-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PCqrlPRERbXB9WnoHpr0tf+BfyXhPoUigSsbYfDokb7cyuoWWeiZmAlclabTvdW7 IZ2Jobslfn7AOcMHn4XtAw== 0000950123-99-001760.txt : 19990303 0000950123-99-001760.hdr.sgml : 19990303 ACCESSION NUMBER: 0000950123-99-001760 CONFORMED SUBMISSION TYPE: S-3/A PUBLIC DOCUMENT COUNT: 6 FILED AS OF DATE: 19990302 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ETOWN CORP CENTRAL INDEX KEY: 0000764403 STANDARD INDUSTRIAL CLASSIFICATION: WATER SUPPLY [4941] IRS NUMBER: 222596330 STATE OF INCORPORATION: NJ FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3/A SEC ACT: SEC FILE NUMBER: 333-65951 FILM NUMBER: 99554714 BUSINESS ADDRESS: STREET 1: 600 SOUTH AVE STREET 2: P O BOX 788 CITY: WESTFIELD STATE: NJ ZIP: 07090 BUSINESS PHONE: 9086541234 MAIL ADDRESS: STREET 1: P O BOX 788 STREET 2: C/O E'TOWN CORP CITY: WESTFIELD STATE: NJ ZIP: 07090 S-3/A 1 E'TOWN 1 As filed with the Securities and Exchange Commission on March 1, 1999 Registration No. 333-65951 ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 AMENDMENT NO. 1 TO FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 E'TOWN CORPORATION ------------------ (Exact name of registrant as specified in its charter) New Jersey ---------- (State or other jurisdiction of incorporation or organization) 22-2596330 ---------- (I.R.S. Employer Identification No.) 600 SOUTH AVENUE WESTFIELD, NEW JERSEY 07091-0788 908-654-1234 ------------ (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) Walter M. Braswell Secretary E'town Corporation 600 South Avenue Westfield, New Jersey 07091-0788 (908) 654-1234 -------------- (Name, address, including zip code, and telephone number, including area code, of agent for service) Copies to: David P. Falck Winthrop, Stimson, Putnam & Roberts One Battery Park Plaza New York, New York 10004-1490 (212) 858-1000 The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. ================================================================================ 2 Subject to Completion Dated March 1, 1999 P R O S P E C T U S $75,000,000 E'TOWN CORPORATION DEBT SECURITIES ---------------------------- We intend to offer from time to time up to $75,000,000 of our unsecured debt securities. We will provide specific terms of each issue of debt securities in a prospectus supplement to this prospectus. You should read this prospectus and any prospectus supplement carefully before you invest. NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED THESE DEBT SECURITIES OR DETERMINED THAT THIS PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. The date of this Prospectus is _________, 1999. THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY NOT SELL THESE SECURITIES UNTIL A REGISTRATION STATEMENT RELATING TO THESE SECURITIES FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES, AND IT IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED. 3 THE COMPANY E'town Corporation was incorporated under the laws of the State of New Jersey in 1985 to serve as a holding company for Elizabethtown Water Company and its wholly owned subsidiary, The Mount Holly Water Company. Elizabethtown and Mount Holly are regulated water companies serving customers in central New Jersey. Elizabethtown and Mount Holly are engaged in the distribution of water for domestic, commercial, industrial and fire protection purposes and for resale by other water companies and public bodies. Elizabethtown and Mount Holly are public utilities and are regulated by the New Jersey Board of Public Utilities. Elizabethtown presently constitutes most of our assets and contributes most of our earnings. We also own Edison Water Company, which operates the water system of the Township of Edison, New Jersey under a long-term contract, and Liberty Water Company, which operates the water system of the City of Elizabeth, New Jersey under a long-term contract. Both Edison and Liberty are unregulated. In addition, we own E'town Properties, Inc. and Applied Water Management, Inc. which are unregulated subsidiaries. E'town Properties owns various parcels of real estate in New Jersey. E'town and E'town Properties are in the process of selling those parcels, and expect to invest the sale proceeds into water utility and wastewater investments. Applied Water Management develops, owns and operates private water and wastewater facilities for corporate and municipal clients. Our subsidiaries serve a total of 230,000 water customers in New Jersey, 53 municipalities (for fire protection service), and 11 municipalities and other water companies (for wholesale service). Our executive offices are located at 600 South Avenue, Westfield, New Jersey 07091-0788. Its telephone number is (908) 654-1234. WHERE YOU CAN FIND MORE INFORMATION We are required by the Securities Exchange Act of 1934 to file annual, quarterly and special reports and other information with the Securities and Exchange Commission. These reports and other information can be inspected and copied at the SEC's public reference room at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the SEC's Regional Offices at Seven World Trade Center, Suite 1300, New York, New York 10048, and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of this material can also be obtained visiting the SEC's website at http://www.sec.gov and by written request addressed to the SEC, Public Reference Section, 450 Fifth Street, N.W., Washington, D.C. 20549. We have filed with the SEC a registration statement on Form S-3 under the Securities Act of 1933 with respect to the debt securities offered by this prospectus. This prospectus does not contain all of the information included in the registration statement. For further information you should refer to the registration statement. The SEC allows us to "incorporate by reference" the information we file with it, which 3 4 means that we can disclose important information to you by referring to those documents. The information incorporated by reference is considered to be a part of this prospectus, and information that we file later with the SEC will automatically update and supersede this information. The information included in this document is not complete, and should be read together with the information incorporated by reference. We incorporate by reference the documents listed below and our future filings with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act until we or any underwriters sell all of the debt securities: o E'town's Annual Report on Form 10-K for the year ended December 31, 1997. o E'town's Quarterly Reports on Form 10-Q for the quarters ended March 31, 1998, June 30, 1998, and September 30, 1998. You may request a copy of these filings at no cost, by writing or telephoning us at the following address: E'town Corporation 600 South Avenue Westfield, New Jersey 07090 Attention: Secretary Telephone: (908) 654-1234 You should rely only on the information incorporated by reference or provided in this prospectus or the prospectus supplement. We have not authorized anyone else to provide you with different information. We are not making an offer of these debt securities in any state where the offer is not permitted. You should not assume that the information in this prospectus or any prospectus supplement is accurate as of any date other than the date on the front of those documents. RATIO OF EARNINGS TO FIXED CHARGES The following table sets forth our ratio of earnings to fixed charges on a historical basis for each of the five full years ending with the period ended December 31, 1997 and for the nine months ended September 30, 1998. Year Ended Nine Months December 31 Ended September 30, ----------- ------------------- 1993 1994 1995 1996 1997 1998 ---- ---- ---- ---- ---- ---- Ratio of Earnings to Fixed Charges 2.65 2.43 2.47 2.18 2.67 3.03 Earnings to Fixed Charges equals the sum of net income, dividends, Federal income taxes and interest expense (which excludes capitalized interest) divided by fixed charges. Fixed charges consist of interest paid on long-term and short-term debt, which includes capitalized interest and amortization of debt discount. 3 5 USE OF PROCEEDS Unless otherwise set forth in a prospectus supplement, we will use the proceeds from the sale of the debt securities: o together with other funds, to make a loan or equity contribution to Liberty to enable it to make payments under its contract with the City of Elizabeth, New Jersey aggregating $50 million through June 2000, or to repay short-term debt incurred for such purpose, and o for other general corporate purposes, including: o debt refinancing, o investments in existing or new subsidiaries, o acquisitions, and o working capital. Pending these uses, we may temporarily invest proceeds in short-term securities. DESCRIPTION OF DEBT SECURITIES This prospectus describes certain general terms and provisions of our debt securities. The particular terms of each series of debt securities we offer for sale will be described in a prospectus supplement to this prospectus. We will also indicate in the prospectus supplement whether the general terms and provisions described here apply to that particular series of debt securities. Accordingly, you should read both the description set forth below and the description set forth in the applicable prospectus supplement for the complete terms of any particular series of debt securities. The debt securities will be issued from time to time in one or more new series under an indenture to be dated as of ___________, 1999 between us and Summit Bank, as trustee. Selected provisions of the indenture and the debt securities are summarized below. This summary is not complete and is subject to the detailed provisions of the indenture. You should read the copy of the indenture which we filed with the SEC as an exhibit to the registration statement for the debt securities for the complete text of those provisions that may be important to you. References in parentheses below refer to section numbers in the indenture. General The indenture does not limit the principal amount of debt securities which we may issue. The debt securities will be our unsecured and unsubordinated obligations and will rank equally with all of our other unsecured and unsubordinated obligations. The prospectus supplement for any new series of debt securities will describe their specific terms, including the following: o the title of the debt securities of the series; 4 6 o any limit on the aggregate principal amount of the series; o the date or dates on which we will pay principal on the debt securities of the series; o the rate or rates at which any of the debt securities of the series will bear interest, the date or dates from which any such interest will accrue, the dates on which interest will be payable and the regular record date for the interest payable on any interest payment date; o the place or places where the principal of and premium, if any, and interest on the debt securities of the series will be payable; o the period or periods within which, the price or prices at which and the terms and conditions on which any of the debt securities of the series may be redeemed at our option; o the terms and conditions of any obligation on our part to redeem or purchase any of the debt securities of the series pursuant to any sinking fund or analogous provision or at the option of a holder of the debt securities; o the denominations in which the debt securities of the series will be issued, if other than denominations of $1,000 and any integral multiple thereof; o if the amount of principal of or any premium or interest on any of the debt securities of the series will be determined with reference to an index or pursuant to a formula, the manner in which those amounts will be determined; o if any debt securities of the series will be issued in book-entry form and, if so, any and all matters incidental to those debt securities; o any addition to the Events of Default described in this prospectus or in the indenture applicable to the debt securities of the series; o any addition to our covenants for the benefit of the holders of debt securities described in this prospectus or in the indenture; and o any other terms of the debt securities of the series not inconsistent with the provisions of the indenture. (Section 301). Indenture Restrictions Under the indenture, we may not voluntarily place any type of lien on any of the common stock of Elizabethtown unless, at the same time or prior to such action, we also secure all of the debt securities equally and ratably with, or ahead of, the debt secured by that lien. (Section 608). The indenture also prohibits our investment in any entity which is not primarily engaged in the generation, distribution or sale of electric energy or natural gas or the distribution or sale of water, or the furnishing of communications services, or water treatment and analysis services, or in the treatment of wastewater, unless: o immediately after giving effect to the investment, the aggregate value of all such investments by us and our subsidiaries would not exceed $50,000,000, and o no Event of Default or event which, after notice or lapse of time or both, would become an Event of Default under the Indenture would result. This restriction will not apply if we consolidate with or merge into another company, and are not the surviving company. (Section 609). 5 7 Form, Exchange and Transfer The debt securities of each series will be issuable only in fully registered form without coupons and in denominations of $1,000 and any integral multiple thereof. (Sections 201 and 302). Debt securities of any series may be exchanged for other debt securities of the same series, of any authorized denomination and of like tenor and aggregate principal amount in accordance with the terms of the indenture. (Section 305). Subject to the terms of the indenture and the limitations applicable to global securities, debt securities may be presented for exchange or for registration of transfer at the office of the security registrar or any transfer agent designated by us. No service charge will be made for any exchange or registration of transfer, except that we may require reimbursement of any applicable tax or other governmental charges. We will act as security registrar for each series of debt securities. Any transfer agent for a series of debt securities will be named in the applicable prospectus supplement. We may at any time add or remove a transfer agent or change the office through which any transfer agent acts, provided we maintain a transfer agent in each place of payment for the debt securities. (Section 602). We will not be required to execute, register the transfer of, or exchange (a) any debt security of any series or tranche during the 15 days prior to giving notice of redemption for the series or tranche, or (b) any debt security selected for redemption, except the unredeemed portion of any debt security being redeemed in part. (Section 305). Payment and Paying Agents Payment of interest on a debt security on any interest payment date will be made to the person in whose name that debt security is registered at the close of business on the regular record date for such interest. (Section 307). Principal of and any premium and interest on the debt securities of a particular series will be payable at the corporate trust office of Summit Bank, as paying agent, in Hackensack, New Jersey, or at the office of any other paying agent designated by us for such purpose from time to time. Any other paying agent for any series of debt securities will be named in the applicable prospectus supplement. We may at any time add or remove any paying agent or change the office through which any paying agent acts, provided we maintain a paying agent in each place of payment for the debt securities. (Section 602). Redemption Any terms for the optional or mandatory redemption of any series of debt securities will be specified in the applicable prospectus supplement. Debt securities will be redeemable at our option only upon notice mailed not less than 30 nor more than 60 days' prior to the redemption date. If less than all the debt securities of a series or tranche are redeemed, the particular debt securities to be redeemed will be selected in the manner provided for in that series, or if not so provided, as the security registrar deems fair and appropriate. (Section 403 and 404). 6 8 We may make any redemption at our option conditional upon the paying agent's receipt by the redemption date of sufficient money to pay the debt securities to be redeemed. (Section 404). Events of Default The indenture defines any one or more of the following events to be an "Event of Default" with respect to any series of debt securities: o failure to pay any interest on any debt security of that series within 60 days after the same becomes due and payable, o failure to pay the principal of or premium, if any, on any debt security of that series when due and payable, o failure by us to perform or our breach of any other indenture covenant or warranty (other than a covenant or warranty solely for the benefit of one or more series of debt securities other than that series), for 60 days after written notice to us by the Trustee, or to us and the Trustee by the holders of at least 33% in principal amount of the outstanding debt securities of that series as provided in the indenture, o certain events of bankruptcy, insolvency or reorganization, or o any other Event of Default specified with respect to the debt securities of that series. (Section 801). An Event of Default with respect to a particular series of debt securities does not necessarily constitute an Event of Default with respect to any other series of debt securities. Remedies If an Event of Default for any series of debt securities occurs and continues, the trustee or the holders of at least 33% in principal amount of the debt securities of the series may declare the principal amount (or the applicable portion of the principal amount of any debt securities of the series issued as discount securities) of all debt securities of that series to be due and payable immediately. If, however, an Event of Default applicable to more than one series of debt securities occurs and continues, the trustee or the holders of at least 33% in principal amount of the debt securities of all those series, considered as one class, may declare acceleration, and not the holders of any one series. In general, before a judgment or decree for payment has been obtained by the trustee, a declaration of acceleration with respect to the debt securities of any series may be rescinded and annulled if we deposit with the trustee enough money to pay all past due amounts (other than amounts due by acceleration), including principal, premium and interest, interest upon overdue interest and any amounts due to the trustee under the indenture. (Section 802). Subject to certain rights of the trustee, the holders of a majority in principal amount of the outstanding debt securities of all series affected by an Event of Default may direct the time, method and place of conducting any proceeding for any remedy available to the trustee, or exercising any trust or power conferred on the trustee, with respect to the debt securities of such series. (Section 7 9 812). The holders of a majority in principal amount of the affected debt securities may waive any past default under the indenture except a payment default or a default of an indenture covenant or provision which can only be modified or amended by consent of all holders of the affected debt securities. (Section 813). The right of a holder of a debt security to institute a proceeding under the indenture is subject to certain conditions precedent, but each holder has an absolute right to receive payment of principal and premium, if any, and interest, if any, on or after the applicable due date specified in the debt security and to institute suit for the enforcement of any such payment. (Sections 807 and 808). Within 90 days after the occurrence of any Event of Default or event which, after notice or lapse of time or both, would become an Event of Default with respect to the debt securities of any series, the trustee must give the holders of those debt securities notice of the default, unless it is cured or waived. In the case of a payment default on the debt securities of the series, however, the trustee may withhold notice if the trustee determines that it is in the interest of the holders to do so. In addition, notice regarding a covenant Event of Default shall not be given to holders until at least 75 days after the event occurs. (Section 902). We must file annually with the trustee a certificate signed by one of our officers regarding our compliance with all conditions and covenants under the indenture, without regard to grace periods or notice requirements. (Section 606). Consolidation, Merger, Conveyance, Transfer or Lease We cannot consolidate with or merge into any other corporation or sell or lease our properties and assets substantially as an entirety to any person unless: o the successor corporation in the consolidation or merger or the person acquiring or leasing such property and assets: o is organized and existing under the laws of the United States of America, any state thereof or the District of Columbia, and o expressly assumes the due and punctual payment of the principal, premium and interest on all outstanding debt securities and the performance of all of our covenants under the indenture, o immediately after giving effect to such transactions, no Event of Default or event which, after notice or lapse of time or both, would become an Event of Default has occurred and is continuing, and o we deliver to the certificate and opinion of counsel required by the indenture. (Section 1101). There are no provisions that will afford the holders of debt securities protection in the event of a highly leveraged transaction involving E'town. There are also no provisions that will require the repurchase of the debt securities upon a change in control of E'town. 8 10 Modification of Indenture The indenture may be amended or modified with the consent of the holders of a majority in principal amount of the debt securities of all series affected by such amendment or modification, considered as one class. We may not, however, without the consent of the holder of each debt security of each series directly affected thereby, amend or modify the indenture to: o change the stated maturity of the principal of, or any installment of principal of or interest on, any debt security, or reduce the principal thereof or the interest rate (or the amount of any installment of interest thereon), if any, thereon or redemption premium thereon, or change the method of calculating the interest rate thereon, or reduce the principal amount of any discount security payable upon acceleration of maturity thereof, or change the currency in which any amount on any debt security is payable or impair the right to institute suit for the enforcement of any such payment, o reduce the percentage in principal amount of debt securities of the series required to consent to any such amendment or modification or to any waiver of compliance or default under the indenture or to reduce the requirements for quorum and voting under the indenture, or o modify certain of the provisions of the indenture relating to supplemental indentures, waivers of certain covenants and waivers of past