================================================================================
NEW JERSEY RESOURCES CORPORATION
$25,000,000 3.75% Senior Notes due March 15, 2009
--------------
NOTE PURCHASE AGREEMENT
--------------
Dated as of March 15, 2004
(Exhibit 4-2)
================================================================================
TABLE OF CONTENTS
(Not a part of the Agreement)
SECTION HEADING PAGE
SECTION 1. Authorization of Notes.......................................................... 1
Section 1.1. Authorization of Notes................................................. 1
SECTION 2. Sale and Purchase of Notes; Guaranty............................................ 1
Section 2.1. Sale and Purchase of Notes............................................. 1
Section 2.2. Guaranty Agreement..................................................... 1
SECTION 3. Closing......................................................................... 2
SECTION 4. Conditions to Closing........................................................... 2
Section 4.1. Representations and Warranties......................................... 2
Section 4.2. Performance; No Default................................................ 2
Section 4.3. Compliance Certificates................................................ 2
Section 4.4. Guaranty Agreement..................................................... 3
Section 4.5. Opinions of Counsel.................................................... 3
Section 4.6. Purchase Permitted by Applicable Law, Etc.............................. 3
Section 4.7. Related Transactions................................................... 3
Section 4.8. Payment of Special Counsel Fees........................................ 3
Section 4.9. Private Placement Number............................................... 4
Section 4.10. Changes in Corporate Structure......................................... 4
Section 4.11. Funding Instructions................................................... 4
Section 4.12. Proceedings and Documents.............................................. 4
SECTION 5. Representations and Warranties of the Company................................... 4
Section 5.1. Organization; Power and Authority...................................... 4
Section 5.2. Authorization, Etc..................................................... 4
Section 5.3. Disclosure............................................................. 5
Section 5.4. Organization and Ownership of Shares of Subsidiaries................... 5
Section 5.5. Financial Statements................................................... 6
Section 5.6. Compliance with Laws, Other Instruments, Etc........................... 6
Section 5.7. Governmental Authorizations, Etc....................................... 6
Section 5.8. Litigation; Observance of Statutes and Orders.......................... 6
Section 5.9. Taxes.................................................................. 6
Section 5.10. Title to Property; Leases.............................................. 7
Section 5.11. Licenses, Permits, Etc................................................. 7
-i-
Section 5.12. Compliance with ERISA.................................................. 7
Section 5.13. Private Offering by the Company........................................ 8
Section 5.14. Use of Proceeds; Margin Regulations.................................... 8
Section 5.15. Existing Debt.......................................................... 8
Section 5.16. Foreign Assets Control Regulations, Etc................................ 9
Section 5.17. Status under Certain Statutes.......................................... 9
Section 5.18. Environmental Matters.................................................. 9
Section 5.19. Employment Matters..................................................... 10
Section 5.20. Hedging Contract Policies.............................................. 10
Section 5.21. Permitted Related Business Opportunities............................... 10
Section 5.22. Notes Rank Pari Passu.................................................. 10
SECTION 6. Representations of the Purchasers............................................... 10
Section 6.1. Purchase for Investment................................................ 10
Section 6.2. Source of Funds........................................................ 11
SECTION 7. Information as to Company....................................................... 12
Section 7.1. Financial and Business Information..................................... 12
Section 7.2. Officer's Certificate.................................................. 14
Section 7.3. Inspection............................................................. 15
SECTION 8. Prepayment of the Notes......................................................... 15
Section 8.1. Required Prepayments................................................... 15
Section 8.2. Optional Prepayments with Make-Whole Amount............................ 15
Section 8.3. Allocation of Partial Prepayments...................................... 16
Section 8.4. Maturity; Surrender, Etc............................................... 16
Section 8.5. Purchase of Notes...................................................... 16
Section 8.6. Make-Whole Amount for Notes............................................ 16
SECTION 9. Affirmative Covenants........................................................... 18
Section 9.1. Compliance with Law.................................................... 18
Section 9.2. Insurance.............................................................. 18
Section 9.3. Maintenance of Properties.............................................. 18
Section 9.4. Payment of Taxes and Claims............................................ 18
Section 9.5. Corporate Existence, Etc............................................... 19
Section 9.6. Ownership of Subsidiaries.............................................. 19
Section 9.7. Hedging Contract Policies.............................................. 19
Section 9.8. Guaranty Agreement..................................................... 19
SECTION 10. Negative Covenants.............................................................. 20
-ii-
Section 10.1. Leverage Ratio......................................................... 20
Section 10.2. Interest Coverage Ratio................................................ 20
Section 10.3. Limitation on Priority Debt............................................ 20
Section 10.4. Liens.................................................................. 20
Section 10.5. Investments............................................................ 23
Section 10.6. Restricted Payments.................................................... 23
Section 10.7. Restrictions on Dividends of Subsidiaries, Etc......................... 23
Section 10.8. Sale of Assets, Etc.................................................... 24
Section 10.9. Merger, Consolidation, Etc............................................. 24
Section 10.10. Disposal of Ownership of a Restricted Subsidiary....................... 25
Section 10.11. Limitations on Subsidiaries, Partnerships and Joint Ventures........... 25
Section 10.12. Limitation on Modifications to Hedging Contract Policies............... 26
Section 10.13. Limitation on Synthetic Leases......................................... 26
Section 10.14. Nature of Business..................................................... 26
Section 10.15. Transactions with Affiliates........................................... 26
Section 10.16. Designation of Restricted and Unrestricted Subsidiaries................ 27
Section 10.17. Limitations on Modifications........................................... 27
SECTION 11. Events of Default............................................................... 27
SECTION 12. Remedies on Default, Etc........................................................ 30
Section 12.1. Acceleration........................................................... 30
Section 12.2. Other Remedies......................................................... 30
Section 12.3. Rescission............................................................. 31
Section 12.4. No Waivers or Election of Remedies, Expenses, Etc...................... 31
SECTION 13. Registration; Exchange; Substitution of Notes................................... 31
Section 13.1. Registration of Notes.................................................. 31
Section 13.2. Transfer and Exchange of Notes......................................... 31
Section 13.3. Replacement of Notes................................................... 32
SECTION 14. Payments on Notes............................................................... 32
Section 14.1. Place of Payment....................................................... 32
Section 14.2. Home Office Payment.................................................... 32
SECTION 15. Expenses, Etc................................................................... 33
Section 15.1. Transaction Expenses................................................... 33
Section 15.2. Survival............................................................... 33
SECTION 16. Survival of Representations and Warranties; Entire Agreement.................... 33
SECTION 17. Amendment and Waiver............................................................ 34
-iii-
Section 17.1. Requirements........................................................... 34
Section 17.2. Solicitation of Holders of Notes....................................... 34
Section 17.3. Binding Effect, Etc.................................................... 35
Section 17.4. Notes Held by Company, Etc............................................. 35
SECTION 18. Notices......................................................................... 35
SECTION 19. Reproduction of Documents....................................................... 36
SECTION 20. Confidential Information........................................................ 36
SECTION 21. Substitution of Purchaser....................................................... 37
SECTION 22. Miscellaneous................................................................... 38
Section 22.1. Successors and Assigns................................................. 38
Section 22.2. Submission to Jurisdiction............................................. 38
Section 22.3. Payments Due on Non-Business Days...................................... 38
Section 22.4. Severability........................................................... 38
Section 22.5. Construction........................................................... 38
Section 22.6. Counterparts........................................................... 39
Section 22.7. Governing Law.......................................................... 39
-iv-
ATTACHMENTS TO NOTE PURCHASE AGREEMENT:
SCHEDULE A -- Information Relating to Purchasers
SCHEDULE B -- Defined Terms
SCHEDULE 4.10 -- Changes in Corporate Structure
SCHEDULE 5.3 -- Disclosure Materials
SCHEDULE 5.4 -- Subsidiaries of the Company and Ownership of Subsidiary
Stock
SCHEDULE 5.5 -- Financial Statements
SCHEDULE 5.8 -- Certain Litigation
SCHEDULE 5.11 -- Patents, Etc.
SCHEDULE 5.14 -- Use of Proceeds
SCHEDULE 5.15 -- Existing Debt
SCHEDULE 5.20 -- Hedging Contract Policies
SCHEDULE 5.21 -- Permitted Related Business Opportunities
EXHIBIT 1 -- Form of 3.75% Senior Note due March 15, 2009
EXHIBIT 2 -- Form of Subsidiary Guaranty Agreement
EXHIBIT 4.5(a) -- Form of Opinion of Special Counsel for the Company and
the Guarantors
EXHIBIT 4.5(b) -- Form of Opinion of Special Counsel for the Purchasers
-v-
NEW JERSEY RESOURCES CORPORATION
1415 WYKOFF ROAD
WALL, NEW JERSEY 07719
3.75% Senior Notes due March 15, 2009
Dated as of March 15, 2004
TO THE PURCHASERS LISTED IN
THE ATTACHED SCHEDULE A:
Ladies and Gentlemen:
NEW JERSEY RESOURCES CORPORATION, a New Jersey corporation (the
"Company"), agrees with the purchasers listed in the attached Schedule A (the
"Purchasers") as follows:
SECTION 1. AUTHORIZATION OF NOTES.
Section 1.1. Authorization of Notes. The Company will authorize the issue
and sale of $25,000,000 aggregate principal amount of its 3.75% Senior Notes due
March 15, 2009 (the "Notes," such term to include any such notes issued in
substitution therefor pursuant to Section 13 of this Agreement). The Notes shall
be substantially in the form set out in Exhibit 1, with such changes therefrom,
if any, as may be approved by the Purchasers and the Company. Certain
capitalized terms used in this Agreement are defined in Schedule B; references
to a "Schedule" or an "Exhibit" are, unless otherwise specified, to a Schedule
or an Exhibit attached to this Agreement.
SECTION 2. SALE AND PURCHASE OF NOTES; GUARANTY.
Section 2.1. Sale and Purchase of Notes. Subject to the terms and
conditions of this Agreement, the Company will issue and sell to each Purchaser
and each Purchaser will purchase from the Company, at the Closing provided for
in Section 3, Notes in the principal amount specified opposite such Purchaser's
name in Schedule A at the purchase price of 100% of the principal amount
thereof. Each Purchaser's obligations hereunder are several and not joint and no
Purchaser shall have any obligation or liability to any Person for the
performance or nonperformance by any other Purchaser hereunder.
Section 2.2. Guaranty Agreement. The obligations of the Company hereunder
and under the Notes are absolutely, unconditionally and irrevocably guaranteed
by each Restricted Subsidiary (other than Regulated Entities) existing on the
date of the Closing and each other Subsidiary from time to time required to
guaranty the Notes pursuant to Section 9.8 (each a "Guarantor" and,
collectively, the "Guarantors"), pursuant to that certain Subsidiary Guaranty
Agreement dated as of March 15, 2004 (as the same may be amended, supplemented,
restated or otherwise modified from time to time, the "Guaranty Agreement")
substantially in the form of Exhibit 2.
SECTION 3. CLOSING.
The sale and purchase of the Notes to be purchased by the Purchasers shall
occur at the offices of Schiff Hardin LLP, 623 Fifth Avenue, 28th Floor, New
York, New York 10022, at 11:00 a.m., New York, New York time, at a closing (the
"Closing") on March 24, 2004 or on such other Business Day thereafter on or
prior to March 31, 2004 as may be agreed upon by the Company and the Purchasers.
At the Closing, the Company will deliver to each Purchaser the Notes to be
purchased by such Purchaser in the form of a single Note (or such greater number
of Notes in denominations of at least $100,000 as such Purchaser may request)
dated the date of the Closing and registered in such Purchaser's name (or in the
name of its nominee), against delivery by such Purchaser to the Company or its
order of immediately available funds in the amount of the purchase price
therefor by wire transfer of immediately available funds for the account of the
Company. If at the Closing the Company shall fail to tender such Notes to any
Purchaser as provided above in this Section 3, or any of the conditions
specified in Section 4 shall not have been fulfilled to any Purchaser's
satisfaction, such Purchaser shall, at its election, be relieved of all further
obligations under this Agreement, without thereby waiving any rights such
Purchaser may have by reason of such failure or such nonfulfillment.
