, unless authenticated prior to the
first interest payment date for the Bonds, in which case it shall bear interest
from August 15, 1995; provided, however, that, if at the time of authentication
of any Bond, interest on the predecessor Bond of such Bond is in default, such
Bond shall bear interest from the date to which interest has been paid, or, if
no interest has been paid, from August 15, 1995. The Bonds shall be stated to
mature (subject to the right of earlier redemption at the prices and dates and
upon the terms and conditions hereinafter set forth) on August 15, 2025 and
shall bear interest at the rate of ___%.
The Bonds shall be issuable only as registered bonds without
coupons, shall be in the form hereinabove recited, in the denomination of Five
Thousand Dollars ($5,000) or any multiple thereof, shall be lettered "R", and
shall bear such numbers as the Company may reasonably require.
The principal of, and interest on the Bonds shall be payable
at the corporate trust office of the trustee in the City of Philadelphia,
Pennsylvania, in such coin or currency of the United States of America as at the
time of payment is legal tender for the payment of public and private debts;
provided, however, that each installment of interest may be paid by check to the
order of the person entitled thereto, mailed to such person's address as the
same appears on the books maintained for such purpose by or on behalf of the
Company, or by bank wire transfer of immediately available funds pursuant to
instructions and conditions incorporated in an agreement between such person and
the Trustee or the Company.
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The person in whose name any Bond is registered at the close
of business on any record date (as hereinafter defined) with respect to any
interest payment date shall be entitled to receive the interest payable on such
interest payment date notwithstanding the cancellation of such Bond upon any
transfer or exchange subsequent to the record date and prior to such interest
payment date; provided, however, that if and to the extent the Company shall
default in the payment of the interest due on such interest payment date, such
defaulted interest shall be paid to the persons in whose names outstanding Bonds
are registered at the close of business on a subsequent record date established
by notice given by mail by or on behalf of the Company to the holders of Bonds
not less than fifteen days preceding such subsequent record date, such record
date to be not less than ten days preceding the date of payment of such
defaulted interest. The term "record date" as used in this Section 1 with
respect to any regular interest payment date shall mean the last day of the
calendar month next preceding the month in which such interest payment date
occurs if such last day is a business day; if such last day is not a business
day, the record date shall be the next preceding business day.
The Bonds are being issued by the Company to secure the
obligation of the Company to pay to or for the account of the Authority an
amount equal to the principal of, and interest on, the Authority Bonds pursuant
to the Financing Agreement. The Authority Bonds are being sold to finance the
cost of the acquiring, constructing, installing and equipping of the Facilities.
The Authority Bonds are to be issued under the Authority
Indenture and the right, title and interest of the Authority in and to the
Financing Agreement and the payments thereunder and the security for such
payments have been assigned by the Authority to the Authority Trustee, and the
Bonds are to be delivered by the Company on behalf of the Authority directly to
the Authority Trustee, as assignee, as security for the payment of the principal
of, and interest on, the Authority Bonds. The Authority Trustee may not sell,
assign or otherwise transfer the Bonds except for a transfer of the entire
outstanding principal amount thereof to its successor as Trustee under the
Authority Indenture, which successor and each subsequent successor shall hold
the Bonds subject to the same restriction on transfer.
The text of the Bonds and of the certificate of the Trustee
upon such Bonds shall be, respectively, substantially of the tenor and effect
hereinbefore recited.
Exchange of any Bonds shall be effected in accordance with the
applicable provisions of Sections 7, 8 and 9 of Article II of the Original
Indenture.
SECTION 2. The Bonds are redeemable only as follows:
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(a) The 1995 Bonds are subject to redemption prior to maturity
on or after August 15, 2005, at the option of the Authority, as directed by the
Company, out of moneys deposited with or held by the Trustee for such purpose,
as a whole or in part, at any time in the manner described below, at the
redemption prices (stated as a percentage of the principal amount), as set forth
below, of the Bonds to be redeemed , plus interest accrued thereon to the date
fixed for redemption:
Optional Redemption Periods (inclusive) Redemption Prices
- --------------------------------------- -----------------
August 15, 2005 through August 14, 2006 102%
August 15, 2006 through August 14, 2007 101%
August 15, 2007 and thereafter 100%
(b) The Bonds are subject to mandatory redemption as a whole
at any time prior to maturity should the Company be required to accelerate the
payments of the Authority Bonds pursuant to the provisions of Article VII of the
Financing Agreement and Article IX of the Authority Indenture, if the Trustee
shall receive a notice from the Authority or the Authority Trustee that the
Bonds are subject to mandatory redemption in accordance with any of such
provisions.
(c) The Bonds are also subject to redemption at the option of
the Company as a whole at any time or in part from time to time by the
application of moneys from the Maintenance or Improvement Deposit provided for
in the Thirtieth Supplemental Indenture upon payment of the principal amount
thereof, together with, in each such case, unpaid interest accrued to the date
fixed for redemption.
(d) The Bonds are also subject to mandatory redemption by the
Company in whole if the Trustee shall receive a written demand from the
Authority Trustee for redemption of all such Bonds held by the Authority Trustee
stating that an "Event of Default" as defined in Section 9.01 of the Authority
Indenture has occurred and is continuing and that payment of the principal of
the Authority Bonds has been accelerated pursuant to Section 9.01 of the
Authority Indenture, provided that at the time of notice of such redemption as
provided in Section 2 of Article V of the Original Indenture (i) said written
demand shall not have been withdrawn by the Authority Trustee, and (ii) no event
of default under Section 1 of Article XI of the Original Indenture shall have
occurred and be continuing.
SECTION 3. Any redemption of the Bonds shall be effected in
accordance with the provisions of Article V of the Original Indenture.
SECTION 4. In the event any Authority Bonds shall be purchased
by the Company, surrendered by the Company to the Authority Trustee for
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cancellation and cancelled by the Authority Trustee, Bonds corresponding in
principal amount to the Authority Bonds so purchased, surrendered and cancelled
shall be deemed to have been paid in full.
SECTION 5. In the event and to the extent the principal of, or
interest on, any Authority Bonds is paid out of funds held by the Authority
Trustee other than payments of Bonds, the corresponding payment of the principal
of, or interest on, an aggregate principal amount of Bonds equal to the
aggregate principal amount of such Authority Bonds shall be deemed to have been
satisfied.
SECTION 6. All Bonds deemed to have been paid in full as
provided in Section 5 and 6 of this Article I of this Thirtieth Supplemental
Indenture shall be surrendered to the Trustee for cancellation, and the Trustee
shall forthwith cancel the same and, on the written request of the Company,
deliver the same to the Company. In case part of an outstanding Bond shall be
deemed to have been paid as provided in said Section 5 or Section 6, upon
presentation of such Bond at the office of the Trustee, the Trustee shall make a
notation thereon of the payment of the portion of the principal amount of such
Bond so deemed to have been paid unless the registered owner shall elect to
surrender such Bond to the Trustee, in which case the Company shall execute and
the Trustee shall authenticate and deliver, without charge to the registered
owner, Bonds in such authorized denominations as shall be specified by the
registered owner for the unpaid balance of the principal amount of such
outstanding Bond.
SECTION 7. Bonds in the aggregate principal amount of
$22,000,000 may be issued under the provisions of Article IV of the Original
Indenture and may forthwith be executed by the Company and delivered to the
Trustee and shall be authenticated by the Trustee and delivered to or upon the
order of the Company, upon receipt by the Trustee of the resolutions,
certificates, opinions or other instruments or all of the foregoing required to
be delivered upon the issue of bonds pursuant to the provisions of the Original
Indenture.
ARTICLE II.
Maintenance or Improvement Deposit.
SECTION 1. The Company covenants that it will deposit with the
Trustee on or before the March 1 next occurring after the bonds of the 5 1/2%
Series due 1996 cease to be outstanding, or on or before the March 1 next
occurring after the bonds of the 7 7/8% Series due 1997, cease to be
outstanding, or on or before the March 1 next occurring after the bonds of the
8.44% Series due 1997 cease to be outstanding, or on or before the March 1 next
occurring after the bonds of the 9.20% Series due 2001 cease to be outstanding,
or on or before the March 1 next occurring after the bonds of the 8.40% Series
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due 2002 cease to be outstanding, or on or before the March 1 next occurring
after the bonds of the 12.45% Series due 2003 cease to be outstanding, or on or
before the March 1 next occurring after the bonds of the 13% Series due 2005
cease to be outstanding, or on or before the March 1 next occurring after the
bonds of the 10.65% Series due 2006 cease to be outstanding, or on or before the
March 1 next occurring after the bonds of the 9.89% Series due 2008 cease to be
outstanding, or on or before the March 1 next occurring after the bonds of the
7.15% Series due 2008 cease to be outstanding, or on or before the March 1 next
occurring after the bonds of the 9.93% Series due 2013 cease to be outstanding,
or on or before the next March 1 next occurring after the bonds of the 9.97%
Series due 2018 cease to be outstanding, or on or before the March 1 next
occurring after the bonds of the 9.12% Series due 2010 cease to be outstanding,
or on or before the March 1 next occurring after the bonds of the 9.29% Series
due 2026 cease to be outstanding, or on or before the March 1 next occurring
after the bonds of the 9.17% Series due 2021 cease to be outstanding, or on or
before the March 1 next occurring after the bonds of the 6.50% Series due 2010
cease to be outstanding, or on or before the March 1 next occurring after the
bonds of the Medium Term Note Series issued or to be issued under the
Twenty-Ninth Supplemental Indenture cease to be outstanding, whichever is
latest, and on or before March 1 in each year thereafter if and so long as any
of the Bonds are outstanding, an amount in cash (the "Maintenance or Improvement
Deposit") equal to 9% of the Gross Operating Revenues of the Company during the
preceding calendar year less, to the extent that the Company desires to take
such credits, the following:
(b) the amount actually expended for maintenance
during such calendar year; and
(c) the Cost or Fair Value, whichever is less, of
Permanent Additions acquired during such calendar year which
at the time of taking such credit constitute Available
Permanent Additions; and
(d) the unapplied balance, or any part thereof, of
the Cost or Fair Value, whichever is less, of Available
Permanent Additions acquired by the Company during the five
calendar years preceding such calendar year and specified in
the Officers' Certificates delivered to the Trustee pursuant
to Section 2 of this Article, but only to the extent that the
Permanent Additions with respect to which such Cost or Fair
Value was determined shall at the time of taking such credit
constitute Available Permanent Additions.
SECTION 2. The Company covenants that it will on or before
March 1 in each year, beginning with the first deposit made with the Trustee
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under the provisions of Section 1 of this Article, as long as any of the Bonds
are outstanding, deliver to the Trustee the following:
(A) An Officers' Certificate, which shall state:
(i) The amount of the Gross Operating
Revenues for the preceding calendar year;
(ii) 9% of such Gross Operating Revenues;
(iii) The amount actually expended by the
Company for maintenance during such calendar year;
(iv) The amount set forth in subparagraph
(xii) of each Officers' Certificate delivered to the Trustee
pursuant to the provisions of this Section during the
preceding five calendar years (specifying each such Officers'
Certificate), after deducting from each such amount the
aggregate of (a) the Cost or Fair Value, whichever is less, of
all Permanent Additions represented by such amount which have
ceased to be Available Permanent Additions; and (b) any part
of such amount for which the Company has previously taken
credit against any Maintenance or Improvement Deposit
(specifying the Officers' Certificate in which such credit was
taken); and (c) any part of such amount for which the Company
then desires to take credit against the Maintenance or
Improvement Deposit;
(v) An amount which shall be the aggregate
of all amounts set forth pursuant to the provisions of clause
(c) of the foregoing subparagraph (iv);
(vi) The Cost or Fair Value, whichever
is less, of Available Permanent Additions acquired
by the Company during the preceding calendar year;
(vii) That part of the amount set forth in
subparagraph (vi) which the Company desires to use as a credit
against the Maintenance or Improvement Deposit;
(viii) The amount of cash payable to the
Trustee under the provisions of Section 1 of this Article,
which shall be the amount by which the amount set forth in
subparagraph (ii) hereof exceeds the sum of the amounts set
forth in subparagraphs (iii), (v) and (vii) hereof;
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(ix) The sum of all amounts charged on the
books of the Company against any reserve for retirement or
depreciation during the preceding calendar year representing
the aggregate of the Cost when acquired of any part of the
Company's plants and property of the character described in
the granting clauses hereof which has been permanently retired
or abandoned;
(x) The aggregate of the amounts set forth
in subparagraphs (v) and (vii) hereof;
(xi) The amount by which the amount set
forth in subparagraph (x) exceeds the amount set forth in
subparagraph (ix), being the amount required to be deducted
from the Cost or Fair Value of Available Permanent Additions
in order to determine a Net Amount of Available Permanent
Additions pursuant to the provisions of Section 9 of Article I
of the Original Indenture;
(xii) The amount set forth in subparagraph
(vi) after deducting the amount, if any, set forth in
subparagraph (vii); and
(xiii) That all conditions precedent to the
taking of the credit or credits so requested by the Company
have been complied with.
(B) In the event that the Officers' Certificate delivered to
the Trustee pursuant to the provisions of paragraph (A) of this Section shall
state, pursuant to the requirements of subparagraph (vi), the Cost or Fair Value
of Available Permanent Additions acquired by the Company during the preceding
calendar year, the documents specified in paragraphs 2, 3, 5, 6 and 7 of
subdivision (B) of Section 3 of Article IV of the Original Indenture.
(C) An amount in cash equal to the sum set forth in
subparagraph (viii) of the Officers' Certificate provided for in paragraph (A)
hereof.
SECTION 3. All cash deposited with the Trustee as part of any
Maintenance or Improvement Deposit provided for in Section 1 of this Article,
may, at the option of the Company, be applied to the purchase of bonds under the
provisions of Section 2 of Article X of the Original Indenture or to the
redemption of bonds under the provisions of Section 3 of Article X of the
Original Indenture or may be withdrawn by the Company at any time to reimburse
the Company for the cost of a Net Amount of Available Permanent Additions
(excluding, however, from any such Available Permanent Additions all Permanent
Additions included in any certificate delivered to the Trustee for the purpose
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of obtaining a credit against any Maintenance or Improvement Deposit provided
for in Section 1 of this Article to the extent that such Permanent Additions
have been used for any such credit). The Trustee shall pay to or upon the
written order of the Company all or any part of such cash upon the receipt by
the Trustee of:
(a) A Resolution requesting such payment; and
(b) The documents specified in paragraphs 2, 5, 6 and
7 of subdivision (B) of Section 3 of Article IV of the
Original Indenture, with such modifications, additions and
omissions as may be appropriate in the light of the purposes
for which they are used.
ARTICLE III.
Covenants of the Company.
SECTION 1. The Company hereby covenants and agrees with the
Trustee, for the benefit of the Trustee and all the present and future holders
of the Bonds, that the Company will pay the principal of, and interest on, all
bonds issued or to be issued as aforesaid under and secured by the Original
Indenture as hereby supplemented, as well as all bonds which may be hereafter
issued in exchange or substitution therefor, and will perform and fulfill all of
the terms, covenants and conditions of the Original Indenture and of this
Thirtieth Supplemental Indenture with respect to the additional bonds to be
issued under the Original Indenture as hereby supplemented.
SECTION 2. The Company covenants and agrees that so long as
any of the Bonds are outstanding (a) the Company will not make any Stock Payment
if, after giving effect thereto, its retained earnings, computed in accordance
with generally accepted accounting principles consistently applied, will be less
than the sum of (i) Excluded Earnings, if any, since January 31, 1994, and (ii)
$20,000,000; (b) Stock Payments made more than 40 days after the commencement,
and prior to the expiration, of any Restricted Period shall not exceed 65% of
the Company's Net Income during such Restricted Period; and (c) the Company will
not authorize a Stock Payment if there has occurred and is continuing an event
of default under subsections (a) and (b) of Section 1 of Article XI of the
Original Indenture.
For the purposes of this Section 2 the following terms shall
have the following meanings:
"Capitalization" shall mean the sum of (i) the aggregate
principal amount of all Debt at the time outstanding, (ii) the aggregate par or
stated value of all capital stock of the Company of all classes at the time
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outstanding, (iii) premium on capital stock, (iv) capital surplus, and (v)
retained earnings.
"Debt" means (i) all indebtedness, whether or not represented
by bonds, debentures, notes or other securities, for the repayment of money
borrowed, (ii) all deferred indebtedness for the payment of the purchase price
of property or assets purchased (but Debt shall not be deemed to include
Customer Advances for construction or any bonds issued under the Indenture which
are not Outstanding Bonds), (iii) leases which have been or, in accordance with
generally accepted accounting principles, should be recorded as capital leases
and (iv) guarantees of the obligations of another of the nature described in
clauses (i), (ii) or (iii) which have been or, in accordance with generally
accepted accounting principles, should be recorded as debt.
"Determination Date" shall mean the last day of each calendar
quarter. Any calculation with respect to any Determination Date shall be based
on the Company's balance sheet as of such date.
"Excluded Earnings" shall mean 35% of the Company's Net Income
during any Restricted Period.
"Net Income" for any particular Restricted Period shall mean
the amount of net income properly attributable to the conduct of the business of
the Company for such period, as determined in accordance with generally accepted
accounting principles consistently applied, after payment of or provision for
taxes on income for such period.
