BOND HOUSE LETTER N. W. HALSEY & Co. 49 Wall Street New York, Philadelphia, San Francisco, New York, Sept. 28, 1912. Pacific Gas & Electric Co. General & Refunding 5s, 1942 We ask careful consideration of the enclosed circular because we believe these bonds are unusually safe and some of the reasons are as follows: First. The market equity is more than $29,000,000. Second. During the last seven years over $11,500,000 has been put into the property from earnings. Third.-Net earnings for three years have been about double interest charges. Fourth. The Company is paying dividends as follows: 6% on $10,000,000 Preferred Stock. 5% on $31,998,750 Common Stock. Contrast these facts with the present price of 91 and interest at which the bonds yield about 5.60%. The price certainly looks very, very cheap, and it is cheap. The Company is now making application to list on the New York Stock Exchange. We recommend that you telephone or telegraph us to reserve a certain amount of these bonds for you pending investigation, for the preliminary sales have been large, and the price is strictly subject to advance. Yours very truly, JSA:S N. W. HALSEY & CO. AGREEMENT, Dated this 2d day of December, 1901, by and between George J. Gould, Joseph Ramsey, Jr., and William E. Guy, hereinafter called the Syndicate Managers, parties of the first part and the Subscribers hereto, severally, parties of the second part, of whom each is hereinafter termed the syndicate Subscriber, and all of whom, together with the said George J. Gould, Joseph Ramsey, Jr., and William E. Guy, constitute the syndicate. WHEREAS, It is proposed by George J. Gould, Joseph Ramsey, Jr., and William E. Guy, hereinafter designated as Syndicate Managers, to purchase the Little Kanawha Railroad, a line of railroad extending from Parkersburg, West Virginia, up the little Kanawha River about thirty miles, with all its property, franchises, buildings, rights of way as now constructed and owned along the Little Kanawha River; to extend the same eastwardly; to purchase or build a railway from Parkersburg to Zanesville, Ohio, and to purchase coal lands in West Virginia. WHEREAS, For the purpose of providing the necessary money for the purpose herein set forth, and said George J. Gould, Joseph Ramsey, Jr., and William E. Guy, and the Subscribers hereto wish to form a Syndicate to advance the necessary money to the amount of Six Million Dollars, for the purpose herein set forth. NOW, THIS AGREEMENT WITNESSETH, That in consideration of the premises, and of their mutual promises, the parties hereto, and the Syndicate Subscribers, severally, agree with each other and with the Syndicate Managers as follows: I The parties hereto form a syndicate (to be styled the Little Kanawha Syndicate), for the purpose of acquiring and purchasing said railroad properties and other properties hereinbefore described, on terms satisfactory to the Syndicate Managers, and, having acquired the same, to improving, extending, merging, operating, controlling and disposing of the same as may be determined by the Syndicate Managers to be for the benefit of such syndicate. II Each Subscriber hereto and to any counterpart hereof shall set opposite his name the amount of his subscriptions to the syndicate, and shall be called upon to pay and be liable for only such amount 1 Taken from "Cases and Points," Court of Appeals, 1910, page 31, Jones rs. Gould, 200 N. Y. 18.. as shall bear to the obligation of the syndicate not exceeding Eight Million Dollars, the same ratio or proportion as his subscription bears to said maximum obligation. In the event that more than the aggregate amount of Six Million Dollars is subscribed, the Syndicate Managers may reduce any or all subscriptions hereto in such an amount, in their discretion, as shall make the aggregate subscription Six Million Dollars, and in case any such reduction shall be made the Syndicate Managers shall notify the subscribers, whose subscriptions have been reduced, of the amount of such reductions; or the Managers may, in their discretion, accept subscriptions in excess of Six Million Dollars provided that the maximum amount shall not in any event exceed Eight Million Dollars. The funds of the syndicate shall be applied, used and disbursed by the Syndicate Managers for the purpose above set forth, and such other purposes as may become necessary in carrying out the syndicate plans. III The said Syndicate Managers agree to proceed with reasonable diligence to construct or purchase said railway properties and other properties hereinbefore mentioned at such prices and upon such terms of payment as shall, in their judgment, be the best obtainable in the circumstances. IV The Syndicate Subscribers irrevocably nominate and appoint the Syndicate Managers and the survivor or survivors of them, their agents and attorneys, with full power and authority, to do any and all acts and enter into and execute any and all agreements or other instruments necessary or proper, or by the Syndicate Managers deemed expedient in the premises to carry out and perform the said agreements to construct or purchase said properties, and the purposes of this syndicate agreement to that end, to absolutely control the property so to be construed or purchased as fully in all respects as if they were the absolute, owners thereof with power to borrow money thereon, and pledge the property and syndicate subscriptions. or any portion thereof as security therefor, and to