SECTION 4. CONDITIONS TO CLOSING.
Each Purchaser's obligation to purchase and pay for the Notes to be sold
to such Purchaser at the Closing is subject to the fulfillment to such
Purchaser's satisfaction, prior to or at the Closing, of the following
conditions:
Section 4.1. Representations and Warranties. (a) The representations and
warranties of the Company in this Agreement shall be correct when made and at
the time of the Closing.
(b) The representations and warranties of each Guarantor in the
Guaranty Agreement shall be correct when made and at the time of the Closing.
Section 4.2. Performance; No Default. The Company and each Guarantor shall
have performed and complied with all agreements and conditions contained in this
Agreement or in the Guaranty Agreement, as applicable, required to be performed
or complied with by it prior to or at the Closing, and after giving effect to
the issue and sale of the Notes (and the application of the proceeds thereof as
contemplated by Schedule 5.14), no Default or Event of Default shall have
occurred and be continuing.
Section 4.3. Compliance Certificates.
(a) Officer's Certificate. (1) The Company shall have delivered to
such Purchaser an Officer's Certificate, dated the date of the Closing,
certifying that the conditions specified in Sections 4.1(a), 4.2 and 4.10
have been fulfilled.
(2) Each Guarantor shall have delivered to such Purchaser an
Officer's Certificate, dated the date of the Closing, certifying that the
conditions specified in Section 4.1(b) and 4.2 have been fulfilled.
2
(b) Secretary's Certificate. (1) The Company shall have delivered to
such Purchaser a certificate certifying as to the resolutions attached
thereto and other corporate proceedings relating to the authorization,
execution and delivery of the Notes and this Agreement.
(2) Each Guarantor shall have delivered to such Purchaser a
certificate certifying as to the resolutions attached thereto and other
corporate or similar proceedings relating to the authorization, execution
and delivery of the Guaranty Agreement.
Section 4.4. Guaranty Agreement. The Guaranty Agreement shall have been
duly authorized, executed and delivered by each Guarantor and shall be in full
force and effect and such Purchaser shall have received a duly executed copy
thereof.
Section 4.5. Opinions of Counsel. Such Purchaser shall have received
opinions in form and substance satisfactory to such Purchaser, dated the date of
the Closing (a) from Windels Marx Lane & Mittendorf, LLP, special counsel for
the Company and the Guarantors, covering the matters set forth in Exhibit 4.5(a)
and covering such other matters incident to the transactions contemplated hereby
as such Purchaser or special counsel to the Purchasers may reasonably request
(and the Company hereby instructs its counsel to deliver such opinion to such
Purchaser) and (b) from Schiff Hardin LLP, special counsel to the Purchasers in
connection with such transactions, substantially in the form set forth in
Exhibit 4.5(b) and covering such other matters incident to such transactions as
such Purchaser may reasonably request.
Section 4.6. Purchase Permitted by Applicable Law, Etc. On the date of the
Closing, such Purchaser's purchase of Notes shall (a) be permitted by the laws
and regulations of each jurisdiction to which such Purchaser is subject, without
recourse to provisions (such as Section 1405(a)(8) of the New York Insurance
Law) permitting limited investments by insurance companies without restriction
as to the character of the particular investment, (b) not violate any applicable
law or regulation (including, without limitation, Regulation T, U or X of the
Board of Governors of the Federal Reserve System) and (c) not subject such
Purchaser to any tax, penalty or liability under or pursuant to any applicable
law or regulation. If requested by any Purchaser, such Purchaser shall have
received an Officer's Certificate certifying as to such matters of fact as such
Purchaser may reasonably specify to enable it to determine whether such purchase
is so permitted.
Section 4.7. Related Transactions. The Company shall have consummated the
sale of the entire principal amount of the Notes scheduled to be sold on the
date of the Closing pursuant to this Agreement.
Section 4.8. Payment of Special Counsel Fees. Without limiting the
provisions of Section 15.1, the Company shall have paid on or before the Closing
the reasonable fees, charges and disbursements of special counsel to the
Purchasers referred to in Section 4.5(b) to the extent reflected in a statement
of such counsel rendered to the Company at least one Business Day prior to the
Closing.
3
Section 4.9. Private Placement Number. A Private Placement Number issued
by Standard & Poor's CUSIP Service Bureau (in cooperation with the Securities
Valuation Office of the National Association of Insurance Commissioners) shall
have been obtained for the Notes.
Section 4.10. Changes in Corporate Structure. Except as specified in
Schedule 4.10, the Company shall not have changed its jurisdiction of
incorporation or been a party to any merger or consolidation and shall not have
succeeded to all or any substantial part of the liabilities of any other entity,
at any time following the date of the most recent financial statements referred
to in Schedule 5.5.
Section 4.11. Funding Instructions. At least three Business Days prior to
the date of the Closing, such Purchaser shall have received written instructions
executed by an authorized financial officer of the Company directing the manner
of the payment of funds and setting forth (a) the name of the transferee bank,
(b) such transferee bank's ABA number, (c) the account name and number into
which the purchase price for the Notes is to be deposited and (d) the name and
telephone number of the account representative responsible for verifying receipt
of such funds.
Section 4.12. Proceedings and Documents. All corporate and other
proceedings in connection with the transactions contemplated by this Agreement
and all documents and instruments incident to such transactions shall be
satisfactory to such Purchaser and special counsel to the Purchasers, and such
Purchaser and special counsel to the Purchasers shall have received all such
counterpart originals or certified or other copies of such documents as such
Purchaser or special counsel to the Purchasers may reasonably request.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to each Purchaser that:
Section 5.1. Organization; Power and Authority. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation, and is duly qualified as a foreign
corporation and is in good standing in each jurisdiction in which such
qualification is required by law, other than those jurisdictions as to which the
failure to be so qualified or in good standing would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect. The Company
has the corporate power and authority to own or lease the properties it purports
to own or lease, to transact the business it transacts and proposes to transact,
to execute and deliver this Agreement and the Notes and to perform the
provisions hereof and thereof.
Section 5.2. Authorization, Etc. (a) This Agreement and the Notes have
been duly authorized by all necessary corporate action on the part of the
Company, and this Agreement constitutes, and upon execution and delivery thereof
each Note will constitute, a legal, valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except as such
enforceability may be limited by (1) applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally and (2) general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
4
(b) The Guaranty Agreement has been duly authorized by all necessary
corporate or other action on the part of each Guarantor, and the Guaranty
Agreement constitutes a legal, valid and binding obligation of each Guarantor
enforceable against each Guarantor in accordance with its terms, except as such
enforceability may be limited by (1) applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally and (2) general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
Section 5.3. Disclosure. The Company, through its agent, J.P. Morgan
Securities Inc., has delivered to each Purchaser a copy of a Private Placement
Memorandum, dated February 2004 (the "Memorandum"), relating to the transactions
contemplated hereby. Except as disclosed in Schedule 5.3, this Agreement, the
Memorandum, the documents, certificates or other writings identified in Schedule
5.3 and the financial statements listed in Schedule 5.5, taken as a whole, do
not contain any untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein not misleading in light
of the circumstances under which they were made. Except as disclosed in the
Memorandum or as expressly described in Schedule 5.3, or in one of the
documents, certificates or other writings identified therein, or in the
financial statements listed in Schedule 5.5, since September 30, 2003, there has
been no change in the financial condition, operations, business or properties of
the Company or any of its Restricted Subsidiaries except changes that,
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect.
Section 5.4. Organization and Ownership of Shares of Subsidiaries. (a)
Schedule 5.4 is (except as noted therein) a complete and correct list of the
Company's Subsidiaries, showing, as to each Subsidiary, the correct name
thereof, the jurisdiction of its organization, the percentage of shares of each
class of its capital stock or similar equity interests outstanding owned by the
Company and each other Subsidiary and whether or not such Subsidiary is a
Restricted Subsidiary, an Inactive Subsidiary and/or a Regulated Entity.
(b) All of the outstanding shares of capital stock or similar equity
interests of each Restricted Subsidiary shown in Schedule 5.4 as being owned by
the Company and its Subsidiaries have been validly issued, are fully paid and
nonassessable and are owned by the Company or another Subsidiary free and clear
of any Lien (except as otherwise disclosed in Schedule 5.4).
(c) Each Restricted Subsidiary identified in Schedule 5.4 is a
corporation or other legal entity duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization, and is duly
qualified as a foreign corporation or other legal entity and is in good standing
in each jurisdiction in which such qualification is required by law, other than
those jurisdictions as to which the failure to be so qualified or in good
standing would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect. Each such Restricted Subsidiary has the
corporate or other power and authority to own or lease the properties it
purports to own or lease, to transact the business it transacts and proposes to
transact and, in the case of each Restricted Subsidiary that is a Guarantor, to
execute and deliver the Guaranty Agreement and to perform the provisions
thereof.
5
Section 5.5. Financial Statements. The Company has delivered to each
Purchaser copies of the financial statements of the Company and its Subsidiaries
listed on Schedule 5.5. All of said financial statements (including in each case
the related schedules and notes) fairly present in all material respects the
consolidated financial position of the Company and its Subsidiaries as of the
respective dates specified in such Schedule and the consolidated results of
their operations and cash flows for the respective periods so specified and have
been prepared in accordance with GAAP consistently applied throughout the
periods involved except as set forth in the notes thereto (subject, in the case
of any interim financial statements, to normal year-end adjustments).
Section 5.6. Compliance with Laws, Other Instruments, Etc. The execution,
delivery and performance by the Company of this Agreement and the Notes and the
execution and delivery by each Guarantor of the Guaranty Agreement will not (a)
contravene, result in any breach of, or constitute a default under, or result in
the creation of any Lien in respect of any property of the Company or any
Restricted Subsidiary under, any indenture, mortgage, deed of trust, loan,
purchase or credit agreement, lease, corporate charter or by-laws, or any other
Material agreement or instrument to which the Company or any Restricted
Subsidiary is bound or by which the Company or any Restricted Subsidiary or any
of their respective properties may be bound or affected, (b) conflict with or
result in a breach of any of the terms, conditions or provisions of any order,
judgment, decree or ruling of any court, arbitrator or Governmental Authority
applicable to the Company or any Restricted Subsidiary or (c) violate any
provision of any statute or other rule or regulation of any Governmental
Authority applicable to the Company or any Restricted Subsidiary.
Section 5.7. Governmental Authorizations, Etc. No consent, approval or
authorization of, or registration, filing or declaration with, any Governmental
Authority is required in connection with the execution, delivery or performance
by (a) the Company of this Agreement or the Notes or (b) any Guarantor of the
Guaranty Agreement, in each case, other than such consents, approvals,
authorizations, registrations, filings or declarations that have been obtained
or made prior to the date of the Closing.
Section 5.8. Litigation; Observance of Statutes and Orders. (a) Except as
disclosed in Schedule 5.8, there are no actions, suits or proceedings pending
or, to the knowledge of the Company, threatened against or affecting the Company
or any Restricted Subsidiary or any property of the Company or any Restricted
Subsidiary in any court or before any arbitrator of any kind or before or by any
Governmental Authority that, individually or in the aggregate, would reasonably
be expected to have a Material Adverse Effect.
(b) Neither the Company nor any Subsidiary is in default under any
order, judgment, decree or ruling of any court, arbitrator or Governmental
Authority or is in violation of any applicable law, ordinance, rule or
regulation (including, without limitation, Environmental Laws) of any
Governmental Authority, which default or violation, individually or in the
aggregate, would reasonably be expected to have a Material Adverse Effect.
Section 5.9. Taxes. The Company and its Subsidiaries have filed all income
tax returns that are required to have been filed in any jurisdiction, and have
paid all taxes shown to be due
6
and payable on such returns and all other taxes and assessments payable by them,
to the extent such taxes and assessments have become due and payable and before
they have become delinquent, except for any taxes and assessments (a) the amount
of which is not, individually or in the aggregate, Material or (b) the amount,
applicability or validity of which is currently being contested in good faith by
appropriate proceedings and with respect to which the Company or a Subsidiary,
as the case may be, has established adequate reserves in accordance with GAAP.