defaults. Without the consent of any holders of debt securities, we and the trustee may enter into one or more supplemental indentures for certain specified purposes, including to: o evidence the assumption by a successor entity of our obligations under the indenture and the debt securities, o add to the covenants for the benefit of holders of the debt securities, o add any additional Events of Default with respect to all or any series of debt securities, o establish the form or terms of debt securities of any series as permitted by the indenture, o evidence the acceptance of appointment of a separate or successor trustee, o cure any ambiguity, defect or inconsistency in the indenture, or o make any other change in the indenture that does not adversely affect holders in any material respect (Section 1201). Satisfaction and Discharge Any debt securities will be deemed paid, and our obligations on those debt securities will be deemed satisfied and discharged, if we irrevocably deposit with the trustee or any paying agent, in trust: o money sufficient, or o U.S. government obligations, which are not redeemable or prepayable at the issuer's option, the principal of and the interest on which when due, without regard to reinvestment, will provide moneys which, together with the money, if any, deposited with or held by the trustee, will be sufficient, or 9 11 o a combination of the preceding two items which will be sufficient, to pay when due the principal of and premium, if any, and interest, if any, due and to become due on the debt securities that are outstanding. For this purpose, U.S. government obligations include direct obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by, the United States of America and entitled to the benefit of its full faith and credit and instruments evidencing a direct ownership interest in, or to any specific payments due on, such obligations. (Section 701). Resignation of the Trustee The trustee may resign at any time by giving us written notice and may be removed at any time by the holders of a majority in principal amount of outstanding debt securities. A resignation or removal of the trustee and an appointment of a successor trustee will not become effective until the successor trustee accepts the appointment in accordance with the indenture. So long as no Event of Default or event which, after notice or lapse of time, or both, would become an Event of Default has occurred and is continuing and except with respect to a trustee appointed by the holders, if we appoint a successor trustee and such successor accepts such appointment in accordance with the indenture, the trustee will be deemed to have resigned and the successor will be deemed to have been appointed. (Section 910). The Trustee We have a commercial banking relationship with Summit Bank. BOOK-ENTRY SECURITIES Unless otherwise specified in the applicable prospectus supplement, each series of debt securities will be issued under a book-entry system in the form of one or more global securities deposited with The Depository Trust Company, New York, New York ("DTC"). The global securities will be registered in the name of DTC or its nominee. DTC is a limited-purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17A of the Exchange Act. DTC holds securities that its participants ("Participants") deposit with DTC. DTC also facilitates the settlement among Participants of securities transactions, such as transfers and pledges, in deposited securities through electronic computerized book-entry changes in Participants' accounts, thereby eliminating the need for physical movement of securities certificates. Direct Participants include securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is owned by a number of its Direct Participants and by the New York Stock Exchange, Inc., the American Stock Exchange, Inc. and the National Association of Securities Dealers, Inc. Access to DTC system is also available to others such as securities brokers and dealers, banks, and trust companies that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ("Indirect Participants"). The rules applicable to DTC and its Participants are on file with the SEC. Purchases of debt securities under DTC's system must be made by or through Direct Participants, who will receive a credit for the debt securities on DTC's records. The beneficial 10 12 ownership interest of each actual purchaser of each debt security is in turn recorded on the Direct and Indirect Participants' records. Beneficial owners will not receive written confirmation from DTC of their purchase, but are expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which they purchased. Transfers of ownership interests in the debt securities are entered on the books of Participants acting on behalf of beneficial owners. Beneficial owners will not receive certificates representing their ownership interests in debt securities, except if use of the book-entry system for the debt securities is discontinued. To facilitate subsequent transfers, all debt securities deposited by Participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co. The deposit of debt securities with DTC and their registration in the name of Cede & Co. effect no change in beneficial ownership. DTC has no knowledge of the actual beneficial owners of the debt securities. DTC's records reflect only the identity of the Direct Participants to whose accounts such debt securities are credited, which may or may not be the beneficial owners. The Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to beneficial owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. DTC and Cede & Co. will not consent or vote with respect to the debt securities. Under its usual procedures, DTC mails an omnibus proxy to us as soon as possible after the record date. The omnibus proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts the debt securities are credited on the record date (identified in a listing attached to the omnibus proxy). Principal, premium, if any and interest payments on the debt securities will be made to DTC. DTC's practice is to credit Direct Participants' accounts on the payable date in accordance with their respective holdings shown on DTC's records unless DTC has reason to believe that it will not receive payment on the payable date. Payments by Participants to beneficial owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such Participant and not of DTC, agent, or E'town, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal and interest to DTC is the responsibility of DTC, and disbursement of such payments to the beneficial owners is the responsibility of Direct and Indirect Participants. DTC may discontinue providing its services as securities depository for the debt securities at any time by giving us reasonable notice. If that occurs and a successor securities depository is not obtained, or if we decide to discontinue using DTC's book-entry transfer system, debt security certificates will be printed and delivered. DTC management is aware that some computer applications, systems and the like for processing data that are dependent upon calendar dates, including dates before, on and after January 1, 2000, may encounter "Year 2000 problems." DTC has informed its participants and other members of the financial community that it has developed and is implementing a program so that its data processing computer applications and systems relating to the timely payment of distributions (including principal and income payments) to securityholders, book-entry deliveries, and settlement of trades within DTC, continue to function appropriately. This program includes a technical assessment and a remediation plan, each of which is complete. In addition, DTC's plan includes a testing phase, which is expected to be completed within appropriate time frames. However, DTC's ability to perform its services properly is also dependent upon other parties, including issuers and their agents, as well as third-party vendors from whom DTC licenses software and hardware, and third-party vendors on whom DTC relies for information or the provision of services, including telecommunication and electric utility service providers, among others. DTC has informed the financial community that it is contacting (and will continue to contact) third-party vendors from whom DTC acquires services to: (1) impress upon them the importance of those services being Year 2000 compliant; and (2) determine the extent of their efforts for Year 2000 remediation (and, as appropriate, testing) of their services. In addition, DTC is in the process of developing contingency plans as it deems appropriate. According to DTC, the foregoing information with respect to Year 2000 has been provided to the financial community for informational purposes only and is not intended to serve as a representation, warranty or contract modification of any kind. The information in this section concerning DTC and DTC's book-entry system has been obtained from sources that E'town believes to be reliable, but E'town takes no responsibility for the accuracy thereof. 11 13 PLAN OF DISTRIBUTION We may sell the debt securities: o through underwriters or dealers, o directly to one or more purchasers, o through agents or o through a combination of any such methods of sale. The applicable prospectus supplement will set forth the terms of the offering of the debt securities of a series, including the name or names of any underwriters, dealers or agents, the purchase price of the debt securities of the series and the proceeds to us from the sale, any underwriting discounts and other items constituting underwriters' compensation, any initial public offering price and any discounts or concessions allowed or reallowed or paid by any underwriters to dealers. Any initial public offering price and any discounts or concessions allowed or reallowed or paid to dealers by any underwriters may be changed from time to time. If underwriters are used in the sale of the debt securities of any series, the debt securities will be acquired by the underwriters for their own account and may be resold from time to time in one or more transactions, including negotiated transactions, at a fixed public offering price or at varying prices determined at the time of sale. The underwriters with respect to a particular underwritten offering of debt securities will be named in the applicable prospectus supplement and, if an underwriting syndicate is used, the managing underwriter or underwriters will be set forth on the cover page of such prospectus supplement. In connection with the sale of debt securities, the underwriters may receive compensation from us or from purchasers in the form of discounts, concessions or commissions. The underwriters will be, and any dealers participating in the distribution of the debt securities may be, deemed to be underwriters within the meaning of the Securities Act of 1933, as amended. We have agreed to indemnify the underwriters against certain civil liabilities, including liabilities under the Securities Act. The underwriting agreement pursuant to which any debt securities are to be sold will provide that the obligations of the underwriters are subject to certain conditions precedent and that the underwriters will be obligated to purchase all of the debt securities if any are purchased. However, the agreement between us and the underwriters providing for the sale of the debt securities may provide that under certain circumstances involving a default of underwriters, less than all of the debt securities may be purchased. Any underwriters utilized may engage in stabilizing transactions and syndicate covering transactions in accordance with Rule 104 under the Exchange Act. Stabilizing transactions permit bids to purchase the underlying security so long as the stabilizing bids do not exceed a specified maximum. Syndicate covering transactions involve purchases of the debt securities in the open market after the distribution has been completed in order to cover syndicate short positions. Such stabilizing transactions and syndicate covering transactions may cause the price of the debt securities to be higher than it would otherwise be in the absence of such transactions. The debt securities of any series may be sold directly by us or through agents designated by us from time to time. The applicable prospectus supplement shall set forth the name of any agent involved in the offer or sale of any debt securities as well as any commissions payable by us to such agent. Unless otherwise indicated in the prospectus supplement, any such agent will be acting on a 12 14 best efforts basis for the period of its appointment. If so indicated in the applicable prospectus supplement, we will authorize agents, underwriters or dealers to solicit offers by certain specified institutions to purchase debt securities from us at the public offering price set forth in such prospectus supplement pursuant to delayed delivery contracts providing for payment and delivery on a specified date in the future. Such contracts will be subject to those conditions set forth in the applicable prospectus supplement, and such prospectus supplement will set forth the commission payable for solicitation of such contracts. EXPERTS The financial statements and the related financial statement schedules incorporated in this prospectus by reference from our Annual Report on Form 10-K for the year ended December 31, 1997 have been audited by Deloitte & Touche LLP, independent auditors, as stated in their reports, which are incorporated herein by reference, and have been so incorporated in reliance upon the reports of such firm given upon their authority as experts in accounting and auditing. LEGALITY Certain legal matters concerning the offering will be passed upon for us by Walter M. Braswell, Esq., our Secretary and counsel, and Winthrop, Stimson, Putnam & Roberts, New York, New York, our special New York counsel. Certain legal matters will be passed upon for any underwriters, agents or dealers by McCarter & English, LLP, Newark, New Jersey. 13 15 [Back Cover] $75,000,000 E'TOWN CORPORATION DEBT SECURITIES TABLE OF CONTENTS The Company..................................... 2 Where You Can Find More Information............. 2 Ratio of Earnings to Fixed Charges.............. 3 Use of Proceeds................................. 4 Description of Debt Securities.................. 4 Book-Entry Securities........................... 10 Plan of Distribution............................ 12 Experts......................................... 13 Legality........................................ 13 16 PART II INFORMATION NOT REQUIRED IN PROSPECTUS Item 14. Other Expenses of Issuance and Distribution.
Initial Sale ---- Registration Statement filing fee $ 22,125 *Rating Agencies' fees 55,000 *Trustees' fees 5,000 *Fees of Company's counsel 50,000 *Fees of Agents' counsel (including blue-sky expenses) 40,000 *Accountants' fees 20,000 *Printing and engraving costs 5,300 *Miscellaneous expenses 5,000 -------- Total Expenses $202,425 ========
* Estimated Item 15. Indemnification of Directors and Officers. Article 3, Section 6 of the Company's By-Laws provides that the Company shall indemnify each director or officer of the Company and any person who, at the request of the Company, has served as a director, officer or trustee of another corporation in which the Company has a financial interest against reasonable costs, expenses and counsel fees paid or incurred (including any judgments, fines or reasonable settlements exclusive of any amount paid to the Company in settlement) in connection with the defense of any action, suit or proceeding in which such person is named as a party by reason of having been such director, officer or trustee or by reason of any action taken or not taken in such capacity unless such director, officer or trustee is finally adjudged to have been derelict in the performance of his duties as director, officer or trustee. If any such action, suit or proceeding is settled or otherwise terminated as against such director, officer or trustee without a final determination on the merits and the Board of Directors of the Company shall determine that such director, officer or trustee has not in any substantial way been derelict in the performance of his duties as charged in such action, suit or proceeding, the Company shall indemnify such director, officer or trustee as aforesaid. Such rights of indemnification are not exclusive of any rights to which a director or officer of the Company may have pursuant to statute or otherwise. Section 14A:3-5 of the New Jersey Business Corporation Act (the "Act") gives a corporation the power, without a specific authorization in its certificate of incorporation or by-laws, to indemnify a corporate agent against expenses and liabilities incurred in connection with certain proceedings involving the corporate agent by reason of his being or having been such a corporate agent, provided that with regard to a proceeding other than one by or in the right of the corporation, the corporate agent must have acted in good faith and in a manner reasonably believed to be in or not opposed to the best interests of the corporation and, with respect to any criminal proceeding, such corporate agent had no reasonable cause to believe his conduct was unlawful. In any such proceeding, termination of a proceeding by judgment, order, settlement, conviction or upon plea of nolo contendere or its equivalent does not of itself create a presumption that any such corporate agent failed to meet the above applicable standards of conduct. The indemnification provided by the Act does not exclude any rights to which a corporate agent may be entitled under a certificate of incorporation, by-law, agreement, vote of shareholders or otherwise. No indemnification, other than that required when a corporate agent is successful on the merits or otherwise in any of the above proceedings shall be allowed if such indemnification would be inconsistent with a provision of the certificate of incorporation, a by-law or a resolution of the board of directors or of the shareholders, an agreement or other proper corporate action in effect at the time of the accrual of the alleged cause of action which prohibits, limits or otherwise conditions the exercise of indemnification powers by the corporation or the rights of indemnification to which a corporate agent may be entitled. The Company also has insurance policies which, among other things, provide officers and directors liability coverage, individually and in the aggregate up to a limit of $20 million for each loss within a 12-month period. II-1 17 Item 16. List of Exhibits. 1 Form of Distribution Agreement* 4(a) Form of Indenture between E'town Corporation and Summit Bank** 4(b) Form of Debt Security** 5(a) Opinion of Walter M. Braswell* 5(b) Opinon of Winthrop, Stimson, Putnam & Roberts, special New York counsel to E'town Corporation* 12 Computation of Ratio of Earnings to Fixed Charges* 23(a) Consent of Deloitte & Touche LLP, Independent Auditors** 23(b) Consent of Walter M. Braswell, Esq. (incorporated into Exhibit 5(a))* 23(b) Consent of Winthrop, Stimson, Putnam & Roberts (incorporated into Exhibit 5(b))* 24 Power of attorney for each officer and director signing the Registration Statement** 25 Statement of eligibility of trustee (Statement of Eligibility and Qualification on Form T-1 of Summit Bank under the Indenture)* 27 Financial Data Schedule** - ----------------- * To be filed herewith ** Filed previously Item 17. Undertakings. The undersigned registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: (i) To include any prospectus required by section 10(a)(3) of the Securities Act; and (ii) To reflect in the prospectus any facts or events arising after the effective date of this registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in this registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the SEC pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20 percent change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement; and (iii) To include any material information with respect to the plan of distribution not previously disclosed in this registration statement or any material change to such information in this registration statement; Provided, however, that paragraphs (1)(i) and (1)(ii) above do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed with or furnished to the SEC by the registrant pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, (the "Exchange Act") that are incorporated by reference in this registration statement. (2) That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (4) That, for purposes of determining any liability under the Securities Act, each filing of the registrant's annual II-2 18 report pursuant to Section 13(a) or 15(d) of the Exchange Act (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Exchange Act) that is incorporated by reference in this registration statement shall be deemed to be a new registration statement relating to the securities offered herein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (5) Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. II-3 19 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant certifies that it has reasonable grounds to believe that it meets all the requirements for filing on Form S-3 and this Amendment No. 1 has been signed on its behalf by the undersigned, thereunto duly authorized, in the City of Westfield and State of New Jersey, on the 1st day of March, 1999. E'TOWN CORPORATION By: /s/Gail P. Brady -------------------- Title: Treasurer Pursuant to the requirements of the Securities Act of 1933, this Amendment No. 1 has been signed by the following persons in the capacities and on the dates indicated. Signature Title Date - --------- ----- ---- */s/Andrew M. Chapman President and Director March 1, 1999 - ------------------------- (Principal Executive Officer) /s/Gail P. Brady Treasurer March 1, 1999 - ------------------------- (Principal Financial Officer) */s/Thomas J. Cawley Director March 1, 1999 - ------------------------- */s/Anthony S. Cicatiello Director March 1, 1999 - ------------------------- */s/Edward A. Clerico Director March 1, 1999 - ------------------------- */s/Dennis Doll Controller (Principal March 1, 1999 - ------------------------- Accounting Officer) */s/Anne Evans Estabrook Director, Chairman of March 1, 1999 - ------------------------- the Board */s/James W. Hughes Director March 1, 1999 - ------------------------- */s/John Kean Director March 1, 1999 - ------------------------- */s/Robert W. Kean, III Director March 1, 1999 - ------------------------- */s/Barry T. Parker Director March 1, 1999 - ------------------------- */s/Hugh M. Pfaltz Director March 1, 1999 - ------------------------- */s/Chester A. Ring Director March 1, 1999 - ------------------------- */s/Joan Verplanck Director March 1, 1999 - ------------------------- *By: Gail P. Brady ------------------------- as Attorney-in-Fact II-4 20 Exhibit Index Exhibit No. Description - ------- ----------- 1 Form of Distribution Agreement* 4(a) Form of Indenture between E'town Corporation and Summit Bank** 4(b) Form of Debt Security** 5(a) Opinion of Walter M. Braswell* 5(b) Opinon of Winthrop, Stimson, Putnam & Roberts, special New York counsel to E'town Corporation* 12 Computation of Ratio of Earnings to Fixed Charges* 23(a) Consent of Deloitte & Touche LLP, Independent Auditors** 23(b) Consent of Walter M. Braswell, Esq. (incorporated into Exhibit 5(a))* 23(b) Consent of Winthrop, Stimson, Putnam & Roberts (incorporated into Exhibit 5(b))* 24 Power of attorney for each officer and director signing the Registration Statement** 25 Statement of eligibility of trustee (Statement of Eligibility and Qualification on Form T-1 of Summit Bank under the Indenture)* 27 Financial Data Schedule** - ----------------- * To be filed herewith ** Filed previously EX-1 2 FORM OF DISTRIBUTION AGREEMENT 1 Exhibit 1 E'TOWN CORPORATION $75,000,000 Medium-Term Notes DISTRIBUTION AGREEMENT ________, 1999 _____________, New Jersey A.G. Edwards & Sons, Inc. One North Jefferson St. Louis, Missouri 63103 Legg Mason Wood Walker, Incorporated 100 Light Street, 34th Floor Baltimore, MD 21202 Dear Sirs: E'town Corporation, a New Jersey corporation (the "Company"), confirms its agreement with each of you with respect to the issue and sale by the Company of up to $75,000,000 aggregate principal amount of its Medium-Term Notes (the "Notes"). The Company proposes to issue the Notes under its Indenture (the "Indenture") dated as of ___________, 1999 to Summit Bank and its successors, if any ("Summit"), as trustee (the "Indenture Trustee"). The Notes will be issued in minimum denominations of $______ and integral multiples thereof (unless otherwise specified by the Company), will be issued only in fully registered form and will have the annual interest rates, maturities and, if appropriate, other terms set forth in a supplement or supplements to the Prospectus referred to below. The Notes will be issued, and the terms thereof established, in accordance with the Indenture and, in the case of Notes sold pursuant to Section 2(a), the Administrative Procedures for the Notes, attached hereto as Exhibit A (the "Procedures"). The Procedures may only be amended by written agreement of the 2 Company and you after notice to, and with the approval of, the Indenture Trustee. For the purposes of this Agreement, the term "Agent" shall refer to either of you acting solely in the capacity as agent for the Company pursuant to Section 2(a) and not as principal, the term "Purchaser" shall refer to either of you acting solely as principal pursuant to Section 2(b) and not as agent, and the term "you" shall refer to you together at any time either of you is acting in both such capacities or in either such capacity. 