sell and dispose of the same upon such terms as may be, in their judgment, for the interest of this syndicate, and with like power to hold, manage, control and dispose of, in their discretion, any and all stocks and securities acquired on any sale or disposal of said property or any part thereof. V Unless sooner terminated by the Syndicate Managers in their discretion, and upon notice to the Syndicate Subscribers, this Agree ment shall continue for the period of three years from or after the first day of February, 1902, and for such further period thereafter as the Syndicate Managers, in their discretion, find reasonably neces sary or advisable in the interests of the Syndicate Subscribers. VI The Syndicate Subscribers will, from time to time, and at any time on call of Syndicate Managers, and to the amount of such call or calls make cash payments on account of their respective subscriptions hereunder, upon ten days' written notice by mail from the Syndicate Managers. All payments hereunder, from time to time by the Syndicate Subscribers, shall be made to the Trust Company designated in such call for the account of the Syndicate Managers. Each subscriber shall, at the time of making each of the payments called hereunder, receive a certificate issued by said Trust Company certifying the amount of such payment and the interest of such subscriber in said syndicate subject to the terms and conditions of this agreement. Such certificates shall be in assignable form and shall be transferable only on the books of said Trust Company by assignment and surrender of such certificates, and upon such assignment and surrender a new certificate shall be issued in the name of the transferee. VII The Syndicate Managers shall have the sole direction, management and the entire conduct of the syndicate, and the enumeration of particular or specific powers in this Agreement shall not be considered. as in any way limiting or abridging the general power or discretion intended to be conferred upon and reserved to the Syndicate Managers in order to authorize them to do any and all things proper, necessary or expedient in their discretion to carry out the purpose of this Agreement. Neither shall they, or any of them, be liable under any of the provisions of this Agreement, or in any or for any matter connected therewith, except for one of good faith, and the failure to exercise reasonable diligence. VIII The Syndicate Managers shall be entitled to a commission of one and one-half per cent. on the amount of subscriptions hereto, without any obligation to share the same with any Subscriber or to account therefor to the syndicate or to any Subscriber. All expenses of the Syndicate Managers including counsel fees, brokerage commissions, and all other disbursements and expenses made by them in connection with the carrying out of the purpose of this Agreement shall be a charge to the syndicate, and all profits and losses of the syndicate shall be divided and borne pro rata. The Syndicate Managers are to be subscribers to the syndicate, and to the extent of any such subscription or reservation by them, they are to participate in the profits and losses to the same extent as other subscribers. Should the Syndicate Managers, in the carrying out of this Agreement, sell and dispose of said properties or stocks and securities received therefor, the net proceeds of such sale shall be distributed pro rata to the subscribers from time to time, in the discretion of the Syndicate Managers. Should such railroad properties not be sold but be capitalized by the formation of a new company or companies of which company or companies the Syndicate Managers acquire the securities issue, or should said properties or any part thereof be disposed of for stocks or securities which are not sold by the Syndicate Managers, then after the payment of all expenses and commissions accruing under this Agreement to said Syndicate Managers and upon the termination of the syndicate, such securities so acquired shall be distributed pro rata to the Subscribers hereto or their assigns as provided herein. IX Each Subscriber hereby ratifies, assents to and agrees to be bound by any action of the Syndicate Managers taken under this Agreement, and agrees to perform all of his undertakings hereunder from time to time on the call of the Syndicate Managers to the full extent of the amount set opposite his name or allotted to him; but he shall be liable hereunder solely to the Syndicate Managers or their assigns, and only to the extent of his individual participation in the syndicate. Each and every party hereto will, upon reasonable request, execute and deliver all further writing which may be necessary or proper to carry this Agreement into effect. The failure of any Syndicate Subscriber to perform any of his undertakings hereunder shall not release or affect any other Syndicate Subscriber. The Syndicate Managers may, in their discretion, by written consent release any Syndicate Subscriber. In case any Syndicate Subscriber shall fail to perform any of his undertakings hereunder or be released by the Syndicate Managers, other Subscribers may be received by the Syndicate Managers and take the share of the Subscriber so failing to perform his undertakings or so released. Upon failure of any Syndicate Subscriber to perform any of his undertakings hereunder, the Syndicate Managers shall have the right at their option to exclude such Syndicate Subscriber from further |