The charges, accruals and reserves on the books of the Company and its
Subsidiaries in respect of Federal, state or other taxes for all fiscal periods
are adequate. The Federal income tax liabilities of the Company and its
Subsidiaries have been determined by the Internal Revenue Service and paid for
all fiscal years up to and including the fiscal year ended September 30, 1999.
Section 5.10. Title to Property; Leases. The Company and its Restricted
Subsidiaries have good and sufficient title related to the ownership of their
respective Material properties, including all such properties reflected in the
most recent audited balance sheet referred to in Section 5.5 or purported to
have been acquired by the Company or any Restricted Subsidiary after said date
(except as sold or otherwise disposed of in the ordinary course of business), in
each case free and clear of Liens prohibited by this Agreement, except for those
defects in title and Liens that, individually or in the aggregate, would not
have a Material Adverse Effect. All Material leases are valid and subsisting and
are in full force and effect in all material respects.
Section 5.11. Licenses, Permits, Etc. Except as disclosed in Schedule
5.11, the Company and its Restricted Subsidiaries own or possess all licenses,
permits, franchises, authorizations, patents, copyrights, service marks,
trademarks, trade names and domain names or rights thereto, that are Material,
without known conflict with the rights of others, except for those conflicts
that, individually or in the aggregate, would not have a Material Adverse
Effect.
Section 5.12. Compliance with ERISA. (a) The Company and each ERISA
Affiliate have operated and administered each Plan in compliance with all
applicable laws except for such instances of noncompliance as have not resulted
in and would not reasonably be expected to result in a Material Adverse Effect.
Neither the Company nor any ERISA Affiliate has incurred any liability pursuant
to Title I or IV of ERISA or the penalty or excise tax provisions of the Code
relating to employee benefit plans (as defined in Section 3 of ERISA), and no
event, transaction or condition has occurred or exists that would reasonably be
expected to result in the incurrence of any such liability by the Company or any
ERISA Affiliate, or in the imposition of any Lien on any of the rights,
properties or assets of the Company or any ERISA Affiliate, in either case
pursuant to Title I or IV of ERISA or to such penalty or excise tax provisions
or to Section 401(a)(29) or 412 of the Code, other than such liabilities or
Liens as would not be, individually or in the aggregate, Material.
(b) The present value of the aggregate benefit liabilities under each of
the Plans (other than Multiemployer Plans), determined as of the end of such
Plan's most recently ended plan year on the basis of the actuarial assumptions
specified for funding purposes in such Plan's most recent actuarial valuation
report, did not exceed the aggregate current value of the assets of such Plan
allocable to such benefit liabilities. The term "benefit liabilities" has the
meaning specified in Section 4001 of ERISA and the terms "current value" and
"present value" have the meanings specified in Section 3 of ERISA.
7
(c) The Company and its ERISA Affiliates have not incurred withdrawal
liabilities (and are not subject to contingent withdrawal liabilities) under
Section 4201 or 4204 of ERISA in respect of Multiemployer Plans that,
individually or in the aggregate, are Material.
(d) The accumulated post-retirement benefit obligation (determined as of
the last day of the Company's most recently ended fiscal year in accordance with
Financial Accounting Standards Board Statement No. 106, without regard to
liabilities attributable to continuation coverage mandated by Section 4980B of
the Code) of the Company and its Restricted Subsidiaries is not Material.
(e) The execution and delivery of this Agreement and the issuance and
sale of the Notes hereunder will not involve any transaction that is subject to
the prohibitions of Section 406 of ERISA or in connection with which a tax could
be imposed pursuant to Section 4975(c)(1)(A)-(D) of the Code. The representation
by the Company in the first sentence of this Section 5.12(e) with respect to
each Purchaser is made in reliance upon and subject to the accuracy of such
Purchaser's representation in Section 6.2 as to the sources of the funds used to
pay the purchase price of the Notes to be purchased by such Purchaser.
Section 5.13. Private Offering by the Company. Neither the Company nor
anyone authorized to act on its behalf has offered the Notes or the Guaranty
Agreement or any similar securities for sale to, or solicited any offer to buy
any of the same from, or otherwise approached or negotiated in respect thereof
with, any Person other than the Purchasers and not more than 15 other
Institutional Investors of the type described in clause (c) of the definition
thereof, each of which has been offered the Notes and the Guaranty Agreement at
a private sale for investment. Neither the Company nor anyone acting on its
behalf has taken, or will take, any action that would subject the issuance or
sale of the Notes or the execution and performance of the Guaranty Agreement to
the registration requirements of Section 5 of the Securities Act.
Section 5.14. Use of Proceeds; Margin Regulations. The Company will apply
the proceeds of the sale of the Notes as set forth in Schedule 5.14. No part of
the proceeds from the sale of the Notes hereunder will be used, directly or
indirectly, for the purpose of buying or carrying any margin stock within the
meaning of Regulation U of the Board of Governors of the Federal Reserve System
(12 CFR 221), or for the purpose of buying or carrying or trading in any
securities under such circumstances as to involve the Company in a violation of
Regulation X of said Board (12 CFR 224) or to involve any broker or dealer in a
violation of Regulation T of said Board (12 CFR 220). Margin stock does not
constitute more than 25% of the value of the consolidated assets of the Company
and its Subsidiaries and the Company does not have any present intention that
margin stock will constitute more than 25% of the value of such assets. As used
in this Section, the terms "margin stock" and "purpose of buying or carrying"
shall have the meanings assigned to them in said Regulation U.
Section 5.15. Existing Debt. Except as described therein, Schedule 5.15
sets forth a complete and correct list of all outstanding Debt of the Company
and its Restricted Subsidiaries as of March 24, 2004 for the Company and as of
December 31, 2003 for the Restricted Subsidiaries, since which dates there has
been no Material change in the amounts, interest rates, sinking funds,
installment payments or maturities of the Debt of the Company or its Restricted
8
Subsidiaries. Neither the Company nor any Restricted Subsidiary is in default
and no waiver of default is currently in effect, in the payment of any principal
or interest on any Debt of the Company or such Restricted Subsidiary and no
event or condition exists with respect to any Debt of the Company or any
Restricted Subsidiary that would permit (or that with notice or the lapse of
time, or both, would permit) one or more Persons to cause such Debt to become
due and payable before its stated maturity or before its regularly scheduled
dates of payment.
Section 5.16. Foreign Assets Control Regulations, Etc. Neither the sale of
the Notes by the Company hereunder nor its use of the proceeds thereof will
violate the Anti-Terrorism Order, the Patriot Act, the Trading with the Enemy
Act, as amended, or any of the foreign assets control regulations of the United
States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) or any
enabling legislation or executive order relating thereto. The Company is not a
"blocked person" under the Patriot Act. The representation by the Company in the
first sentence of this Section 5.16 is made upon the assumption that the sources
of the funds used to purchase the Notes do not, by themselves, violate any of
the foregoing.
Section 5.17. Status under Certain Statutes. Neither the Company nor any
Subsidiary is an "investment company" registered or required to be registered
under the Investment Company Act of 1940 or an "affiliated person" of an
"investment company" or an "affiliated person" of such "affiliated person" or
under the "control" of an "investment company" as such terms are defined in the
Investment Company Act of 1940, as amended, and shall not become such an
"investment company" or such an "affiliated person" or under such "control."
Neither the Company nor any Subsidiary is a "holding company" or a "subsidiary
company" of a "holding company," or an "affiliate" of a "holding company" or of
a "subsidiary company" of a "holding company" within the meaning of the Public
Utility Holding Company Act of 1935, as amended. Based upon the immediately
preceding sentence, neither the Company nor the issue and sale of the Notes is
subject to regulation under the Public Utility Holding Company Act of 1935, as
amended. Neither the Company nor any Subsidiary is subject to the ICC
Termination Act of 1995, as amended, or the Federal Power Act, as amended.
Neither the Company nor any Subsidiary is subject to any Federal or state
statute or regulation limiting its ability to incur Debt.
Section 5.18. Environmental Matters. Neither the Company nor any
Restricted Subsidiary has knowledge of any claim or has received any notice of
any claim, and no proceeding has been instituted raising any claim against the
Company or any of its Restricted Subsidiaries or any of their respective real
properties now or formerly owned, leased or operated by any of them or other
assets, alleging any damage to the environment or violation of any Environmental
Laws, except, in each case, such as would not reasonably be expected to result
in a Material Adverse Effect. Except as otherwise disclosed to the Purchasers in
writing:
(a) neither the Company nor any Restricted Subsidiary has knowledge
of any facts which would give rise to any claim, public or private, of
violation of Environmental Laws or damage to the environment emanating
from, occurring on or in any way related to real properties now or
formerly owned, leased or operated by any of them or to other assets or
their use, except, in each case, such as would not reasonably be expected
to result in a Material Adverse Effect;
9
(b) neither the Company nor any of its Restricted Subsidiaries has
stored any Hazardous Materials on real properties now or formerly owned,
leased or operated by any of them or has disposed of any Hazardous
Materials in a manner contrary to any Environmental Laws in each case in
any manner that would reasonably be expected to result in a Material
Adverse Effect; and
(c) all buildings on all real properties now owned, leased or
operated by the Company or any of its Restricted Subsidiaries are in
compliance with applicable Environmental Laws, except where failure to
comply would not reasonably be expected to result in a Material Adverse
Effect.
Section 5.19. Employment Matters. The Company and each Restricted
Subsidiary is in compliance with the Labor Contracts except where the failure to
comply would not reasonably be expected to result in a Material Adverse Effect.
There are no outstanding grievances, arbitration awards or appeals therefrom
arising out of the Labor Contracts or current or threatened strikes, picketing,
handbilling or other work stoppages or slowdowns at facilities of the Company or
any Restricted Subsidiary that in any case would reasonably be expected to
result in a Material Adverse Effect.
Section 5.20. Hedging Contract Policies. Schedule 5.20 sets forth a true
and correct copy of the Hedging Contract Policies. The Company and each of its
Restricted Subsidiaries is subject to and is in compliance with the Hedging
Contract Policies (notwithstanding that such policies only refer specifically to
NJR Energy Services Company) in all material respects as if such policies were
the stated policies of the Company and each Restricted Subsidiary, and the
Company shall, and shall cause each Restricted Subsidiary that engages in any
Hedging Transaction to continue to comply in all material respects with the
Hedging Contract Policies as if such policies were the stated policies of each
of the Company and each Restricted Subsidiary.
Section 5.21. Permitted Related Business Opportunities. The information
set forth on Schedule 5.21 is true, complete and correct in all material
respects and sets forth a list of the Investments in Permitted Related Business
Opportunities by the Company and each Restricted Subsidiary as of the date of
the Closing and includes, without limitation, the amount and nature of each such
Investment, a description of the activities engaged in by the Company and each
Restricted Subsidiary in connection with such Investment, and a description of
the activities engaged in by the Person in which the Investment has been made.
Section 5.22. Notes Rank Pari Passu. The obligations of the Company under
this Agreement and the Notes rank at least pari passu in right of payment with
all other unsecured Senior Debt (actual or contingent) of the Company,
including, without limitation, all unsecured Senior Debt of the Company
described in Schedule 5.15.
SECTION 6. REPRESENTATIONS OF THE PURCHASERS.
Section 6.1. Purchase for Investment. Each Purchaser represents that it is
purchasing the Notes for its own account or for one or more separate accounts
maintained by such Purchaser or for the account of one or more pension or trust
funds and not with a view to the distribution thereof, provided that the
disposition of such Purchaser's or such pension or trust fund's property
10
shall at all times be within such Purchaser's or such pension or trust fund's
control. Each Purchaser understands that the Notes have not been registered
under the Securities Act and may be resold only if registered pursuant to the
provisions of the Securities Act or if an exemption from registration is
available, except under circumstances where neither such registration nor such
an exemption is required by law, and that the Company is not required to
register the Notes.