1. Representations and Warranties. The Company represents and warrants to, and agrees with, you as set forth below in this Section 1. Certain terms used in this Section 1 are defined in paragraph (c) hereof. (a) The Company meets the requirements for use of Form S-3 under the Securities Act of 1933, as amended (the "Act"), and has filed with the Securities and Exchange Commission (the "Commission") a registration statement on such Form (File No. 333-65951), including a basic prospectus, which has become effective, for the registration under the Act of up to $75,000,000 aggregate initial offering price of Notes. Such registration statement, as amended at the date of this Agreement, meets the requirements set forth in Rule 415(a)(1)(ix) or (x) under the Act and complies in all other material respects with said Rule. The Company has included in such registration statement, or has filed or will file with the Commission pursuant to the applicable paragraph of Rule 424 under the Act, a supplement or supplements to the form of prospectus included in such registration statement relating to the Notes and the plan of distribution thereof (any of such supplements, a "Prospectus Supplement"). In connection with the sale of Notes, the Company proposes to file with the Commission pursuant to the applicable paragraph of Rule 424 under the Act further supplements to the Prospectus Supplement providing for the specification of or a change in the interest rates, if any, maturity dates, issuance prices, redemption terms and prices, if any, and, if appropriate, other terms of the Notes sold pursuant hereto or the offering thereof (any such supplement being hereinafter called a "Pricing Supplement"). (b) At each of the following times: (i) as of the Execution Time, (ii) on the Effective Date, (iii) when any supplement to the Prospectus is filed with the Commission, (iv) as of the date of any Terms Agreement (as defined by Section 2(b)) and (v) at the date of delivery by the Company of any Notes sold hereunder (a "Closing Date"), (1) the Registration Statement, as amended as of any such time, and the Prospectus, as supplemented as of any such time, and the Indenture, each as amended or supplemented as of any such time, complied or will comply as to form in all material respects with the applicable requirements of the Act, the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"), and the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the respective rules thereunder; (2) the Registration Statement, as amended as of any such time, did not or will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein not misleading; and (3) the Prospectus, as supplemented as of any such time, will not include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that the 2 3 Company makes no representations or warranties as to (A) that part of the Registration Statement that shall constitute the Statements of Eligibility and Qualification (Forms T-1) under the Trust Indenture Act of the Indenture Trustee, (B) any information contained in any Prospectus Supplement relating to The Depository Trust Company ("DTC") or DTC's book-entry system or (C) the information contained in or omitted from the Registration Statement or the Prospectus (or any supplement thereto) in reliance upon and in conformity with information furnished in writing to the Company by you specifically for use in connection with the preparation of the Registration Statement or the Prospectus (or any supplement thereto). (c) The terms which follow, when used in this Agreement, shall have the meanings indicated. The term "Effective Date" shall mean the later of (i) each date that the Registration Statement and any post-effective amendment or amendments thereto became or become effective or (ii) the time and date of the filing of the Company's most recent Annual Report on Form 10-K. "Execution Time" shall mean the date and time that this Agreement is executed and delivered by the parties hereto. "Basic Prospectus" shall mean the form of basic prospectus relating to the Notes contained in the Registration Statement at the Effective Date (unless such basic prospectus has been amended by the Company subsequent to the Effective Date, in which case "Basic Prospectus" shall mean the form of basic prospectus as so amended). "Prospectus" shall mean the Basic Prospectus as supplemented by the Prospectus Supplement and as it may be further amended or supplemented at the particular time referred to. "Registration Statement" shall mean the registration statement referred to in paragraph (a) above, including incorporated documents, exhibits and financial statements, as it may be amended at the particular time referred to. "Rule 415" and "Rule 424" refer to such rules under the Act. Any reference herein to the Registration Statement, the Basic Prospectus, the Prospectus Supplement or the Prospectus shall be deemed to refer to and include the documents incorporated by reference therein pursuant to Item 12 of Form S-3 which were filed under the Exchange Act on or before the Effective Date of the Registration Statement or the issue date of the Basic Prospectus, the Prospectus Supplement or the Prospectus, as the case may be; and any reference herein to the terms "amend", "amended", "amendment" or "supplement" with respect to the Registration Statement, the Basic Prospectus, the Prospectus Supplement or the Prospectus shall be deemed to refer to and include the filing of any document under the Exchange Act after the Effective Date of the Registration Statement or the issue date of the Basic Prospectus, the Prospectus Supplement or the Prospectus, as the case may be, deemed to be incorporated therein by reference. (d) Neither the Company nor any of its Subsidiaries (as hereinafter defined) has sustained, since the date of the latest audited financial statements included or incorporated by reference in the Registration Statement and the Prospectus, any 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, which has had or is reasonably likely to have a material adverse effect on the financial position, stockholders' equity or results of operations of the Company and its 3 4 Subsidiaries taken as a whole, otherwise than as set forth or contemplated in the Registration Statement and the Prospectus; and, since the respective dates as of which information is given in the Registration Statement and the Prospectus, there has not been any change in the capital stock (other than pursuant to any stock purchase, dividend reinvestment, savings, bonus, incentive, or similar plan, or conversions of convertible securities into common stock) or long-term debt (other than normal amortization of debt premium and discount, bank or finance company borrowings and repayments in the ordinary course, or additional issuances or repurchases of commercial paper) of the Company or its Subsidiaries (except as may relate to (i) a trust fund relating to certain public financing for The Mount Holly Water Company relating to its Mansfield Project, and (ii) debenture payments that may be required pursuant to the indenture relating to the 6 3/4% Convertible Subordinated Debentures of E'town Corporation on the death of a holder) or any material adverse change, or any 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 and its Subsidiaries taken as a whole, otherwise than as set forth or contemplated in the Registration Statement and the Prospectus. (e) Each of Elizabethtown Water Company, The Mount Holly Water Company, E'town Properties, Inc., Applied Water Management, Inc., Liberty Water Company and Edison Water Company (collectively the "Subsidiaries") and the Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of the jurisdiction of its incorporation, with power and authority (corporate and other) to own its properties and conduct its business as described in the Prospectus and is duly qualified to do business in each jurisdiction in which it owns or leases real property or in which the conduct of its business requires such qualification except where the failure to be so qualified, considering all such cases in the aggregate, does not involve a material risk to the business, properties, financial position or results of operations of the Company and its Subsidiaries taken as a whole; and all of the outstanding shares of capital stock of each of the Subsidiaries have been duly authorized and validly issued, are fully paid and nonassessable and are owned beneficially by the Company subject to no security interest, other encumbrance or adverse claim. (f) The creation, issuance and sale of the Notes have been duly and validly authorized by the Company and, when issued and authenticated in accordance with the provisions of the Indenture and delivered and paid for by the purchasers thereof, the Notes will constitute valid and legally binding obligations of the Company entitled to the benefits provided by the Indenture equally and ratably with the securities outstanding thereunder; this Agreement and the Indenture have been duly authorized, executed and delivered by the Company and constitute valid and legally binding instruments, enforceable in accordance with their terms, subject, as to enforcement, to bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting the enforcement of creditors' rights generally, to general equitable principles (regardless of whether such enforceability is considered in a proceeding in equity or at law) and to an implied covenant of good faith, reasonableness and fair 4 5 dealing; and the Notes and the Indenture conform in all material respects to the descriptions thereof in the Registration Statement and the Prospectus. (g) The issue and sale of the Notes and the compliance by the Company with all of the provisions of the Notes, the Indenture, this Agreement and any Terms Agreement, and the consummation of the transactions herein and therein contemplated will not conflict with or result in a breach of any of the terms or provisions of, or constitute a default under, 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 (except that, for purposes of this representation and warranty, compliance with any financial covenant requiring an arithmetic computation (not determinable at the Execution Time) in respect of any Notes shall be measured at the time of the establishment of the terms of such Notes), nor will such action result in any violation of the provisions of the Company's Certificate of Incorporation, as amended, or the Bylaws 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 or assets; and no consent, approval, authorization, order, registration or qualification of or with any such court or governmental agency or body is required for the issue and sale of the Notes or the consummation by the Company of the other transactions contemplated by this Agreement or any Terms Agreement or the Indenture except such as have been obtained prior to the Execution Time under the Act and the Trust Indenture Act and such consents, approvals, authorizations, registrations or qualifications as may be required under state securities or Blue Sky laws in connection with the public offering of the Notes. (h) Other than as set forth or contemplated in the Prospectus, there are no legal or governmental proceedings pending to which the Company or any of its Subsidiaries is a party or of which any property of the Company or any of its Subsidiaries is the subject which, if determined adversely to the Company or any of its Subsidiaries, would individually or in the aggregate have a material adverse effect on the financial position, stockholders' equity or results of operations of the Company and its Subsidiaries taken as a whole; and, to the best of the Company's knowledge, no such proceedings are threatened or contemplated by governmental authorities or threatened by others. (i) There are no contracts or documents of the Company or any of its Subsidiaries that are required to be described in the Registration Statement or the Prospectus or to be filed as exhibits to the Registration Statement by the Act or by the rules and regulations thereunder that have not been so described or filed. (j) The Company is not in violation of any of its organizational documents or in default in the performance or observance of any material obligation, agreement, covenant or condition contained in any indenture, mortgage, deed of trust, loan agreement, lease or other agreement 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. 5 6 (k) The Company is not, and, after giving effect to the offering and sale of the Securities, will not be an "investment company" or an entity "controlled" by an "investment company," as such terms are defined in the Investment Company Act of 1940, as amended. 2. Appointment of Agents; Solicitation by the Agent of Offers to Purchase; Sales of Notes to a Purchaser. (a) Subject to the terms and conditions set forth herein, the Company hereby authorizes each of the Agents to act as its agent to solicit offers for the purchase of all or part of the Notes from the Company. On the basis of the representations and warranties, and subject to the terms and conditions set forth herein, each Agent agrees, as agent of the Company, to use its reasonable best efforts to solicit offers to purchase the Notes from the Company upon the terms and conditions set forth in the Prospectus (and any supplement thereto) and in the Procedures. The Company reserves the right, in its sole discretion, to reject any offer to purchase Notes, in whole or in part. In addition, the Company reserves the right, in its sole discretion, to instruct the Agents to suspend at any time, for any period of time or permanently, the solicitation of offers to purchase the Notes. Upon receipt of instructions from the Company, the Agents will forthwith suspend solicitations of offers to purchase Notes from the Company until such time as the Company has advised them that such solicitation may be resumed. The Company agrees to pay each Agent a commission on the Closing Date with respect to each sale of Notes by the Company as a result of a solicitation made by such Agent pursuant to this subsection, in an amount equal to that percentage specified in Schedule I hereto of the aggregate principal amount of the Notes sold by the Company. Such commission shall be payable as specified in the Procedures. Subject to the provisions of this Section 2 and to the Procedures, offers for the purchase of Notes may be solicited by the Agents as agents for the Company at such times and in such amounts as the Agents deem advisable. The Company may from time to time offer Notes for sale otherwise than through an Agent; provided, however, that so long as this Agreement shall be in effect the Company shall not solicit or accept offers to purchase Notes through any agent other than the Agents unless (I) such agents have entered into a Distribution Agreement with the Company providing for the sale of Notes on terms and conditions substantially similar to those contained herein, and (ii) such solicitation or acceptance is on terms with respect to commissions substantially similar to those set forth in Exhibit A hereto and the Company shall give the Agents reasonable notice of the appointment of such agent for the purpose of soliciting the Notes. (b) Subject to the terms and conditions stated herein, whenever the Company and you determine that the Company shall sell Notes directly to you as Purchaser, each such sale of Notes shall be made in accordance with the terms of this Agreement and, unless otherwise agreed by the Company and the Purchaser, any supplemental agreement relating thereto between the Company and the Purchaser. Each such supplemental agreement (which shall be substantially in the form of Exhibit B hereto) is herein referred to as a "Terms Agreement". The Purchaser's commitment to purchase Notes pursuant to any Terms Agreement shall be deemed to have been made on the basis of the 6 7 representations and warranties of the Company herein contained and shall be subject to the terms and conditions herein set forth. Each Terms Agreement shall describe the Notes to be purchased by the Purchaser pursuant thereto, specify the principal amount of such Notes, the price to be paid to the Company for such Notes, the rate at which interest will be paid on the Notes, the Closing Date for such Notes, the place of delivery of the Notes and payment therefor, the method of payment and any modification of the requirements for the delivery of the opinions of counsel, the certificates from the Company or its officers, and the letter from the Company's independent auditors, pursuant to Section 6(b). Such Terms Agreement shall also specify the period of time referred to in Section 4(m). Delivery of the certificates for Notes sold to the Purchaser pursuant to any Terms Agreement shall be made as agreed to between the Company and the Purchaser as set forth in the respective Terms Agreement, not later than the Closing Date set forth in such Terms Agreement, against payment of funds to the Company in the net amount due to the Company for such Notes by the method and in the form set forth in the respective Terms Agreement. (c) The Agents shall not have any obligation to purchase Notes from the Company as principal. However, absent an agreement between an Agent and the Company that such Agent shall be acting solely as an agent for the Company, such Agent shall be deemed to be acting as principal in connection with any offering of Notes by the Company through such Agent. Accordingly, the Agents, individually or in a syndicate, may agree from time to time to purchase Notes from the Company as principal for resale to investors and other purchasers determined by such Agents. Any purchase of Notes from the Company by an Agent as principal shall be made in accordance with this Agreement, including the Administrative Procedures attached hereto. 3. Offering and Sale of Notes. The Agents and the Company agree to perform the respective duties and obligations specifically provided to be performed by them in the Procedures. 