"Outstanding Bonds" shall mean bonds which are outstanding
within the meaning indicated in Section 20 of Article I of the Original
Indenture except that, in addition to the bonds referred to in clauses (a), (b)
and (c) of said Section 20, said term shall not include bonds for the retirement
of which sufficient funds have been deposited with the Trustee with irrevocable
instructions to apply such funds to the retirement of such bonds at a specified
time, which may be either the maturity thereof or a specified redemption date,
whether or not notice of redemption shall have been given.
"Restricted Period" shall mean a period commencing on any
Determination Date on which the total Debt of the Company is, or as the result
of any Stock Payment then declared or set aside and to be made thereafter will
be, more than 70% of Capitalization, and continuing until the third consecutive
Determination Date on which the total Debt of the Company does not exceed 70% of
Capitalization.
"Stock Payment" shall mean any payment in cash or property
(other than stock of the Company) to any holder of shares of any class of
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capital stock of the Company as such holder, whether by dividend or upon the
purchase, redemption, conversion or other acquisition of such shares, or
otherwise.
SECTION 3. The Company covenants and agrees that so long as
any of the Bonds are outstanding, neither the Company nor any subsidiary of the
Company will, directly or indirectly, lend or in any manner extend its credit
to, or indemnify, or make any donation or capital contribution to, or purchase
any security of, any corporation which directly or indirectly controls the
Company, or any subsidiary or affiliate (other than an affiliate which is a
subsidiary of the Company) of any such corporation.
ARTICLE IV.
The Trustee.
SECTION 1. The Trustee hereby accepts the trust hereby
declared and provided, and agrees to perform the same upon the terms and
conditions in the Original Indenture, as supplemented by this Thirtieth
Supplemental Indenture.
SECTION 2. Subject to the provisions of Article XIII of the
Original Indenture, the Trustee may execute any of the trusts or powers hereof
and perform any of its duties by or through and consult with attorneys, agents,
officers or employees selected by the Trustee in its sole discretion. The
Trustee shall be entitled to advice of counsel concerning all matters of trusts
hereof and the duties hereunder and may in all case pay such reasonable
compensation to all such attorneys, agents, officers and employees as may
reasonably be employed in connection with the trusts hereof. The Trustee may act
and rely upon the opinion or advice of any attorney (who may be the attorney or
attorneys for the Company). The Trustee may act and rely on written opinions of
experts employed by the Trustee and such advice shall be full and complete
authorization and protection in respect of any action taken, suffered or omitted
by the Trustee hereunder in good faith and in reliance thereon. The Trustee
shall not be responsible for any loss or damage resulting from any action or
non-action in good faith taken in reliance upon such opinion or advice. The
Trustee shall not be bound to confirm, verify or make any investigation into the
facts or matters stated in any financial or other statements, resolution,
certificate, statement, instrument, opinion, report, notice, request, direction,
consent, order or other paper or document furnished pursuant to the terms
hereof.
SECTION 3. Before the Trustee shall be required to foreclose
on, or to take control or possession of, the real property or leasehold interest
(the "Premises") which may be the subject of any mortgage or mortgages for which
the Trustee is mortgagee in connection with the issuance of the Bonds, the
Trustee shall be indemnified and held harmless by the holders and/or beneficial
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owners of the Bonds from and against any and all expense, loss, or liability
that may be suffered by the Trustee in connection with any spill, leak or
release which may have occurred on or invaded the Premises or any contamination
by an Hazardous Substance (hereinafter defined), whether caused by the Company
or any other person or entity, including, but not limited to, (1) any and all
reasonable expenses that the Trustee may incur in complying with any of the
Environmental Statutes (hereinafter defined), (2) any and all reasonable costs
that the Trustee may incur in studying or remedying any spill, leak or release
which may have occurred on or invaded the Premises or any contamination, (3) any
and all fines or penalties assessed upon the Trustee by reason of such
contamination, (4) any and all loss of value of the Premises or the improvements
thereon by reason of such contamination, and (5) any and all legal fees and
costs reasonably incurred by the Trustee in connection with any of the
foregoing. As used in this Section, contamination by any Hazardous Substance
shall include contamination, arising from the presence, creation, production,
collection, treatment, disposal, discharge, release, storage, transport or
transfer of any Hazardous Substance at or from the Premises or any improvements
thereon. As used in this Section, the term "Hazardous Substance" shall mean
petroleum hydrocarbons or any substance which (a) constitutes a hazardous waste
or substance under any applicable federal, state or local law, rule, order or
regulation now or hereafter adopted; (b) constitutes a "hazardous substance" as
such term is defined under the Comprehensive Environmental Response,
Compensation and Liability Act, as amended (42 U.S.C. Section 9601 et seq.) and
the regulations issued thereunder and any comparable state or local law or
regulation; (c) constitutes a "hazardous waste" under the Resource Conservation
and Recovery Act, (42 U.S.C. Section 6991) and the regulations issued thereunder
and any comparable state or local law or regulation; (d) constitutes a
pollutant, contaminant, chemical or industrial, toxic or hazardous substance or
waste as such terms are defined under Federal Clean Water Act, as amended (33
U.S.C. Section 1251 et seq.), the Toxic Substances Control Act, as amended (15
U.S.C. Section 2601 et seq.), or any comparable state or local laws or
regulations; (e) exhibits any of the characteristics enumerated in 40 C.F.R.
Sections 261.20 - 261.24, inclusive; (f) those extremely hazardous substances
listed in Section 302 of the Superfund Amendments and Reauthorization Act of
1986 (Public Law 99-499, 100 Stat. 1613) which are present in threshold planning
or reportable quantities as defined under such act; (g) toxic or hazardous
chemical substances which are present in quantities which exceed exposure
standards as those terms are defined under Sections 6 and 8 of the Occupational
Safety and Health Act, as amended (29 U.S.C. Sections 655 and 657 and 29 C.F.R.
Part 1910, subpart 2); and (h) any asbestos, petroleum-based products or any
Hazardous Substance contained within or release from any underground or
aboveground storage tanks. As used in this Section, the term "Environmental
Statutes" shall mean the statutes, laws, rules, orders and regulations referred
to in (a) through (h) inclusive in the preceding sentence.
-28-
<PAGE>
ARTICLE V.
Miscellaneous.
SECTION 1. This instrument is executed and shall be construed
as an indenture supplemental to the Original Indenture, and shall form a part
thereof, and except as hereby supplemented, the Original Indenture and the
First, Second, Third, Fourth, Fifth, Sixth, Seventh, Eighth, Ninth, Tenth,
Eleventh, Twelfth, Thirteenth, Fourteenth, Fifteenth, Sixteenth, Seventeenth,
Eighteenth, Nineteenth, Twentieth, Twenty-First, Twenty-Second, Twenty-Third,
Twenty-Fourth, Twenty-Fifth, Twenty-Sixth, Twenty- Seventh, Twenty-Eighth and
Twenty-Ninth Supplemental Indentures are hereby confirmed. All references in
this Thirtieth Supplemental Indenture to the Original Indenture shall be deemed
to refer to the Original Indenture as heretofore amended and supplemented, and
all terms used herein shall be taken to have the same meaning as in the Original
Indenture, as so amended, except in the cases where the context clearly
indicates otherwise.
SECTION 2. Any notices to the Trustee under this Thirtieth
Supplemental Indenture shall be delivered to the Trustee by registered or
certified mail, hand delivery or other courier or express delivery service (with
receipt confirmed) or by telecopy (with receipt confirmed) at the following
address:
CoreStates Bank, N.A.
Corporate Trust Administration
510 Walnut Street, 6th Floor
F.C. 1-9-6-69
Philadelphia, PA 19106
Attention: Philadelphia Suburban Water
Administrator
Telecopy: (215) 973-2955
Any change in such address or telecopy number may be made by notice to the
Company delivered in the manner set forth above.
SECTION 3. All recitals in this Thirtieth Supplemental
Indenture are made by the Company only and not by the Trustee; and all of the
provisions contained in the Original Indenture in respect of the rights,
privileges, immunities, powers and duties of the Trustee shall be applicable in
respect hereof as fully and with like effect as if set forth herein in full.
SECTION 4. Although this Thirtieth Supplemental Indenture is
dated for convenience and for the purpose of reference as of August 15, 1995,
the actual date or dates of execution hereof by the Company and the Trustee are
as indicated by their respective acknowledgments annexed hereto.
-29-
<PAGE>
SECTION 5. In order to facilitate the recording or filing of
this Thirtieth Supplemental Indenture, the same may be simultaneously executed
in several counterparts, each of which shall be deemed to be an original and
such counterparts shall together constitute but one and the same instrument.
-30-
<PAGE>
IN WITNESS WHEREOF the parties hereto have caused their
corporate seals to be hereunto affixed and their authorized officers have hereto
affixed their signatures, and their authorized officers have duly attested the
execution hereof, as of the fifteenth day of August, 1995.
[CORPORATE SEAL] PHILADELPHIA SUBURBAN WATER
COMPANY
Attest: Roy H. Stahl By: Michael P. Graham
------------------- -----------------------------------
Asst. Secretary Vice President
[CORPORATE SEAL] CORESTATES BANK, N.A.
Attest: Cathy Wiedecke By: Charles J. Adomanis
------------------- -----------------------------------
Authorized Officer Authorized Officer
-31-
<PAGE>
Corestates Bank, N.A., Mortgagee and Trustee named in the
foregoing Thirtieth Supplemental Indenture, hereby certifies that its precise
name and the post office address of its Corporate Trust Department are as
follows:
CoreStates Bank, N.A.
P.O. Box 13834
Philadelphia, Pennsylvania 19101
Attn: Corporate Trust Department.
CORESTATES BANK, N.A.
By: Cathy Wiedecke
---------------------------------------
Authorized Officer
-32-
<PAGE>
COMMONWEALTH OF PENNSYLVANIA )
) ss.:
COUNTY OF MONTGOMERY )
On the 30th day of August, 1995, before me, the Subscriber, a
Notary Public for the Commonwealth of Pennsylvania, personally appeared Michael
P. Graham, who acknowledged himself to be the Vice President of Philadelphia
Suburban Water Company, a corporation, and that he as such Vice President, being
authorized to do so, executed the foregoing Thirtieth Supplemental Indenture as
and for the act and deed of said corporation and for the uses and purposes
therein mentioned, by signing the name of the corporation by himself as such
officer.
In Witness Whereof I hereunto set my hand and official seal.
[NOTARIAL SEAL]
Nancy C. Lavin
----------------------------------
-33-
<PAGE>
COMMONWEALTH OF PENNSYLVANIA )
) ss.:
COUNTY OF PHILADELPHIA )
On the 29th day of August, 1995 before me, the Subscriber, a
Notary Public for the Commonwealth of Pennsylvania, personally appeared Charles
J. Adomanis, who acknowledged himself to be a Vice President of CoreStates Bank,
N.A., Trustee, a national banking association, and that he as such Vice
President, being authorized to do so, executed the foregoing Thirtieth
Supplemental Indenture as and for the act and deed of said national banking
association and for the uses and purposes therein mentioned by signing the name
of said national banking association by herself as such officer.
In Witness Whereof I hereunto set my hand and official seal.
[NOTARIAL SEAL]
Jonathan R. Wright
-----------------------------------
-34-
<PAGE>
EXHIBIT A
BONDS REDEEMED OR PAID AT MATURITY
Principal Amount
Paid of Redeemed
(If less than all Date
Series Bonds of Series) Paid Maturity
- ------ ---------------- ---- --------
3 1/4 % Series Due 1971 12/31/70 Redemption
9 5/8 % Series Due 1975 6/15/75 Maturity
9.15 % Series Due 1977 11/1/77 Maturity
3 % Series Due 1978 7/1/78 Maturity
3 3/8 % Series Due 1982 7/1/82 Maturity
3.90 % Series Due 1983 7/1/83 Maturity
3 1/2 % Series Due 1986 1/1/86 Maturity
4 1/2 % Series Due 1987 1/1/87 Maturity
4 1/8 % Series Due 1988 5/1/88 Maturity
5 % Series Due 1989 9/1/89 Maturity
4 5/8 % Series Due 1991 5/1/91 Maturity
4.70 % Series Due 1992 4/1/92 Maturity
6 7/8 % Series Due 1993 1/1/93 Maturity
4.55 % Series Due 1994 3/1/94 Maturity
10 1/8% Series Due 1995 $6,300,000 --------- Sinking Fund
10 1/8% Series Due 1995 $3,700,000 5/17/93 Redemption
9.20 % Series Due 2001 $3,850,000 --------- Sinking Fund
9.20 % Series Due 2001 $3,150,000 5/1/93 Redemption
8.40 % Series Due 2002 $5,850,000 --------- Sinking Fund
5.95 % Series Due 2002 $1,200,000 --------- Sinking Fund
12.45 % Series Due 2003 $1,000,000 8/1/93 Sinking Fund
12.45 % Series Due 2003 $9,000,000 8/2/93 Redemption
8 7/8 % Series Due 2010 $ 800,000 --------- Sinking Fund
8 7/8 % Series Due 2010 $7,200,000 6/30/92 Redemption
EXHIBIT B
COUNTY COMPANY'S REAL RECORDED IN
GRANTOR ESTATE INDEX NO. DATE OF DEED BOOK PAGE
- ------- ---------------- ------------ ---------
Kulicke and Soffa vii-D-3 8/16/95 Not Yet Recorded
Industries, Inc.
(Montgomery County)
Clover Croft vii-C-3 3/27/95 Not Yet Recorded
Farms, Inc.
(Uwchlan Twp.,
Chester Co.)
<PAGE>
BOND PURCHASE AGREEMENT
$22,000,000
DELAWARE COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY
6.35% Water Facilities Revenue Bonds
due August 15, 2025
(Philadelphia Suburban Water Company Project)
Series of 1995
Bond Purchase Agreement dated August 24, 1995 among the
DELAWARE COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY (the "Issuer"); PHILADELPHIA
SUBURBAN WATER COMPANY, a Pennsylvania corporation (the "Company"), and LEGG
MASON WOOD WALKER, INCORPORATED, 1735 Market Street, Philadelphia, Pennsylvania
(the "Underwriter").
1. Background.
(a) The Issuer proposes to enter into a Construction and
Financing Agreement (the "Financing Agreement") dated as of August 15, 1995 with
the Company, under which the Issuer will agree to loan to the Company funds to
provide financing of the costs of certain capital projects consisting of
improvements and additions to the Company's water facilities (the "Project
Facilities") located within municipalities in Delaware, Chester, Bucks and
Montgomery Counties, Pennsylvania. To finance the loan under the Financing
Agreement, the Issuer proposes to issue and sell $22,000,000 aggregate principal
amount of the bonds identified above (the "Bonds") to the Underwriter, who will
in turn reoffer the Bonds for sale to the public;
(b) The Bonds will be issued pursuant to the Pennsylvania
Economic Development Financing Law, Act of August 23, 1967, P.L. 251, as amended
and supplemented (the "Act"), a resolution adopted by the Issuer on March 28,
1995 (the "Resolution") and under a Trust Indenture dated as of August 15, 1995
(the "Indenture") between the Issuer and PNC Bank, National Association, as
trustee (the "Trustee"). The Bonds will have such terms as set forth in Schedule
I attached hereto. The Bonds will be payable out of payments by the Company
under the Financing Agreement, including payments under its First Mortgage Bond,
in the principal amount of $22,000,000 (the "First Mortgage Bond") to be issued
concurrently with the Bonds pursuant to the Company's Indenture of Mortgage (the
"Original Indenture") dated as of January 1, 1941 to CoreStates Bank, N.A., as
trustee (the "Mortgage Trustee"), as heretofore amended and supplemented and as
to be further supplemented by a Thirtieth Supplemental Indenture (the "Thirtieth
Supplemental Indenture") dated as of August 15, 1995 (the Original Indenture as
so supplemented and amended is hereinafter referred to as the "First Mortgage
Indenture"). All of the Issuer's rights under the Financing Agreement to receive
<PAGE>
and enforce repayment of its loan to the Company and to enforce payment of the
Bonds, including all of the Issuer's rights to the First Mortgage Bond, and all
of the Issuer's rights to moneys and securities in the Construction Fund, the
Debt Service Fund and the Revenue Fund established by the Indenture, except for
the Issuer's rights to reimbursement for expenses and indemnification thereunder
and rights relating to amendments of and notices under the Financing Agreement,
will be assigned to the Trustee as security for the Bonds pursuant to the
Indenture;
(c) The Project Facilities are intended to constitute
facilities for the furnishing of water for purposes of Section 142(a)(4) of the
Internal Revenue Code of 1986, as amended (the "Code"), so that the interest on
the Bonds will not be includable in gross income for federal income tax purposes
under the Code and the Underwriter may offer the Bonds for sale without
registration under the Securities Act of 1933, as amended (the "Securities Act
of 1933") or qualification of the Indenture under the Trust Indenture Act of
1939; and
(d) A Preliminary Official Statement dated July 14, 1995,
including the Appendices thereto and all documents incorporated therein by
reference (the "Preliminary Official Statement"), has been supplied to the
parties hereto, and a final Official Statement to be dated as of the date
hereof, including the Appendices thereto and all documents incorporated therein
by reference (the "Final Official Statement"), prepared for use in such offering
will be supplied to the parties hereto as soon as it is available subject to
Section 10 hereof. The Final Official Statement, as it may be amended or
supplemented with the consent of the Issuer, the Underwriter and the Company, is
hereinafter referred to as the "Official Statement".
2. Purchase, Sale and Closing. On the terms and conditions
herein set forth, the Underwriter will buy from the Issuer, and the Issuer will
sell to the Underwriter, the Bonds at a purchase price equal to 98.75% of the
principal amount thereof, plus interest accrued, if any, to the Closing date.