Section 6.2. Source of Funds. Each Purchaser represents that at least one
of the following statements is an accurate representation as to each source of
funds (a "Source") to be used by such Purchaser to pay the purchase price of the
Notes to be purchased by such Purchaser hereunder:
(a) the Source is an "insurance company general account" within the
meaning of Department of Labor Prohibited Transaction Exemption ("PTE")
95-60 (issued July 12, 1995) and there is no employee benefit plan,
treating as a single plan, all plans maintained by the same employer or
employee organization, with respect to which the amount of the general
account reserves and liabilities for all contracts held by or on behalf of
such plan, exceeds 10% of the total reserves and liabilities of such
general account (exclusive of separate account liabilities) plus surplus,
as set forth in the National Association of Insurance Commissioners Annual
Statement filed with such Purchaser's state of domicile; or
(b) the Source is either (1) an insurance company pooled separate
account, within the meaning of PTE 90-1 (issued January 29, 1990) or (2) a
bank collective investment fund, within the meaning of the PTE 91-38
(issued July 12, 1991) and, except as such Purchaser has disclosed to the
Company in writing pursuant to this paragraph (b), no employee benefit
plan or group of plans maintained by the same employer or employee
organization beneficially owns more than 10% of all assets allocated to
such pooled separate account or collective investment fund; or
(c) the Source constitutes assets of an "investment fund" (within
the meaning of Part V of the QPAM Exemption) managed by a "qualified
professional asset manager" or "QPAM" (within the meaning of Part V of the
QPAM Exemption), no employee benefit plan's assets that are included in
such investment fund, when combined with the assets of all other employee
benefit plans established or maintained by the same employer or by an
affiliate (within the meaning of Section V(c)(1) of the QPAM Exemption) of
such employer or by the same employee organization and managed by such
QPAM, exceed 20% of the total client assets managed by such QPAM, the
conditions of Part I(c) and (g) of the QPAM Exemption are satisfied,
neither the QPAM nor a Person controlling or controlled by the QPAM
(applying the definition of "control" in Section V(e) of the QPAM
Exemption) owns a 5% or more interest in the Company and (1) the identity
of such QPAM and (2) the names of all employee benefit plans whose assets
are included in such investment fund have been disclosed to the Company in
writing pursuant to this paragraph (c); or
(d) the Source is a governmental plan; or
11
(e) the Source is one or more employee benefit plans, or a separate
account or trust fund comprised of one or more employee benefit plans,
each of which has been identified to the Company in writing pursuant to
this paragraph (e); or
(f) the Source does not include assets of any employee benefit plan,
other than a plan exempt from the coverage of ERISA.
As used in this Section 6.2, the terms "employee benefit plan,"
"governmental plan," "party in interest" and "separate account" shall have the
respective meanings assigned to such terms in Section 3 of ERISA.
SECTION 7. INFORMATION AS TO COMPANY.
Section 7.1. Financial and Business Information. The Company shall deliver
to each holder of Notes that is an Institutional Investor:
(a) Quarterly Statements -- within 55 days after the end of each
quarterly fiscal period in each fiscal year of the Company (other than the
last quarterly fiscal period of each such fiscal year), duplicate copies
of:
(1) a consolidated and consolidating balance sheet of the
Company and its Subsidiaries as at the end of such quarter, and
(2) consolidated and consolidating statements of income,
changes in shareholders' equity and cash flows of the Company and
its Subsidiaries for such quarter and (in the case of the second and
third quarters) for the portion of the fiscal year ending with such
quarter,
setting forth in each case in comparative form the figures for the
corresponding periods in the previous fiscal year, all in reasonable
detail, prepared in accordance with GAAP applicable to quarterly financial
statements generally, and certified by a Senior Financial Officer as
fairly presenting, in all material respects, the financial position of the
companies being reported on and their results of operations and cash
flows, subject to changes resulting from normal year-end adjustments,
provided that delivery within the time period specified above of copies of
the Company's Quarterly Report on Form 10-Q prepared in compliance with
the requirements therefor and filed with the Securities and Exchange
Commission shall be deemed to satisfy the requirements of this Section
7.1(a);
(b) Annual Statements -- within 100 days after the end of each
fiscal year of the Company, duplicate copies of,
(1) a consolidated and consolidating balance sheet of the
Company and its Subsidiaries, as at the end of such year, and
(2) consolidated and consolidating statements of income,
changes in shareholders' equity and cash flows of the Company and
its Subsidiaries, for such year,
12
setting forth in each case in comparative form the figures for the
previous fiscal year, all in reasonable detail, prepared in accordance
with GAAP, and accompanied by an opinion thereon of independent certified
public accountants of recognized national standing, which opinion shall
state that such financial statements present fairly, in all material
respects, the financial position of the companies being reported upon and
their results of operations and cash flows and have been prepared in
conformity with GAAP, and that the examination of such accountants in
connection with such financial statements has been made in accordance with
generally accepted auditing standards, and that such audit provides a
reasonable basis for such opinion in the circumstances, provided that the
delivery within the time period specified above of the Company's Annual
Report on Form 10-K for such fiscal year (together with the Company's
annual report to shareholders, if any, prepared pursuant to Rule 14a-3
under the Exchange Act) prepared in accordance with the requirements
therefor and filed with the Securities and Exchange Commission shall be
deemed to satisfy the requirements of this Section 7.1(b);
(c) SEC and Other Reports -- with reasonable promptness, upon their
becoming available, one copy of (1) each financial statement, report,
notice or proxy statement sent by the Company or any Restricted Subsidiary
to public securities holders generally and (2) each regular or periodic
report, each registration statement that shall have become effective
(without exhibits except as expressly requested by such holder), and each
final prospectus and all amendments thereto filed by the Company or any
Restricted Subsidiary with the Securities and Exchange Commission;
(d) Notice of Default or Event of Default -- with reasonable
promptness, and in any event within five days after a Responsible Officer
becoming aware of the existence of any Default or Event of Default, a
written notice specifying the nature and period of existence thereof and
what action the Company is taking or proposes to take with respect
thereto;
(e) ERISA Matters -- with reasonable promptness, and in any event
within five days after a Responsible Officer becoming aware of any of the
following, a written notice setting forth the nature thereof and the
action, if any, that the Company or an ERISA Affiliate proposes to take
with respect thereto:
(1) with respect to any Plan, any reportable event, as defined
in Section 4043(b) of ERISA and the regulations thereunder, for
which notice thereof has not been waived pursuant to such
regulations as in effect on the date hereof; or
(2) the taking by the PBGC of steps to institute, or the
threatening by the PBGC of the institution of, proceedings under
Section 4042 of ERISA for the termination of, or the appointment of
a trustee to administer, any Plan, or the receipt by the Company or
any ERISA Affiliate of a notice from a Multiemployer Plan that such
action has been taken by the PBGC with respect to such Multiemployer
Plan; or
13
(3) any event, transaction or condition that could result in
the incurrence of any liability by the Company or any ERISA
Affiliate pursuant to Title I or IV of ERISA or the penalty or
excise tax provisions of the Code relating to employee benefit
plans, or in the imposition of any Lien on any of the rights,
properties or assets of the Company or any ERISA Affiliate pursuant
to Title I or IV of ERISA or such penalty or excise tax provisions,
if such liability or Lien, taken together with any other such
liabilities or Liens then existing, would reasonably be expected to
have a Material Adverse Effect;
(f) Unrestricted Subsidiaries -- at such time as either (1) the
aggregate amount of the total assets of all Unrestricted Subsidiaries
exceeds 10% of the consolidated total assets of the Company and its
Subsidiaries determined in accordance with GAAP or (2) one or more
Unrestricted Subsidiaries account for more than 10% of the consolidated
gross revenues of the Company and its Subsidiaries determined in
accordance with GAAP, and within the respective periods provided in
paragraphs (a) and (b) above, financial statements of the character and
for the dates and periods as in said paragraphs (a) and (b) covering each
Unrestricted Subsidiary (or groups of Unrestricted Subsidiaries on a
consolidated basis) together with consolidating statements reflecting
eliminations or adjustments required in order to reconcile such financial
statements to the corresponding consolidated financial statements of the
Company and its Subsidiaries delivered pursuant to paragraphs (a) and (b)
above; and
(g) Requested Information -- with reasonable promptness, such other
data and information relating to the business, operations, affairs,
financial condition, assets or properties of the Company or any of its
Restricted Subsidiaries or relating to the ability of the Company to
perform its obligations hereunder and under the Notes as from time to time
may be reasonably requested by any such holder of Notes.
Section 7.2. Officer's Certificate. Each set of financial statements
delivered to a holder of Notes pursuant to Section 7.1(a) or Section 7.1(b)
hereof shall be accompanied by a certificate of a Senior Financial Officer
setting forth:
(a) Covenant Compliance -- the information (including reasonably
detailed calculations) required in order to establish whether the Company
was in compliance with the requirements of Section 10.1 through Section
10.8, inclusive, and Section 10.13 during the quarterly or annual period
covered by the statements then being furnished (including with respect to
each such Section, where applicable, the calculations of the maximum or
minimum amount, ratio or percentage, as the case may be, permissible under
the terms of such Sections, and the calculation of the amount, ratio or
percentage then in existence); and
(b) Event of Default-- a statement that such officer has reviewed
the relevant terms hereof and has made, or caused to be made, under his or
her supervision, a review of the transactions and conditions of the
Company and its Subsidiaries from the beginning of the quarterly or annual
period covered by the statements then being furnished to the date of the
certificate and that such review shall not have disclosed the
14
existence during such period of any condition or event that constitutes a
Default or an Event of Default or, if any such condition or event existed
or exists (including, without limitation, any such event or condition
resulting from the failure of the Company or any Subsidiary to comply with
any Environmental Law), specifying the nature and period of existence
thereof and what action the Company shall have taken or proposes to take
with respect thereto.
Section 7.3. Inspection. The Company shall permit the representatives of
each holder of Notes that is an Institutional Investor:
(a) No Default -- if no Default or Event of Default then exists, at
the expense of such holder and upon reasonable prior written notice to the
Company, to visit the principal executive office of the Company, to
discuss the affairs, finances and accounts of the Company and its
Restricted Subsidiaries with the Company's officers, and, with the consent
of the Company (which consent will not be unreasonably withheld) to visit
the other offices and properties of the Company and each Restricted
Subsidiary, all at such reasonable times and as often as may be reasonably
requested in writing; and
(b) Default -- if a Default or Event of Default then exists, at the
expense of the Company, to visit and inspect any of the offices or
properties of the Company or any Restricted Subsidiary, to examine all
their respective books of account, records, reports and other papers, to
make copies and extracts therefrom, and to discuss their respective
affairs, finances and accounts with their respective officers and
independent public accountants (and by this provision the Company
authorizes said accountants to discuss the affairs, finances and accounts
of the Company and its Restricted Subsidiaries), all at such times and as
often as may be requested.
SECTION 8. PREPAYMENT OF THE NOTES.
Section 8.1. Required Prepayments. The Notes shall not be subject to
required prepayments.
Section 8.2. Optional Prepayments with Make-Whole Amount. The Company may,
at its option, upon notice as provided below, prepay at any time all, or from
time to time any part of, the Notes, in an amount not less than $1,000,000 in
aggregate principal amount of the Notes then outstanding in the case of a
partial prepayment, at 100% of the principal amount so prepaid together with
interest accrued thereon to the date of such prepayment and the Make-Whole
Amount, if any, determined for the prepayment date with respect to such
principal amount. The Company will give each holder of Notes written notice of
each optional prepayment under this Section 8.2 not less than 30 days and not
more than 60 days prior to the date fixed for such prepayment. Each such notice
shall specify such date, the aggregate principal amount of the Notes to be
prepaid on such date, the principal amount of each Note held by such holder to
be prepaid (determined in accordance with Section 8.4), and the interest to be
paid on the prepayment date with respect to such principal amount being prepaid,
and shall be accompanied by a certificate of a Senior Financial Officer as to
the estimated Make-Whole Amount due in connection with such prepayment
(calculated as if the date of such notice were the date of the prepayment),
setting forth the details of such computation. Two Business Days prior to such
15
prepayment, the Company shall deliver to each holder of Notes a certificate of a
Senior Financial Officer specifying the calculation of such Make-Whole Amount as
of the specified prepayment date.
Section 8.3. Allocation of Partial Prepayments. In the case of each
partial prepayment of the Notes pursuant to Section 8.2 hereof, the principal
amount of the Notes to be prepaid shall be allocated among all of the Notes at
the time outstanding in proportion, as nearly as reasonably practicable, to the
respective unpaid principal amounts thereof not theretofore called for
prepayment. All partial prepayments made pursuant to Section 8.5(b) shall be
applied only to the Notes of the holders who have elected to participate in such
prepayment.