4. Agreements. The Company agrees with you that: (a) Prior to the termination of the offering of the Notes, the Company will not file any amendment of the Registration Statement or supplement to the Prospectus (except for (i) periodic or current reports filed under the Exchange Act, (ii) a Pricing Supplement or (iii) a supplement relating to an offering of Securities other than the Notes) unless the Company has furnished you a copy for your review prior to filing and given you a reasonable opportunity to comment on any such proposed amendment or supplement. Subject to the foregoing sentence, the Company will cause each supplement to the Prospectus to be filed with the Commission pursuant to the applicable paragraph of Rule 424 within the time period prescribed. The Company will promptly advise you (i) when the Prospectus, and any supplement thereto, shall have been filed with the Commission pursuant to Rule 424, (ii) when, prior to the termination of the offering of the Notes, any amendment of the Registration Statement shall have been filed or become effective, (iii) of any request by the Commission for any amendment of the Registration 7 8 Statement or supplement to the Prospectus or for any additional information, (iv) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or the institution or threatening of any proceeding for that purpose and (v) of the receipt by the Company of any notification with respect to the suspension of the qualification of the Notes for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose. The Company will use its best efforts to prevent the issuance of any such stop order and, if issued, to obtain as soon as possible the withdrawal thereof. (b) If, at any time when a prospectus relating to the Notes is required to be delivered under the Act, any event occurs as a result of which the Prospectus as then supplemented would include an untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, or if it shall be necessary to amend the Registration Statement or to supplement the Prospectus to comply with the Act or the Exchange Act or the respective rules thereunder, the Company promptly will (i) notify you to suspend solicitation of offers to purchase Notes (and, if so notified by the Company, you shall forthwith suspend such solicitation and cease using the Prospectus as then supplemented), (ii) prepare and file with the Commission, subject to the first sentence of paragraph (a) of this Section 4, an amendment or supplement which will correct such statement or omission or effect such compliance and (iii) supply any supplemented Prospectus to you in such quantities as you may reasonably request. If such amendment or supplement, and any documents, certificates and opinions furnished to you pursuant to paragraph (g) of this Section 4 in connection with the preparation of filing of such amendment or supplement are satisfactory in all respects to you, you will, upon the filing of such amendment or supplement with the Commission and upon the effectiveness of an amendment to the Registration Statement, if such an amendment is required, resume your obligation to solicit offers to purchase Notes hereunder. (c) During the term of this Agreement, the Company will timely file all documents required to be filed with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act. In addition, on the date (or as soon as practicable thereafter) on which the Company makes any announcement to the general public concerning earnings or concerning any other event which is required to be described, or which the Company proposes to describe, in a document filed pursuant to the Exchange Act, the Company will furnish to you the information contained in such announcement. The Company will notify you of any downgrading in the rating of the Notes or any other debt securities of the Company or its Subsidiaries, or any public announcement of placement of the Notes or any other debt securities of the Company on what is commonly termed a "watch list" for possible downgrading, by any "nationally recognized statistical rating organization" (as defined for purposes of Rule 436(g) under the Act), promptly after the Company learns of any such downgrading or public announcement. (d) As soon as practicable, the Company will make generally available to its security holders and to you an earnings statement or statements of the Company and its 8 9 Subsidiaries which will satisfy the provisions of Section 11(a) of the Act and Rule 158 under the Act. (e) The Company will furnish to you and your counsel, without charge (except as otherwise provided herein), a reasonable number of copies of the Registration Statement (including exhibits thereto) and, so long as delivery of a prospectus may be required by the Act, as many copies of the Prospectus and any supplement thereto as you may reasonably request. (f) The Company will arrange for the qualification of the Notes for sale under the laws of such jurisdictions as you may designate, will maintain such qualifications in effect so long as required for the distribution of the Notes, and upon your request will arrange for the determination of the legality of the Notes for purchase by institutional investors. (g) During the term of this Agreement, the Company shall furnish to you (i) copies of all annual, quarterly and other reports furnished to stockholders, (ii) copies of all annual, quarterly and current reports (without exhibits but including documents incorporated by reference therein) of the Company filed with the Commission under the Exchange Act and (iii) such other information concerning the Company as you may reasonably request from time to time. (h) The Company shall, whether or not any sale of the Notes is consummated, (i) pay all expenses incident to the performance of its obligations under this Agreement, including, but not limited to, the fees and disbursements of its accountants and counsel, the cost of printing or other production and delivery of the Registration Statement, the Prospectus, all amendments thereof and supplements thereto, the Indenture, this Agreement and all other documents relating to the offering, the cost of preparing, printing, packaging and delivering the Notes, the fees and disbursements, including fees of counsel, incurred pursuant to Section 4(f), the fees and disbursements of the Indenture Trustee and the fees of any ratings agency that rates the Notes, (ii) reimburse you on a quarterly basis for all reasonable out-of-pocket expenses incurred by you in connection with this Agreement (including, but not limited to, advertising and promotional expenses), and (iii) pay the reasonable fees and expenses of your counsel incurred in connection with this Agreement. (i) Each acceptance by the Company of an offer to purchase Notes will be deemed to be a new making to you of the representations and warranties of the Company in Section 1 (except that such representations and warranties shall be deemed to relate solely to the Registration Statement as then amended and to the Prospectus as then amended and supplemented to relate to such Notes). Each such acceptance by the Company of an offer for the purchase of Notes shall be deemed to constitute an additional representation, warranty and agreement by the Company that, as of the settlement date for the sale of such Notes, after giving effect to the issuance of such Notes, of any other Notes to be issued on or prior to such settlement date and of any other Securities to be issued and sold by the Company on or prior to such settlement date, the 9 10 aggregate amount of Securities (including any Notes) which have been issued and sold by the Company will not exceed the amount of Securities registered pursuant to the Registration Statement of the Company. The Company will inform you promptly upon your request of the aggregate amount of Securities registered under the Registration Statement which remain unsold. (j) Except as otherwise provided in subsection (n) of this Section 4, each time that the Registration Statement or the Prospectus is amended or supplemented (other than by a Pricing Supplement) the Company will deliver or cause to be delivered promptly to you a certificate of the Company, signed by any of the Chairman of the Board, the President, any Vice President having responsibilities for financial matters or the Controller or Treasurer of the Company, dated the date of the effectiveness of such amendment or the date of the filing of such supplement, in form reasonably satisfactory to you, of the same tenor as the certificate referred to in Section 5(d) but modified to relate to the last day of the fiscal quarter for which financial statements of the Company were last filed with the Commission and to the Registration Statement and the Prospectus as amended and supplemented to the time of the effectiveness of such amendment or the filing of such supplement. (k) Except as otherwise provided in subsection (n) of this Section 4, each time that the Registration Statement or the Prospectus is amended or supplemented (other than by a Pricing Supplement), the Company shall furnish or cause to be furnished promptly to you a written opinions of Walter M. Braswell, Secretary of, and counsel to, the Company, and Winthrop, Stimson, Putnam & Roberts ("WSPR"), special New York counsel for the Company, satisfactory to you, dated the date of the effectiveness of such amendment or the date of the filing of such supplement, in form satisfactory to you, of the same tenor as the opinion referred to in Section 5(b), but modified to relate to the Registration Statement and the Prospectus as amended and supplemented to the time of the effectiveness of such amendment or the filing of such supplement or, in lieu of such opinion, such counsel may furnish you with a letter to the effect that you may rely on such counsel's last opinion to the same extent as though it were dated the date of such letter authorizing reliance (except that statements in such last opinion will be deemed to relate to the Registration Statement and the Prospectus as amended and supplemented to the time of the effectiveness of such amendment or the filing of such supplement). (l) Except as otherwise provided in subsection (n) of this Section 4, each time that the Registration Statement or the Prospectus is amended or supplemented (other than by a Pricing Supplement) to set forth amended or supplemental financial information (derived from the accounting records of the Company subject to the internal controls of the Company's accounting system or derived directly from such records by computation), the Company shall cause its independent auditors promptly to furnish you a letter, dated the date of the effectiveness of such amendment or the date of the filing of such supplement, in form satisfactory to each of you, of the same tenor as the letter referred to in Section 5(e) with such changes as may be necessary to reflect the amended and supplemental financial information included or incorporated by reference in the 10 11 Registration Statement and the Prospectus, as amended or supplemented to the date of such letter. (m) During the period, if any, specified in any Terms Agreement, the Company shall not, without the prior consent of the Purchaser thereunder, issue or announce the proposed issuance of any of its debt securities, including the Notes, with maturities or other terms substantially similar to the Notes being purchased pursuant to such Terms Agreement. (n) The Company shall not be required to comply with the provisions of subsections (j), (k) and (l) of this Section 4 during any period (which may occur from time to time during the term of this Agreement) for which the Company has instructed the Agents to suspend the solicitation of offers to purchase Notes; provided that, during any such period, any Purchaser does not then hold any Notes purchased pursuant to a Terms Agreement. Whenever the Company has instructed the Agents to suspend the solicitation of offers to purchase Notes for any such period, however, prior to instructing the Agents to resume the solicitation of offers to purchase Notes or prior to entering into any Terms Agreement, the Company shall be required to comply with the provisions of subsections (j), (k) and (l) of this Section 4, but only to the extent of delivering or causing to be delivered the most recent certificate, opinion or letter, as the case may be, which would have otherwise been required under each such subsection unless the Agents otherwise reasonably request that such documents in respect of prior periods be delivered. (o) As soon as practicable after the Execution Time, the Company will make all recordings, registrations and filings necessary to perfect and preserve the rights created under the Supplemental Indenture. 5. Conditions to the Obligations of the Agents. The obligations of the Agents to solicit offers to purchase the Notes shall be subject to (i) the accuracy of the representations and warranties on the part of the Company contained herein as of the Execution Time, on the Effective Date and when any supplement to the Prospectus is filed with the Commission, (ii) the accuracy of the statements of the Company made in any certificates pursuant to the provisions hereof, (iii) the performance by the Company of its obligations hereunder and (iv) the following additional conditions: (a) If filing of the Prospectus, or any supplement thereto, is required pursuant to Rule 424, the Prospectus, and any such supplement, shall have been filed in the manner and within the time period required by Rule 424; and no stop order suspending the effectiveness of the Registration Statement shall have been issued and no proceedings for that purpose shall have been instituted or threatened. (b) The Company shall have furnished to the Agents the opinions of Walter M. Braswell, Secretary of, and counsel to, the Company, and of WSPR, special New York counsel for the Company, dated the Execution Time, to the effect that: 11 12 (i) (To be delivered by Walter M. Braswell) The Company and each of its Subsidiaries has been duly incorporated and is validly existing as a corporation in good standing under the laws of the jurisdiction of its incorporation, with power and authority (corporate and governmental) to own its properties and conduct its business as described in the Prospectus, as amended or supplemented, and is duly qualified to do business in each jurisdiction in which it owns or leases real property or in which the conduct of its business requires such qualification except where the failure to be so qualified, considering all such cases in the aggregate, does not involve a material risk to the business, properties, financial position or results of operations of the Company, and all of the outstanding shares of capital stock of each of the Subsidiaries have been duly authorized and validly issued, are fully paid and non-assessable and are owned of record and beneficially by the Company subject to no security interest, other encumbrance, or adverse claim. (ii) (To be delivered by Walter M. Braswell) Other than as set forth or contemplated in the Prospectus, 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 which, if determined adversely to the Company, would individually or in the aggregate have a material adverse effect on the consolidated financial position, stockholders' equity or results of operations of the Company and its Subsidiaries; and, to the best of such counsel's knowledge, no such proceedings are threatened or contemplated by governmental authorities or threatened by others. (iii) (To be delivered by Walter M. Braswell) This Agreement has been duly authorized, executed and delivered by the Company (iv) (To be delivered by WSPR) This Agreement is legally binding instrument, enforceable in accordance with its terms, subject, as to enforcement, to bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting the enforcement of creditors' rights generally, to general equitable principles (regardless of whether such enforceability is considered in a proceeding in equity or at law) and to an implied covenant of good faith, reasonableness and fair dealing. (v) (To be delivered by Walter M. Braswell) The Indenture has been duly authorized, executed and delivered by the Company (vi) (To be delivered by WSPR) The Indenture is a legally binding instrument, enforceable in accordance with its terms, subject, as to enforcement, to bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting the enforcement of creditors' rights generally, to general equitable principles (regardless of whether such enforceability is considered in a proceeding in equity or at law) and to an implied 12 13 covenant of good faith , reasonableness and fair dealing; and the Indenture has been duly qualified under the Trust Indenture Act. (vii) (To be delivered by Walter M. Braswell) The creation, issuance and sale of the Notes have been duly and validly authorized by the Company and, when issued in accordance with the authorizing resolutions of the Board of Directors of the Company and in accordance with any applicable orders of regulatory bodies and, when maturity dates, interest rates and other similar terms have been inserted therein and such Notes have been executed and authenticated as specified in the Indenture and delivered against payment of the consideration therefor determined in accordance with this Agreement, such notes will be valid obligations of the Company. (viii) (To be delivered by WSPR) When issued in accordance with the authorizing resolutions of the Board of Directors of the Company and in accordance with any applicable orders of regulatory bodies and, when maturity dates, interest rates and other similar terms have been inserted therein and such Notes have been executed and authenticated as specified in the Indenture and delivered against payment of the consideration therefor determined in accordance with this Agreement such Notes will constitute legally binding obligations of the Company enforceable in accordance with their terms, subject, as to enforcement, to bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium, and other similar laws relating to or affecting the enforcement of creditors' rights generally, to general equitable principles (regardless of whether such enforceability is considered in a proceeding in equity or at law) and to an implied covenant of good faith, reasonableness and fair dealing, and will be entitled to the benefit provided by the Indenture equally and ratably with the securities outstanding thereunder; and the Notes and Indenture conform as to legal matters in all material respects to the descriptions thereof contained in the Registration Statement and the Prospectus. (ix) (To be delivered by both Walter M. Braswell and WSPR, as noted) The issue and sale of the Notes and the compliance by the Company with all of the provisions of the Notes, the Indenture and this Agreement and the consummation of the transactions therein and herein contemplated (except as to compliance with any financial covenant requiring an arithmetic computation not determinable at the Execution Time as to which such counsel need express no opinion) will not conflict with or result in a breach of any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust, loan agreement or material other agreement or instrument known, as of the date of such opinion, to such counsel 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 any violation of the provisions of the Company's Certificate of Incorporation, as amended, or the Bylaws of the Company or any statute or any order, rule or regulation known, as of the date of 13 14 such opinion, to such counsel of any (To be delivered by Walter M. Braswell) [New Jersey] (To be delivered by WSPR) [New York or Federal]court or governmental agency or body having jurisdiction over the Company or any of its properties. (x) (To be delivered by both Walter M. Braswell and WSPR, as noted) No consent, approval, authorization, order, registration or qualification of or with any (To be delivered by Walter M. Braswell) [New Jersey] (To be delivered by WSPR) [New York or Federal] court or governmental agency or body having jurisdiction over the Company or any of its properties is required for the issue and sale of the Notes or the consummation by the Company of the other transactions contemplated by this Agreement, or the Indenture, except such as have been obtained under the Act and the Trust Indenture Act and such consents, approvals, authorizations, registrations or qualifications as may be required under state securities or Blue Sky laws in connection with the public offering of the Notes. (xi) (To be delivered by WSPR) The Registration Statement, at the Effective Date, and the Prospectus, as of the date of such opinion (except as to the financial statements and other financial or statistical data contained or incorporated by reference therein and except as to any information contained in any Prospectus Supplement relating to DTC or DTC's book-entry system as to which such counsel need express no opinion) comply as to form in all material respects with all applicable requirements of the Act, and, with respect to the documents or portions thereof filed with the Commission pursuant to the Exchange Act and incorporated by reference in the Prospectus pursuant to Item 12 of Form S-3, the Exchange Act and the applicable instructions, rules and regulations of the Commission thereunder; on the basis of information received from the Commission, at the date of such opinion, the Registration Statement has become effective under the Act, and, to the best knowledge of such counsel, no proceedings for a stop order with respect thereto have been instituted or are pending or threatened under Section 8 of the Act. (xii) (To be delivered by both Walter M. Braswell and WSPR, as noted) Based on such counsel's participation in the preparation of the Registration Statement (but such opinion may state that such counsel did not independently check or verify the correctness of the statements made by the Company or factual information included in the Registration Statement and Prospectus, and thereby may assume the correctness thereof, except insofar as such statements or information relate to such counsel or are stated in the Registration Statement or Prospectus as having been made on their authority as experts), no facts have come to the attention of such counsel to cause them to believe, and such counsel have no reason to believe, that the Registration Statement, at the Effective Date, contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading (except as to the financial statements or other financial or statistical 14 15 data Statement and the Prospectus and except as to any information contained in any Prospectus Supplement relating to DTC or DTC's book-entry system), or that the Prospectus, as of the date of such opinion, includes an untrue statement of a material fact or omits to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading (except as to the financial statements or other financial or statistical data contained in or incorporated by reference in the Registration Statement and the Prospectus and except as to any information contained in any Prospectus Supplement relating to DTC or DTC's book-entry system). (xiii) The Company is not subject to regulation under the Public Utility Holding Company Act of 1935. (xiv) As to factual matters (including relating to the Company's financial condition) included in said opinion, such counsel may rely upon certificates of public officials as of a recent date, the warranties and representations of the Company set forth in this Agreement, and certificates of the Company made pursuant to the provisions of this Agreement. (c) The Agents shall have received from McCarter & English, LLP, counsel for the Agents, an opinion, dated the Execution Time, with respect to the issuance and sale of the Notes, the Indenture, the Registration Statement, the Prospectus (together with any supplement thereto) and other related matters as the Agents may reasonably require, and the Company shall have furnished to such counsel such documents as they reasonably request for the purpose of enabling them to pass upon such matters. (d) The Company shall have furnished to the Agents a certificate of the Company, signed by any of the Chairman of the Board, the President, any Vice President having responsibilities for financial matters or the Controller or Treasurer of the Company, dated the Execution Time, to the effect that the signer of such certificate has carefully examined the Registration Statement, the Prospectus, any supplement to the Prospectus and this Agreement and that: (i) The representations and warranties of the Company in this Agreement and the Indenture are true and correct in all material respects and the Company has complied with all the agreements and satisfied all the conditions on its part to be performed or satisfied as a condition to the obligation of the Agents to solicit offers to purchase the Notes. (ii) No stop order suspending the effectiveness of the Registration Statement has been issued and no proceedings for that purpose have been instituted or, to the Company's knowledge, threatened. 