Payment shall be made in immediately available funds to the Trustee for the
account of the Issuer. Closing (the "Closing") will be at the offices of
Dilworth, Paxson, Kalish & Kauffman, Philadelphia, Pennsylvania, at 10:00 a.m.,
Eastern Standard Time, on August 31, 1995, or at such other date, time or place
as may be agreed on by the parties hereto. The Bonds will be delivered in New
York, New York in the form of one typewritten bond maturing August 15, 2025,
registered in the name of Cede & Co., as nominee for The Depository Trust
Company.
The Underwriter agrees to make a bona fide public offering of
the Bonds at the initial offering prices or yields set forth in the Official
Statement; provided, however, the Underwriter reserves the right (and the Issuer
2
<PAGE>
and the Company hereby expressly acknowledge such right): (i) to make
concessions to dealers; (ii) to effect transactions that stabilize or maintain
the market price of the Bonds above that which might otherwise prevail in the
open market and to discontinue at any time such stabilizing transactions; and
(iii) to change such initial offering prices, all as the Underwriter shall deem
necessary in connection with the marketing of the Bonds.
3. Issuer's Representations. The Issuer makes the following
representations, all of which shall survive Closing, that:
(a) The Issuer is a body politic and corporate, duly
created and existing under the Constitution and laws of the Commonwealth of
Pennsylvania (the "Commonwealth"), and has, and at the date of Closing will
have, full legal right, power and authority to: (i) enter into this Bond
Purchase Agreement; (ii) execute and deliver the Indenture, the Financing
Agreement, this Bond Purchase Agreement and the other various documents required
in connection therewith (collectively, the "Issuer Financing Documents"); (iii)
issue, sell and deliver the Bonds to the Underwriter as provided herein; and
(iv) carry out and to consummate the transactions contemplated by the Issuer
Financing Documents and the Official Statement to be carried out and/or
consummated by it;
(b) The Preliminary Official Statement, as it pertains to
the Issuer, as of its date, was correct and complete in all material respects
and did not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements contained therein, in light of the circumstances under which they
were made, not misleading;
(c) The Official Statement as it pertains to the Issuer as
of its date is or will be correct and complete in all material respects and does
not or will not, with respect to the Issuer, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements contained therein, in light of the
circumstances under which they were made, not misleading;
(d) The Issuer has complied, and will at the Closing be in
compliance in all material respects, with the provisions of the Act;
(e) To the extent required by law, by official action of
the Issuer prior to or concurrently with the acceptance hereof, the Issuer has
duly authorized and approved the Preliminary Official Statement and the Official
Statement, and has duly authorized and approved the execution and delivery of,
3
<PAGE>
and the performance by the Issuer of the obligations on its part contained in
the Issuer Financing Documents;
(f) To the best of the knowledge of the officer of the
Issuer executing this Bond Purchase Agreement, the Issuer is not in material
breach of or in default under any applicable law or administrative regulation of
the Commonwealth or the United States; and the execution and delivery of the
Issuer Financing Documents, and compliance with the provisions of each thereof,
will not conflict with or constitute a breach of or default under any law,
administrative regulation, judgment, decree, loan agreement, note, resolution,
agreement or other instrument to which the Issuer is a party or is otherwise
subject;
(g) All approvals, consents and orders of any governmental
authority, board, agency or commission having jurisdiction which would
constitute a condition precedent to the Issuer's legal ability to issue the
Bonds or to the performance by the Issuer of its obligations hereunder and under
the Issuer Financing Documents have been obtained or will be obtained prior to
the Closing;
(h) The Bonds, when issued, authenticated and delivered in
accordance with the Indenture and sold to the Underwriter as provided herein,
will be validly issued, and will be valid and binding limited obligations of the
Issuer enforceable in accordance with their terms (except as an enforcement of
remedies may be limited by bankruptcy, insolvency, reorganization, moratorium or
other laws or legal or equitable principles affecting the enforcement of
creditors' rights ("Creditors' Rights Limitations"));
(i) The terms and provisions of the Issuer Financing
Documents will comply in all respects with the requirements of the Act;
(j) The terms and provisions of the Issuer Financing
Documents when executed and delivered by the respective parties thereto, will
constitute the valid, legal and binding obligations of the Issuer enforceable in
accordance with their respective terms (except as enforcement of remedies may be
limited by Creditors' Rights Limitations);
(k) There is no action, suit, proceeding, inquiry or
investigation, at law or in equity, before or by any court, public board or
body, pending or, to the knowledge of the Issuer, threatened against the Issuer,
affecting the existence of the Issuer or the titles of its officers to their
respective offices or seeking to prohibit, restrain or enjoin the sale, issuance
or delivery of the Bonds or the revenues or assets of the Issuer pledged or to
4
<PAGE>
be pledged to pay the principal of and interest on the Bonds, or the pledge
thereof, or in any way contesting or affecting the validity or enforceability of
the Issuer Financing Documents or contesting in any way the completeness or
accuracy of the Preliminary Official Statement or the Official Statement, or
contesting the power or authority of the Issuer with respect to the issuance of
the Bonds or the execution and delivery of the Issuer Financing Documents, nor,
to the knowledge of the Issuer, is there any meritorious basis therefor, wherein
an unfavorable decision, ruling or finding would materially adversely affect the
validity or enforceability of the Issuer Financing Documents; and
(l) The net proceeds received from the Bonds and applied in
accordance with the Indenture shall be used in accordance with the Act as
described in the Official Statement.
4. Company's Representations. The Company makes the
following representations, all of which will survive the Closing:
(a) The Company has not sustained since December 31, 1994
any material loss or interference with its business from fire, explosion, flood
or other calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree; and since the
respective dates as of which information is given in the Official Statement,
there have not been any material changes in the capital stock or long-term debt
of the Company or any material adverse change, or a development involving a
prospective material adverse change, in or affecting the general affairs,
management, financial position, stockholders' equity or results of operations of
the Company, otherwise than as set forth or contemplated in the Official
Statement;
(b) The Company has been duly organized and is existing as
a corporation under the laws of the Commonwealth, with power (corporate and
other) to own its properties and conduct its business as described in the
Official Statement;
(c) The First Mortgage Bond has been duly authorized, and,
when issued and delivered as contemplated by this Bond Purchase Agreement, will
have been duly executed, authenticated, issued and delivered and will constitute
a valid and legally binding obligation of the Company entitled to the benefits
provided by the First Mortgage Indenture;
(d) The Original Indenture has been duly authorized,
executed and delivered by the Company and the Mortgage Trustee, and the
Thirtieth Supplemental Indenture has been duly authorized. When the Thirtieth
Supplemental Indenture, in substantially the form approved by the Company, has
been executed and delivered by the Company and the Mortgage Trustee and recorded
5
<PAGE>
as required by law, the First Mortgage Indenture (i) will constitute a valid and
legally binding instrument enforceable in accordance with its terms except as
enforceability may be limited by Creditors' Rights Limitations, and (ii) will
constitute a direct, valid and enforceable first mortgage lien (except as
enforceability of such lien may be limited by Creditors' Rights Limitations),
upon all of the properties and assets of the Company (not heretofore released as
provided for in the First Mortgage Indenture) specifically or generally
described or referred to in the First Mortgage Indenture as being subject to the
lien thereof (which properties and assets constitute substantially all of the
Company's properties and assets other than securities), except for permitted
liens under the First Mortgage Indenture, and will create a similar lien upon
all properties and assets acquired by the Company after the execution and
delivery of the Thirtieth Supplemental Indenture and required to be subjected to
the lien of the First Mortgage Indenture pursuant thereto when so acquired
(which properties and assets will constitute substantially all of the Company's
properties and assets subsequently acquired other than securities), except for
permitted liens under the First Mortgage Indenture; the Original Indenture has
been, and the Thirtieth Supplemental Indenture will be duly filed, recorded or
registered in each place in the Commonwealth in which such filing, recording or
registration was or is required to protect and preserve the lien of the First
Mortgage Indenture; and all necessary approvals of regulatory authorities,
commissions and other governmental bodies having jurisdiction over the Company
required to subject to the lien of the First Mortgage Indenture, the mortgaged
property or trust estate (as defined in the First Mortgage Indenture) have been
duly obtained;
(e) The Company has good and marketable title in fee simple
to all of its real property, good and marketable title to all of its other
interests in real property (other than to certain rights of way, easements,
occupancy rights, riparian and flowage rights and real property interests of a
similar nature, the lack of good and marketable title to which in each case does
not interfere with the proper operation of its properties or the conduct of its
business) and good and marketable title to all personal property owned by it, in
each case free and clear of all liens, encumbrances and defects except such as
are described in the Official Statement, the lien of the First Mortgage
Indenture, permitted liens under the First Mortgage Indenture or such as do not
materially affect the value of such property and do not interfere with the use
made and proposed to be made of such property by the Company; and any real
property and buildings held under lease by the Company are held by it under
valid, subsisting and enforceable leases with such exceptions as are not
material and do not interfere with the use made and proposed to be made of such
property and buildings by the Company;
6
<PAGE>
(f) The Company has all licenses, franchises, permits,
authorizations, rights, approvals, consents and orders of all governmental
authorities or agencies necessary for the ownership or lease of the properties
owned or leased by it and for the operation of the business carried on by it as
described in the Official Statement, and all water rights, riparian rights,
easements, rights of way and other similar interests and rights described or
referred to in the First Mortgage Indenture necessary for the operation of the
business carried on by it as described in the Official Statement, in each case
with such exceptions as are not material and do not interfere with the conduct
of the business of the Company; except as otherwise set forth in the Official
Statement, all such licenses, franchises, permits, orders, authorizations,
rights, approvals and consents are in full force and effect and contain no
unduly burdensome provisions; except as otherwise set forth in the Official
Statement, there are no legal or governmental proceedings pending or threatened
that would result in a material modification, suspension or revocation thereof;
and the Company has the legal power to exercise the rights of eminent domain for
the purposes of conducting its water utility operations;
(g) The issue and sale of the Bonds, the issue and delivery
of the First Mortgage Bond and the compliance by the Company with all of the
provisions of the Bonds, the First Mortgage Indenture, the Financing Agreement,
the Indenture, the Continuing Disclosure Agreement (as defined hereafter) and
this Bond Purchase Agreement will not conflict with or result in a breach of any
of the terms or provisions of, or constitute a default under, or result in the
creation or imposition of any lien, charge or encumbrance (other than the lien
of the First Mortgage Indenture) upon any of the property or assets of the
Company pursuant to the terms of any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which the Company is a party or by
which the Company is bound or to which any of the property or assets of the
Company is subject, nor will such action result in a violation of the provisions
of the Articles of Incorporation, as amended, or the By-Laws of the Company or
any statute or any order, rule or regulation of any court or governmental agency
or body having jurisdiction over the Company or any of its property; and no
consent, approval, authorization, order, registration or qualification of or
with any court or any such regulatory authority or other governmental body
(other than those already obtained) is required for the issue and sale of the
Bonds, the issue and delivery of the First Mortgage Bond or the consummation by
the Company of the other transactions contemplated by this Bond Purchase
Agreement or the First Mortgage Indenture;
(h) The Pennsylvania Public Utility Commission by order has
duly authorized the issuance and delivery of the First Mortgage Bond on terms
not inconsistent with this Bond Purchase Agreement;
7
<PAGE>
(i) The Company is not a holding company, a registered
holding company or an affiliate of a registered holding company within the
meaning of the Public Utility Holding Company Act of 1935, as amended;
(j) There are no legal or governmental proceedings pending
to which the Company is a party or of which any property of the Company is the
subject, other than as set forth in the Official Statement and other than
litigation incident to the kind of business conducted by the Company which, if
determined adversely to the Company, would not have a material adverse effect on
the financial position, stockholders' equity or results of operations of the
Company; and, to the best of the Company's knowledge, no such proceedings are
threatened or contemplated by governmental authorities or threatened by others;
(k) (i) The Project Facilities consist of either land or
property of a character subject to depreciation for federal income tax purposes
and will be used to furnish water that is or will be made available to members
of the general public (including electric utility, industrial, agricultural, or
commercial users); (ii) the rates for the furnishing or sale of the water have
been established or approved by a State or political subdivision thereof, by an
agency or instrumentality of the United States, or by a public service or public
utility commission or other similar body of any State or political subdivision
thereof; and (iii) all other information supplied by the Company with respect to
the exclusion from gross income pursuant to Section 103 of the Code of the
interest on the Bonds is correct and complete;
(l) The Company has not, within the immediately
preceding ten years, defaulted in the payment of principal or interest on any of
its bonds, notes or other securities, or any legally authorized obligation
issued by it;
(m) The information with respect to the Company and the
Project Facilities and the descriptions of the Bonds, the Indenture, the
Financing Agreement, the First Mortgage Bond, the First Mortgage Indenture and
the Continuing Disclosure Agreement contained in the Official Statement
(including Appendix A and the information incorporated therein by reference) do
not contain an untrue statement of a material fact or omit to state a material
fact necessary to make such information and descriptions, in light of the
circumstances under which they were made, not misleading; and
(n) The Company will undertake, pursuant to the Continuing
Disclosure Agreement dated as of July 15, 1995 to be entered into between the
Company and the Trustee (the "Continuing Disclosure Agreement"), to provide
annual reports and notices of certain material events in accordance with Rule
15c2-12 under the Securities Exchange Act of 1934, as amended ("Rule 15c2-12").
8
<PAGE>
A description of this undertaking and the Continuing Disclosure Agreement is set
forth in the Preliminary Official Statement and will also be set forth in the
Final Official Statement.
5. Issuer's Covenants. The Issuer will:
(a) cooperate in qualifying the Bonds for offer and sale
under the Blue Sky laws of states designated by the Underwriter, provided that
the Issuer shall not be required to qualify to do business or consent to service
of process in any state or jurisdiction other than the Commonwealth and the
Issuer's out-of-pocket costs in respect thereof are paid by the Company or are
otherwise provided for; and
(b) refrain from knowingly taking any action with regard to
which the Issuer may exercise control that would result in the loss of the
exclusion from gross income for federal income tax purposes of interest on the
Bonds referred to under the caption "Tax Matters" in the Official Statement.
6. Company's Covenants. The Company agrees that it will:
(a) refrain from taking any action, or from permitting any
action, with regard to which the Company may exercise control, to be taken, that
would result in the loss of the exclusion from gross income for federal tax
purposes of interest on the Bonds; and
(b) indemnify the Issuer, its members, directors, officers
and employees and the Underwriter, its officers, directors, officials, employees
and each person, if any, who controls the Underwriter within the meaning of
Section 15 of the Securities Act of 1933 (collectively, "Indemnified Parties")
against claims asserted against them in connection with the offering and sale of
the Bonds (i) on the ground that the Preliminary Official Statement or the
Official Statement (except for the information relating to the Issuer under the
caption "The Authority," information under the captions "Underwriting," "The
1995 Bonds - Book-Entry-Only System" and "Bond Insurance" and in Appendix E, and
any information furnished in writing by the Underwriter specifically for use
therein) contains an alleged untrue statement of material fact or an alleged
omission to state any material fact necessary to make the statements therein not
misleading in light of the circumstances under which they were made, or (ii)
arising by virtue of the failure to register the Bonds under the Securities Act
of 1933, or to qualify the Indenture under the Trust Indenture Act of 1939.
9
<PAGE>
7. Underwriter's Covenants. By acceptance hereof the
Underwriter agrees to indemnify and hold harmless the Issuer, its members,
officers, directors and employees and the Company, its officers, directors and
employees, and each person, if any, who controls the Company within the meaning
of Section 15 of the Securities Act of 1933 (collectively, "Indemnified
Parties") against claims, losses, damages, liabilities and expenses asserted
against them, or any of them, in connection with (i) the offering and sale of
the Bonds on the grounds that the information under the caption "Underwriting"
or the information furnished by the Underwriter in writing specifically for use
in the Preliminary Official Statement or the Official Statement contains an
untrue statement of a material fact or omits to state any material fact
necessary to make the statements therein not misleading in light of the
circumstances under which they were made, or (ii) failure on the part of the
Underwriter to deliver an Official Statement to any purchaser; and will
reimburse any legal or other expenses reasonably incurred by an Indemnified
Party in connection with investigating or defending any such loss, claim,
damage, liability or action. This indemnity agreement will be in addition to any
liability which the Underwriter may otherwise have. The Underwriter shall not be
liable for any settlement of any such action effected without its consent.
8. Notice of Indemnification; Settlement. Promptly after
receipt by an Indemnified Party of notice of the commencement of any action
against an Indemnified Party hereunder in respect of which indemnity is to be
sought against the Company or the Underwriter, as the case may be (the
"Indemnifying Party"), such Indemnified Party will notify the Indemnifying Party
in writing of such action and the Indemnifying Party may assume the defense
thereof, including the employment of counsel and the payment of all expenses;
but the omission so to notify the Indemnifying Party will not relieve the
Indemnifying Party from any liability which it may have to any Indemnified Party
otherwise than hereunder. The Indemnifying Party shall not be liable for any
settlement of any such action effected without its consent, but if settled with
the consent of the Indemnifying Party or if there is a final judgment for the
plaintiff in any such action, the Indemnifying Party will indemnify and hold
harmless any Indemnified Party from and against any loss or liability by reason
of such settlement or judgment. The indemnity agreements contained in this Bond
Purchase Agreement shall include reimbursement for expenses reasonably incurred
by an Indemnified Party in investigating the claim and in defending it if the
Indemnifying Party declines to assume the defense and shall survive delivery of
the Bonds.