Section 8.4. Maturity; Surrender, Etc. In the case of each prepayment of
Notes pursuant to this Section 8, the principal amount of each Note to be
prepaid shall mature and become due and payable on the date fixed for such
prepayment, together with interest on such principal amount accrued to such date
and the applicable Make-Whole Amount, if any. From and after such date, unless
the Company shall fail to pay such principal amount when so due and payable,
together with the interest and Make-Whole Amount, if any, as aforesaid, interest
on such principal amount shall cease to accrue. Any Note paid or prepaid in full
shall be surrendered to the Company and cancelled and shall not be reissued, and
no Note shall be issued in lieu of any prepaid principal amount of any Note.
Section 8.5. Purchase of Notes. The Company will not, and will not permit
any Affiliate to, purchase, redeem, prepay or otherwise acquire, directly or
indirectly, any of the outstanding Notes except (a) upon the payment or
prepayment of the Notes in accordance with the terms of this Agreement and the
Notes or (b) pursuant to an offer to purchase made by the Company or an
Affiliate pro rata to the holders of all Notes at the time outstanding upon the
same terms and conditions. Any such offer shall provide each holder with
sufficient information to enable it to make an informed decision with respect to
such offer, and shall remain open for at least 15 Business Days. If the holders
of more than 50% of the principal amount of the Notes then outstanding accept
such offer, the Company shall promptly notify the remaining holders of such fact
and the expiration date for the acceptance by holders of Notes of such offer
shall be extended by the number of days necessary to give each such remaining
holder at least 10 Business Days from its receipt of such notice to accept such
offer. The Company will promptly cancel all Notes acquired by it or any
Affiliate pursuant to any payment, prepayment or purchase of Notes pursuant to
any provision of this Agreement and no Notes may be issued in substitution or
exchange for any such Notes.
Section 8.6. Make-Whole Amount for Notes. The term "Make-Whole Amount"
shall mean, with respect to any Note, an amount equal to the excess, if any, of
the Discounted Value of the Remaining Scheduled Payments with respect to the
Called Principal of such Note over the amount of such Called Principal, provided
that the Make-Whole Amount may in no event be less than zero. For the purposes
of determining the Make-Whole Amount, the following terms have the following
meanings:
"Called Principal" shall mean, with respect to any Note, the
principal of such Note that is to be prepaid pursuant to Section 8.2
or has become or is
16
declared to be immediately due and payable pursuant to Section 12.1,
as the context requires.
"Discounted Value" shall mean, with respect to the Called
Principal of any Note, the amount obtained by discounting all
Remaining Scheduled Payments with respect to such Called Principal
from their respective scheduled due dates to the Settlement Date
with respect to such Called Principal, in accordance with accepted
financial practice and at a discount factor (applied on the same
periodic basis as that on which interest on the Notes is payable)
equal to the Reinvestment Yield with respect to such Called
Principal.
"Reinvestment Yield" shall mean, with respect to the Called
Principal of any Note, 0.50% over the yield to maturity implied by
(a) the yields reported, as of 10:00 a.m. (New York, New York time)
on the second Business Day preceding the Settlement Date with
respect to such Called Principal, on the display designated as "Page
PX1" on the Bloomberg Financial Markets Services Screen (or such
other display as may replace Page PX1 on the Bloomberg Financial
Markets Services Screen) for actively traded U.S. Treasury
securities having a maturity equal to the Remaining Average Life of
such Called Principal as of such Settlement Date, or (b) if such
yields are not reported as of such time or the yields reported as of
such time are not ascertainable, the Treasury Constant Maturity
Series Yields reported, for the latest day for which such yields
have been so reported as of the second Business Day preceding the
Settlement Date with respect to such Called Principal, in Federal
Reserve Statistical Release H.15 (519) (or any comparable successor
publication) for actively traded U.S. Treasury securities having a
constant maturity equal to the Remaining Average Life of such Called
Principal as of such Settlement Date. Such implied yield will be
determined, if necessary, by (1) converting U.S. Treasury bill
quotations to bond-equivalent yields in accordance with accepted
financial practice and (2) interpolating linearly between (i) the
actively traded U.S. Treasury security with the maturity closest to
and greater than the Remaining Average Life and (ii) the actively
traded U.S. Treasury security with the maturity closest to and less
than the Remaining Average Life.
"Remaining Average Life" shall mean, with respect to any
Called Principal, the number of years (calculated to the nearest
one-twelfth year) obtained by dividing (a) such Called Principal
into (b) the sum of the products obtained by multiplying (1) the
principal component of each Remaining Scheduled Payment with respect
to such Called Principal by (2) the number of years (calculated to
the nearest one-twelfth year) that will elapse between the
Settlement Date with respect to such Called Principal and the
scheduled due date of such Remaining Scheduled Payment.
"Remaining Scheduled Payments" shall mean, with respect to the
Called Principal of any Notes, all payments of such Called Principal
and interest thereon that would be due after the Settlement Date
with respect to such Called Principal
17
if no payment of such Called Principal were made prior to its
scheduled due date, provided that if such Settlement Date is not a
date on which interest payments are due to be made under the terms
of the Notes, then the amount of the next succeeding scheduled
interest payment will be reduced by the amount of interest accrued
to such Settlement Date and required to be paid on such Settlement
Date pursuant to Section 8.2 or 12.1.
"Settlement Date" shall mean, with respect to the Called
Principal of any Note, the date on which such Called Principal is to
be prepaid pursuant to Section 8.2 or has become or is declared to
be immediately due and payable pursuant to Section 12.1, as the
context requires.
SECTION 9. AFFIRMATIVE COVENANTS.
The Company covenants that so long as any of the Notes are outstanding:
Section 9.1. Compliance with Law. The Company will, and will cause each of
its Subsidiaries to, comply with all laws, ordinances or governmental rules or
regulations to which each of them is subject, including, without limitation,
Environmental Laws, and will obtain and maintain in effect all licenses,
certificates, permits, franchises and other governmental authorizations
necessary to the ownership of their respective properties or to the conduct of
their respective businesses, in each case to the extent necessary to ensure that
non-compliance with such laws, ordinances or governmental rules or regulations
or failures to obtain or maintain in effect such licenses, certificates,
permits, franchises and other governmental authorizations would not reasonably
be expected, individually or in the aggregate, to have a Material Adverse
Effect.
Section 9.2. Insurance. The Company will, and will cause each of its
Restricted Subsidiaries to, maintain, with financially sound and reputable
insurers, insurance with respect to their respective properties and businesses
against such casualties and contingencies, of such types, on such terms and in
such amounts (including deductibles, co-insurance and self-insurance, if
adequate reserves are maintained with respect thereto) as is customary in the
case of entities of established reputations engaged in the same or a similar
business and in the same industry and similarly situated.
Section 9.3. Maintenance of Properties. The Company will, and will cause
each of its Restricted Subsidiaries to, maintain and keep, or cause to be
maintained and kept, their respective properties in good repair, working order
and condition (other than ordinary wear and tear), so that the business carried
on in connection therewith may be properly conducted at all times, provided that
this Section shall not prevent the Company or any Restricted Subsidiary from
discontinuing the operation and the maintenance of any of its properties if such
discontinuance is desirable in the conduct of its business and the Company has
concluded that such discontinuance would not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect.
Section 9.4. Payment of Taxes and Claims. The Company will, and will cause
each of its Subsidiaries to, file all income tax or similar tax returns required
to be filed in any jurisdiction
18
and to pay and discharge all taxes shown to be due and payable on such returns
and all other taxes, assessments, governmental charges or levies payable by any
of them, to the extent such taxes and assessments have become due and payable
and before they have become delinquent, provided that neither the Company nor
any Subsidiary need pay any such tax or assessment if (1) the amount,
applicability or validity thereof is contested by the Company or such Subsidiary
on a timely basis in good faith and in appropriate proceedings, and the Company
or a Subsidiary has established adequate reserves therefor in accordance with
GAAP on the books of the Company or such Subsidiary or (2) the nonpayment of all
such taxes and assessments in the aggregate would not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect.
Section 9.5. Corporate Existence, Etc. The Company will at all times
preserve and keep in full force and effect its corporate existence. Subject to
Sections 10.8, 10.9 and 10.10, the Company will at all times preserve and keep
in full force and effect the corporate existence of each of its Restricted
Subsidiaries (unless merged into the Company or a Wholly-Owned Restricted
Subsidiary) and all rights and franchises of the Company and its Restricted
Subsidiaries unless, in the good faith judgment of the Company, the termination
of or failure to preserve and keep in full force and effect such corporate
existence, right or franchise would not reasonably be expected, individually or
in the aggregate, to have a Material Adverse Effect.
Section 9.6. Ownership of Subsidiaries. The Company shall at all times own
(a) 100% of the issued and outstanding equity interests of New Jersey Natural
Gas and (b) 51% or more of the issued and outstanding equity interests in each
Guarantor.
Section 9.7. Hedging Contract Policies. The Company will, and will cause
each of its Restricted Subsidiaries to, comply with the Hedging Contract
Policies (notwithstanding that such policies only refer specifically to NJR
Energy Services Company) as if such policies were the stated policies of the
Company and each Restricted Subsidiary.
Section 9.8. Guaranty Agreement. (a) The Company shall promptly, and in
any event within five Business Days after (1) the formation or acquisition of a
new Restricted Subsidiary (other than a Regulated Entity), (2) the occurrence of
any other event creating a new Restricted Subsidiary (other than a Regulated
Entity), (3) the designation of an Unrestricted Subsidiary (other than a
Regulated Entity) as a Restricted Subsidiary or (4) an Unrestricted Subsidiary
becoming a guarantor or co-obligor in respect of the Bank Credit Agreement,
cause such Subsidiary to execute and deliver a supplement to the Guaranty
Agreement (a "Supplement") in the form of Exhibit A to the Guaranty Agreement.
(b) Within 15 days of the delivery by any Subsidiary of a Supplement
pursuant to Section 9.8(a)(1), the Company shall cause such Subsidiary to
deliver to each holder of Notes (1) such documents and evidence with respect to
such Subsidiary as any holder may reasonably request in order to establish the
existence and good standing of such Subsidiary and evidence that the Board of
Directors of such Subsidiary has adopted resolutions authorizing the execution
and delivery of such Supplement and the guaranty of the Notes, (2) evidence of
compliance with such Subsidiary's outstanding Debt instruments in the form of
(i) a compliance certificate from such Subsidiary to the effect that such
Subsidiary is in compliance with all terms and conditions of its outstanding
Debt instruments, (ii) consents or approvals of the holder or holders of any
evidence of Debt or security, and/or (iii) amendments of agreements pursuant to
which any evidence
19
of Debt or security may have been issued, all as may be reasonably deemed
necessary by the holders of Notes to permit the execution and delivery of such
Supplement by such Subsidiary, (3) an opinion of counsel to the effect that (i)
such Subsidiary is a corporation or other business entity, duly organized,
validly existing and in good standing under the laws of its jurisdiction of
organization, has the corporate or other power and the authority to execute and
deliver such Supplement and to perform the Guaranty Agreement, (ii) the
execution and delivery of such Supplement and performance of the Guaranty
Agreement has been duly authorized by all necessary action on the part of such
Subsidiary, such Supplement has been duly executed and delivered by such
Subsidiary and the Guaranty Agreement constitutes the legal, valid and binding
contract of such Subsidiary enforceable against such Subsidiary in accordance
with its terms, subject to bankruptcy, insolvency, fraudulent conveyance or
similar laws affecting creditors' rights generally, and general principles of
equity (regardless of whether the application of such principles is considered
in a proceeding in equity or at law), (iii) the execution and delivery of such
Supplement and the performance by such Subsidiary of the Guaranty Agreement do
not conflict with or result in any breach of any of the provisions of or
constitute a default under or result in the creation of a Lien upon any of the
property of such Subsidiary pursuant to the provisions of any law, order, rule
or regulation, its charter documents or any agreement or other instrument known
to such counsel to which such Subsidiary is a party to or by which such
Subsidiary may be bound and (iv) no approval, consent or withholding of
objection on the part of, or filing, registration or qualification with, any
Governmental Authority, Federal or state, is necessary in connection with the
lawful execution and delivery of such Supplement by such Subsidiary or the
performance of the Guaranty Agreement by such Subsidiary, which opinion may
contain such assumptions and qualifications as are reasonably acceptable to the
Required Holders and (4) all other documents and showings reasonably requested
by the holders of Notes in connection with the execution and delivery of such
Supplement, which documents shall be reasonably satisfactory in form and
substance to such holders and their special counsel, and each holder of Notes
shall have received a copy (executed or certified as may be appropriate) of all
of the foregoing legal documents.