15 16 (iii) (1) Neither the Company nor any of its Subsidiaries has sustained since the date of the latest audited financial statements included or incorporated by reference in the Registration Statement and the Prospectus, any 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, which has had or is reasonably likely to have a material adverse effect on the financial position, stockholders' equity or results of operations of the Company and its Subsidiaries taken as a whole, otherwise than as set forth or contemplated in the Registration Statement and the Prospectus and (2) since the respective dates as of which information is given in the Registration Statement and the Prospectus, there has not been any change in the capital stock (other than pursuant to any stock purchase, dividend reinvestment, savings, bonus, incentive, or similar plan, conversions of convertible securities into common stock) or long- term debt (other than normal amortization of debt premium and discount, bank or finance company borrowings and repayments in the ordinary course, or additional issuances or repurchases of commercial paper) of the Company or its Subsidiaries (except as may relate to (i) a trust fund relating to certain public financing for The Mount Holly Water Company relating to its Mansfield Project, and (ii) debenture payments that may be required pursuant to the indenture relating to the 6 3/4% Convertible Subordinated Debentures of E'town Corporation on the death of a holder) or any material adverse change, or any 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 and its subsidiaries taken as a whole, otherwise than as set forth or contemplated in the Registration Statement and the Prospectus. (e) At the Execution Time, Deloitte & Touche LLP shall have furnished to the Agents a letter, dated as of the Execution Time, in form and substance satisfactory to the Agents, stating in effect that: (i) They are independent auditors with respect to the Company within the meaning of the Act and the applicable published rules and regulations thereunder. (ii) In their opinion the financial statements and schedules of the Company included in the Company's Annual Report on Form 10-K for the year ended December 31, 1997, which are incorporated by reference in the Prospectus and examined by such firm, comply as to form in all material respects with the applicable accounting requirements of the Act and the Exchange Act, and the respective published rules and regulations thereunder. (iii) On the basis of procedures (but not an audit in accordance with generally accepted auditing standards) consisting of: (A) reading the Annual Report on Form 10-K which contains audited consolidated financial statements (the "Audited Amounts"), (B) performing the procedures specified by the 16 17 American Institute of Certified Public Accountants for a review of interim financial information as described in SAS No. 71, Interim Financial Information, on the unaudited condensed interim financial statements of the Company included in the Registration Statement and the Prospectus (the "Unaudited Statements"), and reading any more recent unaudited interim financial data of the Company, (C) reading the minutes of meetings of the shareholders, Board of Directors and Committees of the Board of Directors of the Company held during the period from December 31, 1997 as set forth in the minutes book through a specified date not more than five business days prior to the date of such letter; and (D) making inquiries of certain officials of the Company who have responsibility for financial and accounting matters regarding the specific items for which representations are requested in Sections 5(e)(iii)(1) to 5(e)(iii)(4), nothing has come to their attention as a result of the foregoing procedures that caused them to believe that: (1) the Unaudited Statements incorporated by reference in the Registration Statement and the Prospectus do not comply in form in all material respects with the applicable accounting requirements and with the published rules and regulations of the Commission with respect to financial statements included or incorporated in Quarterly Reports on Form 10-Q under the Exchange Act; or that any material modifications should be made to said Unaudited Statements for them to be in conformity with generally accepted accounting principles; (2) the Audited Amounts were not derived from the financial statements of the Company; (3) at the date of the latest available monthly consolidated balance sheet of the Company read by such accountants, there was any change in the capital stock (other than pursuant to any stock purchase, dividend reinvestment, savings, bonus, incentive, or similar plan, or conversions of convertible securities into common stock) or long-term debt (other than normal amortization of debt premium and discount, bank or finance company borrowings and repayments in the ordinary course, or additional issuances or repurchases of commercial paper) of the Company or its Subsidiaries (except as may relate to (i) a trust fund relating to certain public financing for The Mount Holly Water Company relating to its Mansfield Project, and (ii) debenture payments that may be required pursuant to the indenture relating to the 6 3/4% Convertible Subordinated Debentures of E'town Corporation on the death of a holder), or any decrease in the total shareholders' equity, as compared with amounts shown on the latest balance sheet included in the Audited Statements, except, in all instances, for the above-referenced changes or changes or decreases which are described in such letter; or (4) for the period subsequent to the date of the Audited Statements to the date of the latest available monthly consolidated income 17 18 statement of the Company read by such accountants, there were any decreases, as compared with the corresponding period of the previous year, in total operating revenues or net income of the Company, except, in all instances, for changes or decreases which are described in such letter. (iv) They have compared certain dollar amounts (or percentages derived from such dollar amounts) (A) which appear in the Prospectus under the caption "Ratio of Earnings to Fixed Charges", (B) which appear or are incorporated by reference in the Company's Annual Report on Form 10-K incorporated by reference in the Registration Statement and the Prospectus under the caption "Management's Discussion and Analysis of Financial Condition and Results of Operations" or (C) which appear in the most recent of the Company's Quarterly Reports on Form 10-Q incorporated by reference in the Registration Statement and the Prospectus under the captions "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Ratio of Earnings to Fixed Charges" (in each case to the extent that such dollar amounts, percentages and other financial information are derived from the accounting records of the Company subject to the internal controls of the Company's accounting system or are derived directly from such records by computation) to the accounting records of the Company or schedules prepared from data in such records and have found such dollar amounts, percentages and other financial information to be in agreement. References to the Prospectus in this paragraph (e) include any supplement thereto at the date of the letter. (f) The Agents shall have received copies of the letters of Representations between the Company, the Indenture Trustee and DTC, satisfactory to each of you, summarizing DTC's agreement to hold, safekeep and effect book-entry transfers of the Notes. (g) Prior to the Execution Time, the Company shall have furnished to the Agents such further information, documents, certificates and opinions of counsel as the Agents may reasonably request. If any of the conditions specified in this Section 5 shall not have been fulfilled in all material respects when and as provided in this Agreement, or if any of the opinions and certificates mentioned above or elsewhere in this Agreement shall not be in all material respects reasonably satisfactory in form and substance to the Agents and counsel for the Agents this Agreement and all obligations of the Agents hereunder may be canceled at any time by the Agents. Notice of such cancellation shall be given to the Company in writing or by telephone or telegraph confirmed in writing. The documents required to be delivered by this Section 5 at the Execution Time shall be delivered at the office of WSPR, One Battery Park Plaza, New York, NY 10004-1490. 18 19 6. Conditions to the Obligations of the Purchaser. The obligations of the Purchaser to purchase any Notes will be subject to the accuracy of the representations and warranties on the part of the Company herein as of the date of any related Terms Agreement and as of the Closing Date for such Notes, to the performance and observance by the Company of all covenants and agreements herein contained on its part to be performed and observed and to the following additional conditions precedent: (a) No stop order suspending the effectiveness of the Registration Statement shall have been issued and no proceedings for the purpose of suspending the effectiveness of the Registration Statement shall have been instituted or threatened. (b) If specified by any related Terms Agreement and except to the extent modified by such Terms Agreement, the Purchaser shall have received, appropriately updated, (i) a certificate of the Company, dated as of the Closing Date, to the effect set forth in Section 5(d), (ii) the opinions of Walter M. Braswell, Secretary of, and counsel to, the Company, and of WSPR, special New York counsel for the Company, dated as of the Closing Date, substantially to the effect set forth in Section 5(b), (iii) the opinion of McCarter & English, LLP, counsel for the Purchaser, dated as of the Closing Date, substantially to the effect set forth in Section 5(c) and (iv) the letter of Deloitte & Touche, LLP, independent auditors for the Company, dated as of the Closing Date, substantially to the effect set forth in Section 5(e); provided, however, that references to the Registration Statement and the Prospectus in such certificate, opinions and letter shall be to the Registration Statement and the Prospectus as then amended and supplemented. (c) Prior to the Closing Date, the Company shall have furnished to the Purchaser such further information, certificates and documents as the Purchaser may reasonably request. If any of the conditions specified in this Section 6 shall not have been fulfilled in all material respects when and as provided in this Agreement and any Terms Agreement, or if any of the opinions and certificates mentioned above or elsewhere in this Agreement or such Terms Agreement shall not be in all material respects reasonably satisfactory in form and substance to the Purchaser and its counsel, such Terms Agreement and all obligations of the Purchaser thereunder and with respect to the Notes subject thereto may be canceled at, or any time prior to, the respective Closing Date by the Purchaser. Notice of such cancellation shall be given to the Company in writing or by telephone or telegraph confirmed in writing. 7. Right of Person Who Agreed to Purchase to Refuse to Purchase. The Company agrees that any person who has agreed to purchase and pay for any Note, including a Purchaser, and any person who purchases pursuant to a solicitation by the Agents, shall have the right to refuse to purchase such Note if, at the Closing Date therefor, either (a) any condition set forth in Section 5 or 6, as applicable, shall not be satisfied or (b) subsequent to the agreement to purchase such Note, there shall have occurred (i) any change in or affecting the business or properties of the Company and its Subsidiaries, considered as one enterprise, the effect of which, in the reasonable judgment of such person, has a material adverse effect on the investment quality of such Note or (ii) any event described in paragraphs (ii),(iii), (iv) or (v) of Section 9(b). 19 20 8. Indemnification and Contribution. (a) The Company will indemnify you and hold you harmless against all losses, claims, damages or liabilities, joint or several, to which you may become subject, under the Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in any preliminary prospectus, any preliminary prospectus supplement, the Registration Statement, the Prospectus and any other prospectus relating to the Notes, or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse you for any legal or other expenses reasonably incurred by you in connection with investigating or defending any such action or claim; provided, however, that the Company shall not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in any preliminary prospectus, any preliminary prospectus supplement, the Registration Statement, the Prospectus and any other prospectus relating to the Notes or any such amendment or supplement in reliance upon and in conformity with written information furnished to the Company by you expressly for use in the Prospectus. (b) You will indemnify and hold harmless the Company against any losses, claims, damages or liabilities to which the Company may become subject, under the Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in any preliminary prospectus, any preliminary prospectus supplement, the Registration Statement, the Prospectus and any other prospectus relating to the Notes, or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in any preliminary prospectus, any preliminary prospectus supplement, the Registration Statement, the Prospectus and any other prospectus relating to the Notes, or any amendment or supplement thereto, in reliance upon and in conformity with written information furnished to the Company by you expressly for use therein; and will reimburse the Company for any legal or other expenses reasonably incurred by the Company in connection with investigating or defending any such action or claim. The Company acknowledges that the statements set forth in the last paragraph of the cover page, and under the heading "Plan of Distribution," of the Prospectus Supplement constitute the only information furnished in writing by any of you for inclusion in the documents referred to in the foregoing indemnity, and you confirm that such statements are correct. (c) Promptly after receipt by an indemnified party under this Section 8 of notice of the commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against the indemnifying party under this Section 8, notify 20 21 the indemnifying party in writing of the commencement thereof; but the failure so to notify the indemnifying party (i) will not relieve it from liability under paragraph (a) or (b) above unless and to the extent it did not otherwise learn of such action and such failure results in the forfeiture by the indemnifying party of substantial rights and defenses and (ii) will not, in any event, relieve the indemnifying party from any obligations to any indemnified party other than the indemnification obligation provided in paragraph (a) or (b) above. The indemnifying party shall be entitled to appoint counsel of the indemnifying party's choice at the indemnifying party's expense to represent the indemnified party in any action for which indemnification is sought (in which case the indemnifying party shall not thereafter be responsible for the fees and expenses of any separate counsel retained by the indemnified party or parties except as set forth below); provided, however, that such counsel shall be satisfactory to the indemnified party. Notwithstanding the indemnifying party's election to appoint counsel to represent the indemnified party in an action, the indemnified party shall have the right to employ separate counsel (including local counsel), and the indemnifying party shall bear the reasonable fees, costs and expenses of one such separate counsel for all indemnified parties if (i) the use of counsel chosen by the indemnifying party to represent the indemnified party would present such counsel with a conflict of interest, (ii) the actual or potential defendants in, or targets of, any such action include both the indemnified party and the indemnifying party and the indemnified party shall have reasonably concluded that there may be legal defenses available to it and/or other indemnified parties which are different from or additional to those available to the indemnifying party, (iii) the indemnifying party shall not have employed counsel satisfactory to the indemnified party to represent the indemnified party within a reasonable time after notice of the institution of such action or (iv) the indemnifying party shall authorize the indemnified party to employ separate counsel at the expense of the indemnifying party. (d) If the indemnification provided for in this Section 8 is unavailable to or insufficient to hold harmless an indemnified party under subsection (a) or (b) above in respect of any losses, claims, damages or liabilities (or actions in respect thereof) referred to therein, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities (or actions in respect thereof) in such proportion as is appropriate to reflect the relative benefits received by the Company on the one hand and you on the other in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities (or actions in respect thereof), as well as other equitable considerations, including relative fault. 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 relates to information supplied by the Company on the one hand or you on the other and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company and you agree that it would not be just and equitable if contribution pursuant to this subsection (d) 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 subsection (d). The amount paid or payable by an indemnified party as a result of the losses, claims, damages or liabilities (or actions in respect thereof) referred to above 38 22 in this subsection (d) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. (e) The obligations of the Company under this Section 8 shall be in addition to any liability which the Company may otherwise have and shall extend, upon the same terms and conditions, to each person, if any who controls any of you within the meaning of the Act or the Exchange Act; and the obligations of you under this Section 8 shall be in addition to any liability which you may otherwise have and shall extend, upon the same terms and conditions, to each officer and director of the Company and to each person, if any, who controls the Company within the meaning of the Act or the Exchange Act. 9. Termination. (a) This Agreement will continue in effect until terminated as provided in this Section 9. This Agreement may be terminated by either the Company as to you or by you as to the Company, by giving written notice of such termination to you or the Company, as the case may be. This Agreement shall so terminate at the close of business on the first business day following the receipt of such notice by the party to whom such notice is given. In the event of such termination, no party shall have any liability to the other party hereto, except as provided in the third paragraph of Section 2(a), Section 4(h), Section 8 and Section 10. (b) Each Term Agreement shall be subject to termination in the absolute discretion of the Purchaser, by notice given to the Company prior to delivery of any payment for Notes to be purchased thereunder, if prior to such time (i) the Purchaser shall exercise its right to refuse to purchase the Notes which are the subject of such Terms Agreement in accordance with the provisions of Section 7, or (ii) there shall have occurred any outbreak or escalation of hostilities or other national or international calamity or crisis, the effect of which shall be such as to make it, in the reasonable judgment of the Purchaser, impractical to market the Notes or enforce contracts for the sale of the Notes, or (iii) trading in any securities of the Company shall have been suspended by the Commission or a national securities exchange, or if trading generally on either the American Stock Exchange or the New York Stock Exchange shall have been suspended, or minimum or maximum prices for trading shall have been fixed, or maximum ranges for prices for securities shall have been required, by either of said exchanges or by order of the Commission or any other governmental authority, or if a banking moratorium shall have been declared by either Federal, new York or New Jersey authorities, or (iv) if the rating assigned by any "nationally recognized statistical rating organization" (as defined for purposes of Rule 436(g) under the Act) to the Notes as of the date of the applicable Terms Agreement shall have been lowered since that date, or (v) the subject matter of any amendment or supplement to the Registration Statement or the Prospectus prepared and issued by the Company, or the exceptions set forth in any letter of Deloitte & Touche LLP furnished pursuant to Section 5(e) hereof, shall have 22 23 made it, in the judgment of the Purchaser, impracticable or inadvisable to market the Notes or enforce contracts for the sale of the Notes. 10. Representations and Indemnities to Survive. The respective agreements, representations, warranties, indemnities and other statements of the Company or its officers and of you set forth in or made pursuant to this Agreement will remain in full force and effect, regardless of any investigation made by or on behalf of you or the Company or any of the directors, officers, employees, agents or controlling persons referred to in Section 8 hereof, and will survive delivery of and payment for the Notes. The provisions of Sections 4(h) and 8 hereof shall survive the termination or cancellation of this Agreement. The provisions of this Agreement (including without limitation Section 7 hereof) applicable to any purchase of a Note for which an agreement to purchase exists prior to the termination hereof shall survive any termination of this Agreement. If at the time of termination of this Agreement any Purchaser shall own any Notes with the intention of selling them, the provisions of Section 4 shall remain in effect until such Notes are sold by the Purchaser. 11. Notices. All communications hereunder will be in writing and effective only on receipt, and, if sent to any of you, will be mailed, delivered or telecopied and confirmed to such of you, at the address specified in Schedule I hereto; or, if sent to the Company, will be mailed, delivered or telecopied and confirmed to it at E'town Corporation, 600 South Avenue, Westfield, NJ 07091-0788 Attention: Mrs. Gail P. Brady 12. Successors. This Agreement will inure to the benefit of and be binding upon the parties hereto and their respective successors and the officers and directors and controlling persons referred to in Section 8 hereof, and no other person will have any right or obligation hereunder. 13. Applicable Law. This Agreement will be governed by and construed in accordance with the laws of the State of New Jersey applicable to contracts made and to be performed within the State of New Jersey. 14. Counterparts. This Agreement may be executed in counterparts, which together shall constitute one and the same instrument. If signed in counterparts, this Agreement shall not become effective unless at least one counterpart hereof shall have been executed and delivered on behalf of each party hereto. 23 24 If the foregoing is in accordance with your understanding of our agreement, please sign and return to us the enclosed duplicate hereof, whereupon this letter and your acceptance shall represent a binding agreement among the Company and you. Very truly yours, E'TOWN CORPORATION By:___________________________ Title: The foregoing Agreement is hereby confirmed and accepted as of the date hereof. A.G. EDWARDS & SONS, INC. By: ______________________________ Title: LEGG MASON WOOD WALKER, INCORPORATED By: ______________________________ Title: 24 25 SCHEDULE I Commissions: The Company agrees to pay the Agent a commission equal to the following percentage of the principal amount of each Note sold by the Agent:
Term Commission Rate ---- ---------- ---- From 1 year to less than 18 months % From 18 months to less than 2 years From 2 years to less than 3 years From 3 years to less than 4 years From 4 years to less than 5 years From 5 years to less than 6 years From 6 years to less than 7 years