9. Equitable Contribution. If the indemnification provided for
in Section 6(b) is unavailable to the Underwriter (or any controlling person
thereof) in respect of any losses, claims, damages or liabilities referred to
therein, then the Company shall, in lieu of indemnifying the Underwriter,
10
<PAGE>
contribute to the amount paid or payable by the Underwriter as a result of such
losses, claims, damages or liabilities in such proportion as is appropriate to
reflect the relative benefits received by the Company and the Underwriter,
respectively, from the offering of the Bonds. If, however, the allocation
provided by the immediately preceding sentence is not permitted by applicable
law, then the Company shall contribute to such amount paid or payable by the
Underwriter in such proportion as is appropriate to reflect not only such
relative benefits but also the relative fault of the Company and the
Underwriter, respectively, in connection with the statements or omission which
resulted in such losses, claims, damages or liabilities, as well as any other
relevant equitable considerations. The relative benefit received by the Company
or the Underwriter shall be deemed to be in the same proportion as the total
proceeds from the offering (before deducting issuance costs and expenses other
than underwriting fees and commissions) received by the Company, on the one
hand, bear to the total underwriting fees and commissions received by the
Underwriter, on the other hand. The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
related to information supplied by the Company or the Underwriter and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Company and the Underwriter
agree that it would not be just and equitable if contribution pursuant to this
Section 9 were determined by pro rata allocation or by any other method of
allocation which does not take account of the equitable considerations referred
to above in this Section 9. The amount paid or payable by the Underwriter as a
result of the losses, claims, damages or liabilities referred to above in this
Section 9 shall be deemed to include any legal or other expenses reasonably
incurred by the Underwriter in connection with investigating or defending any
such action or claim. Notwithstanding the provisions of this Section 9, the
Underwriter shall not be required to contribute any amount in excess of the
amount by which the total price at which the Bonds underwritten by it and
distributed to the public were offered to the public exceeds the amount of any
damages which the Underwriter has otherwise been required to pay by reason of
such untrue or allegedly untrue statement or omission or alleged omission.
10. Official Statement; Public Offering.
(a) In order to enable the Underwriter to comply with Rule
15c2-12 (i) the Company has prepared or caused the preparation of the
Preliminary Official Statement, which the Company and the Issuer (but only with
respect to the information therein with respect to the Issuer under the headings
"The Authority," "Introductory Statement" and "Absence of Material Litigation")
11
<PAGE>
deem final and complete as of its date; (ii) the Company shall provide to the
Underwriter sufficient copies of the Official Statement in sufficient time to
accompany any confirmation that requires payment from any customer and in any
event within seven business days after the date of this Bond Purchase Agreement;
and (iii) the Company agrees to notify the Underwriter of any developments that
would render the Official Statement misleading in any material respect during
the period that the Official Statement is required to be delivered in connection
with the sale of the Bonds and for a period of 25 days thereafter. The Issuer
and the Company hereby authorize the use of the Preliminary Official Statement
and the Official Statement by the Underwriter in connection with the offering of
the Bonds.
(b) After the Closing, and until the Underwriter has
informed the Issuer and the Company that the Underwriter has sold all the Bonds,
the Issuer and the Company will not adopt or distribute any amendment of or
supplement to the Final Official Statement, except with the prior written
consent of the Underwriter; and if any event relating to or affecting the
Issuer, the Company or the Bonds shall occur, the result of which shall make it
necessary, in the reasonable opinion of the Underwriter, to amend or supplement
the Official Statement in order to make it not misleading in light of the
circumstances existing at that time, the Company shall forthwith prepare, and
the Company shall approve for distribution, a reasonable number of copies of an
amendment of or supplement to the Official Statement, in form and substance
satisfactory to the Underwriter, so that the Official Statement then will not
contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in light of the circumstances existing
at that time, not misleading. The Issuer shall cooperate with the Company in the
issuance and distribution of any such amendment or supplement.
(c) The Underwriter agrees to promptly provide a nationally
recognized municipal securities information repository and the Municipal
Securities Rulemaking Board ("MSRB") with a copy of the Final Official Statement
for filing in accordance with Rule 15c2-12.
11. Conditions of Underwriter's Obligations. The Underwriter's
obligations to purchase and pay for the Bonds and the Issuer's obligation to
issue and deliver the Bonds are subject to fulfillment of the following
conditions at or before Closing:
(a) The representations of the Issuer and the Company
herein shall be true on and as of the date of the Closing and shall be confirmed
by appropriate certificates at Closing;
12
<PAGE>
(b) Neither the Issuer nor the Company shall be in default
in the performance of any of their respective covenants herein;
(c) The Underwriter shall have received:
(i) Opinions of Dilworth, Paxson, Kalish & Kauffman,
Bond Counsel, dated the date of Closing, in the forms attached as
Exhibits A and B hereto, addressed to the Issuer, the Trustee and
the Underwriter;
(ii) An opinion of Lastowka & Messick, P.C., counsel
for the Issuer, dated the date of Closing with respect to the
matters set forth in Exhibit C hereto, addressed to the Trustee
and the Underwriter;
(iii) Opinions of Dilworth, Paxson, Kalish & Kauffman
and Company Counsel, dated the date of Closing, in the forms
attached as Exhibit D hereto, addressed to the Underwriter and
the Issuer and, in the case of the opinion of Company Counsel, to
Bond Counsel;
(iv) An opinion of Ballard Spahr Andrews & Ingersoll,
counsel for the Underwriter, in form and substance satisfactory
to the Underwriter;
(v) An opinion of counsel to Financial Guaranty
Insurance Company ("FGIC"), in form and substance satisfactory to
the Underwriter, relating to the enforceability of the Municipal
Bond New Issue Insurance Policy and the information concerning
FGIC in the Official Statement;
(vi) An agreed upon procedures letter dated the date of
Closing, from KPMG Peat Marwick LLP, the Company's independent
certified public accountants, with respect to the Official
Statement, in form satisfactory to the Underwriter;
(vii) A certificate dated the date of Closing executed
by the Chairman of the Issuer to the effect that:
(A) the representations, warranties and covenants
of the Issuer contained herein, to the best of the knowledge
of such Chairman, are true and correct in all material
respects on and as of the date of Closing with the same
effect as if made on the date of Closing; and
(B) to the best of the knowledge of such Chairman,
the Issuer has complied in all material respects with all
agreements and satisfied in all material respects all of the
13
<PAGE>
conditions on its part to be performed or satisfied at or
prior to the Closing;
(viii) A certificate dated the date of Closing executed
by the chief financial officer of the Company to the effect that:
(A) the representations and warranties of the
Company in this Bond Purchase Agreement are true and correct
in all material respects as of the date of Closing;
(B) the Preliminary Official Statement and the
Official Statement, as of their respective dates, insofar as
they relate to the Company do not contain any untrue
statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the
statements therein not misleading; and
(C) no event affecting the Company occurred since
the date of the Bond Purchase Agreement which is required to
be disclosed in the Official Statement in order to make the
statements and information therein not misleading in any
material respect;
(ix) Two executed copies of the Indenture, the
Financing Agreement, the Bond Purchase Agreement, the Thirtieth
Supplemental Indenture and the Continuing Disclosure Agreement;
(x) Two copies of the Articles of Incorporation and
By-laws of the Company, as amended to the date of Closing, and of
the resolutions of the Board of Directors of the Company
authorizing and approving the execution and delivery of this Bond
Purchase Agreement, the Financing Agreement, the First Mortgage
Bond, the Thirtieth Supplemental Indenture, the Continuing
Disclosure Agreement and the incurrence of indebtedness with
respect thereto and all transactions described in the Official
Statement and contemplated by this Bond Purchase Agreement, all
certified by its Secretary or Assistant Secretary;
(xi) Two copies of the Resolution;
(xii) A letter from KPMG Peat Marwick dated the date of
Closing and addressed to the Underwriter consenting to the use of
the financial statements prepared by such firm and all references
to such firm contained in the Preliminary Official Statement and
the Official Statement;
14
<PAGE>
(xiii) Evidence of the issuance of the Municipal Bond
New Issue Insurance Policy by FGIC which unconditionally and
irrevocably guarantees the payment when due of the principal of
and interest on the 1995 Bonds;
(xiv) Evidence satisfactory to the Underwriter of a
rating of "AAA" assigned by Standard & Poor's and a rating of
"AAA" assigned by Fitch Investors Service, Inc., and that such
ratings are in full force and effect as of the date of Closing;
and
(xv) Such additional documentation as the Underwriter
or its counsel or Bond Counsel may reasonably request to evidence
compliance with applicable law and the validity of the Bonds, the
Financing Agreement, the Indenture, this Bond Purchase Agreement,
the First Mortgage Indenture, the First Mortgage Bond and the
Continuing Disclosure Agreement, and to evidence that the
interest on the Bonds is not includable in gross income under the
Code and the status of the offering under the Securities Act of
1933 and the Trust Indenture Act of 1939.
(d) At Closing there shall not have been any material
adverse change in the financial condition of the Company or any adverse
development concerning the business or assets of the Company which would result
in a material adverse change in the prospective financial condition or results
of operations of the Company from that described in the Official Statement
which, in the judgment of the Underwriter, makes it inadvisable to proceed with
the sale of the Bonds; and the Underwriter shall have received certificates of
the Company certifying that no such material adverse change has occurred or, if
such a change has occurred, full information with respect thereto; and
(e) The Underwriter shall deliver at Closing a certificate
in form acceptable to Bond Counsel to the effect that the Underwriter has sold
to the public (excluding bond houses and brokers) a substantial amount of the
Bonds at initial offering prices no higher than, or yields no lower than, those
shown on the cover page of the Official Statement and that such certificate may
be relied upon for purposes of determining compliance with Section 148 of the
Code.
12. Events Permitting the Underwriter to Terminate. The
Underwriter may terminate its obligation to purchase the Bonds at any time
before Closing if any of the following occurs:
(a) A legislative, executive or regulatory action or
proposed action or a court decision which, in the judgment of the Underwriter,
casts sufficient doubt on the legality of, or the exclusion from gross income
for federal income tax purposes of interest on obligations such as the Bonds so
15
<PAGE>
as to materially impair the marketability or materially lower the market price
thereof; or
(b) Any action by the Securities and Exchange Commission or
a court which would require registration of the Bonds or the First Mortgage Bond
under the Securities Act of 1933 or qualification of the Indenture under the
Trust Indenture Act of 1939; or
(c) Any general suspension of trading in securities on the
New York Stock Exchange or the establishment, by the New York Stock Exchange, by
the Securities and Exchange Commission, by any federal or state agency, or by
the decision of any court, of any limitation on prices for such trading, or any
outbreak of hostilities or other national or international calamity or crisis,
or any material escalation in any such hostilities, calamity or crisis, the
effect of which on the financial markets of the United States shall be such as
to make it impracticable for the Underwriter to enforce contracts for the sale
of the Bonds; or
(d) Any event or condition which, in the reasonable
judgment of the Underwriter, renders untrue or incorrect, in any material
respect as of the time to which the same purports to relate, the information
contained in the Official Statement, or which requires that information not
reflected in the Official Statement or Appendices thereto should be reflected
therein in order to make the statements and information contained therein not
misleading in any material respect as of such time; provided that the Issuer,
the Company and the Underwriter will use their best efforts to amend or
supplement the Official Statement to reflect, to the satisfaction of the
Underwriter, such changes in or additions to the information contained in the
Official Statement; or
(e) pending or threatened litigation affecting or arising
out of the ownership of the Project Facilities or any other facilities of the
Company or the issuance of the Bonds which in the reasonable judgment of the
Underwriter would materially impair the marketability or materially lower the
market price of the Bonds; or
(f) Sufficient quantities of the Official Statement are not
delivered to the Underwriter in a timely manner as required by Section 10
hereof.
If the Underwriter terminates its obligation to purchase the
Bonds because any of the conditions specified in Section 11 or this Section 12
shall not have been fulfilled at or before the Closing, such termination shall
not result in any liability on the part of the Issuer, the Underwriter, or,
16
<PAGE>
except for the payment of such costs of issuance described in Section 13 hereof
which are due and payable, the Company.
13. Expenses. All expenses and costs of the authorization,
issuance, sale and delivery of the Bonds including, without limitation, the
preparation of and furnishing to the Underwriter of the Preliminary Official
Statement and the Official Statement, the preparation and execution of the
Bonds, the Financing Agreement, the Indenture, the First Mortgage Bond, the
Thirtieth Supplemental Indenture and this Bond Purchase Agreement, rating agency
fees, the issuance and closing fees of the Issuer, the fees and disbursements of
Bond Counsel, the fees and disbursements of counsel to the Underwriter and the
expenses incurred in connection with qualifying the Bonds for sale under the
securities laws of various jurisdictions and preparing Blue Sky and legal
investment memoranda shall be paid by the Company as provided in this Bond
Purchase Agreement. The Issuer shall bear no out-of-pocket expense in connection
with the transactions contemplated by this Bond Purchase Agreement. The
Underwriter will pay all other expenses of the Underwriter in connection with
the public offering of the Bonds.
14. Execution in Counterparts. This Bond Purchase Agreement
may be executed in any number of counterparts, all of which taken together shall
constitute one and the same instrument, and any of the parties hereto may
execute this Bond Purchase Agreement by signing any such counterpart.
15. Notices and Other Actions. All notices, requests, demands
and formal actions hereunder will be in writing mailed, telegraphed or delivered
to:
The Underwriter:
Legg Mason Wood Walker, Incorporated
1735 Market Street, 11th Floor
Philadelphia, Pennsylvania 19103
Attention: George C. Werner, III
Vice President
The Company:
Philadelphia Suburban Water Company
762 Lancaster Avenue
Bryn Mawr, Pennsylvania 19010
Attention: Michael P. Graham
Senior Vice President and Treasurer
17
<PAGE>
The Issuer:
Delaware County Industrial Development
Authority
14 West Front Street
Media, Pennsylvania 19063
Attention: Kathy A. Robson
16. Governing Law. This Bond Purchase Agreement shall be
governed by and construed in accordance with the laws of the Commonwealth of
Pennsylvania and may not be assigned by the Issuer, the Company or the
Underwriter.
17. Successors. This Bond Purchase Agreement will inure to the
benefit of and be binding upon the parties and their respective successors and,
as to Sections 6 and 7 above, the directors, officers, employees and agents of
the Issuer, and will not confer any rights upon any other person. The term
"successor" shall not include any holder of any Bonds merely by virtue of such
holding.
18
<PAGE>
IN WITNESS WHEREOF, the Issuer, the Company and the
Underwriter have caused their duly authorized representatives to execute and
deliver this Bond Purchase Agreement as of the date first written above.
DELAWARE COUNTY INDUSTRIAL
DEVELOPMENT AUTHORITY
By: Kathy Robson
---------------------------------
Chairman
PHILADELPHIA SUBURBAN WATER
COMPANY
By: Michael P. Graham
---------------------------------
Senior Vice President-Finance
Treasurer
LEGG MASON WOOD WALKER, INCORPORATED
By: George Werner
---------------------------------
Vice President
19
<PAGE>
SCHEDULE I
Terms of Bonds
Day to Date: August 15, 1995
Maturity Date: August 15, 2005
Interest Payment Dates: February 15 and February 15,
commencing February 15, 1996
Rate of Interest: 6.35%
Redemption provisions:
The Bonds are subject to redemption as follows:
Optional Redemption. The Bonds are subject to redemption prior
to maturity at the option of the Issuer, upon direction of the Company, on or
after August 15, 2005, as a whole or in part at any time, at the redemption
prices (stated as a percentage of the principal amount) set forth below, plus
interest accrued to the date fixed for redemption.
Optional Redemption Periods (inclusive) Redemption Prices
--------------------------------------- -----------------
August 15, 2005 through August 14, 2006 102%
August 15, 2006 through August 14, 2007 101
August 15, 2007 and thereafter 100
Extraordinary Optional Redemption. The Bonds are subject to
redemption at the option of the Company as a whole at any time prior to maturity
at a redemption price of 100% of the principal amount thereof plus accrued
interest to the redemption date upon the occurrence of the following events:
(a) the Project Facilities are partially or totally damaged or
destroyed by fire or other casualty and the Company determines within sixty (60)
days after such damage or destruction that satisfactory restoration of the
Project Facilities may not be made; or
(b) all or substantially all of the Project Facilities are
taken or condemned as a whole by a public body in the exercise of its power of
eminent domain, or any portion of the Project Facilities are so taken or
condemned and the Company determines that the remaining portion of the Project
Facilities is unsuitable for the Company's business; or
(c) if changes in the economic availability or raw materials,
operating supplies, labor or facilities necessary for the operation of the
Facilities or the water supply and distribution system of which they are part as
an efficient facility or technological or other changes shall have occurred
which, in the Company's opinion, render the Facilities or such system
uneconomical for their intended purposes.