SECTION 10. NEGATIVE COVENANTS.
The Company covenants that so long as any of the Notes are outstanding:
Section 10.1. Leverage Ratio. The Company will not, at any time, permit
the ratio of Consolidated Total Debt to Consolidated Total Capitalization to
exceed 0.65 to 1.00.
Section 10.2. Interest Coverage Ratio. The Company will not, at any time,
permit the Interest Coverage Ratio to be less than 2.50 to 1.00.
Section 10.3. Limitation on Priority Debt. The Company will not, at any
time, permit Priority Debt to exceed an amount equal to 20% of Consolidated
Total Capitalization as of the end of the then most recently ended fiscal
quarter of the Company.
Section 10.4. Liens. The Company will not, and will not permit any of its
Restricted Subsidiaries to, directly or indirectly create, incur, assume or
permit to exist (upon the happening of a contingency or otherwise) any Lien on
or with respect to any property or asset (including,
20
without limitation, any document or instrument in respect of goods or accounts
receivable) of the Company or any such Restricted Subsidiary, whether now owned
or held or hereafter acquired, or any income or profits therefrom, or assign or
otherwise convey any right to receive income or profits, except:
(a) Liens for taxes, assessments or other governmental charges which
are not yet due and payable or the payment of which is not at the time
required by Section 9.4;
(b) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, materialmen and other similar Liens, in each
case, incurred in the ordinary course of business for sums not yet due and
payable or the payment of which is not at the time required by Section
9.4;
(c) Liens (other than any Lien imposed by ERISA) incurred or
deposits made in the ordinary course of business (1) in connection with
workers' compensation, unemployment insurance and other types of social
security or retirement benefits, or (2) to secure (or to obtain letters of
credit that secure) the performance of tenders, statutory obligations,
surety bonds, appeal bonds, bids, leases (other than Capital Leases),
performance bonds, purchase, construction or sales contracts, and other
similar obligations, in each case not incurred or made in connection with
the borrowing of money, the obtaining of advances or credit or the payment
of the deferred purchase price of property;
(d) subject to Section 11(k), any attachment or judgment Lien,
unless the judgment it secures shall not, within 30 days after the entry
thereof, have been discharged or execution thereof stayed pending appeal,
or shall not have been discharged within 30 days after the expiration of
any such stay;
(e) leases or subleases granted to others, easements, rights-of-way,
restrictions and other similar charges or encumbrances or minor survey
exceptions, in each case incidental to, and not interfering with, the
ordinary conduct of the business of the Company or any of its Restricted
Subsidiaries, provided that such Liens do not, in the aggregate,
materially detract from the value of such property;
(f) Liens on property or assets of any Restricted Subsidiary
securing Debt owing to the Company or to a Wholly-Owned Restricted
Subsidiary;
(g) Liens existing on the date of the Closing and described on
Schedule 5.15 hereto (other than Liens on "Excepted Property" of New
Jersey Natural Gas as defined in the Mortgage Indenture as in effect on
the date of the Closing);
(h) Liens on accounts receivable owned by Securitization
Subsidiaries that are Restricted Subsidiaries and incurred pursuant to
Receivables Securitization Transactions;
(i) any Lien created to secure all or any part of the purchase
price, or to secure Debt incurred or assumed to pay all or any part of the
purchase price or cost of
21
construction, of property (or any improvement thereon) acquired or
constructed by the Company or a Restricted Subsidiary after the date of
the Closing, provided that:
(1) any such Lien shall extend solely to the item or items of
such property (or improvement thereon) so acquired or constructed
and, if required by the terms of the instrument originally creating
such Lien, other property (or improvement thereon) which is an
improvement to or is acquired for specific use in connection with
such acquired or constructed property (or improvement thereon) or
which is real property being improved by such acquired or
constructed property (or improvement thereon);
(2) the principal amount of the Debt secured by any such Lien
shall at no time exceed an amount equal to the lesser of (i) the
cost to the Company or such Restricted Subsidiary of the property
(or improvement thereon) so acquired or constructed and (ii) the
Fair Market Value (as determined in good faith by one or more
officers of the Company to whom authority to enter into the subject
transaction has been delegated by the board of directors of the
Company) of such property (or improvement thereon) at the time of
such acquisition or construction;
(3) any such Lien shall be created contemporaneously with, or
within 180 days after, the acquisition or construction of such
property; and
(4) the aggregate principal amount of all Debt secured by such
Liens shall be permitted by the limitation set forth in Section
10.1;
(j) any Lien existing on property of a Person immediately prior to
its being consolidated with or merged into the Company or a Restricted
Subsidiary or its becoming a Subsidiary, or any Lien existing on any
property acquired by the Company or any Restricted Subsidiary at the time
such property is so acquired (whether or not the Debt secured thereby
shall have been assumed), provided that (1) no such Lien shall have been
created or assumed in contemplation of such consolidation or merger or
such Person becoming a Subsidiary or such acquisition of property, (2)
each such Lien shall extend solely to the item or items of property so
acquired and, if required by the terms of the instrument originally
creating such Lien (i) other property which is an improvement to or is
acquired for specific use in connection with such acquired property or
(ii) other property that does not constitute property or assets of the
Company or any of its Restricted Subsidiaries and (3) the aggregate amount
of all Debt secured by such Liens shall be permitted by the limitation set
forth in Section 10.1;
(k) Liens on assets of New Jersey Natural Gas (other than Liens on
"Excepted Property" as defined in the Mortgage Indenture as in effect on
the date of the Closing) which Liens secure Debt outstanding as of the
date of the Closing under the Mortgage Indenture and any additional Debt
that is issued in accordance with Article Two of the Mortgage Indenture
(as in effect on the date of the Closing) and is otherwise permitted by
limitation set forth in Section 10.1; provided that such additional Debt
shall not contain covenants, defaults and other terms and conditions more
restrictive than or in addition to those contained in this Agreement, and,
shall specifically and expressly not contain any
22
covenant or agreement with respect to the issuance or payment of dividends
more restrictive than the restrictions contained in Section 4.1 of the
Twenty-Sixth Supplemental Indenture dated as of October 1, 1995,
supplemental to the Mortgage Indenture;
(l) Liens securing the Permitted Construction Project, provided that
(1) such Liens shall extend solely to the assets acquired or constructed
by Commercial Realty and Resources Corp., a Subsidiary of the Company, as
part of the Permitted Construction Project and (2) the aggregate amount of
all Debt secured by such Liens shall (i) not exceed $20,000,000 and (ii)
be permitted by the limitation set forth in Section 10.1;
(m) any Lien renewing, extending or refunding any Lien permitted by
paragraphs (g), (i), (j), (k) or (l) of this Section 10.4, provided that
(1) the principal amount of Debt secured by such Lien immediately prior to
such extension, renewal or refunding is not increased or the maturity
thereof reduced, (2) such Lien is not extended to any other property and
(3) immediately after such extension, renewal or refunding no Default or
Event of Default would exist; and
(n) other Liens not otherwise permitted by paragraphs (a) through
(m), inclusive, of this Section 10.4 securing Debt, provided that the Debt
secured by such Liens shall be permitted by the limitations set forth in
Sections 10.1 and 10.3.
Notwithstanding the foregoing, the Company will not, and will not permit
any Subsidiary to, directly or indirectly create, incur, assume or permit to
exist (upon the happening of a contingency or otherwise) any Lien on or with
respect to the capital stock of New Jersey Natural Gas.
Section 10.5. Investments. The Company will not permit New Jersey Natural
Gas to make or authorize any Investment other than a Permitted Investment.
Section 10.6. Restricted Payments. (a) The Company will not, and will not
permit any Restricted Subsidiary to, declare or make or incur any liability to
declare or make any Restricted Payment unless immediately after giving effect to
such action no Default or Event of Default would exist.
(b) The Company will not, and will not permit any Restricted Subsidiary
to, declare a Restricted Payment that is not payable within 60 days of such
declaration.
Section 10.7. Restrictions on Dividends of Subsidiaries, Etc. The Company
will not, and will not permit any Subsidiary to, enter into any agreement which
would restrict any Restricted Subsidiary's ability or right to pay dividends to,
or make advances to or investments in, the Company or, if such Restricted
Subsidiary is not directly owned by the Company, the "parent" Restricted
Subsidiary of such Restricted Subsidiary; provided that the foregoing shall not
apply to restrictions and conditions imposed by law or this Agreement, the NJNG
Note Agreement, the Bank Credit Agreement, the NJNG Bank Credit Agreement or the
Mortgage Indenture, in each case, as in effect on the date of Closing.
23
Section 10.8. Sale of Assets, Etc. (a) Except as permitted under Section
10.9 and Section 10.10, the Company will not, and will not permit any of its
Restricted Subsidiaries to, make any Asset Disposition unless:
(1) in the good faith opinion of the Company, the Asset
Disposition is in the best interest of the Company or such
Restricted Subsidiary;
(2) immediately after giving effect to the Asset Disposition,
no Default or Event of Default would exist; and
(3) immediately after giving effect to the Asset Disposition
the Disposition Value of all property that was the subject of any
Asset Disposition occurring in the immediately preceding 12
consecutive month period would not exceed 10% of Consolidated
Tangible Assets as of the end of the then most recently ended fiscal
year of the Company.
(b) If the Net Proceeds Amount for any Transfer is, within 365 days
after such Transfer, (1) applied to a Debt Prepayment Application or (2)
applied to or would otherwise constitute a Property Reinvestment
Application, then such Transfer, only for the purpose of determining
compliance with subsection (3) of Section 10.8(a) as of a date on or after
the Net Proceeds Amount is so applied, shall be deemed not to be an Asset
Disposition.
(c) Notwithstanding the foregoing, the sale of accounts receivable
to a Securitization Subsidiary in connection with a Receivables
Securitization Transaction shall not be considered a sale of assets for
purposes of this Section 10.8; provided, that, to the extent any such sale
results in the aggregate amount of Debt of all Securitization Subsidiaries
under all Receivables Securitization Transactions being in excess of
$100,000,000, the Company shall treat that portion of such sale resulting
in the aggregate amount of Debt of all Securitization Subsidiaries under
all Receivables Securitization Transactions being in excess of
$100,000,000 as an Asset Disposition subject to this Section 10.8 without
application of this clause (c).
Section 10.9. Merger, Consolidation, Etc. The Company will not, and will
not permit any Restricted Subsidiary to, consolidate with or merge with any
other Person or convey, transfer or lease all or substantially all of its assets
in a single transaction or series of transactions to any Person (except that a
Restricted Subsidiary may (x) consolidate with or merge with, or convey,
transfer or lease all or substantially all of its assets in a single transaction
or series of transactions to, the Company or another Restricted Subsidiary or
any other Person so long as such Restricted Subsidiary is the surviving Person
and (y) convey, transfer or lease all of its assets in compliance with the
provisions of Section 10.8 or 10.10), provided that the foregoing restriction
does not apply to the consolidation or merger of the Company with, or the
conveyance, transfer or lease of all or substantially all of the assets of the
Company in a single transaction or series of transactions to, any Person so long
as:
(a) the successor formed by such consolidation or the survivor of
such merger or the Person that acquires by conveyance, transfer or lease
all or substantially all of the
24
assets of the Company as an entirety, as the case may be (the "Successor
Corporation"), shall be a solvent Person organized and existing under the
laws of the United States or any State thereof (including the District of
Columbia);
(b) if the Company is not the Successor Corporation, (1) such Person
shall have executed and delivered to each holder of the Notes its
assumption of the due and punctual performance and observance of each
covenant and condition of this Agreement and the Notes (pursuant to such
agreements or instruments as shall be reasonably satisfactory to the
Required Holders), (2) such Person shall have caused to be delivered to
each holder of the Notes an opinion of nationally recognized independent
counsel, or other independent counsel reasonably satisfactory to the
Required Holders, to the effect that all agreements or instruments
effecting such assumption are enforceable in accordance with their terms
and comply with the terms hereof and (3) each Guarantor shall have
reaffirmed, in writing, its obligations under the Guaranty Agreement; and
(c) immediately after giving effect to such transaction, no Default
or Event of Default would exist.