Address for Notice to You: Notices to A.G. Edwards & Sons, Inc. shall be directed to it at One North Jefferson, St. Louis, Missouri 63103, Attention: [_________], and to Legg Mason Wood Walker, Incorporated at 100 Light Street, 34th Floor, Baltimore, MD 21202, Attention: [__________]. 26 EXHIBIT A E'town Corporation Medium-Term Notes Administrative Procedures Medium-Term Notes (the " Notes"), are to be offered on a continuing basis by E'town Corporation (the "Company"). A.G. Edwards & Sons, Inc. and Legg Mason Wood Walker, Incorporated, as agents (the "Agents"), have agreed to use their reasonable best efforts to solicit offers to purchase the Notes. The Notes are being sold pursuant to a Distribution Agreement between the Company and the Agents dated _______, 1999 (the "Distribution Agreement") to which these administrative procedures are attached as an exhibit. The Notes will be issued under the Company's Indenture, dated as of _________, 1999 (the "Indenture"), to Summit Bank ("Summit"), as trustee (the "Indenture Trustee"). Summit will act as the paying agent (the "Paying Agent") for the payment of principal and premium, if any, and interest on the Notes and will perform, as the Paying Agent, unless otherwise specified, the other duties specified herein. The Notes will rank equally and ratably with all other unsecured and unsubordinated indebtedness of the Company. The Notes have been registered with the Securities and Exchange Commission (the "Commission") and will bear interest at fixed rates ("Fixed Rate Notes"). Each Note will be represented by either a Global Security (as defined hereinafter) delivered to Summit, as agent for The Depository Trust Company ("DTC"), and recorded in the book-entry system maintained by DTC (a "Book-Entry Note") or a certificate delivered to the holder thereof or a person designated by such holder (a "Certificated Note"). Except as set forth in the Prospectus or in a pricing supplement (as defined in Section 1(c) of the Distribution Agreement), (i) each Note will be initially issued as a Book-Entry Note and (ii) an owner of a Book-Entry Note will not be entitled to receive a certificate representing such Note. The procedures to be followed during, and the specific terms of, the solicitation of offers by the Agents and the sale as a result thereof by the Company are explained below. Book-Entry Notes will be issued in accordance with the administrative procedures set forth in Part I hereof and Certificated Notes will be issued in accordance with the administrative procedures set forth in Part II hereof. Administrative procedures applicable to both Book-Entry Notes and Certificated Notes are set forth in Part III hereof. Administrative responsibilities, document control and record-keeping functions will be handled for the Company by its [Controller and Treasurer]. The Company will promptly advise the Agents and the Indenture Trustee in writing of those persons handling administrative responsibilities with whom the Agents and the Indenture Trustee are to communicate regarding offers to purchase Notes and the details of their delivery. A-1 27 To the extent the procedures set forth below conflict with the provisions of the Notes, the Indenture or the Distribution Agreement, the relevant provisions of the Notes, the Indenture and the Distribution Agreement shall control. Unless otherwise defined herein, terms defined in the Indenture shall be used herein as therein defined. PART I: ADMINISTRATIVE PROCEDURES FOR BOOK-ENTRY NOTES In connection with the qualification of the Book-Entry Notes for eligibility in the book-entry system maintained by DTC, Summit will perform the custodial, document control and administrative functions described below, in accordance with its respective obligations under a Letter of Representations to be delivered from the Company and Summit to DTC and a Medium-Term Note Certificate Agreement between Summit, and DTC, dated as of __________, 1998 (the "MTN Certificate Agreement"), and its obligations as a participant in DTC, including DTC's Same-Day Funds Settlement System ("SDFS"). Issuance: On any date of settlement (as defined under "Settlement" below) for one or more Book-Entry Notes, the Company will issue a single global security in fully registered form without coupons (a "Global Security") representing up to $[75,000,000] principal amount of all such Notes that have the same date of maturity, ("Maturity Date"), redemption provisions, if any, and interest rate. Each Global Security will be dated and issued as of the date of its authentication by the Indenture Trustee. No Global Security will represent any Certificated Note. Identification Numbers: The Company has arranged with the CUSIP Service Bureau of Standard & Poor's Corporation (the "CUSIP Service Bureau") for the reservation of one series of CUSIP numbers (including tranche numbers), which series consists of approximately _____ CUSIP numbers and relates to Global Securities representing the Book-Entry Notes. The Company has obtained from the CUSIP Service Bureau a written list of such series of reserved CUSIP numbers and has delivered to DTC and the Indenture Trustee a written list of ___ CUSIP numbers of such series. The Company will assign CUSIP numbers to Global Securities as described below under Settlement Procedure "B". It is expected that DTC will notify the CUSIP Service Bureau periodically of the CUSIP numbers that the Company has assigned to Global Securities. At any time when fewer than ___ of the reserved CUSIP numbers of the series remain unassigned to Global Securities, the Indenture Trustee shall so advise the Company and, if it deems necessary, the Company will reserve additional CUSIP numbers for assignment to Global Securities representing Book-Entry Notes. Upon obtaining such additional CUSIP numbers, the Company shall deliver a list of such additional CUSIP numbers to the Indenture Trustee and DTC. Registration: Each Global Security will be registered in the name of Cede & Co., as A-2 28 nominee for DTC, on the Security Register maintained under the Indenture. It is expected that the beneficial owner of a Book-Entry Note (or one or more indirect participants in DTC designated by such owner) will designate one or more participants in DTC (with respect to such Note, the "Participants") to act as agent or agents for such owner in connection with the book-entry system maintained by DTC, and it is expected that DTC will record in book-entry form, in accordance with instructions provided by such Participants, a credit balance with respect to such beneficial owner in such Note in the account of such Participants. The ownership interest of such beneficial owner in such Note will be recorded through the records of such Participants or through the separate records of such Participants and one or more indirect participants in DTC. Transfers: Transfers of a Book-Entry Note will be accomplished by book entries made by DTC and, in turn, by Participants (and in certain cases, one or more indirect Participants in DTC) acting on behalf of beneficial transferees and transferors of such Note. Consolidations: Upon receipt of written instructions from the Company, Summit may deliver to DTC and the CUSIP Service Bureau at any time a written notice of consolidation (a copy of which shall be attached to the resulting Global Security) specifying (i) the CUSIP numbers of two or more Outstanding Global Securities that represent Book-Entry Notes having the same Terms and for which interest has been paid to the same date, (ii) a date, occurring at least thirty days after such written notice is delivered and at least thirty days before the next Interest Payment Date for such Book-Entry Notes, on which such Global Securities shall be exchanged for a single replacement Global Security and (iii) a new CUSIP number to be assigned to such replacement Global Security. Upon receipt of such a notice, it is expected that DTC will send to its participants (including Summit) a written reorganization notice to the effect that such exchange will occur on such date. Prior to the specified exchange date, Summit will deliver to the CUSIP Service Bureau a written notice setting forth such exchange date and the new CUSIP number and stating that, as of such exchange date, the CUSIP numbers of the Global Securities to be exchanged will no longer be valid. On the specified exchange date, Summit will exchange such Global Securities for a single Global Security bearing the new CUSIP number, and the CUSIP numbers of the exchanged Global Securities will, in accordance with CUSIP Service Bureau procedures, be canceled and not reassigned until the Book-Entry Notes represented by such exchanged Global securities have matured or been redeemed. Maturities: Each Book-Entry Note will mature on a date not less than one year nor more than 30 years after the date of settlement for such Note. A-3 29 Denominations: Book-Entry Notes will be issued in principal amounts of $1,000 or any amount in excess thereof that is an integral multiple of $1,000. Global Securities will be denominated in principal amounts not in excess of $___________. Interest: General. Interest on each Book-Entry Note will accrue from and including the original issue date of, or the last date to which interest has been paid on, the Global Security representing such Note. Each payment of interest on a Book-Entry Note will include interest accrued to but excluding the Interest Payment Date or the Maturity Date or, upon earlier redemption or repayment, the date of such redemption or repayment (the "Redemption Date"), as the case may be. Interest payable on the Maturity Date or the Redemption Date of a Book-Entry Note will be payable to the person to whom the principal of such Note is payable. Standard & Poor's Corporation will use the information received in the pending deposit message described under Settlement Procedure "C" below in order to include the amount of any interest payable and certain other information regarding the related Global Security in the appropriate weekly bond report published by Standard & Poor's Corporation. Record Dates. The record date with respect to any Interest Payment Date shall be the [December 15 or June 15], as the case may be (whether or not a Business Day) immediately preceding such Interest Payment Date (each a "Regular Record Date"). Fixed Rate Book- Entry Notes: Interest payments on Fixed Rate Book-Entry Notes will be made semi-annually on [January 1 and July 1] of each year and on the Maturity Date or the Redemption Date; provided, however, that in the case of a Fixed Rate Book-Entry Note issued between a Regular Record Date and an Interest Payment Date, the first interest payment will be made on the Interest Payment Date following the next succeeding Regular Record Date. Payments of Interest: Payment of Interest Only. Promptly after each Principal and Regular Record Date, the Paying Agent will deliver to the Company and DTC a written notice specifying by CUSIP number the amount of interest to be paid on each Global Security on the following Interest Payment Date (other than an Interest Payment Date coinciding with the Maturity Date) and the total of such amounts. It is expected that DTC will confirm the amount payable on each Global Security on such Interest Payment Date by reference to the appropriate (daily or weekly) bond reports published by Standard & Poor's Corporation. The Company will pay to the Paying Agent the total amount of interest due on such Interest Payment Date A-4 30 (other than on the Maturity Date), and the Paying Agent will pay such amount to DTC at the times and in the manner set forth under "Manner of Payment" below. If any Interest Payment Date for a Book-Entry Note is not a Business Day, the payment due on such day shall be made on the next succeeding Business Day, except that, if such Note is a LIBOR Note and such next succeeding Business Day is in the next succeeding calendar month, such payment will be made on the immediately preceding Business Day; and no interest shall accrue on such payment for the period from and after such Interest Payment Date. Payments on Maturity Date, Etc.: On or about the first Business Day of each month on which a payment is due, the Paying Agent will deliver to the Company and DTC a written list of principal and, to the extent known at such time, interest to be paid on each Global Security maturing either on the Maturity Date or the Redemption Date in the following month. The Company and DTC will confirm with the Paying Agent the amounts of such principal and interest payments with respect to each such Global Security on or about the fifth Business Day preceding the Maturity Date or the Redemption Date, as the case may be, of such Global Security. The Company will pay to the Paying Agent the principal amount of such Global Security, together with interest due on such Maturity Date or Redemption Date in the manner set forth below under "Manner of Payment". The Paying Agent will pay such amounts to DTC at the times and in the manner set forth below under "Manner of Payment". If the Maturity Date or the Redemption Date of a Global Security representing Book-Entry Notes is not a Business Day, the payment due on such day shall be made on the next succeeding Business Day, except that, if such Note is a LIBOR Note and such next succeeding Business Day is in the next succeeding calendar month, such payment will be made on the immediately preceding Business Day; and no interest shall accrue on such payment for the period from and after such Maturity Date or the Redemption Date. Promptly after payment to DTC of the principal and interest due at the Maturity Date or the Redemption Date of such Global Security, the Paying Agent will cancel such Global Security in accordance with the terms of the Indenture. Manner of Payment: The total amount of any principal and interest due on Global Securities on any Interest Payment Date or on the Maturity Date or the Redemption Date shall be paid by the Company to the Paying Agent in immediately available funds for use by the Paying Agent no later than 9:30 A.M. (New York City time) on such date. The Company will make such payment on such Global Securities by wire transfer to the Paying Agent or by the Paying Agent's debiting the account of the Company maintained with the Paying Agent.The Company will confirm such instructions in writing to the Paying Agent. Prior to 10:00 A.M. (New York City time) on each Maturity Date or Redemption Date or as soon as reasonably possible A-5 31 thereafter, the Paying Agent will pay by separate wire transfer (using Fedwire message entry instructions in a form previously agreed to with DTC) to an account at the Federal Reserve Bank of New York previously agreed to with DTC, in funds available for immediate use by DTC, each payment of principal (together with interest thereon) due on Global Securities on any Maturity Date or Redemption Date. On each Interest Payment Date, interest payments shall be made to DTC in same day funds in accordance with existing arrangements between the Paying Agent and DTC. Thereafter, on each such date, it is expected that DTC will pay, in accordance with its SDFS operating procedures then in effect, such amounts in funds available for immediate use to the respective Participants in whose names the Book-Entry Notes represented by such Global Securities are recorded in the book-entry system maintained by DTC. Neither the Company nor the Paying Agent shall have any responsibility or liability for the payment by DTC to such Participants of the principal of and interest on the Book-Entry Notes. Withholding Taxes: The amount of any taxes required under applicable law to be withheld from any interest payment on a Book-Entry Note will be determined and withheld by the Participant, indirect participant in DTC or other person responsible for forwarding payments and materials directly to the beneficial owner of such Note. Settlement: The receipt by the Company of immediately available funds in payment for a Book-Entry Note and the authentication and issuance of the Global Security representing such Note shall constitute "settlement" with respect to such Note. All orders accepted by the Company will be settled on the third Business Day following the date of sale of a Book-Entry Note unless the Company, the Indenture Trustee and the purchaser agree to settlement on another day that shall be no earlier than the next Business Day. Settlement Procedures with regard to each Book-Entry Note sold by the Company through an Agent, as agent, shall be as follows: A. Such Agent will advise the Company by telephone, followed by facsimile transmission, of the following settlement information: 1. Principal amount. 2. Maturity Date. 3. The interest rate. 4. Interest Payment Dates. 5. Redemption provisions, if any, or provisions for the A-6 32 repayment or purchase by the Company at the option of the Holder, if any. 6. Settlement date. 7. Issue price. 8. Agent's commission, determined as provided in Section 2(a) of the Distribution Agreement. 9. Original Issue Discount, if any. B. The Company will assign a CUSIP number to such Book-Entry Note and will advise Summit by facsimile transmission or other mutually acceptable means of the information set forth in Settlement Procedure "A" above, the name of such Agent and the CUSIP number assigned to such Book-Entry Note. The Company will notify the Agent of such CUSIP number by telephone as soon as practicable. Each such communication by the Company shall constitute a representation and warranty by the Company to Summit and the Agent that (i) such Note is then, and at the time of issuance and sale thereof will be, duly authorized for issuance and sale by the Company, and (ii) the Global Security representing such Note will conform with the terms of the Indenture pursuant to which such Note and Global Security are issued. C. Summit will enter a pending deposit message through DTC's Participant Terminal System, providing the following settlement information to DTC, which shall route such information to such Agent and Standard & Poor's Corporation: 1. The information set forth in Settlement Procedure "A". 2. Identification of such Note as a Fixed Rate Book-Entry Note. 3. Initial Interest Payment Date for such Note, number of days by which such date succeeds the related Regular Record Date and amount of interest payable on such Interest Payment Date. 4. CUSIP number of the Global Security representing such Note. 5. Whether such Global Security will represent any other Book-Entry Note (to the extent known at such time). A-7 33 D. The Indenture Trustee will complete and authenticate the Global Security representing such Note. E. It is expected that DTC will credit such Note to Summit's participant account at DTC. F. Summit will enter an SDFS deliver order through DTC's Participant Terminal System instructing DTC to (i) debit such Note to Summit's participant account and credit such Note to such Agent's participant account and (ii) debit such Agent's settlement account and credit Summit's settlement account for an amount equal to the price of such Note less such Agent's commission. The entry of such a deliver order shall constitute a representation and warranty by Summit to DTC that (a) the Global Security representing such Book-Entry Note has been issued and authenticated and (b) Summit is holding such Global Security pursuant to the MTN Certificate Agreement. G. Such Agent will enter an SDFS deliver order through DTC's Participant Terminal System instructing DTC (i) to debit such Note to such Agent's participant account and credit such Note to the participant accounts of the Participants with respect to such Note and (ii) to debit the settlement accounts of such Participants and credit the settlement account of such Agent for an amount equal to the price of such Note. H. Transfers of funds in accordance with SDFS deliver orders described in Settlement Procedures "F" and "G" will be settled in accordance with SDFS operating procedures in effect on the settlement date. I. Summit will, upon confirming receipt of such funds from the Agent, wire transfer to the account of the Company maintained at [name of bank] (for credit to E'town Corporation, Account No. ___________) in immediately available funds in the amount transferred to Summit in accordance with Settlement Procedure "F". J. Such Agent will confirm the purchase of such Note to the purchaser either by transmitting to the Participants with respect to such Note a confirmation order or orders through DTC's institutional delivery system or by mailing a written confirmation to such purchaser. A-8 34 Settlement Procedures Timetable: For orders of Book-Entry Notes solicited by an Agent, as agent, and accepted by the Company for settlement on the first Business Day after the sale date, Settlement Procedures "A" through "J" set forth above shall be completed as soon as possible but not later than the respective times (New York City time) set forth below: Settlement Procedure Time - --------- ---- A. 11:00 A.M. on the sale date B. 12:00 Noon on the sale date C. 5:00 P.M. on the sale date D. 3:00 P.M. on the sale date E. 8:05 A.M. on the settlement date F-G 3:00 P.M. on the settlement date H. 4:30 P.M. on the settlement date I-J. 5:00 P.M. on the settlement date If a sale is to be settled more than one Business Day after the sale date, Settlement Procedures "A", "B" and "C" shall be completed as soon as practicable but no later than 11:00 A.M. and 12:00 Noon on the first Business Day after the sale date with respect to Settlement Procedures "A" and "B", respectively, and no later than 5:00 P.M. on the first Business Day after the sale date, with respect to Settlement Procedure "C". Settlement Procedure "D" shall occur no later than 3:00 P.M. on the last Business Day prior to the settlement date. Settlement Procedures "H" and "I" are subject to extension in accordance with any extension of Fedwire closing deadlines and in the other events specified in the SDFS operating procedures in effect on the settlement date. If settlement of a Book-Entry Note is rescheduled or canceled, the Company will instruct Summit by no later than 12:00 Noon on the Business Day immediately preceding the scheduled settlement date to deliver to DTC through DTC's Participant Terminal System a cancellation message to such effect and Summit will enter such message, by no later than 2:00 P.M. on such Business Day, through DTC's Participation Terminal System. Failure to Settle: If Summit or the Agent fails to enter an SDFS deliver order with respect to a Book-Entry Note pursuant to Settlement Procedure "F" or "G," Summit may upon the approval of the Company deliver to DTC, through DTC's Participant Terminal System, as soon as practicable, a withdrawal message instructing DTC to debit such Note to Summit's participant account, A-9 35 provided that Summit's participant account contains a principal amount of the Global Security representing such Note that is at least equal to the principal amount to be debited. If a withdrawal message is processed with respect to all the Book-Entry Notes represented by a Global Security, Summit will mark such Global Security "canceled", make appropriate entries in Summit's records and send such canceled Global Security to the Company. The CUSIP number assigned to such Global Security shall, in accordance with CUSIP Service Bureau procedures, be canceled and not reassigned until the Book-Entry Notes represented by such Global Security have matured or been redeemed. If a withdrawal message is processed with respect to one or more, but not all, of the Book-Entry Notes represented by a Global Security, Summit will exchange such Global Security for another Global Security, which shall represent the Book-Entry