Schedule I-2
<PAGE>
================================================================================
CONSTRUCTION AND FINANCING
AGREEMENT
between
DELAWARE COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY
and
PHILADELPHIA SUBURBAN WATER COMPANY
---------------------------
Dated as of August 15, 1995
---------------------------
================================================================================
<PAGE>
TABLE OF CONTENTS
----------
<TABLE>
<CAPTION>
Page
----
Parties
Recitals;
<S> <C> <C>
Organization and purpose of Authority; nature of
activity of Corporation; authorization of
facilities and of water facilities revenue
bonds; issuance of water facilities revenue
bonds under Indenture; approval by Secretary
of Commerce ............................................................................. 1
ARTICLE I. Definitions................................................................. 2
ARTICLE II. Representations and Findings................................................ 7
SECTION 2.01........................................................................ 7
SECTION 2.02........................................................................ 8
SECTION 2.03........................................................................ 8
ARTICLE III. Completion of the Facilities; Issuance of the
Bonds....................................................................... 9
SECTION 3.01........................................................................ 9
SECTION 3.02........................................................................ 9
SECTION 3.03........................................................................ 9
SECTION 3.04........................................................................ 10
SECTION 3.05........................................................................ 10
SECTION 3.06........................................................................ 10
SECTION 3.07........................................................................ 10
SECTION 3.08........................................................................ 11
SECTION 3.09........................................................................ 11
SECTION 3.10........................................................................ 11
ARTICLE IV. Loan by Authority to Corporation;
Repayment of Loan; Security for Payment;
Assignment to Trustee; Operation and
Maintenance; Insurance and Indemnification;
Liens; and Payments in Lieu of Taxes........................................ 12
SECTION 4.01........................................................................ 12
SECTION 4.02........................................................................ 12
SECTION 4.03........................................................................ 13
SECTION 4.04........................................................................ 13
SECTION 4.05........................................................................ 13
SECTION 4.06........................................................................ 14
SECTION 4.07........................................................................ 14
SECTION 4.08........................................................................ 15
SECTION 4.09........................................................................ 15
SECTION 4.10........................................................................ 15
-i-
<PAGE>
ARTICLE V. Special Covenants........................................................... 15
SECTION 5.01........................................................................ 15
SECTION 5.02........................................................................ 15
SECTION 5.03........................................................................ 16
SECTION 5.04........................................................................ 16
SECTION 5.05........................................................................ 16
SECTION 5.06........................................................................ 16
SECTION 5.07........................................................................ 16
ARTICLE VI. Assignment, Leasing and Selling............................................. 17
SECTION 6.01........................................................................ 17
SECTION 6.02........................................................................ 17
ARTICLE VII. Events of Default and Remedies.............................................. 18
SECTION 7.01........................................................................ 18
SECTION 7.02........................................................................ 20
SECTION 7.03........................................................................ 20
SECTION 7.04........................................................................ 20
SECTION 7.05........................................................................ 20
ARTICLE VIII. Miscellaneous............................................................... 21
SECTION 8.01........................................................................ 21
SECTION 8.02........................................................................ 21
SECTION 8.03........................................................................ 21
SECTION 8.04........................................................................ 22
SECTION 8.05........................................................................ 22
SECTION 8.06........................................................................ 22
SECTION 8.07........................................................................ 22
SECTION 8.08........................................................................ 22
SECTION 8.09........................................................................ 24
SECTION 8.10........................................................................ 25
EXHIBIT A.............................................................................................. 1
</TABLE>
-ii-
<PAGE>
CONSTRUCTION AND FINANCING AGREEMENT
THIS CONSTRUCTION AND FINANCING AGREEMENT, dated as of August
15, 1995, by and between the DELAWARE COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY, a
body corporate and politic organized and existing under and by virtue of the
laws of the Commonwealth of Pennsylvania (hereinafter called the "Authority"),
party of the first part, and PHILADELPHIA SUBURBAN WATER COMPANY, a corporation
organized and existing under the laws of the Commonwealth of Pennsylvania
(hereinafter called the "Corporation"), party of the second part,
WITNESSETH:
WHEREAS, the Authority was organized by the municipal
authorities of the County of Delaware, pursuant to the Economic Development
Financing Law of the Commonwealth of Pennsylvania, the Act of August 23, 1967,
P.L. 251, as amended (the "Act"), which Act declares it to be the policy of the
Commonwealth of Pennsylvania to promote the health, safety, morals, employment,
business opportunities and general welfare of the people thereof by providing
for the creation of industrial and commercial development authorities which
shall exist and operate as public instrumentalities of the Commonwealth for the
public purpose of alleviating unemployment, maintaining employment at a high
level, eliminating and preventing blight and eliminating or reducing air and
water pollution, and creating and developing business opportunities by the
construction, improvement, rehabilitation, revitalization and financing of
industrial, commercial, manufacturing and research and development enterprises;
and
WHEREAS, the Act declares that every authority incorporated
under it shall be for the purpose of acquiring, holding, constructing,
improving, maintaining, owning, financing and leasing, as lessor or as lessee,
among other things, facilities for the furnishing of water; and
WHEREAS, the Corporation is engaged primarily in the activity,
under the regulatory control of the Pennsylvania Public Utility Commission, of
furnishing water available on reasonable demand to members of the general
public; and
WHEREAS, the Authority adopted resolutions on June 28, 1994
and March 28, 1995 providing for the issuance and sale by the Authority of its
revenue bonds to provide funds for the costs of acquisition, construction,
installation and equipping of the Facilities (hereinafter defined); and
WHEREAS, in connection with the issuance by the Authority of
its revenue bonds to provide funds for the cost of the Facilities, the
Corporation is to enter into this Construction and Financing Agreement
-1-
<PAGE>
(hereunder called the "Agreement") under which the Authority agrees to loan
funds to the Corporation for the construction and installation of the Facilities
and the Corporation agrees to pay to the Authority, in repayment of the loan,
amounts sufficient to amortize such revenue bonds; and
WHEREAS, the Corporation has commenced the acquisition,
construction, installation and equipping of the Facilities; and
WHEREAS, the Corporation now desires the Authority to proceed
with the issuance and sale of its revenue bonds to provide the funds to pay the
cost of the Facilities; and
WHEREAS, the Authority, by due corporate action, has
authorized the issuance and sale of a maximum of $22,000,000 principal amount of
its Water Facilities Revenue Bonds (Philadelphia Suburban Water Company
Project), Series of 1995 (hereinafter called the "1995 Series Bonds"), the
proceeds to be used to pay and to reimburse the Corporation for its payment of
the costs of acquiring, constructing, installing and equipping the Facilities;
and
WHEREAS, the 1995 Series Bonds are to be issued under and
secured by a Trust Indenture (hereinafter called the "Indenture"), dated as of
August 15, 1995, between the Authority and PNC Bank, National Association, a
national banking association organized and existing under the laws of the United
States of America and having its principal corporate trust office and place of
business in Philadelphia, Pennsylvania, as trustee (hereinafter called the
"Trustee"); and
WHEREAS, the proceedings to be undertaken by the Authority in
respect of the acquisition, construction, installation and equipping of the
Facilities and the financing thereof have been approved by the Secretary of
Commerce of the Commonwealth of Pennsylvania;
NOW, THEREFORE, the parties hereto, intending to be legally
bound hereby and in consideration of the mutual covenant hereinafter contained,
DO HEREBY AGREE as follows:
ARTICLE I.
Definitions
Capitalized terms, not otherwise defined herein, shall have
the meanings ascribed thereto in the Indenture.
For all purposes of this Agreement, the terms defined in this
Article I shall have the meanings herein specified, unless the context clearly
otherwise requires:
-2-
<PAGE>
Act:
"Act" shall mean the Act of August 23, 1967, P.L. 251, as
amended, of the General Assembly of the Commonwealth of Pennsylvania, known as
the Economic Development Financing Law, and all acts supplemental thereto or
amendatory thereof.
Administration Expenses:
"Administration Expenses" shall mean the reasonable and
necessary expenses incurred by the Authority with respect to this Agreement, the
Indenture and the Facilities, including the Authority's annual administration
fees and the compensation and expenses paid to the Trustee under the Indenture.
Agreement:
"Agreement" shall mean this Construction and Financing
Agreement dated as of August 15, 1995, between the Authority and the
Corporation, and any and all modifications, alterations, amendments and
supplements hereto.
Authority:
"Authority" shall mean Delaware County Industrial Development
Authority, the party of the first part hereto.
Authorized Corporation Representative:
"Authorized Corporation Representative" shall mean any of the
persons at the time designated to act as such on behalf of the Corporation by
written certificate furnished to the Authority and the Trustee containing the
specimen signature of such person and signed on behalf of the Corporation by its
President, Vice President, Treasurer or Assistant Treasurer. An Authorized
Corporation Representative may be an employee of the Corporation.
Bonds:
"Bond" or "Bonds" shall mean any or all of the 1995 Series
Bonds of the Authority authenticated and delivered under the Indenture.
The term "outstanding under the Indenture" or "outstanding
thereunder" or "outstanding", when used with reference to Bonds, shall mean, as
at any particular date, the aggregate of all Bonds authenticated and delivered
under the Indenture, except:
(a) Bonds cancelled at or prior to such date;
(b) Bonds for the redemption of which cash shall have been
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theretofore deposited with the Trustee; provided that notice of such redemption
shall have been given as provided in Article VII of the Indenture or provisions
satisfactory to the Trustee shall have been made therefor;
(c) Bonds for the payment of which cash shall have been
theretofore deposited with the Trustee in an amount equal to the principal
amount thereof and interest thereon to maturity;
(d) Bonds otherwise deemed to be paid as provided in
Section 13.01 of the Indenture; and
(e) Bonds in lieu of or in substitution for which other
Bonds shall have been authenticated and delivered pursuant to the Indenture.
Code:
The "Code" shall mean the Internal Revenue Code of 1986, as
amended.
Completion Date:
"Completion Date" shall mean the date of completion of
acquisition, construction, installation and equipping of the Facilities, as that
date shall be certified pursuant to Section 3.07 hereof.
Construction Fund:
"Construction Fund" shall mean the fund so entitled created
under Section 4.01 of the Indenture with respect to the Facilities.
Construction Period:
"Construction Period" shall mean the period between the
beginning of the construction of the Facilities or the date on which the 1995
Series Bonds are first delivered to the initial purchasers thereof, whichever is
earlier, and the Completion Date.
Continuing Disclosure Agreement:
"Continuing Disclosure Agreement" shall mean that certain
Continuing Disclosure Agreement between the Corporation and the Trustee dated
the date of issuance and delivery of the Bonds, as originally executed and as it
may be amended from time to time in accordance with the terms thereof.
Corporation:
"Corporation" shall mean Philadelphia Suburban Water
Company, a Pennsylvania corporation, or any corporation which is
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the surviving, resulting or transferee corporation in any merger, consolidation
or transfer of assets permitted under Section 5.02 hereof.
Cost of Construction:
"Cost of Construction" in respect of the Facilities shall mean
and be deemed to include all items within the definition of "cost" contained in
the Act (73 P.S. ss. 373), including but not limited to (a) obligations of the
Authority and the Corporation incurred for labor, materials and other expenses
and to contractors, builders and materialmen in connection with the acquisition,
construction, installation and equipping of the Facilities; (b) the cost of
contract bonds and of insurance of all kinds that may be deemed by the
Corporation to be desirable or necessary during the course of acquisition,
construction, installation and equipping of the Facilities which is not paid by
the contractor or contractors or otherwise provided for; (c) the expenses of the
Corporation for engineering, including test borings, surveys, estimates, plans
and specifications and preliminary investigations therefor, and for supervising
construction, as well as for the performance of all other duties required or
reasonably necessary for the proper completion of the Facilities; (d) legal,
accounting, financial, advertising, recording and printing expenses, the service
fee of the Authority, compensation and expenses of the Trustee, and all other
expenses incurred in connection with the issuance of the Bonds; (e) interest,
not otherwise provide for, accruing upon the Bonds until completion of the
Facility; (f) all other costs which the Authority and the Corporation shall be
required to pay under the terms of any contract or contracts for the
acquisition, construction, installation and equipping of the Facilities; and (g)
any sums required to reimburse the Authority and the Corporation for advances
made by them for any of the above items, or for any other costs incurred and for
work done by them which are properly chargeable to the Facilities.
Counsel:
"Counsel" shall mean an attorney or firm of attorney at law
(who may be employed by or counsel to the Trustee, the Authority or the
Corporation) satisfactory to the Trustee.
Debt Service Fund:
"Debt Service Fund" shall mean the fund created under Section
5.03 of the Indenture.
Facilities:
"Facilities" shall mean the facilities for the furnishing
of water in the counties of Bucks, Chester, Delaware and Montgomery which are to
be acquired, constructed, installed and equipped and to be financed under this
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Agreement, less any deletions therefor and together with any additions,
improvements and modification thereto and substitutions therefor made in
accordance with the provisions of this Agreement. The Facilities are described
more fully in Exhibit A hereto.
First Mortgage Bonds:
"First Mortgage Bonds" shall mean bonds of the Corporation
issued and outstanding under the Mortgage Indenture.
Indenture:
"Indenture" shall mean the Trust Indenture dated as of August
15, 1995, between the Authority and PNC Bank, National Association as trustee,
securing the Bonds, and any indenture supplemental thereto or amendatory
thereof.
Loan:
"Loan" shall mean the financing provided by the Authority to
the Corporation pursuant to Section 4.01 hereof to provide funds for and toward
the Costs of Construction of the Facilities.
Loan Repayments:
"Loan Repayments" shall mean the payments to be made by
the Corporation to the Authority pursuant to Section 4.02 hereof
Mortgage Indenture:
"Mortgage Indenture" shall mean the Indenture of Mortgage
dated as of January 1, 1941 from the Corporation to The Pennsylvania Company for
Insurances on Lives and Granting Annuities (now CoreStates Bank, N.A.), as
Trustee, as supplemented and amended.
1995 Series Bonds:
"1995 Series Bonds" shall mean the Bonds of the Authority in
the aggregate principal amount of $22,000,000 designated the 6.35% Water
Facilities Revenue Bonds (Philadelphia Suburban Water Company Project), Series
of 1995, issued under the Indenture to provide funds for and toward the Cost of
Construction of the Facilities.
Participating Underwriter:
"Participating Underwriter" shall have the meaning ascribed
thereto in the Continuing Disclosure Agreement.
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Permitted Encumbrances:
"Permitted Encumbrances" shall mean and include (a) liens for
taxes, assessments and other governmental charges not delinquent or which can be
paid without penalty; (b) unfiled inchoate mechanics' and materialmen's liens
for construction work in progress; (c) workmen's, repairmen's, warehousemen's
and carriers' liens and other similar liens, if any, arising in the ordinary
course of business; (d) all the following, if they do not individually or in the
aggregate materially impair the use of the Facilities or materially detract from
the value thereof to the Corporation, viz: any easements, restrictions, mineral,
oil, gas and mining rights and reservations, zoning laws and defects in title or
other encumbrances to which the Facilities may be subject; (e) any lien for the
satisfaction and discharge of which a sum of money deemed adequate by the
Trustee is on deposit with the Trustee under the Indenture; (f) the lien of the
Mortgage Indenture; (g) the rights of the Authority under this Agreement; and
(h) the lien of the Indenture.
Plans and Specifications:
"Plans and Specifications" shall mean the plans and
specifications prepared for the Facilities, duly certified by an Authorized
Corporation Representative and on file at the principal office of the
Corporation in Bryn Mawr, Pennsylvania, as the same may be revised from time to
time prior to the Completion Date in accordance with Section 3.06 of this
Agreement.
Tax Compliance Agreement:
"Tax Compliance Agreement" shall mean the Tax Compliance
Agreement executed by the Authority and the Company in connection with the
issuance of the Bonds.
Trustee:
"Trustee" shall mean PNC Bank, National Association, as
trustee under the Indenture, and its successors as such trustee.
ARTICLE II.
Representations and Findings
SECTION 2.01. The Authority makes the following representations as the
basis for the undertakings on the part of the Corporation herein contained:
(a) The Authority is a public instrumentality of the
Commonwealth of Pennsylvania and a public body corporate and politic organized
and existing under and pursuant to the Act;
(b) The Authority has power to enter into this Agreement
and to perform and observe the agreements and covenants on its part contained
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herein; and by proper corporate action has duly authorized the execution and
delivery hereof; and the execution and delivery of this Agreement by the
Authority and its performance of its obligations hereunder to the best of its
knowledge do not and will not violate or constitute a default under the
Authority's Articles of Incorporation or bylaws or any agreement, indenture,
mortgage, lease, note or other obligation or instrument or order or regulation
of any court or administrative agency binding upon the Authority;
(c) Under existing statutes and decisions no taxes on
income or profits are imposed on the Authority; and
(d) As required by the Act, the Secretary of Commerce of
the Commonwealth of Pennsylvania has approved under date of June 29, 1995, the
proceedings to be undertaken in respect of the issuance and sale of the 1995
Series Bonds and the construction of the Facilities.
SECTION 2.02. The Corporation makes the following representations as
the basis for the undertakings on the part of the Authority herein contained:
(a) The Corporation is a corporation duly organized,
validly existing and in good standing under the laws of the Commonwealth of
Pennsylvania, and has all required corporate power to enter into this Agreement
and to perform and observe the agreements and covenants on its part contained
herein; the Corporation by proper corporate action has duly authorized the
execution and delivery of this Agreement; and the execution and delivery of this
Agreement by the Corporation and its performance of its obligations hereunder do
not and will not violate or constitute a default under the Corporation's
Articles of Incorporation or bylaws or any agreement, indenture, mortgage,
lease, note or other obligation or instrument or any order of any court or
administrative agency binding upon the Corporation;
(b) The cost of the Facilities, as defined in the Act (73
P.S. ss. 373), is estimated by the Corporation at the date of execution hereof
to be not less than $22,976,650;
(c) The Facilities are to be located in the Counties of
Delaware, Chester, Montgomery and Bucks and within the authorized service area
of the Corporation; and
(d) No part or unit of the Facilities was first placed in
service earlier than one year prior to the date hereof.