No such conveyance, transfer or lease of all or substantially all of the assets
of the Company shall have the effect of releasing the Company or any Successor
Corporation that shall theretofore have become such in the manner prescribed in
this Section 10.9 from its liability under this Agreement or the Notes.
Section 10.10. Disposal of Ownership of a Restricted Subsidiary. The
Company will not, and will not permit any Subsidiary to, sell or otherwise
dispose of any shares of Restricted Subsidiary Stock, nor will the Company
permit any such Restricted Subsidiary to issue, sell or otherwise dispose of any
shares of its own Restricted Subsidiary Stock, provided that the foregoing
restrictions do not apply to:
(a) the issue of directors' qualifying shares by any such Restricted
Subsidiary;
(b) any such Transfer of Restricted Subsidiary Stock constituting a
Transfer described in clause (a) of the definition of "Asset Disposition";
and
(c) the Transfer of the Restricted Subsidiary Stock of a Restricted
Subsidiary (other than New Jersey Natural Gas) owned by the Company and
its other Subsidiaries; provided that such Transfer satisfies the
requirements of Section 9.6 and Section 10.8.
Section 10.11. Limitations on Subsidiaries, Partnerships and Joint
Ventures. The Company will not, and will not permit any of its Restricted
Subsidiaries to, own or create directly or indirectly any Restricted
Subsidiaries other than (a) any Restricted Subsidiary which is a Regulated
Entity, (b) any Restricted Subsidiary which is a Guarantor on the date of the
Closing and (c) any Restricted Subsidiary formed after the date of the Closing
that becomes a Guarantor under the Guaranty Agreement pursuant to Section 9.8.
The Company shall not, and shall not permit any Restricted Subsidiary to, become
or agree to become (1) a general or limited partner in any general or limited
partnership, except that the Company may be a general or limited partner in any
Subsidiary and any Restricted Subsidiary may be a general or limited partner in
25
any other Subsidiary and except that the Company and its Restricted Subsidiaries
may be a limited partner in a Permitted Related Business Opportunity, (2) a
member or manager of, or hold a limited liability company interest in, a limited
liability company, except that the Company may be a member or manager of, or
hold limited liability company interests in, its Subsidiaries and Restricted
Subsidiaries may be members or managers of, or hold limited liability company
interests in, other Subsidiaries and except that the Company and its Restricted
Subsidiaries may be members or managers of, or hold limited liability company
interests in a Permitted Related Business Opportunity or (3) a joint venturer or
hold a joint venture interest in any joint venture, except that the Company and
its Restricted Subsidiaries may become a joint venturer in or hold a joint
venture interest in any joint venture that is a Permitted Related Business
Opportunity.
Section 10.12. Limitation on Modifications to Hedging Contract Policies.
The Company will not, and will not permit any of its Restricted Subsidiaries to,
amend, modify, supplement, restate or rescind the Hedging Contract Policies in a
manner which, when compared with past practice of the Company and its Restricted
Subsidiaries, would render hedging transactions entered into pursuant to the
Hedging Contract Policies (as so modified) materially more speculative.
Section 10.13. Limitation on Certain Leases. The Company will not, and
will not permit any of its Restricted Subsidiaries to, engage in any off-balance
sheet transaction (i.e., the liabilities in respect of which do not appear on
the liability side of the balance sheet, with such balance sheet prepared in
accordance with GAAP) providing the functional equivalent of borrowed money
(including asset securitizations, sale/leasebacks or Synthetic Leases (other
than any sale/leaseback transaction or Synthetic Lease entered into, in either
case, with respect to meter assets and which transaction is otherwise permitted
by this Agreement)) with liabilities in excess, in the aggregate for the Company
and its Restricted Subsidiaries as of any date of determination, of 5% of the
Consolidated Tangible Assets.
For purposes of this Section 10.13, the amount of any lease which is not a
Capital Lease is the aggregate amount of minimum lease payments due pursuant to
such lease for any non-cancelable portion of its term.
Section 10.14. Nature of Business. The Company will not, and will not
permit any of its Restricted Subsidiaries to, engage in any business if, as a
result, the general nature of the business in which the Company and its
Restricted Subsidiaries, taken as a whole, would then be engaged would be
substantially and materially changed from the general nature of the business in
which the Company and its Restricted Subsidiaries are engaged on the date of the
Closing.
Section 10.15. Transactions with Affiliates. Except in the case of a
Permitted Related Business Opportunity, the Company will not, and will not
permit any Restricted Subsidiary to, enter into, directly or indirectly, any
Material transaction or group of related transactions (including, without
limitation, the purchase, lease, sale or exchange of properties of any kind or
the rendering of any service) with any Affiliate (other than the Company or a
Restricted Subsidiary), except in the ordinary course and pursuant to the
reasonable requirements of the Company's or such Restricted Subsidiary's
business and upon fair and reasonable terms no less favorable to the Company or
such Restricted Subsidiary than would be obtainable in a comparable arm's-length
transaction with a Person not an Affiliate.
26
Section 10.16. Designation of Restricted and Unrestricted Subsidiaries.
The Company may designate any Subsidiary to be a Restricted Subsidiary and may
designate any Restricted Subsidiary to be an Unrestricted Subsidiary by giving
written notice to each holder of Notes that the Board of Directors of the
Company has made such designation, provided, however, that no Subsidiary may be
designated a Restricted Subsidiary and no Restricted Subsidiary may be
designated an Unrestricted Subsidiary unless, at the time of such action and
after giving effect thereto, (a) solely in the case of a Restricted Subsidiary
being designated an Unrestricted Subsidiary, such Restricted Subsidiary being
designated an Unrestricted Subsidiary shall not have any continuing Investment
in the Company or any other Restricted Subsidiary and (b) no Default or Event of
Default shall have occurred and be continuing. Any Restricted Subsidiary which
has been designated an Unrestricted Subsidiary and which has then been
redesignated a Restricted Subsidiary, in each case in accordance with the
provisions of the first sentence of this Section 10.16, shall not at any time
thereafter be redesignated an Unrestricted Subsidiary without the prior written
consent of the Required Holders. Any Unrestricted Subsidiary which has been
designated a Restricted Subsidiary and which has then been redesignated an
Unrestricted Subsidiary, in each case in accordance with the provisions of the
first sentence of this Section 10.16, shall not at any time thereafter be
redesignated a Restricted Subsidiary without the prior written consent of the
Required Holders.
Section 10.17. Limitations on Modifications. The Company will not, and
will not permit any of its Restricted Subsidiaries to, enter into or be subject
to any agreement which prohibits amendments to this Agreement without the
consent of a Person not party to this Agreement; provided, however that the
Company and its Restricted Subsidiaries will be permitted to enter into, and be
subjected to, restrictions imposed by the lender parties to the Bank Credit
Agreement from time to time so long as such restrictions are no more onerous
than the restrictions set forth in Section 8.2.18 of the Bank Credit Agreement
(as in effect on the Closing Date).
SECTION 11. EVENTS OF DEFAULT.
An "Event of Default" shall exist if any of the following conditions or
events shall occur and be continuing:
(a) the Company defaults in the payment of any principal or
Make-Whole Amount on any Note when the same becomes due and payable,
whether at maturity or at a date fixed for prepayment or by declaration or
otherwise; or
(b) the Company defaults in the payment of any interest on any Note
for more than five days after the same becomes due and payable; or
(c) the Company defaults in the performance of or compliance with
any term contained in Section 9.6 or Section 10; or
(d) the Company defaults in the performance of or compliance with
any term contained herein (other than those referred to in paragraphs (a),
(b) and (c) of this Section 11) and such default is not remedied within 30
days after the earlier of (1) a Responsible Officer obtaining actual
knowledge of such default and (2) the Company receiving written notice of
such default from any holder of a Note (any such written
27
notice to be identified as a "notice of default" and to refer specifically
to this paragraph (d) of Section 11); or
(e) any representation or warranty made in writing by or on behalf
of the Company or any Guarantor or by any officer of the Company or any
Guarantor in this Agreement, the Guaranty Agreement or in any writing
furnished in connection with the transactions contemplated hereby proves
to have been false or incorrect in any material respect on the date as of
which made; or
(f) (1) the Company or any Significant Subsidiary is in default (as
principal or as guarantor or other surety) in the payment of any principal
of or premium or make-whole amount or interest on any Debt that is
outstanding in an aggregate principal amount of at least $15,000,000
beyond any period of grace provided with respect thereto or (2) the
Company or any Significant Subsidiary is in default in the performance of
or compliance with any term of any evidence of any Debt in an aggregate
outstanding principal amount of at least $15,000,000 or of any mortgage,
indenture or other agreement relating thereto or any other condition
exists, and as a consequence of such default or condition such Debt has
become, or has been declared (or one or more Persons are entitled to
declare such Debt to be), due and payable before its stated maturity or
before its regularly scheduled dates of payment or (3) as a consequence of
the occurrence or continuation of any event or condition (other than the
passage of time or the right of the holder of Debt to convert such Debt
into equity interests), (i) the Company or any Significant Subsidiary has
become obligated to purchase or repay Debt before its regular maturity or
before its regularly scheduled dates of payment in an aggregate
outstanding principal amount of at least $15,000,000 or (ii) one or more
Persons have the right to require the Company or any Significant
Subsidiary so to purchase or repay such Debt; or
(g) there shall occur under that certain Note Purchase Agreement
dated as of March 15, 2004 (as the same may be amended, restated,
refinanced, replaced or otherwise modified from time to time, the "NJNG
Note Agreement") by and among New Jersey Natural Gas and the purchasers
named in Schedule A thereto an "Event of Default" (as such term is defined
in such NJNG Note Agreement); or
(h) the Company or any Restricted Subsidiary is in default under the
terms of any agreement involving any off-balance sheet transaction
(including any asset securitization, sale/leaseback transaction or
Synthetic Lease) with obligations in the aggregate thereunder for which
the Company or any Restricted Subsidiary may be obligated in an amount in
excess of $15,000,000, and such breach, default or event of default
consists of the failure to pay (beyond any period of grace permitted with
respect thereto) any obligation when due (whether at stated maturity, by
acceleration or otherwise) or if such breach or default permits or causes
the acceleration of any obligation or the termination of such agreement;
or
(i) the Company or any Significant Subsidiary (1) is generally not
paying, or admits in writing its inability to pay, its debts as they
become due, (2) files, or consents by answer or otherwise to the filing
against it of, a petition for relief or reorganization or
28
arrangement or any other petition in bankruptcy, for liquidation or to
take advantage of any bankruptcy, insolvency, reorganization, moratorium
or other similar law of any jurisdiction, (3) makes an assignment for the
benefit of its creditors, (4) consents to the appointment of a custodian,
receiver, trustee or other officer with similar powers with respect to it
or with respect to any substantial part of its property, (5) is
adjudicated as insolvent or to be liquidated or (6) takes corporate action
for the purpose of any of the foregoing; or
(j) a court or governmental authority of competent jurisdiction
enters an order appointing, without consent by the Company or any of its
Significant Subsidiaries, a custodian, receiver, trustee or other officer
with similar powers with respect to it or with respect to any substantial
part of its property, or constituting an order for relief or approving a
petition for relief or reorganization or any other petition in bankruptcy
or for liquidation or to take advantage of any bankruptcy or insolvency
law of any jurisdiction, or ordering the dissolution, winding-up or
liquidation of the Company or any of its Significant Subsidiaries, or any
such petition shall be filed against the Company or any of its Significant
Subsidiaries and such petition shall not be dismissed within 60 days; or
(k) a final judgment or judgments for the payment of money
aggregating in excess of $15,000,000 (exclusive of amounts fully covered
by valid and collectible insurance in respect thereof subject to customary
deductibles) are rendered against one or more of the Company and its
Significant Subsidiaries and which judgments are not, within 45 days after
entry thereof (or such shorter period as judgment creditors are stayed
pursuant to applicable law from executing on such judgment or judgments),
bonded, discharged or stayed pending appeal, or are not discharged within
45 days after the expiration of such stay (or such shorter period as
judgment creditors are stayed pursuant to applicable law from executing on
such judgment or judgments); or
(l) (1) default shall occur under the Guaranty Agreement and such
default shall continue beyond the period of grace, if any, allowed with
respect thereto or (2) the Guaranty Agreement shall cease to be in full
force and effect for any reason whatsoever, including, without limitation,
a determination by any Governmental Authority or court that such agreement
is invalid, void or unenforceable or any Guarantor shall contest or deny
in writing the validity or enforceability of the Guaranty Agreement; or
(m) if (1) any Plan shall fail to satisfy the minimum funding
standards of ERISA or the Code for any plan year or part thereof or a
waiver of such standards or extension of any amortization period is sought
or granted under Section 412 of the Code, (2) a notice of intent to
terminate any Plan on other than a standard basis shall have been or is
reasonably expected to be filed with the PBGC or the PBGC shall have
instituted proceedings under Section 4042 of ERISA to terminate or appoint
a trustee to administer any Plan or the PBGC shall have notified the
Company or any ERISA Affiliate that a Plan may become a subject of any
such proceedings, (3) the present value of the aggregate benefit
liabilities within the meaning of Section 4001(a)(18) of ERISA under all
Plans (determined as of the end of the most recent Plan year on the basis
of the actuarial assumptions specified for funding purposes in the most
recent actuarial
29
valuation), shall exceed the aggregate actuarial value of their assets by
an amount equal to 10% of Consolidated Tangible Net Worth, (4) the Company
or any ERISA Affiliate shall have incurred or is reasonably expected to
incur any liability pursuant to Title I or IV of ERISA or the penalty or
excise tax provisions of the Code relating to employee benefit plans, (5)
the Company or any ERISA Affiliate withdraws from any Multiemployer Plan
or (6) the Company or any ERISA Affiliate establishes or amends any
employee welfare benefit plan that provides post-employment welfare
benefits in a manner that would increase the liability of the Company or
any ERISA Affiliate thereunder; and any such event or events described in
clauses (1) through (6) above, either individually or together with any
other such event or events, would reasonably be expected to have a
Material Adverse Effect.