Notes previously represented by the surrendered Global Security with respect to which a withdrawal message has not been processed and shall bear the CUSIP number of the surrendered Global Security. If the purchase price for any Book-Entry Note is not timely paid to the Participants with respect to such Note by the beneficial purchaser thereof (or a person, including an indirect participant in DTC, acting on behalf of such purchaser), such Participants and, in turn, the Agent for such Note may enter SDFS deliver orders through DTC's Participant Terminal System reversing the orders entered pursuant to Settlement Procedures "G" and "F", respectively. Thereafter, Summit will deliver the withdrawal message and take the related actions described in the preceding paragraph. If such failure shall have occurred for any reason other than a default by the Agent in the performance of its obligations hereunder or under the Distribution Agreement, then the Company will reimburse such Agent or Summit, as applicable, on an equitable basis for the loss of the use of funds during the period when they were credited to the account of the Company. Notwithstanding the foregoing, upon any failure to settle with respect to a Book-Entry Note, DTC may take any actions in accordance with its SDFS operating procedures then in effect. In the event of a failure to settle with respect to one or more, but not all, of the Book-Entry Notes to have been represented by a Global Security, the Indenture Trustee will provide, in accordance with Settlement Procedure "D," for the authentication and issuance of a Global Security representing the other Book-Entry Notes to have been represented by such Global Security and will make appropriate entries in its records. PART II: ADMINISTRATIVE PROCEDURES FOR CERTIFICATED NOTES A-10 36 Summit will serve as registrar in connection with the Certificated Notes. Maturities: Each Certificated Note will mature on a date not less than one year and not more than 30 years after the date of delivery by the Company of such Note. Price to Public: Each Certificated Note will be issued at the percentage of principal amount specified in the Prospectus relating to the Notes. Denominations: The denomination of any Certificated Note will be a minimum of $1,000 or any amount in excess thereof which is an integral multiple of $1,000. Registration: Certificated Notes will be issued only in fully registered form. Interest: General. Interest on each Certificated Note will accrue from and including the original issue date of, or the last date to which interest has been paid on, such Note. Each payment of interest on a Certificated Note will include interest accrued to but excluding the Interest Payment Date or the Maturity Date or, upon earlier redemption, the Redemption Date, as the case may be. Interest payable on the Maturity Date or the Redemption Date of a Certificated Note will be payable to the person to whom the principal of such Note is payable. Record Dates. Unless otherwise set forth in the applicable Pricing Supplement, the record dates with respect to the Interest Payment Dates shall be the Regular Record Dates. Fixed Rate Certificated Notes. Unless otherwise specified pursuant to "Settlement Procedures" below, interest payments on Fixed Rate Certificated Notes will be made semi-annually on [January 1 and July 1] and on the Maturity Date or the Redemption Date; provided, however, that in the case of a Fixed Rate Certificated Note issued between a Regular Record Date and an Interest Payment Date, the first interest payment will be made on the Interest Payment Date following the next succeeding Regular Record Date. Payments of Principal and Interest: Interest will be payable to the person and in whose name a Certificated Note is registered at the close of business on the Regular Record Date next preceding an Interest Payment Date; provided, however, that, in the case of a Certificated Note originally issued between a Regular Record Date and an Interest Payment Date, the first payment of interest will be made on the Interest Payment Date following the next succeeding Regular Record A-11 37 Date to the person in whose name such Note was registered at the close of business on such next Regular Record Date. Unless other arrangements are made acceptable to the Company, all interest payments (excluding interest payments made on the Maturity Date or the Redemption Date) on a Certificated Note will be made by check mailed to the person entitled thereto as provided above. Summit will pay the principal amount of each Certificated Note on the Maturity Date upon presentation of such Certificated Note to Summit at the principal corporate trust office of Summit in New York, New York. Such payment, together with payment of interest due on the Maturity Date, will be made from funds deposited with Summit by the Company. Summit will be responsible for withholding taxes on interest paid on Certificated Notes as required by applicable law. Within 10 days following each Regular Record Date, the Indenture Trustee will inform the Company of the total amount of the interest payments to be made by the Company on the next succeeding Interest Payment Date. The Indenture Trustee will provide monthly to the Company a list of the principal and interest to be paid on Certificated Notes maturing in the next succeeding month. Settlement Procedures: The settlement date with respect to any offer to purchase Certificated Notes accepted by the Company will be a date on or before the fifth Business Day next succeeding the date of acceptance unless otherwise agreed by the purchaser, the Indenture Trustee and the Company and shall be specified upon acceptance of such offer. The Company will instruct the Indenture Trustee to effect delivery of each Certificated Note no later than 1:00 P.M. (New York City time) on the settlement date to the Presenting Agent (as defined under "Preparation of Pricing Supplement" in Part III below) for delivery to the purchaser. Settlement Procedures: For each offer to purchase a Certificated Note that is accepted by the Company, the Presenting Agent will provide (unless provided by the purchaser directly to the Company) by telephone and facsimile transmission or other mutually acceptable means the following information to the Company: 1. Name in which such Note is to be registered (the "Registered Owner"). 2. Address of the Registered Owner and, if different, address for payment of principal and interest. 3. Taxpayer identification number of the Registered Owner. 4. Principal amount. A-12 38 5. Maturity Date. 6. The interest rate. 7. Interest Payment Dates. 8. Redemption provisions, if any, or provisions for the repayment or repurchase by the Company at the option of the Holder, if any. 9. Settlement date. 10. Issue price. 11. Agent's commission, determined as provided in Section 2(a) of the Distribution Agreement. The Presenting Agent will advise the Company of the foregoing information (unless provided by the purchaser directly to the Company) for each offer to purchase a Certificated Note solicited by such Agent and accepted by the Company in time for the Indenture Trustee to prepare and authenticate the required Certificated Note. Before accepting any offer to purchase a Certificated Note to be settled in less than three Business Days, the Company shall verify that the Indenture Trustee will have adequate time to prepare and authenticate such Note. After receiving from the Presenting Agent the details for each offer to purchase a Certificated Note that has been accepted by the Company, the Company will, after recording the details and any necessary calculations, provide appropriate documentation to the Indenture Trustee, including the information provided by the Presenting Agent necessary for the preparation and authentication of such Note. Note Deliveries and Cash Payments: Upon receipt of appropriate documentation and instructions, the Company will cause the Indenture Trustee to prepare and authenticate the pre-printed 4-ply Certificated Note packet containing the following documents in forms approved by the Company, the Presenting Agent and the Indenture Trustee: 1. Note with customer receipt. 2. Stub 1 - For the Presenting Agent. 3. Stub 2 - For the Company. 4. Stub 3 - For the Indenture Trustee. Each Certificated Note shall be authenticated on the settlement date A-13 39 therefor. The Indenture Trustee will authenticate each Certificated Note and deliver it (with the confirmation) to the Presenting Agent (and deliver the stubs as indicated above), all in accordance with written or electronic instructions (or oral instructions confirmed in writing (which may be given by facsimile transmission) on the next Business Day) from the Company. Delivery by the Indenture Trustee of each Certificated Note will be made in accordance with said instructions against receipts therefor and in connection with contemporaneous receipt by the Company from the Presenting Agent on the settlement date in immediately available funds of an amount equal to the issue price of such Note less the Presenting Agent's commission. Upon verification ("Verification") by the Presenting Agent that a Certificated Note has been prepared and properly authenticated by the Indenture Trustee and registered in the name of the purchaser in the proper principal amount and other terms in accordance with the aforementioned confirmation, payment will be made to the Company by the Presenting Agent the same day as the Presenting Agent's receipt of the Certificated Note in immediately available funds. Such payment shall be made by the Presenting Agent only upon prior receipt by the Presenting Agent of immediately available funds from or on behalf of the purchaser unless the Presenting Agent decides, at its option, to advance its own funds for such payment against subsequent receipt of funds from the purchaser. Upon delivery of a Certificated Note to the Presenting Agent, Verification by the Presenting Agent and the giving of instructions for payment, the Presenting Agent shall promptly deliver such Note to the purchaser. In the event any Certificated Note is incorrectly prepared, the Indenture Trustee shall promptly issue a replacement Certificated Note in exchange for such incorrectly prepared Note. Failure To Settle: If the Presenting Agent, at its own option, has advanced its own funds for payment against subsequent receipt of funds from the purchaser, and if the purchaser shall fail to make payment for the Certificated Note on the settlement date therefor, the Presenting Agent will promptly notify the Indenture Trustee and the Company by telephone, promptly confirmed in writing (but no later than the next Business Day). In such event, the Company shall promptly provide the Indenture Trustee with appropriate documentation and instructions consistent with these procedures for the return of the Certificated Note to the Indenture Trustee and the Presenting Agent will promptly return the Certificated Note to the Indenture Trustee. Upon (i) confirmation from the Indenture Trustee in writing (which may be given by facsimile transmission) that the Indenture Trustee has received the Certificated Note and upon (ii) confirmation from the Presenting Agent in writing (which may be given by facsimile transmission) that the A-14 40 Presenting Agent has not received payment from the purchaser (the matters referred to in clauses (i) and (ii) are referred to hereinafter as the "Confirmations"), the Company will promptly pay to the Presenting Agent an amount in immediately available funds equal to the amount previously paid by the Presenting Agent in respect of such Note. Assuming receipt of the Certificated Note by the Indenture Trustee and of the Confirmations by the Company, such payment will be made on the settlement date, if reasonably practical, and in any event not later than the Business Day following the date of receipt of the Certificated Note and Confirmations. If a purchaser shall fail to make payment for the Certificated Note for any reason other than the failure of the Presenting Agent to provide the necessary information to the Company as described above for settlement or to provide a confirmation to the purchaser within a reasonable period of time as described above or otherwise to satisfy its obligation hereunder or in the Distribution Agreement, and if the Presenting Agent shall have otherwise complied with its obligations hereunder and in the Distribution Agreement, the Company will reimburse the Presenting Agent on an equitable basis for its loss of the use of funds during the period when they were credited to the account of the Company. Immediately upon receipt of the Certificated Note in respect of which the failure occurred, the Indenture Trustee will void such Note, make appropriate entries in its records and send such cancelled Note to the Company; and upon such action, the Certificated Note will be deemed not to have been issued, authenticated and delivered. PART III: ADMINISTRATIVE PROCEDURES APPLICABLE TO BOTH BOOK-ENTRY NOTES AND CERTIFICATED NOTES Calculation Of Interest: Fixed Rate Notes. Interest on Fixed Rate Notes (including interest for partial periods) will be calculated on the basis of a 360-day year of twelve thirty-day months. (Examples of interest calculations are as follows: The period from August 15, 1999 to February 15, 2000 equals 6 months and 0 days, or 180 days; the interest payable equals 180/360 times the annual rate of interest times the principal amount of the Note. The period from September 17, 1999 to February 15, 2000 equals 4 months and 28 days, or 148 days; the interest payable equals 148/360 times the annual rate of interest times the principal amount of the Note.) A-15 41 Procedure For Rate Setting and Posting: The Company and the Agents will discuss from time to time the aggregate amount of, the issuance price of, and the interest rates to be borne by, Notes that may be sold as a result of the solicitation of offers by the Agents. If the Company decides to set prices of, and rates borne by, any Notes in respect of which the Agents are to solicit offers (the setting of such prices and rates to be referred to herein as "posting") or if the Company decides to change prices or rates previously posted by it, it will promptly advise the Agents of the prices and rates to be posted. Acceptance of Offers: If the Company posts prices and rates as provided above, each Agent as agent for and on behalf of the Company, shall promptly accept offers received by the Agent to purchase Notes at the prices and rates so posted, subject to (i) any instructions from the Company received by the Agent concerning the aggregate principal amount of such Notes to be sold at the prices and rates so posted or the period during which such posted prices and rates are to be in effect, (ii) any instructions from the Company received by each Agent changing or revoking any posted prices and rates, (iii) compliance with the securities laws of the United States and all other jurisdictions and (iv) such Agent's right to reject any such offer as provided below. If the Company does not post prices and rates and an Agent receives an offer to purchase Notes or, if while posted prices and rates are in effect, the Agent receives an offer to purchase Notes on terms other than those posted by such Company, the Agent will promptly advise the Company of each such offer other than offers rejected by such Agent as provided below. The Company will have the sole right to accept any such offer to purchase Notes. The Company may reject any such offer in whole or in part. Each Agent may, in its discretion reasonably exercised, reject any offer to purchase Notes received by it in whole or in part. Preparation Of Pricing Supplement: If any offer to purchase an Note is accepted by the Company, the Company, with the approval of the Agent that presented such offer (the "Presenting Agent"), will prepare a pricing supplement (a "Pricing Supplement") reflecting the terms of such Note and will arrange to have a copy electronically filed with the Commission in accordance with the applicable paragraph of Rule 424 under the Act and the provision of Regulation S-T thereunder and will supply at least 10 copies thereof (or additional copies if requested) to the Presenting Agent. The Presenting A-16 42 Agent will cause a Prospectus and Pricing Supplement to be delivered to the purchaser of such Note. In each instance that a Pricing Supplement is prepared, the Agents will affix the Pricing Supplement to Prospectuses prior to their use. Outdated Pricing Supplements (other than those retained for files) will be destroyed. Procedures For Rate Changes: When the Company has determined to change the interest rates of Notes being offered, it will promptly advise the Agents and the Agents will forthwith suspend solicitation of offers. Each Agent will telephone the Company with recommendations as to the changed interest rates. At such time as the Company has advised the Agents of the new interest rates, the Agents may resume solicitation of offers. Until such time only "indications of interest" may be recorded. Suspension of Solicitation, Amendment or Supplement of Prospectus: The Company may instruct the Agents to suspend at any time, for any period of time or permanently, the solicitation of offers to purchase Notes. Upon receipt of such instructions from the Company, the Agents will forthwith suspend solicitation of offers to purchase Notes from the Company until such time as the Company has advised them that such solicitation may be resumed. If the Company decides to amend or supplement the Registration Statement (as defined in Section 1(c) of the Distribution Agreement) or the Prospectus (except for a supplement relating to an offering of securities other than the Notes), it will promptly advise the Agents and the Indenture Trustee and will furnish the Agent and the Indenture Trustee with the proposed amendment or supplement in accordance with the terms of, and its obligations under, the Distribution Agreement. The Company will, consistent with such obligations, promptly advise each Agent and the Indenture Trustee whether orders outstanding at the time each Agent suspends solicitation may be settled and whether copies of such Prospectus and Prospectus Supplement as in effect at the time of the suspension, together with the appropriate Pricing Supplement, may be delivered in connection with the settlement of such orders. The Company will have the sole responsibility for such decision and for any arrangements that may be made in the event that the Company determines that such orders may not be settled or that copies of such Prospectus, Prospectus Supplement and Pricing Supplement may not be so delivered. The Company will file with the Commission for filing therewith any A-17 43 supplement to the Prospectus relating to the Notes, provide the Agent with copies of any such supplement, and confirm to the Agents that such supplement has been filed with the Commission pursuant to the applicable paragraph of Rule 424. Confirmation: For each offer to purchase a Note solicited by an Agent and accepted by or on behalf of the Company, the Presenting Agent will issue a confirmation to the purchaser, with a copy to the Company, setting forth the details set forth above and delivery and payment instructions. Trustee/Paying Agent Not to Risk Funds: Nothing herein shall be deemed to require the Indenture Trustee/Paying Agent to risk or expend its own funds in connection with any payment to the Company, DTC, the Agents or the purchaser or a holder, it being understood by all parties that payments made by the Indenture Trustee/Paying Agent to the Company, DTC, the Agent or a purchaser or holder shall be made only to the extent that funds are provided to the Indenture Trustee/Paying Agent for such purpose. Authenticity of Signatures: The Company will cause the Indenture Trustee to furnish the Agents from time to time with the specimen signatures of each of the Indenture Trustee's officers, employees or agents who has been authorized by the Indenture Trustee to authenticate Notes, but the Agents will have no obligation or liability to the Company or the Indenture Trustee in respect of the authenticity of the signature of any officer, employee or agent of the Company or the Indenture trustee on any such Note. Payment of Expenses: Each Agent shall forward to the Company, on a monthly basis, a statement of the reasonable out-of-pocket expenses incurred by such Agent during that month which are reimbursable to it pursuant to the terms of the Distribution Agreement. The Company will remit payment to the Agent currently on a monthly basis. Delivery of Prospectus: A copy of the Prospectus, Prospectus Supplement and Pricing Supplement relating to a Note must accompany or precede the earliest of any written offer of such Note, confirmation of the purchase of such Note or payment for such Note by its purchaser. If notice of a change in the terms of the Notes is received by an Agent between the time an order for an Note is placed and the time written confirmation thereof is sent by such Agent to a customer or his agent, such confirmation shall be accompanied by a Prospectus, Prospectus Supplement and Pricing Supplement setting forth the terms in effect when the order was placed. Subject to "Suspension of A-18 44 Solicitation; Amendment or Supplement of Prospectus" above, each Agent will deliver a Prospectus, Prospectus Supplement and Pricing Supplement as herein described with respect to each Note sold by it. A-19 45 EXHIBIT B TERMS AGREEMENT E'town Corporation 600 South Avenue Westfield, NJ 07091-0788 Attention: Subject in all respects to the terms and conditions of the Distribution Agreement (the "Distribution Agreement"), dated _________ __, 199_, among A.G. Edwards & Sons, Inc., Legg Mason Wood Walker, Incorporated and E'town Corporation (the "Company"), the undersigned agrees to purchase the following principal amount of the Company's ______________ Medium-Term Notes (the "Notes"): Aggregate Principal Amount: $ Interest Rate: Date of Maturity: Interest Payment Dates: Regular Record Dates: Purchase Price: % of Principal Amount [plus accrued interest from , 199 ] Purchase Date and Time: Place for Delivery of Notes and Payment Therefor Method of Payment: Modification, if any, in the requirements to deliver the documents specified in Section 6(b) of the Distribution Agreement: Period during which additional Notes may not be sold pursuant to Section 4(m) of the Distribution Agreement: Book-Entry Notes or Certificated Notes: 46 This Agreement shall be governed by and construed in accordance with the laws of New Jersey. [Insert name of Purchaser(s)] By___________________________ Title: Accepted: , 199_ E'TOWN CORPORATION By___________________________ Title: B-2 EX-5.A 3 OPINION OF WALTER M. BRASWELL 1 Exhibit 5(a) [Opinion of Walter M. Braswell] March 1, 1999 E'town Corporation 600 South Avenue Westfield, New Jersey 07090 Ladies and Gentlemen: I have acted as counsel to E'town Corporation (the "Company") in connection with the proposed issuance and sale of up to $75,000,000 aggregate principal amount of Debt Securities (the "Debt Securities") of the Company to be issued under an Indenture, to be dated as of March 1, 1999, between the Company and Summit Bank (the "Indenture"). I have reviewed, among other things, the registration statement on Form S-3 (No. 333-65951), and the prospectus included therein, with respect