SECTION 2.03. The Authority hereby confirms its findings that:
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(a) The Corporation is of a nature and size and is engaged
in activities which require substantial capital, is financially responsible to
assume all obligations prescribed by the Authority and the Act and is qualified
to be an "occupant" for purposes of the Act; and
(b) The project to be undertaken by the Authority hereunder
will promote the purposes of the Act by protecting the health, safety and
general welfare of the people of Pennsylvania and encouraging economic
development within Pennsylvania through the provision of basic services and
facilities, thereby alleviating unemployment, maintaining employment at a high
level and creating and developing business opportunities.
ARTICLE III.
Completion of the Facilities;
Issuance of the Bonds
SECTION 3.01. Work on certain of the Facilities has been commenced or
has been completed.
SECTION 3.02. The Corporation will cause the acquisition, construction,
installation and equipping of the Facilities to be completed with all reasonable
dispatch for and at the expense of the Authority, as herein provided,
substantially in accordance with the Plans and Specifications. In order to
effectuate the purposes of this Agreement the Corporation will make, execute,
acknowledge and deliver, or cause to be made, executed, acknowledged and
delivered, all such contracts, orders, receipts, writings and instructions, in
the name of the Corporation or otherwise, with or to other persons, firms or
corporations, and in general do or cause to be done all such other things as may
be requisite or proper for acquiring, constructing, installing and equipping the
Facilities and fulfilling the obligations of the Corporation under this
Agreement.
The Corporation will maintain such records in connection with
the acquisition, construction, installation and equipping of the Facilities as
to permit ready identification of the Facilities, and the Cost of Construction
thereof.
SECTION 3.03. In order to provide funds for payment of the Cost of
Construction of the Facilities the Authority will sell, issue and deliver to the
initial purchasers thereof, the 1995 Series Bonds and deliver the proceeds
thereof to the Trustee. A sum equal to the accrued interest, if any, paid by the
initial purchasers of the 1995 Series Bonds shall be deposited in the Debt
Service Fund and the balance of the proceeds received from said sale shall be
deposited in the Construction Fund.
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SECTION 3.04. In the Indenture, the Authority has authorized and
directed the Trustee to make payments from the Construction Fund to pay the Cost
of Construction of the Facilities upon receipt of requisitions signed by an
Authorized Corporation Representative, stating with respect to each payment to
be made: (1) the requisition number, (2) the name and address of the person,
firm or corporation to whom payment is due, (3) the amount to be paid, (4) the
general purpose for which the obligation, item of cost or expense was incurred,
and (5) that each obligation, item of cost or expense mentioned therein has been
properly incurred, is a proper charge against the Construction Fund and has not
been the basis of any prior withdrawal.
SECTION 3.05. The Corporation will cause such requisitions to be
submitted to the Trustee as may be necessary to effect payments out of the
Construction Fund in accordance with the provisions of the Indenture; provided,
however, that the Corporation will not submit any requisition for payment of any
item not properly included in the cost of the Facilities as defined in the Act
or which, if paid, would result in less than substantially all the proceeds from
the 1995 Series Bonds being used to acquire, construct, install and equip the
Facilities.
SECTION 3.06. The Corporation may revise the Plans and Specifications,
including revisions to add structures, equipment, fixtures and machinery not
described in Exhibit A hereto and to modify or delete structures, equipment,
fixtures and machinery described therein, at any time and from time to time
prior to the Completion Date, provided that in the case of a material change (i)
an Authorized Corporation Representative shall certify to the Trustee that the
Facilities provided for by the revised Plans and Specifications will constitute
facilities for the furnishing of water meeting the requirements of Section
142(a)(4) of the Internal Revenue Code of 1986, as amended, and any applicable
regulations thereunder; and (ii) the Trustee shall be furnished with an
unqualified opinion of Counsel experienced in matters relating to the issuance
of, and tax exemption of interest on, bonds issued by states and their political
subdivisions that the revision of the Plans and Specifications and the
expenditure of moneys from the Construction Fund to pay the Cost of Construction
of the Facilities in accordance with the revised Plans and Specifications will
not impair the exemption of interest on the Bonds from federal income taxation.
SECTION 3.07. When all the Facilities are completed, the Corporation
shall so notify the Authority and the Trustee by a certificate of an Authorized
Corporation Representative. Such certificate shall establish the Completion Date
and shall state that, except for amounts retained by the Trustee at the
Corporation's direction for any Cost of Construction of the Facilities not then
due and payable or the liability for payment of which is being contested or
disputed by the Corporation, (i) acquisition, construction, installation and
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equipping of the Facilities have been completed substantially in accordance with
the Plans and Specifications, and all labor, services, materials and supplies
used therefor have been paid for; and (ii) all other facilities necessary in
connection with the Facilities have been acquired, constructed, installed and
equipped in accordance with the Plans and Specifications, and all costs and
expenses incurred in connection therewith have been paid. Notwithstanding the
foregoing, such certificate may state that it is given without prejudice to any
rights against third parties which exist at the date thereof or which may
subsequently come into being.
SECTION 3.08. If the moneys in the Construction Fund shall not be
sufficient to pay the Cost of Construction of the Facilities in full, the
Corporation will complete the Facilities and pay all that portion of the Cost of
Construction thereof in excess of the moneys available therefor in the
Construction Fund. The Authority does not make any warranty, either express or
implied, that the moneys which will be paid into the Construction Fund will be
sufficient to pay the Cost of Construction of the Facilities. If the Corporation
shall pay any portion of the Cost of Construction of the Facilities pursuant to
the provisions of this Section, it shall not be entitled to any reimbursement
therefor from the Authority, the Trustee or the holders of any of the Bonds, nor
shall it be entitled to any diminution in or postponement of the Loan Repayments
required in Section 4.02 hereof to be paid by the Corporation.
SECTION 3.09. In the event of default of any contractor or
subcontractor under any contract made by it in connection with the Facilities or
in the event of a breach of warranty with respect to any materials, workmanship
or performance guaranty, the Corporation may proceed, either separately or in
conjunction with others, to pursue such remedies against the contractor or
subcontractor so in default and against each surety for the performance of such
contract as it may deem advisable. The Corporation will advise the Authority of
the steps it intends to take in connection with any such default. If the
Corporation shall so notify the Authority, the Corporation may, in its own name
or in the name of the Authority, prosecute any action or proceeding or take any
other action involving any such contractor, subcontractor or surety which the
Corporation deems reasonably necessary, and in such event the Authority will
cooperate fully with the Corporation. Any amounts recovered by way of damages,
refunds, adjustments or otherwise in connection with the foregoing prior to the
Completion Date shall be paid into the Construction Fund, and any amounts so
recovered after the Completion Date shall be retained by or paid to the
Corporation.
SECTION 3.10. Any moneys held in any Fund under the Indenture shall be
invested or reinvested as provided in Article VI of the Indenture. The
Corporation shall not request any investment of such moneys which would be in
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violation of the covenant of the Authority contained in the final paragraph of
Section 6.03 of the Indenture.
ARTICLE IV.
Loan by Authority to Corporation;
Repayment of Loan; Security for Payment;
Assignment to Trustee; Operation and
Maintenance; Insurance and Indemnification;
Liens; and Payments in Lieu of Taxes
SECTION 4.01. The Authority on this date is lending to the Corporation
the sum of $22,000,000 being the proceeds of the issuance of the Bonds.
SECTION 4.02. The Corporation shall pay to the Authority, as and for
the repayment of the loan, (a) on the Business Day prior to each interest
payment date for, maturity date of, or date for redemption of, Bonds, as the
case may be, an amount which, together with other moneys available for the
purpose in the Debt Service Fund under the Indenture, will equal the sum of (i)
the interest which will become due on such date on the Bonds, plus (ii) the
principal amount of the Bonds, if any, maturing on such date, plus (iii) the
principal amount of and premium, if any, on the Bonds, if any, to be redeemed on
such date, and (b) on any date on which Bonds shall be declared to be and shall
become due and payable prior to their stated maturity pursuant to the provisions
of the Indenture, an aggregate amount equal to the sum of the principal,
premium, if any, and interest so becoming due and payable on the Bonds. Nothing
herein contained shall be construed as imposing on the Authority or on the
Trustee any duty or responsibility of giving any prior notice to the Corporation
of the due date of any Loan Repayment hereunder, or of the amount on deposit in
the Bond Fund, or of the amount of any credits available to the Corporation
against any Loan Repayment and failure by the Corporation to receive any such
prior notice, even if customarily given by the Authority or the Trustee, shall
not relieve the Corporation of its obligation to make any Loan Repayment when it
is due and payable.
All such payments shall be made in funds which will be
immediately available funds at the place of payment on the payment date in
question. The Corporation shall have the option to make prepayment, from time to
time, in whole or in part of any amount due as aforesaid on account of the loan,
together with interest accrued and to accrue with respect to such prepayment.
The Authority shall direct the Trustee to apply such prepayments to the purchase
or redemption of Bonds in such manner, consistent with the provisions of the
Indenture, as may be directed by the Corporation.
In the event the Corporation shall fail to make any of the payments
required in this Section, the item or payment so in default shall continue as an
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obligation of the Corporation until the amount in default shall have been fully
paid, and the Corporation will pay the same with interest thereon from the due
date until paid at the highest rate per annum borne by the Bonds.
The obligation of the Corporation to make Loan Repayments
hereunder is subject to acceleration as set forth in Sections 7.02 hereof.
SECTION 4.03. To further secure the obligation of the Corporation to
make repayment of the loan, the Corporation will execute and deliver its First
Mortgage Bonds under the Mortgage Indenture in one or more series, in such
principal amounts and with such interest rates, interest payment and maturity
dates and redemption provisions as may correspond to such provisions of the 1995
Series Bonds issued and sold by the Authority. Contemporaneously with the
execution and delivery of this Agreement the Corporation is executing and
delivering, as security for its obligation to make Loan Repayments, its First
Mortgage Bonds, 6.35% Series Due 2025, in the principal amount of $22,000,000
which contain provisions with respect to interest rate, interest payment and
maturity dates, redemption and acceleration of maturity corresponding to such
provisions of the 1995 Series Bonds.
SECTION 4.04. It is understood and agreed that the obligations of the
Corporation to make the payments due under this Agreement and the First Mortgage
Bonds securing those obligations are to be assigned and pledged by the Authority
to the Trustee. The Corporation assents to such assignment and pledge and agrees
that, as to the Trustee, its obligation to make such payments and the payments
required under the First Mortgage Bonds shall be absolute and unconditional and
shall not be subject to any defense other than payment or to any right of set
off, counterclaim or recoupment arising out of any breach by the Authority of
any obligation to the Corporation, whether hereunder or otherwise, or out of any
indebtedness or liability at any time owing to the Corporation by the Authority.
The Authority directs the Corporation, and the Corporation agrees, to pay to the
Trustee at its principal corporate trust office all payments pursuant to this
Agreement and the payments required under the First Mortgage Bonds.
So long as any Bonds are outstanding, the Corporation will pay
to the Authority on each of the Loan Repayment dates referred to in Section 4.02
of this Agreement the amount of Administration Expenses not theretofore provided
for which have then accrued and become payable.
SECTION 4.05. The Corporation will maintain, preserve, and keep the
Facilities or cause the Facilities to be maintained, preserved and kept, with
the appurtenances and every part and parcel thereof, in good repair, working
order and condition and, from time to time, will make or cause to be made all
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such repairs, replacements and renewals as it deems necessary. The Authority
shall not operate the Facilities or have any obligation to maintain them.
The Corporation shall have the privilege of remodeling the Facilities
or making substitutions, modifications and improvements to the Facilities from
time to time as it, in its discretion, may deem to be desirable for its uses and
purposes, the cost of which remodeling, substitutions, modifications and
improvements shall be paid by the Corporation and the same shall be the property
of the Corporation and be included under the terms of this Agreement as part of
the Facilities.
SECTION 4.06. At all times during the term of this Agreement the
Corporation will keep the Facilities continuously insured in accordance with the
requirements of the Mortgage Indenture. The Corporation releases the Authority
and the Trustee from, agrees that the Authority and the Trustee shall not be
liable for, and agrees to indemnify and hold the Authority and the Trustee, and
their agents, employees and servants, harmless from, any liability arising out
of the construction of the Facilities or the Loan. If any such claim is
asserted, the Authority or the Trustee will give prompt notice to the
Corporation and the Corporation will assume the defense thereof, with full power
to litigate, compromise or settle the claim in its sole discretion. The
Corporation will reimburse the Authority or the Trustee, as the case may be, for
all direct costs, including reasonable attorney's fees, properly incurred in
connection therewith.
SECTION 4.07. The Corporation will pay or cause to be discharged or
make adequate provision to satisfy and discharge, within sixty (60) days after
the same shall accrue, any lien or charge upon any Loan Repayments hereunder or
upon any First Mortgage Bonds pledged as security for the payment thereof and
all lawful claims or demands which, if unpaid, might be or become a lien upon
any Loan Repayments hereunder or upon any First Mortgage Bonds pledged as
security for the payment thereof, except Permitted Encumbrances; provided, that,
if the Corporation shall first notify the Authority and Trustee of its intention
so to do, the Corporation may in good faith contest any such lien or charge or
claim or demand in appropriate legal proceedings, and in such event may permit
the items so contested to remain undischarged and unsatisfied during the period
of such contest and any appeal therefrom, unless the Authority or the Trustee
shall notify the Corporation in writing that, in the opinion of Counsel, by
nonpayment of any such items the lien of the Indenture as to the Loan Repayments
payable pursuant to this Agreement or as to any First Mortgage Bonds pledged as
security for the payment thereof will be materially endangered, in which event
the Corporation shall promptly pay and cause to be satisfied and discharged all
such unpaid items. The Authority will cooperate fully with the Corporation in
any such contest.
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SECTION 4.08. So long as the Corporation operates the Facilities, they
will be used for purposes permitted by the Act and as facilities for the
furnishing of water.
SECTION 4.09. The Corporation will pay, or cause to be paid, in
addition to the payments provided for in Section 4.02 and Section 4.07 hereof,
all of the expenses of operation of the Facilities, including, without
limitation, the cost of all necessary and proper repairs, replacements and
renewals made pursuant to Section 4.05 hereof.
SECTION 4.10. It is understood and agreed that the payments under
Section 4.02 hereof and other charges payable hereunder shall continue to be
payable at the time and in the amounts herein specified, whether or not the
Facilities, or any portion thereof, shall have been destroyed by fire or other
casualty, or title thereto, or the use thereof, shall have been taken by the
exercise of the power of eminent domain, and that there shall be no abatement of
any such payments and other charges by reason thereof.
ARTICLE V.
Special Covenants
SECTION 5.01. The Authority makes no warranty, either express or
implied, as to the actual or designed capacity of the Facilities, as to the
suitability of the Facilities for the purposes specified in this Agreement, or
that the Facilities will be suitable for the Corporation's purposes or needs.
SECTION 5.02. The Corporation will maintain its corporate existence and
its qualification to do business in Pennsylvania, will not dissolve or otherwise
dispose of all or substantially all its assets and will not consolidate with or
merge into another corporation; provided, however, that the Corporation may
consolidate with or merge into another corporation, or sell or otherwise
transfer to another corporation all or substantially all its assets as an
entirety and thereafter dissolve, if (a) the successor corporation assumes in
writing all the obligations of the Corporation herein and in the First Mortgage
Bonds, and (b) if the successor corporation is not a Pennsylvania corporation,
said successor shall either qualify to do business in Pennsylvania or file with
the Trustee a consent to service of process in Pennsylvania in form satisfactory
to the Trustee.
If consolidation, merger or sale or other transfer is made as permitted
by this Section, the provisions of this Section shall continue in full force and
effect and no further consolidation, merger or sale or other transfer shall be
made except in compliance with the provisions of this Section.
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SECTION 5.03. The Corporation will operate the Facilities as part of
its system for the furnishing of water to the general public at rates approved
by the Public Utility Commission of the Commonwealth of Pennsylvania, and to
that end will maintain in force and effect the requisite franchises, operating
rights, certificates of public convenience and necessity, tariffs, licenses and
permits.
SECTION 5.04. In the event it may be necessary for the proper
performance of this Agreement on the part of the Authority or the Corporation
that any application or applications for any permit or license to do or to
perform certain things be made to any governmental or other agency by the
Corporation or the Authority, the Corporation and the Authority shall execute
upon the request of the other such application or applications.
SECTION 5.05. The Authority will maintain its corporate existence and
duly will procure any necessary renewals and extensions thereof; will use its
best efforts to maintain, preserve and renew all its rights, powers, privileges
and franchises; and will comply with all valid acts, rules, regulations, orders
and directions of any legislative, executive, administrative or judicial body
applicable to the Facilities. The Authority further covenants that it will not
voluntarily or knowingly take or fail to take any action that would result in
the loss of any exemption from taxes which it presently enjoys or to which it
may subsequently become entitled.
SECTION 5.06. The Corporation hereby covenants and agrees that it will
comply with and carry out all of the provisions of the Continuing Disclosure
Agreement. Notwithstanding any other provision of this Agreement, failure of the
Corporation to comply with the Continuing Disclosure Agreement shall not be
considered an event of default; however, the Trustee may (and, at the request of
any Participating Underwriter or the holders of at least 25% aggregate principal
amount in Outstanding Bonds, shall) or any Bondholder may take such actions as
may be necessary and appropriate, including seeking specific performance by
court order, to cause the Corporation to comply with its obligations under this
Section 5.06.