to the Debt Securities, as amended by Amendment No. 1 thereto filed under the Securities Act of 1933 on March 01, 1999 (as so amended, the "Registration Statement"). I have also reviewed and am familiar with the originals and copies, certified or otherwise identified to my satisfaction, of pertinent documents, corporate records and other instruments relating to the issuance of the Debt Securities and other actions and proceedings relating thereto. Based upon the foregoing, I am of the opinion that (i) when the Registration Statement shall have become effective, (ii) when the Debt Securities are issued in accordance with the authorizing resolutions of the Board of Directors of the Company and in accordance with any applicable orders of regulatory bodies, (iii) when maturity dates, interest rates and other similar terms have been determined therefor, and (iv) when such Debt Securities have been executed and authenticated as specified in the Indenture and delivered against payment of the consideration therefor, such Debt Securities will be valid and legally binding obligations of the Company, except as may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other similar laws relating to or affecting creditors' rights generally. I am admitted to the bar of the State of New Jersey and do not hold myself out as an expert on the laws of any other jurisdiction. With respect to all matters of New York law, I have relied upon the opinion of even date herewith addressed to me of Winthrop, Stimson, Putnam & Roberts, special New York counsel to the Company filed as Exhibit 5(b) to the Registration Statement. I hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the use of my name under the heading "Legality" in the prospectus included in the Registration Statement. In giving this consent, I do not hereby admit that I am within the category of persons whose consent is required under Section 7 of the Securities Act or the rule and regulations of the Securities and Exchange Commission thereunder. Very truly yours, /s/Walter M. Braswell --------------------- Walter M. Braswell Secretary EX-5.B 4 OPINION OF WINTHROP STIMSON ET AL 1 Exhibit 5(b) [Opinion of Winthrop, Stimson, Putnam & Roberts] March 1, 1999 Walter M. Braswell, Esq. Secretary E'town Corporation 600 South Avenue Westfield, New Jersey 07090 Dear Mr. Braswell: We have acted as special New York counsel to E'town Corporation (the "Company") in connection with the proposed issuance and sale of up to $75,000,000 aggregate principal amount of Debt Securities (the "Debt Securities") of the Company to be issued under an Indenture, to be dated as of March 1, 1999, between the Company and Summit Bank (the "Indenture"). We have reviewed, among other things, (i) the registration statement on Form S-3 (No. 333-65951), and the prospectus included therein, with respect to the Debt Securities, as amended by Amendment No. 1 thereto filed under the Securities Act of 1933 on March 01, 1999, and (ii) your opinion dated the date hereof addressed to the Company filed as Exhibit 5(a) to said Amendment No. 1 (the "Opinion"). We have also reviewed and are familiar with the originals and copies, certified or otherwise identified to our satisfaction, of pertinent documents, corporate records and other instruments relating to the issuance of the Debt Securities and other actions and proceedings relating thereto. Based upon the foregoing, we concur with the Opinion insofar as matters of New York law are expressed therein. We are members of the New York bar and, for purposes of this opinion, do not hold ourselves out as experts on the laws of any jurisdiction other than the State of New York and the United States of America. This opinion is solely for your benefit in connection with the Opinion and may not be relied upon by any other person or for any other purpose without our prior written consent. We consent to the filing of this opinion as an exhibit to the Registration Statement and to the use of our name under the heading "Legality" in the prospectus included in the Registration Statement. In giving this consent, we do not hereby admit that we are within the category of persons whose consent is required under Section 7 of the Securities Act or the rule and regulations of the Securities and Exchange Commission thereunder. Very truly yours, /s/ Winthrop, Stimson, Putnam & Roberts EX-12 5 COMPUTATION OF RATIO OF EARNINGS 1 Exhibit 12 E'TOWN CORPORATION Computation of Ratio of Earnings to Fixed Charges (In Thousands Except Ratios)
NINE MONTHS TWELVE MONTHS ENDED DECEMBER 31, SIX MONTHS ENDED ENDED SEPTEMBER 30, 1993 1994 1995 1996 1997 JUNE 30, 1998 1998 ------- ------- ------- ------- ------- ------------- -------------- EARNINGS: Net income $13,830 $12,088 $15,296 $15,073 $19,260 $ 9,325 $ 17,880 Federal income taxes 7,960 6,908 8,753 8,361 10,895 5,149 9,822 Interest charges 11,923 11,187 11,698 13,316 17,340 8,534 13,047 ------- ------- ------- ------- ------- ------- ------- Earnings available to cover fixed charges 33,713 30,183 35,747 36,750 47,495 23,008 40,749 ------- ------- ------- ------- ------- ------- ------- FIXED CHARGES: Interest on long-term debt 12,374 11,611 11,696 13,800 14,807 8,033 12,082 Other interest 96 470 2,390 2,645 2,560 500 1,038 Amortization of debt discount - net 259 354 358 395 411 217 324 ------- ------- ------- ------- ------- ------- ------- Total fixed charges 12,729 12,435 14,444 16,840 17,778 8,750 13,444 ------- ------- ------- ------- ------- ------- ------- Ratio of Earnings to Fixed Charges 2.65 2.43 2.47 2.18 2.67 2.63 3.03 ======= ======= ======= ======= ======= ======= =======
Earnings to Fixed Charges represents the sum of Net Income, Dividends, Federal income taxes and Interest Charges (which is reduced by Capitalized interest), divided by Fixed Charges. Fixed Charges consist of interest on long and short-term debt (which is not reduced by Capitalized interest) and Amortization of debt discount. EX-25 6 STATEMENT OF ELIGIBILITY 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM T-1 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(B)(2) X --- (Name of Trustee) SUMMIT BANK (I.R.S. Employer Identification No.) 22-0834947 (Address of Principal Executive Offices) 210 Main Street Hackensack, NJ 07601 (Name of Obligor) E'town Corporation (State of Incorporation) New Jersey (I.R.S. Employer Identification No.) 22-2596330 (Address of Principal Executive Offices) 600 South Avenue Westfield, NJ 07091-0788 (Title of Indenture Securities) Debt Securities 2 1. GENERAL INFORMATION FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE: (a) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISORY AUTHORITY TO WHICH IT IS SUBJECT:
Name Address ---- ------- Federal Reserve Bank (2nd District) New York, NY Federal Deposit Insurance Corporation Washington, D.C. New Jersey Department of Banking Trenton, NJ
(b) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS. Yes 2. AFFILIATIONS WITH OBLIGOR IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH AFFILIATION. None (See Note on page 6) 3. VOTING SECURITIES OF THE TRUSTEE FURNISH THE FOLLOWING INFORMATION AS TO EACH CLASS OF VOTING SECURITIES OF THE TRUSTEE: AS OF 12/31/98
Col. A Col. B ------ ------ Summit Bank, Common Stock 34,590,561 shares Summit Bank, Preferred Stock 120,000 shares
4. TRUSTEESHIPS UNDER OTHER INDENTURES IF THE TRUSTEE IS A TRUSTEE UNDER ANOTHER INDENTURE UNDER WHICH ANY OTHER SECURITIES, OR CERTIFICATES OF INTEREST OR PARTICIPATION IN ANY OTHER SECURITIES, OF THE OBLIGOR ARE OUTSTANDING, FURNISH THE FOLLOWING INFORMATION: Not applicable 3 5. INTERLOCKING DIRECTORATES AND SIMILAR RELATIONSHIPS WITH THE OBLIGOR OR UNDERWRITERS If the trustee or any of the directors or executive officers of the trustee is a director, officer, partner, employee, appointee, or representative of the obligor or of any underwriter for the obligor, identify each such person having any such connection and state the nature of each such connection. Anne Evans Estabrook, E'town's Chairman of the Board, serves as a director of Summit Bank. 6. VOTING SECURITIES OF THE TRUSTEE OWNED BY THE OBLIGOR OR ITS OFFICIALS Furnish the following information as to the voting securities of the trustee owned beneficially by the obligor and each director, partner, and executive officer of the obligor: Not applicable - see answer to item 13 7. VOTING SECURITIES OF THE TRUSTEE OWNED BY UNDERWRITERS OR THEIR OFFICIALS Furnish the following information as to the voting securities of the trustee owned beneficially by each underwriter for the obligor and each director, partner, and executive officer of each such underwriter: Not applicable - see answer to item 13 8. SECURITIES OF THE OBLIGOR OWNED OR HELD BY THE TRUSTEE Furnish the following information as to securities of the obligor owned beneficially or held as collateral security for obligations in default by the Trustee: Not applicable - see answer to item 13 9. SECURITIES OF UNDERWRITERS OWNED OR HELD BY THE TRUSTEE If the trustee owned beneficially or holding as collateral security for obligations in default any securities or an underwriter for the obligor, furnish the following information as to each class of securities of such underwriter any of which are owned or held by the trustee: Not applicable - see answer to item 13 4 10. OWNERSHIP OR HOLDINGS BY THE TRUSTEE OF VOTING SECURITIES OF CERTAIN AFFILIATES OR SECURITY HOLDERS OF THE OBLIGOR If the trustee owns beneficially or holds as collateral security for obligations in default voting securities of a person who, to the knowledge of the trustee (1) owns 10 percent or more of the voting stock of the obligor or (2) is an affiliate, other than a subsidiary, of the obligor, furnish the following information as to the voting securities of such person: Not applicable - see answer to item 13 11. OWNERSHIP OR HOLDINGS BY THE TRUSTEE OF ANY SECURITIES OF A PERSON OWNING 50 PERCENT OR MORE OF THE VOTING SECURITIES OF THE OBLIGOR If the trustee owns beneficially or holds as collateral security for obligations in default any securities of a person who, to the knowledge of the trustee, owns 50 percent or more of the voting securities of the obligor, furnish the following information as to each class of securities of such person any of which are owned or held by the trustee: Not applicable - see answer to item 13 12. INDEBTEDNESS OF THE OBLIGOR TO THE TRUSTEE
Col. A Col. B Col. C ------ ------ ------ Nature of Amount Date Due Indebtedness O/S Line of Credit $2,500,000 4/27/99
13. DEFAULTS BY THE OBLIGOR (a) State whether there is or has been a default with respect to the securities under this indenture. Explain the nature of any such default. None (b) If the trustee is a trustee under another indenture under which any other securities, or certificates of interest or participation in any other securities, of the obligor are outstanding, or is trustee for more than one outstanding series of securities under the indenture, state whether there has been a default under any such indenture or series, identify the indenture or series affected, and explain the nature of any such default. None 5 14. AFFILIATIONS WITH THE UNDERWRITERS If any underwriter is an affiliate of the trustee, describe each such affiliation 15. FOREIGN TRUSTEE Identify the order or rule pursuant to which the trustee is authorized to act as sole trustee under indenture qualified or to be qualified under the Act. Not applicable 16. LIST OF EXHIBITS LIST BELOW ALL EXHIBITS FILED AS PART OF THIS STATEMENT OF ELIGIBILITY 1. *Copy of Articles of Association of the Trustee as now in effect. 2. No certificate of authority of the Trustee to commence business is furnished since this authority is contained in the Articles of Association of the Trustee. 3. No copy of the authorization of the trustee to exercise corporate trust powers is furnished since this authorization is contained in the Articles of Association of the Trustee. 4. *Copy of the existing By-Laws of the Trustee as now in effect. 5. Not applicable. 6. The consent of the Trustee required by Section 321(b) of the Act. 7. A copy of the latest report of Condition of the Trustee published pursuant to law or the requirements of its supervising or examining authority. 8. Not applicable. 9. Not applicable. *Exhibits thus designated have heretofore been filed with the Securities and Exchange Commission, have not been amended since filing and are incorporated herein by reference (see Exhibits TIA(i) and TIA(ii) File No. 285667) 6 NOTE The Trustee disclaims responsibility for the accuracy or completeness of information contained in this Statement of Eligibility and Qualification not known to the trustee and not obtained by it through reasonable investigation and as to which information it has obtained from the obligor and has had to rely or will obtain from the principal underwriters and will have to rely. SIGNATURE Pursuant to the requirements of the Trust Indenture Act of 1939, the trustee, Summit Bank, a corporation organized and existing under the laws of the State of New Jersey, has duly caused this Statement of Eligibility and Qualification to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of Hackensack and State of New Jersey on the 26th day of February 1999. SUMMIT BANK By: /s/ Susan M. Scola ----------------------- Susan M. Scola Corporate Trust Officer 7 CONSENT OF TRUSTEE Summit Bank, as trustee (the "Trustee") under an indenture to be entered into between itself and E'Town Corporation. hereby consents to Section 321(b) of the Trust Indenture Act of 1939, as amended, to the furnishing by Federal State, Territorial or District Authorities to the Securities and Exchange Commission of all reports, records or other information relating thereto. SUMMIT BANK By: /s/ Susan M. Scola ----------------------- Susan M. Scola Corporate Trust Officer Dated: February 26, 1999 8 FDIC Certificate Number [ 550 ] Consolidated Report of Income for the period January 1, 1998--December 31, 1998 ALL REPORT OF INCOME SCHEDULES ARE TO BE REPORTED ON A CALENDAR YEAR-TO-DATE BASIS IN THOUSANDS OF DOLLARS. Schedule RI - Income Statement
1480 Dollar Amounts in Thousands Bil Mil Thou 1. Interest income: a. Interest and fee income on loans: (1) In domestic offices: (a) Loans secured by real estate 876,803 1.a.(1)(a) (b) Loans to depository institutions 2,890 1.a.(1)(b) (c) Loans to finance agricultural production and other loans to farmers 21 1.a.(1)(c) (d) Commercial and industrial loans 389,760 1.a.(1)(d) (e) Acceptances of other banks 0 1.a.(1)(e) (f) Loans to individuals for household, family, and other personal expenditures: (1) Credit cards and related plans 20,881 1.a.(1)(f)(1) (2) Other 54,997 1.a.(1)(f)(2) (g) Loans to foreign governments and official institutions 0 1.a.(1)(g) (h) Obligations (other than securities and leases) of states and political subdivisions in the U.S.: (1) Taxable obligations 59 1.a.(1)(h)(1) (2) Tax-exempt obligations 0 1.a.(1)(h)(2) (i) All other loans in domestic offices 14,727 1.a.(1)(i) (2) In foreign offices, Edge and Agreement subsidiaries, and IBFs 0 1.a.(2) b. Income from lease financing receivables: (1) Taxable leases 54,158 1.b.(1) (2) Tax-exempt leases 12 1.b.(2) c. Interest income on balances due from depository institutions:/1 (1) In domestic offices 1,334 1.c.(1) (2) In foreign offices, Edge and Agreement subsidiaries, and IBFs 0 1.c.(2) d. Interest and dividend income on securities: (1) U.S. Treasury securities and U.S. Government agency obligations 428,986 1.d.(1) (2) Securities issued by states and political subdivisions in the U.S.: (a) Taxable securities 0 1.d.(2)(a) (b) Tax-exempt securities 8,919 1.d.(2)(b) (3) Other domestic debt securities 100,044 1.d.(3) (4) Foreign debt securities 1,397 1.d.(4) (5) Equity securities (including investments in mutual funds) 16,490 1.d.(5) e. Interest income from trading assets 163 1.e. f. Interest income on federal funds sold and securities purchased under agreements to resell 12,419 1.f. g. Total interest income (sum of items 1.a through 1.f) 1,983,050 1.g.
9 2. Interest expense: a. Interest on deposits: (1) Interest on deposits in domestic offices: (a) Transaction accounts (NOW accounts, ATS accounts, and telephone and preauthorized transfer accounts) 41,015 2.a.(1)(a) (b) Nontransaction accounts: (1) Money market deposit accounts (MMDAs) 139,502 2.a.(1)(b)(1) (2) Other savings deposits 46,595 2.a.(1)(b)(2) (3) Time deposits of $100,000 or more 88,776 2.a.(1)(b)(3) (4) Time deposits of less than $100,000 284,570 2.a.(1)(b)(4) (2) Interest on deposits in foreign offices, Edge and Agreement subsidiaries and IBFs 0 2.a.(2) b. Expense of federal funds purchased and securities sold under agreements to repurchase 133,849 2.b. c. Interest on demand notes issued to the U.S. Treasury, trading liabilities and other borrowed money 104,547 2.c. d. Not applicable e. Interest on subordinated notes and debentures 11,303 2.e. f. Total interest expense (sum of items 2.a through 2.e) 908,157 2.f. 3. Net interest income (item 1.g. minus 2.f) 1,074,893 3. 4. Provisions: a. Provision for credit losses 60,315 4.a. b. Provision for allocated transfer risk 0 4.b. 5. Noninterest income: a. Income from fiduciary activities 38,033 5.a. b. Service charges on deposit accounts in domestic offices 115,011 5.b. c. Trading revenue (must equal Schedule RI, sum of Memorandum items 8.a through 8.d) 3,170 5.c. d.-e. Not applicable f. Other noninterest income: (1) Other fee income 105,121 5.f.(1) (2) All other noninterest income* 19,628 5.f.(2) g. Total noninterest income (sum of items 5.a through 5.f) 281,163 5.g. 6. a. Realized gains (losses) on held-to-maturity securities 0 6.a. b. Realized gains (losses) on available-for-sale securities 446 6.b. 7. Noninterest expense: a. Salaries and employee benefits 287,685 7.a. b. Expenses of premises and fixed assets (net of rental income) (excluding salaries and employee benefits and mortgage interest) 90,311 7.b. c. Other noninterest expense* 296,511 7.c. d. Total noninterest expense (sum of items 7.a through 7.c) 674,507 7.d. 8. Income (loss) before income taxes and extraordinary items and other adjustments (item 3 plus or minus items 4.a., 4.b, 5.g, 6.a, 6.b and 7.d) 621,680 8. 9. Applicable income taxes (on item 8) 224,404 9. 10. Income (loss) before extraordinary items and other adjustments (item 8 minus 9) 397,276 10. 11. Extraordinary items and other adjustments, net of income taxes* 0 11. 12. Net income (loss) (sum of items 10 and 11) 397,276 12.
- ---------- FN1/ Includes interest income on time certificates of deposit not held for trading FN/2 Describe on Schedule RI-E--Explanations. 2 10 FDIC Certificate Number [ 550 ] Consolidated Report of Condition for Insured Commercial and State-Chartered Savings Banks for December 31,1998 All schedules are to be reported in thousands of dollars. Unless otherwise indicated, report the amount outstanding as of the last business day of the quarter. Schedule RC - Balance Sheet ASSETS Dollar Amounts in Thousands Bil Mil Thou 1. Cash and balances due from depository institutions (from Schedule RC-A): a. Noninterest-bearing balances and currency and coin /2 1,014,463 1.a. b. Interest-bearing balances /3 18,179 1.b. 2. Securities: a. Held-to-maturity securities (from Schedule RC-B, column A) 5,683,646 2.a. b. Available-for-sale securities (from Schedule RC-B, column D) 3,580,352 2.b. 3. Federal funds sold and securities purchased under agreements to resell 117,750 3. 4. Loans and lease financing receivables: a. Loans and leases, net of unearned income (from Schedule RC-C) 18,509,958 4.a. b. LESS: Allowance for loan and lease losses 280,408 4.b. c. LESS: Allocated transfer risk reserve 0 4.c. d. Loans and leases, net or unearned income, allowance and reserve (item 4.a minus 4.b and 4.c) 18,229,550 4.d. 5. Trading assets (from Schedule RC-D) 0 5. 6. Premises and fixed assets (including capitalized leases) 179,857 6. 7. Other real estate owned (form Schedule RC-M) 13,931 7. 8. Investments in unconsolidated subsidiaries and associated companies (from Schedule RC-M) 56,437 8. 9. Customers' liability to this bank on acceptances outstanding 18,089 9. 10. Intangible assets (from Schedule RC-M) 200,802 10. 11. Other assets (from Schedule RC-F) 410,961 11. 12. Total assets (sum of items 1 through 11) 29,504,017 12. LIABILITIES 13. Deposits: a. In domestic offices (sum of totals of columns A and C from Schedule RC-E, part 1) 20,736,955 13.a. (1) Noninterest-bearing /3 4,574,393 13.a.(1) (2) Interest-bearing 16,162,582 13.a.(2) b. In foreign offices, Edge and Agreement subsidiaries, and IBFs (from Schedule RC-E, part II) 0 13.b. (1) Noninterest-bearing 0 13.b.(1) (2) Interest-bearing 0 13.b.(2) 14. Federal funds purchased and securities sold under agreements to repurchase 1,861,520 14. 15. a. Demand notes issued to the U.S. Treasury 79,145 15.a. b. Trading liabilities (from Schedule RC-D) 0 15.b. 16. Other borrowed money (includes mortgage indebtedness and obligations under capitalized leases): a. With a remaining maturity of one year or less 1,371,455 16.a. b. With a remaining maturity of more than one year through
3 11 three years 791,730 16.b. c. With a remaining maturity of more than three years 1,935,957 16.c. 17. Not applicable 18. Bank's liability on acceptances executed and outstanding 18,089 18. 19. Subordinated notes and debentures 140,753 19. 20. Other liabilities (from Schedule RC-G) 440,260 20. 21. Total liabilities (sum of items 13 through 20) 27,365,864 21. 22. Not applicable EQUITY CAPITAL 23, Perpetual preferred stock and related surplus 6,000 23. 24. Common stock 172,953 24. 25. Surplus (exclude all surplus related to preferred stock) 884,721 25. 26. a. Undivided profits and capital reserves 1,272,287 26.a. b. Net unrealized holding gains (losses) on available-for-sale securities 2,182 26.b. 27. Cumulative foreign currency translation adjustments 0 27. 28. Total equity capital (sum of items 23 through 27) 2,138,153 28. 29. Total liabilities and equity capital (sum of items 21 and 28). 29,504,017 29.
2/ Includes cash items in process of connection and unposted debits. 3/ Includes time certificates of deposit not held for trading. 4 12 Memorandum To be reported only with the March Report of Condition. 1. Indicate in the box at the right the number of the statement below that best describes the most comprehensive level of auditing work performed for the bank by independent external auditors as of any date during 1997 Number ------------ ---------- N/A M.1. ------------ ---------- 1 = Independent audit of the bank conducted in accordance with generally accepted auditing standards by a certified public accounting firm which submits a report on the bank. 2 = Independent audit of the bank's parent holding company conducted in accordance with generally accepted auditing standards by a certified public accounting firm which submits a report on the consolidated holding company (but not on the bank separately) 3 = Directors' examination of the bank conducted in accordance with generally accepted auditing standards by a certified public accounting firm (may be required by state chartering authority) 4 = Directors' examination of the bank performed by other external auditors (may be required by state chartering authority) 5 = Review of bank's financial statements by external auditors 6 = Compilation of the bank's financial statements by external auditors 7 = Other audit procedures (excluding tax preparation work) 8. = No external audit work -----END PRIVACY-ENHANCED MESSAGE-----