SECTION 5.07. The Company will not take any action or fail to take any
action (including the requirement to make rebate payments to the United States
as required under Section 148(f) of the Code and the Tax Compliance Agreement)
which would cause the Bonds to be "arbitrage bonds" within the meaning of
Sections 103(b) and 148(a) of the Code or would otherwise cause interest on the
Bonds to be includible in the gross income of the holders thereof (except with
respect to the interest on the Bonds when such Bonds are held by a "substantial
user" of the Facilities or a "related person" within the meaning of Section
147(a) of the Code).
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ARTICLE VI.
Assignment, Leasing and Selling
SECTION 6.01. The Corporation will not sell, lease or otherwise dispose
of or encumber the Facilities except as provided in this Section 6.01. The
Corporation may sell or otherwise dispose of any machinery, fixtures, apparatus,
tools, instruments or other movable property constituting part of the Facilities
which the Corporation deems no longer to be needed or useful in its operation of
the Facilities; provided, that if the original cost of acquisition of such
machinery, fixtures, apparatus, tools, instruments or other movable property
shall be more than $100,000, the Corporation shall, in writing, certify to the
Authority that such items are no longer needed or useful in its operation of the
Facilities. Any proceeds thereof shall be paid to the Trustee for deposit in the
Construction Fund.
The Authority will assign its rights under and interest in this
Agreement, and will pledge and assign all Loan Repayments and security therefor,
including the First Mortgage Bonds of the Corporation pledged as security
therefor, and receipts and revenues receivable under or pursuant to this
Agreement, and income earned by the investment of funds held under the
Indenture, to the Trustee pursuant to the Indenture as security for payment of
the principal of, premium, if any, and interest on the Bonds, but such
assignment or pledge shall be subject to this Agreement. The Authority will not
otherwise sell, assign, transfer, convey or dispose of the revenues from the
Facilities or the First Mortgage Bonds during the term of this Agreement, nor
will it take any action which may reasonably be construed as tending to cause or
induce the levy of special assessments against the Facilities or such revenues
or the First Mortgage Bonds, nor will it create or suffer to be created any lien
or charge upon the Facilities or such revenues or the First Mortgage Bonds
except Permitted Encumbrances.
SECTION 6.02. This Agreement may be assigned in whole or in part and
the Facilities may be sold or leased as a whole or in part by the Corporation,
subject, however, to the following conditions:
(a) No sale, assignment or leasing (other than pursuant to
Section 5.02 hereof) shall relieve the Corporation from primary liability for
any of its obligations hereunder, and in the event of any such sale, assignment
or leasing the Corporation shall continue to remain primarily liable for the
payments specified in Section 4.02 hereof and for performance and observance of
the other agreements on its part herein provided;
(b) The purchaser, assignee or lessee from the Corporation
shall assume the obligations of the Corporation hereunder to the extent of the
interest assigned or leased;
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(c) The Corporation shall, at least fifteen (15) days prior
to the delivery thereof, furnish or cause to be furnished to the Authority for
its information only a true and complete copy of each such proposed sale
agreement, assignment or lease, as the case may be, and shall furnish to the
Authority and the Trustee an executed copy thereof following execution; and
(d) The Corporation shall pay the Authority's reasonable
costs and expenses incurred, and the Authority's reasonable fees charged in
connection with such sale, assignment or lease.
(e) The Corporation shall furnish to the Trustee an opinion
of Counsel nationally recognized as expert in matters relating to the issuance
of obligations by states and political subdivisions thereof and the exemption of
interest thereon from Federal income taxation to the effect that the proposed
sale, assignment or lease, as the case may be, will not adversely affect the
exemption from federal income taxation of interest on the Bonds or any of them.
ARTICLE VII.
Events of Default and Remedies
SECTION 7.01. The following shall be "events of default" under this
Agreement, and the terms "event of default" or "default" shall mean, whenever
they are used in this Agreement, any one or more of the following events:
(a) Failure by the Corporation to pay when due any Loan
Repayments.
(b) Failure by the Corporation to pay when due any payment
required to be made under this Agreement other than Loan Repayments, which
failure shall continue for a period of sixty (60) days after written notice,
specifying such failure and requesting that it be remedied, is given to the
Corporation by the Authority or the Trustee, unless the Corporation is
contesting in good faith its obligation to make the payment or the Authority and
the Trustee shall agree in writing to an extension of such time prior to its
expiration.
(c) Failure by the Corporation to observe and perform any
covenant, condition or agreement on its part to be observed or performed, other
than as referred to in subsections (a) and (b) of this Section, which failure
shall continue for a period of sixty (60) days after written notice, specifying
such failure and requesting that it be remedied, is given to the Corporation by
the Authority or the Trustee, unless the Authority and the Trustee shall agree
in writing to an extension of such time prior to its expiration.
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(d) The dissolution or liquidation of the Corporation or
the filing by the Corporation of a voluntary petition under the laws of the
United States relating to bankruptcy, or failure by the Corporation promptly to
procure the dismissal of an involuntary petition in bankruptcy filed against it,
or an assignment by the Corporation for the benefit of its creditors, or the
entry by the Corporation into an agreement of composition with its creditors, or
the appointment by a court of competent jurisdiction of a receiver for the
Corporation. The term "dissolution or liquidation of the Corporation", as used
in this subsection, shall not be construed to include the cessation of the
corporate existence of the Corporation resulting either from a merger or
consolidation of the Corporation into or with another corporation or a
dissolution or liquidation of the Corporation following a transfer of all or
substantially all its assets as an entirety under the conditions permitting such
actions contained in Section 5.02 hereof.
A failure by the Authority to observe or perform any covenant or
agreement herein contained on its part to be observed or performed shall not
constitute an event of default hereunder, but the Corporation shall be entitled
to enforce the observance and performance by the Authority of any of its
covenants or agreements herein contained by such remedies at law or in equity as
it deems desirable, subject to the limitation of liability set forth in Section
8.03 hereof.
The foregoing provisions of this Section are subject to the following
limitations: If by reason of acts of God; strikes, lockouts or other industrial
disturbances; acts of public enemies; orders of any kind of the government of
the United States or of the Commonwealth of Pennsylvania or any department,
agency, political subdivision or official of either of them, or any civil or
military authority; insurrections; riots; epidemics; landslides; lightning;
earthquakes; fires; hurricanes; storms; floods; washouts; droughts; arrests;
restraint of government and people; civil disturbances; explosions; breakage or
accident to machinery; partial or entire failure of utilities; or any cause or
event not reasonably within the control of the Corporation, the Corporation is
unable in whole or in part to carry out its agreements herein contained, other
than the obligations on the part of the Corporation contained in Sections 4.02
hereof, the Corporation shall not be deemed in default during the continuance of
such inability. However, the Corporation agrees to use its best efforts to
remedy with all reasonable dispatch the cause or causes preventing it from
carrying out its agreements; provided, that the settlement of strikes, lockouts
and other industrial disturbances shall be entirely within the discretion of the
Corporation, and the Corporation shall not be required to make settlement of
strikes, lockouts and other industrial disturbances by acceding to the demands
of the opposing party or parties when such course, in the judgment of the
Corporation, is unfavorable to the Corporation. Any failure of the Corporation
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to perform its obligations under Sections 4.02 hereof shall constitute a default
regardless of the reason for such failure to perform.
SECTION 7.02. Whenever any event of default referred to in Section 7.01
hereof shall have happened and be subsisting, any one or more of the following
remedial steps may be taken, provided the default has not theretofore been
cured;
(a) The Authority, at its option, may declare the unpaid
principal balance of the loan to be immediately due and payable, whereupon the
same shall become immediately due and payable.
(b) The Authority may take any action at law or in equity
to collect the payments then due and thereafter to become due or to enforce
performance and observance of any obligation, agreement or covenant of the
Corporation under this Agreement and under the First Mortgage Bonds. All amounts
collected pursuant to action taken under this Section shall be applied in
accordance with the Indenture.
SECTION 7.03. No remedy conferred upon or reserved to the Authority by
this Agreement is intended to be exclusive of any other available remedy or
remedies, but each and every such remedy shall be cumulative and shall be in
addition to every other remedy given under this Agreement or now or hereafter
existing at law or in equity or by statute. No delay or omission to exercise any
right or power accruing upon any default shall impair any such right or power or
shall be construed to be a waiver thereof, but any such right and power may be
exercised from time to time and as often as may be deemed expedient. In order to
entitle the Authority to exercise any remedy reserved to it in this Article, it
shall not be necessary to give any notice other than such notice as may be
herein expressly required.
SECTION 7.04. If the Corporation shall default under any of the
provisions of this Agreement and the Authority shall employ attorneys or incur
other expenses for the collection of Loan Repayments or to secure possession of
or to resell the Facilities or for the enforcement of performance or observance
of any obligation or agreement on the part of the Corporation contained in this
Agreement or in the First Mortgage Bonds, the Corporation, on demand therefor,
will reimburse the Authority for reasonable fees of such attorneys and such
other reasonable expenses so incurred.
SECTION 7.05. In the event any agreement contained in this Agreement
shall be breached by either party and such breach shall thereafter be waived by
the other party, such waiver shall be limited to the particular breach so waived
and shall not be deemed to waive any other breach hereunder. In view of the
assignment of the Authority's rights in and under this Agreement to the Trustee
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under the Indenture, the Authority shall have no power to exercise any right
hereunder or waive any default hereunder by the Corporation without the consent
of the Trustee to such exercise or waiver, or, if the maturity of the
outstanding Bonds shall have been accelerated at the request of the holders of
the Bonds, the consent of the holders of a majority in principal amount of the
Bonds then outstanding. In the event any default by the Corporation hereunder
shall have been waived as a default under the Indenture by the holders of the
requisite majority in principal amount of the Bonds, no consent of the Trustee
shall be required, and the Authority shall be obligated to waive the
Corporation's default hereunder.
ARTICLE VIII.
Miscellaneous
SECTION 8.01. This Agreement shall terminate upon (i) payment in full
of the Bonds (including interest and premium, if any, thereon), or the making of
provision for payment thereof in accordance with the provisions of the
Indenture, (ii) payment of all other reasonable and necessary obligations
incurred by the Authority to pay the Cost of Construction of the Facilities,
including interest, premium and other charges, if any, thereon, and (iii)
payment of Administration Expenses. Any amounts, other than amounts being held
for payment of the Bonds or other payments referred to in the preceding
sentence, then remaining in the Bond Fund and other Funds established under the
Indenture shall belong to and be paid to the Corporation by the Trustee as
overpayment of the Loan Repayments.
SECTION 8.02. All notices, certificates, requests or other
communications hereunder shall be sufficiently given and shall be deemed given
when mailed by registered mail, postage prepaid, addressed as follows: if to the
Authority, at 14 W. Front Street, Media, Pennsylvania 19063; if to the
Corporation, at 762 Lancaster Avenue, Bryn Mawr, Pennsylvania 19010, Attention:
Vice President (Finance); and if to the Trustee, at PNC Bank, National
Association, 1700 Market Street, Philadelphia, PA 19103 Attention: Corporate
Trust Department. A duplicate copy of each notice, certificate, request or other
communication given hereunder to the Authority, the Corporation or the Trustee
shall also be given to the others. The Corporation, the Authority and the
Trustee, by giving notice as above provided, may designate any further or
different addresses to which subsequent notices, certificates, requests or other
communications shall be sent.
SECTION 8.03. This Agreement shall inure to the benefit of and shall be
binding upon the Authority, the Corporation and their respective successors and
assigns, subject to the limitation that any obligation or liability of the
Authority created by or arising out of this Agreement shall not be a general
debt or liability of the Authority, but shall be payable solely out of the
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proceeds derived from this Agreement, the First Mortgage Bonds, or the sale of
the Bonds or income earned on invested funds as provided herein and in the
Indenture.
SECTION 8.04. This Agreement may be amended in any respect but only by
written agreement of the parties hereto, subject to the limitations upon such
amendments set forth in the Indenture.
SECTION 8.05. This Agreement may be executed in any number of
counterparts, each of which, when so executed and delivered shall be an
original; but such counterparts shall together constitute but one and the same
Agreement.
SECTION 8.06. If any clause, provision or section of this Agreement be
held illegal or invalid by any court, the invalidity of such clause, provision
or section shall not affect any of the remaining clauses, provisions or sections
hereof, and this Agreement shall be construed and enforced as if such illegal or
invalid clause, provision or section had not been contained herein. In case any
agreement or obligation contained in this Agreement be held to be in violation
of law, then such agreement or obligation shall be deemed to be the agreement or
obligation of the Authority or the Corporation, as the case may be, only to the
extent permitted by law.
SECTION 8.07. The laws of the Commonwealth of Pennsylvania shall govern
the construction and interpretation of this Agreement.
SECTION 8.08.
(a) The Corporation agrees that at all times it will protect
and hold the Authority and its officers, members, employees and agents
(including, but not limited to, the Authority's legal counsel), past, present
and future, harmless and indemnified from and against all claims for losses,
damages or injuries to the Trustee or others, including death, personal injury
and property damage or loss, arising during the term hereof or during any other
period when the Authority has, had or shall have any interest in the Facilities
or arising out of the use thereof or any activity conducted thereon or in any
other manner connected therewith, directly or indirectly, including but not
limited to claims arising out of the acquisition, construction, installation,
equipping and operation of the Facilities; and the Authority, and its officers,
members, employees and agents, past, present and future, shall not be liable for
any loss, damage or injury to the person or property of the Corporation or its
agents, servants or employees or any other person who or that may be upon the
Facilities or damaged or injured as a result of any condition existing or
activity occurring upon the Facilities or any other matter connected directly or
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indirectly therewith due to any act or negligence of any person, excepting only
willful misconduct or gross negligence of the Authority, and its officers,
agents, members or employees, past, present and future.
(b) The Corporation hereby covenants and agrees that it will
indemnify the Trustee against any and all claims arising out of the Trustee's
exercise and performance of powers and duties granted unto it by the Indenture
and hereunder in good faith and without gross negligence.
(c) The Corporation will indemnify, hold harmless and defend
the Authority and the Trustee and the respective officers, members, directors,
employees and agents (including, but not limited to, the Authority's legal
counsel) each of them, past, present and future, against all loss, costs,
damages, expenses, suits, judgments, actions and liabilities of whatever nature,
including, specifically, (i) any liability under any state or federal securities
laws (including, but not limited to attorney's fees, litigation and court costs,
amounts paid in settlement and amounts paid to discharge judgments) and (ii) any
and all costs and expense arising out of, or from, any state or federal
environmental laws (including, without limitation, costs of remediation,
attorney's fees, litigation and court costs, amounts paid in settlement and
amounts paid to discharge judgments) directly or indirectly resulting from or
arising out of or related to: (i) the design, construction, installation,
operation, use, occupancy, maintenance or ownership of the Facilities (including
compliance with laws, ordinances and rules and regulations of public authorities
relating thereto); or (ii) any statements or representations with respect to
Corporation, the Project, this Agreement, the Bonds, the Indenture or any other
document or instrument delivered in connection with the issuance of the Bonds
(including any statements or representations made in connection with the offer
or sale thereof) made or given to the Authority, the Trustee or any underwriters
or purchasers of any of the bonds, by the Corporation or any of its directors,
officers, agents or employees, including but not limited to, statements or
representations of facts, financial information or corporate affairs. The
Corporation also will pay and discharge and indemnify and hold harmless the
Authority and the Trustee from (i) any lien or charge upon payments by the
Corporation to the Authority and the Trustee under this Agreement and (ii) any
taxes (including, without limitation, any ad valorem taxes and sales taxes,
assessments, impositions and other charges in respect of any portion of the
Facilities). If any such claim is asserted, or any such lien or charge upon
payments, or any such taxes, assessments, impositions or other charges are
sought to be imposed, the Authority or the Trustee will give prompt notice to
Corporation, and Corporation will have the sole right and duty to assume, and
will assume, the defense thereof, with full power to litigate, compromise or
settle the same in its sole discretion.
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(d) If the indemnification provided herein is for any reason
determined to be unavailable to the Authority or the Trustee, then, with respect
to any such loss, claim, demand or liability, including expenses in connection
therewith, the Authority and the Trustee, as appropriate, shall be entitled as a
matter of right to contribution by the Corporation. The amount of such
contribution shall be in such proportion as is appropriate to reflect relative
culpability of the parties.
(e) The Corporation will not make any claim against the
Authority, nor shall the Authority be liable for any damage or injury to any
property of the Corporation or any other person on the Facilities or to any part
of the Facilities due to any cause whatsoever, nor will the Corporation resist
the Authority's claim to indemnification on the ground that the right to such
claim is not set forth herein with sufficient particularity.
SECTION 8.09.
(a) The Corporation hereby expressly acknowledges that the
Authority is a conduit issuer and that all of the right, title and interest of
the Authority in and to this Agreement are to be assigned to the Trustee (except
for the right of the Authority to receive its reasonable fees and expense and to
indemnification), naming the Trustee its true and lawful attorney for and in its
name to enforce the terms and conditions of this Agreement. Notwithstanding any
other provision contained herein, the Corporation hereby expressly agrees,
acknowledges and covenants that to the extent practicable it shall duly and
punctually perform or cause to be performed each and every duty and obligation
of the Authority hereunder and under the Indenture.
(b) The Corporation shall neither sue the Authority, or any
of its members, officers, agents or employees, past, present or future, for any
costs, damages, expenses, suits, judgments, liabilities, claims, losses,
demands, actions or nonactions based upon this financing or sustained in
connection with or as a result of this financing nor ever raise as a defense in
any proceedings whatsoever that the Authority is a true party in interest.
Notwithstanding any other provisions of this Agreement, the Corporation shall be
entitled to (i) bring an action of specific performance against the Authority to
compel any action required to be taken by the Authority hereunder or an action
to enjoin the Authority from performing any action prohibited by this
instrument, but no such action shall in any way impose pecuniary liability
against the Authority or any of its members, officers, agents or employees,
past, present and future, (ii) join the Authority in any litigation if such
joinder is necessary to pursue any of the Corporation's rights, provided that
prior to such joinder, the Corporation shall post such security as the Authority
may require to further protect the Authority from loss and (iii) pecuniary
remuneration from the Authority for damage or loss suffered by Corporation by
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reason of the willful misconduct of the Authority or any of its members,
officers, agents or employees, past, present or future.
SECTION 8.10.
(a) In the event of any default by the Authority hereunder,
and notwithstanding any provision or obligation to the contrary herein before or
hereinafter set forth, the liability of the Authority its incorporator,
officers, members, agents and employees, past, present or future, shall be
limited to its interest in the Facilities, the improvements thereon, the rents,
issues and profits therefrom, and the lien of any judgment shall be restricted
thereto. The Authority, its incorporator, officers, members, agents and
employees, past, present or future, do not assume general liability nor specific
liability for the repayment of any mortgage or other loan, or for the costs,
fees, penalties, taxes, interest, commissions, charges, insurance or any other
payments therein recited or therein set forth, or incurred in any way in
connection therewith. Other than as set forth hereinabove in this Section 8.10,
there shall be no other recourse for damages of any kind or nature by the
Corporation or any other entity against the Authority, its incorporator,
officers, members, agents and employees, past, present or future, or any of the
property or other assets nor or hereafter owned by it or them, either directly
or indirectly; and all such recourse or liability is hereby expressly waived and
released as a condition of and in consideration of execution and delivery of
this Agreement by the Authority.
(b) No recourse under or upon any obligation, covenant or
agreement contained herein or in any Bond shall be had against the Authority or
any member, officer, employee or agent, past, present or future, of the
Authority or of any successor of the Authority under this Agreement, any other
agreement, any rule of law, statute or constitutional provision, or by
enforcement of any assessment or by any legal or equitable proceeding or
otherwise, its expressly being agreed and understood that the obligations of the
Authority hereunder, and under the Bonds and elsewhere, are solely corporate
obligations of the Authority to the extent specifically limited in the Act and
that no personal liability whatsoever shall attach to or shall be incurred by
the Authority or such members, officers, employees or agents, past, present or
future, of the Authority or of any successor of the Authority, or any of them,
because of such indebtedness or by reason of any obligation, covenant or
agreement contained herein, in the Bonds on implied therefrom.
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IN WITNESS WHEREOF, the parties hereto have caused this Construction
and Financing Agreement to be duly executed as of the day and year first above
written.
DELAWARE COUNTY INDUSTRIAL
DEVELOPMENT AUTHORITY
By Kathy Robson
---------------------------------
Chairman
(Seal)
Attest: Joseph Viscuso
-------------------------
Secretary
PHILADELPHIA SUBURBAN WATER COMPANY
By Michael P. Graham
--------------------------------
Vice President
(Seal)
Attest: Roy H. Stahl
-------------------------
Asst. Secretary
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COMMONWEALTH OF PENNSYLVANIA :
ss.:
COUNTY OF DELAWARE :
On this the 28th day of August, 1995, before me the undersigned
notary public personally appeared Kathy A. Robson who acknowledged herself to be
the Chairman of Delaware County Industrial Development Authority, a public body
corporate and politic organized and existing under the laws of the Commonwealth
of Pennsylvania, and that she as such officer, being authorized to do so,
executed the foregoing Construction and Financing Agreement for the purposes
therein contained by signing the name of Delaware County Industrial Development
Authority by herself as its Chairman.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
[SEAL]
Mary Lou Super
------------------------
Notary Public
My Commission Expires
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COMMONWEALTH OF PENNSYLVANIA :
: ss.:
COUNTY OF PHILADELPHIA :
On this the 28th day of August, 1995, before me the
undersigned notary public personally appeared Michael P. Graham, who
acknowledged himself to be a Vice President of Philadelphia Suburban Water
Company, a corporation organized and existing under the laws of the Commonwealth
of Pennsylvania, and that he as such officer, being authorized to do so,
executed the foregoing Construction and Financing Agreement for the purposes
therein contained by signing the name of the corporation by himself as such
officer.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
[SEAL]
Mary Lou Super
----------------------------------
Notary Public
My Commission Expires
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EXHIBIT A
TO
CONSTRUCTION AND FINANCING
AGREEMENT DATED AS OF AUGUST 15, 1995 BY AND
BETWEEN DELAWARE COUNTY INDUSTRIAL DEVELOPMENT
AUTHORITY AND PHILADELPHIA SUBURBAN WATER COMPANY
The following projects are the Facilities and will be financed with the
proceeds of the Bonds and will be owned by the Corporation (dollar amounts are
maximum Bond proceeds allocable to each category):
(a) New and Replacement Customer Water Lines ($2,330,000): to be
installed in townships throughout Chester, Delaware and Montgomery counties.
(b) New and Replacement Water Meters ($3,490,000): consisting of
approximately 11,750 meters automatically read by telephone and approximately
12,990 conventional manually read meters to be installed in various townships
throughout Chester, Delaware and Montgomery counties.
(c) Acquisition of Water Treatment Equipment ($299,000) consisting of
equipment related to water treatment and quality, flow control and testing and
monitoring, more specifically described as follows:
Bucks County:
Middletown Twp.: filtering, monitoring and testing equipment
at the Neshaminy Creek Treatment Plant at 2520 W. Lincoln
Hwy., Oakford, PA
Chester County:
East Bradford Twp.: monitoring equipment at Radley Mews Well
on Queens Way and tap for sampling at Birmingham Storage Tank
on Birmingham Rd. Northeast of Rt. 52.
East Goshen Twp.: sampling tap at Milltown Storage tank on
Edgewood Road.
Schuylkill Twp.: monitoring equipment at the Pickering West
Treatment Plant on Rt. 23, Phoenixville, PA.
Westtown Twp: monitoring equipment at Chateau Well near 1124
Chateau Drive and sampling tap at Radley Run Storage Tank
located at Radley Run.
West Goshen Twp.: taps for sampling at Boot Rd. Storage Tank
on Boot Rd. and Whitford Hill
Storage Tank near 306 N. Whitford Rd.
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Delaware County:
Newtown Twp.: replacement chlorine detectors at Mitchell
Booster on Newtown Rd. north of Goshen Rd.
Springfield Twp: new and replacement treatment equipment for
the Crum Creek Treatment Plant at 965 Beatty Rd.
Montgomery County:
Abington Twp.: monitoring equipment at North Hills Well on
Chelsea Ave., 200 ft. north of Walnut Ave.
Lower Merion Twp.: laboratory equipment for testing water
quality at PSWCo's laboratory located at 762 Lancaster Ave.,
Bryn Mawr, PA
Springfield Twp.: replacement of flow meter at Oreland Well
at Roesch Ave., 700 ft. south of Walnut Ave.
Plymouth Twp.: replacement of flow meter at Plymouth Well on
Sandy Hill Rd. at Hallowell.
West Whiteland Twp.: replacement of flow meter at Hollow Run
Well on Pottstown Pike next to Hollow Run Apts.
(d) Installation of Tie-In Water Mains ($1,406,000) consisting of water
mains to cross connect or tie in various lines in the distribution system for
improved distribution (including fire service) capability. Mains to be installed
at the following locations:
Chester County:
Easttown Twp.: Church Road from west of Ladderback to east of
Wetherby Ln.
Malvern Borough:
South Warren Ave. from Paoli Pike to 2nd Ave.
King Rd. from Sugartown Rd. to west of Prestside Way
Carters Grove Rd. from Sugartown Rd. to Malvern Ave.
Tredyffrin Twp:
Swedesford Rd. from West Valley Rd. to west of Old Eagle
School Rd.
North Valley Rd. and intersection of Central and North Valley
Rd.
West Goshen Twp.:
King Rd. from Heritage Dr. to Boot Rd.
Burke Rd. and Old Pottstown Pike in Brandywine Knoll
Development
West Chester Pike from east of Green Ln. to McDaniels Dr.
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West Whiteland Twp:
King Rd. from east of Queens Dr. to Princess Ln.
Burke Rd. from Douglass Dr. to proposed Waltz Lea Development
Delaware County:
Darby Twp: Madison Ave. from Lawton Terrace to Magnolia Ave.
Upper Darby Twp:
Bond Ave. from Roberts Ave. to Blythe Ave.
Sansom St. from Shirley Rd. to Long Ln.
Willistown Twp.: Paoli Pike from Harvey Ln. to Long Ln.
Montgomery County:
Abington Twp.: Reservoir Ln. from Old Welsh Rd. to Reservoir
Ave.
Lower Merion Twp.:
Barr Ln. from east of Righters Mill Rd. to Conshohocken State
Rd.
Elmwood Ave. from Russo Rd. to School St.
Radnor Twp.:
Intersection of Morris Rd. and Old Sugartown Rd.
Upper Moreland/Horsham Twps.: Commerce Ave. from north of
Maryland Rd. to Township Line Rd.
Whitemarsh Twp.:
Right-of-way from Pear Tree Lane to 30 inch right-of-way
(e) Installation of New Water Mains due to road construction ($542,000)
at the following locations:
Delaware County:
Glenolden Borough: MacDade Blvd. west of Benson Ave. and east
of South Ave.
Folcroft Twp.: Chester Pike btwn Oak Ave. and King Ave.
Delaware/Chester Counties:
Upper Merion/Tredyffrin Twps:
Rte. 202/422 interchange at Swedesford Rd. bridge
North Gulph Rd. and Rte. 422 at PA Turnpike bridge
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Montgomery County:
Abington Twp.: Roy Ave. btwn Old York Rd. and Edgehill Rd.
Radnor Twp.: Spring Mill Rd. bridge at Rte. 320
Springfield Twp.:
Valley Green Rd. west of Camp Hill Rd.6
Jug handle at the intersection of New Ave. and Pleasant Ave.
Whitemarsh Twp.: Ridge Pike west of Birch Rd.
(f) Water Main Replacements ($6,561,000) for reduced breakage and to
improve water flow and fire protection capabilities:
Chester County:
East Whiteland Twp.:
Paoli Pike btwn Chester Valley Station and Rte. 30
Lancaster Ave. btwn Phoenixville Pike and Church Rd.
Prospect Ave. from Rte. 30 to end of Prospect Ave.
Lancaster Ave. from Church Rd. to Malin Rd.
Malvern Borough: Woodland Ave. from King Rd. to Roberts Ln.
Tredyffrin Twp.:
Diamond Rock to Paoli btwn Swedesford Rd. and Central Ave.
Fairview Rd. from Upper Gulf Rd. to west of Henry Ave.
West Whiteland Twp.: northern section of Meadowbrook Manor
Development.
Westtown Twp.: Garden Circle btwn Wilmington Pike and
Goodwin Ln.
Edgemont/Willistown/Westtown Twps.: West Chester Pike btwn
Township Line and MacDaniels Dr.
Delaware County:
Haverford Twp.: Central Ave. from Fairview Rd. to north of
Bon Air Terrace.
Lower Merion Twp.:
Balwyn Pl. from Bala Ave. to end of Balwyn Pl.
Pennsylvania Ave. from Old Lancaster Ave. to Bryn Mawr Ave.
North Wyoming from Lancaster Ave. north to end of North
Wyoming.
Marple Twp.:
Grant Ave. btwn Lincoln Ave. and Worthington Ave.
Glen Spring Rd. from Rose Hill Rd. to end of Rose Hill Rd.
-4-
<PAGE>
Swarthmore Twp.: Cornell Ave. from Yale Ave. to Westdale
Ave.
Tinicum Twp.:
Industrial Hwy. btwn Stewart Ave. and Wanamaker Ave. and
Ave. btwn Carre Ave. and Lagrange Ave.
Yeadon Twp.: Rockland Ave. from South Longacre Blvd, and
Whitby Ave.
Abington Twp.: Meetinghouse Rd. from Greenwood Rd. to
Township Line Rd.
Cheltenham Twp.:
Railroad Ave. from Roberts west to the end of Railroad Ave.
Greenwood Ave. from Hedgerow Ln. to west of Salisbury Rd.
Conshohocken Twp.:
Washington St. from Ash St. to Cherry St. and Washington St.
from Lime St. to Perry St.
(g) Pumping and Purification Equipment ($621,000) consisting of
replacement and improvement of equipment at PSWCo's water treatment facilities,
booster stations and wells as follows:
Bucks County:
Middletown Twp.: pumping and purification equipment at the
Neshaminy Creek Treatment Plant at 2520 W. Lincoln Hwy.,
Oakford, PA
Chester County:
East Goshen Twp.: pumping equipment at Grand Oak Well opposite
711 Red Maple Dr. and Goshen Downs Well adjacent to 1262 Upton
Circle
East Whiteland Twp.: pump meter at King Rd. Booster Station on
King Rd. near Immaculata College in Malvern.
Schuylkill Twp.: replacement and installation of various items
of pumping and purification equipment at Pickering East and
West Treatment Plants on Rt. 23, Phoenixville, PA
Uwchlan Twp.: replacement of well pump and sewer and sample
drain at Saybrook Well on Saybrook La.
West Whiteland Twp.: replacement of pumping equipment at Shoen
Rd. Well on Shoen Rd.
Willistown Twp.: replacement of pumping equipment at
Greentree Booster on King Rd. bet. Duffryn Ave. and Arlington
Rd.
-5-
<PAGE>
Delaware County:
Springfield Twp.: modifications to boiler, replacement of
pumping and monitoring equipment at Crum Creek Plant at 965
Beatty Rd.
Montgomery County:
Lower Merion Twp.: Computerized distribution system upgrades
and additions at 762 Lancaster Ave., Bryn Mawr, PA.
Oreland: replacement of well pump at Oreland Well at Roesch
Ave., 700 ft. south of Walnut Ave.
Plymouth Twp.: replacement of valve at Karr's Lane Well on
Karrs Lane west of Little Ave.
Upper Dublin Twp.: replacement of pumping equipment at Aidenn
Lair Well on Arran Way south of Limerick La.
Upper Merion Twp.: vapor barrier, booster pump replacement,
control equipment at Upper Merion Reservoir and Well on County
Line Rd., King of Prussia, PA
(h) Other Capital Projects ($8,200,000) consisting of the following:
Bucks County:
Middletown Twp.: plant automation and new laboratory at
Neshaminy Creek Treatment Plant at 2520 W. Lincoln Hwy.,
Oakford, PA.
Chester County:
Schuylkill Twp.: construct storage facility at Pickering Creek
Plant and automation of filters at Pickering East Treatment
Plant on Rt. 23, Phoenixville, PA.
Uwchlan Twp.: construct tank booster on Whitford Rd.
Willistown Twp.: construct Malvern Booster Station on King Rd.
near Hickory booster
West Whiteland Twp.: tie-in water main and booster on Ship Rd.
from Michelle Rd. to south of Springdale Dr.
Delaware County:
Springfield Twp.: automated bulk lime system at Crum Creek
Plant at 965 Beatty Rd.
-6-
<PAGE>
Montgomery County:
Upper Moreland Twp.: pump and related upgrades at Willow Grove
Booster Station at Nash and Forrest Aves., Willow Grove
Upper Moreland Twp.: purchase of land, design and construction
of Eastern Operations Center for construction and maintenance
operations for distribution system consisting of an 18,000 sq.
ft. two-story building on a five acre site containing
approximately 9,000 sq. ft. of office space and 9,000 sq. ft.
of storage and repair garage space located on Computer Dr.,
Willow Grove, PA.
-7-
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated balance sheet at September 30, 1995, and the consolidated
statements of income and cash flow for the nine months ended September 30, 1995
and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<BOOK-VALUE> PRO-FORMA
<TOTAL-NET-UTILITY-PLANT> $425,202
<OTHER-PROPERTY-AND-INVEST> 83
<TOTAL-CURRENT-ASSETS> 31,220
<TOTAL-DEFERRED-CHARGES> 5,429
<OTHER-ASSETS> 48,515
<TOTAL-ASSETS> 510,449
<COMMON> 2,735
<CAPITAL-SURPLUS-PAID-IN> 108,705
<RETAINED-EARNINGS> 42,154
<TOTAL-COMMON-STOCKHOLDERS-EQ> 153,594
5,714
0
<LONG-TERM-DEBT-NET> 189,975
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 6,515
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 887
1,429
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 152,335
<TOT-CAPITALIZATION-AND-LIAB> 510,449
<GROSS-OPERATING-REVENUE> 86,894
<INCOME-TAX-EXPENSE> 9,736
<OTHER-OPERATING-EXPENSES> 52,172
<TOTAL-OPERATING-EXPENSES> 61,908
<OPERATING-INCOME-LOSS> 24,986
<OTHER-INCOME-NET> 0
<INCOME-BEFORE-INTEREST-EXPEN> 24,986
<TOTAL-INTEREST-EXPENSE> 10,804
<NET-INCOME> 13,706
476
<EARNINGS-AVAILABLE-FOR-COMM> 13,706
<COMMON-STOCK-DIVIDENDS> 10,043
<TOTAL-INTEREST-ON-BONDS> 13,845
<CASH-FLOW-OPERATIONS> 21,447
<EPS-PRIMARY> 1.15
<EPS-DILUTED> 1.15
</TABLE>