As used in Section 11(m), the terms "employee benefit plan" and "employee
welfare benefit plan" shall have the respective meanings assigned to such terms
in Section 3 of ERISA.
SECTION 12. REMEDIES ON DEFAULT, ETC.
Section 12.1. Acceleration. (a) If an Event of Default with respect to the
Company described in paragraph (i) or (j) of Section 11 (other than an Event of
Default described in clause (1) of paragraph (i) or described in clause (6) of
paragraph (i) by virtue of the fact that such clause encompasses clause (1) of
paragraph (i)) has occurred, all the Notes then outstanding shall automatically
become immediately due and payable.
(b) If any other Event of Default has occurred and is continuing, the
Required Holders may at any time at its or their option, by notice or notices to
the Company, declare all the Notes then outstanding to be immediately due and
payable.
(c) If any Event of Default described in paragraph (a) or (b) of Section
11 has occurred and is continuing, any holder or holders of Notes at the time
outstanding affected by such Event of Default may at any time, at its or their
option, by notice or notices to the Company, declare all the Notes held by it or
them to be immediately due and payable.
Upon any Note's becoming due and payable under this Section 12.1, whether
automatically or by declaration, such Note will forthwith mature and the entire
unpaid principal amount of such Note, plus (1) all accrued and unpaid interest
thereon and (2) the Make-Whole Amount, if any, determined in respect of such
principal amount (to the full extent permitted by applicable law) shall all be
immediately due and payable, in each and every case without presentment, demand,
protest or further notice, all of which are hereby waived. The Company
acknowledges, and the parties hereto agree, that each holder of a Note has the
right to maintain its investment in the Notes free from repayment by the Company
(except as herein specifically provided for), and that the provision for payment
of the Make-Whole Amount by the Company in the event that the Notes are prepaid
or are accelerated as a result of an Event of Default, is intended to provide
compensation for the deprivation of such right under such circumstances.
Section 12.2. Other Remedies. If any Default or Event of Default has
occurred and is continuing, and irrespective of whether any Notes have become or
have been declared immediately due and payable under Section 12.1, the holder of
any Note at the time outstanding
30
may proceed to protect and enforce the rights of such holder by an action at
law, suit in equity or other appropriate proceeding, whether for the specific
performance of any agreement contained herein or in any Note, or for an
injunction against a violation of any of the terms hereof or thereof, or in aid
of the exercise of any power granted hereby or thereby or by law or otherwise.
Section 12.3. Rescission. At any time after any Notes have been declared
due and payable pursuant to clause (b) or (c) of Section 12.1, the Required
Holders, by written notice to the Company, may rescind and annul any such
declaration and its consequences if (a) the Company has paid all overdue
interest on the Notes, all principal of and Make-Whole Amount, if any, on any
Notes that are due and payable and are unpaid other than by reason of such
declaration, and all interest on such overdue principal and Make-Whole Amount,
if any, and (to the extent permitted by applicable law) any overdue interest in
respect of the Notes, at the Default Rate, (b) all Events of Default and
Defaults, other than non-payment of amounts that have become due solely by
reason of such declaration, have been cured or have been waived pursuant to
Section 17 and (c) no judgment or decree has been entered for the payment of any
monies due pursuant hereto or to the Notes. No rescission and annulment under
this Section 12.3 will extend to or affect any subsequent Event of Default or
Default or impair any right consequent thereon.
Section 12.4. No Waivers or Election of Remedies, Expenses, Etc. No course
of dealing and no delay on the part of any holder of any Note in exercising any
right, power or remedy shall operate as a waiver thereof or otherwise prejudice
such holder's rights, powers or remedies. No right, power or remedy conferred by
this Agreement or by any Note upon any holder thereof shall be exclusive of any
other right, power or remedy referred to herein or therein or now or hereafter
available at law, in equity, by statute or otherwise. Without limiting the
obligations of the Company under Section 15, the Company will pay to the holder
of each Note on demand such further amount as shall be sufficient to cover all
costs and expenses of such holder incurred in any enforcement or collection
under this Section 12, including, without limitation, reasonable attorneys'
fees, expenses and disbursements.
SECTION 13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.
Section 13.1. Registration of Notes. The Company shall keep at its
principal executive office a register for the registration and registration of
transfers of Notes. The name and address of each holder of one or more Notes,
each transfer thereof and the name and address of each transferee of one or more
Notes shall be registered in such register. Prior to due presentment for
registration of transfer, the Person in whose name any Note shall be registered
shall be deemed and treated as the owner and holder thereof for all purposes
hereof, and the Company shall not be affected by any notice or knowledge to the
contrary. The Company shall give to any holder of a Note that is an
Institutional Investor promptly upon request therefor, a complete and correct
copy of the names and addresses of all registered holders of Notes.
Section 13.2. Transfer and Exchange of Notes. Upon surrender of any Note
at the principal executive office of the Company for registration of transfer or
exchange (and in the case of a surrender for registration of transfer, duly
endorsed or accompanied by a written instrument of transfer duly executed by the
registered holder of such Note or its attorney duly authorized in
31
writing and accompanied by the address for notices of each transferee of such
Note or part thereof), the Company shall execute and deliver, at the Company's
expense (except as provided below), one or more new Notes (as requested by the
holder thereof) in exchange therefor, in an aggregate principal amount equal to
the unpaid principal amount of the surrendered Note. Each such new Note shall be
payable to such Person as such holder may request and shall be substantially in
the form of Exhibit 1. Each such new Note shall be dated and bear interest from
the date to which interest shall have been paid on the surrendered Note or dated
the date of the surrendered Note if no interest shall have been paid thereon.
The Company may require payment of a sum sufficient to cover any stamp tax or
governmental charge imposed in respect of any such transfer of Notes. Notes
shall not be transferred in denominations of less than $100,000, provided that
if necessary to enable the registration of transfer by a holder of its entire
holding of Notes, one Note may be in a denomination of less than $100,000. Any
transferee, by its acceptance of a Note registered in its name (or the name of
its nominee), shall be deemed to have made the representation set forth in
Section 6.2.
Section 13.3. Replacement of Notes. Upon receipt by the Company of
evidence reasonably satisfactory to it of the ownership of and the loss, theft,
destruction or mutilation of any Note (which evidence shall be, in the case of
an Institutional Investor, notice from such Institutional Investor of such
ownership and such loss, theft, destruction or mutilation), and
(a) in the case of loss, theft or destruction, of indemnity
reasonably satisfactory to it (provided that if the holder of such Note
is, or is a nominee for, an original Purchaser or another holder of a Note
with a minimum net worth of at least $50,000,000, such Person's own
unsecured agreement of indemnity shall be deemed to be satisfactory), or
(b) in the case of mutilation, upon surrender and cancellation
thereof,
the Company at its own expense shall execute and deliver, in lieu thereof, a new
Note, dated and bearing interest from the date to which interest shall have been
paid on such lost, stolen, destroyed or mutilated Note or dated the date of such
lost, stolen, destroyed or mutilated Note if no interest shall have been paid
thereon.
SECTION 14. PAYMENTS ON NOTES.
Section 14.1. Place of Payment. Subject to Section 14.2, payments of
principal, Make-Whole Amount, if any, and interest becoming due and payable on
the Notes shall be made in New York, New York at the principal office of
JPMorgan Chase Bank in such jurisdiction. The Company may at any time, by notice
to each holder of a Note, change the place of payment of the Notes so long as
such place of payment shall be either the principal office of the Company in
such jurisdiction or the principal office of a bank or trust company in such
jurisdiction.
Section 14.2. Home Office Payment. So long as any Purchaser or its nominee
shall be the holder of any Note, and notwithstanding anything contained in
Section 14.1 or in such Note to the contrary, the Company will pay all sums
becoming due on such Note for principal, Make-Whole Amount, if any, and interest
by the method and at the address specified for such purpose below such
Purchaser's name in Schedule A, or by such other method or at such other address
as such Purchaser shall have from time to time specified to the Company in
writing for such
32
purpose, without the presentation or surrender of such Note or the making of any
notation thereon, except that upon written request of the Company made
concurrently with or reasonably promptly after payment or prepayment in full of
any Note, such Purchaser shall surrender such Note for cancellation, reasonably
promptly after any such request, to the Company at its principal executive
office or at the place of payment most recently designated by the Company
pursuant to Section 14.1. Prior to any sale or other disposition of any Note
held by any Purchaser or its nominee such Purchaser will, at its election,
either endorse thereon the amount of principal paid thereon and the last date to
which interest has been paid thereon or surrender such Note to the Company in
exchange for a new Note or Notes pursuant to Section 13.2. The Company will
afford the benefits of this Section 14.2 to any Institutional Investor that is
the direct or indirect transferee of any Note purchased by any Purchaser under
this Agreement and that has made the same agreement relating to such Note as
such Purchaser has made in this Section 14.2.
SECTION 15. EXPENSES, ETC.
Section 15.1. Transaction Expenses. Whether or not the transactions
contemplated hereby are consummated, the Company will pay the costs and expenses
incurred in connection with the initial filing of this Agreement and all related
documents and financial information, and all subsequent annual and interim
filings of documents and financial information related thereto, with the
Securities Valuation Office of the National Association of Insurance
Commissioners or any successor organization, all costs and expenses (including
reasonable attorneys' fees of a special counsel and, if reasonably required,
local or other counsel) incurred by the Purchasers or any other holder of a Note
in connection with such transactions and in connection with any amendments,
waivers or consents under or in respect of this Agreement, the Notes or the
Guaranty Agreement (whether or not such amendment, waiver or consent becomes
effective), including, without limitation: (a) the costs and expenses incurred
in enforcing or defending (or determining whether or how to enforce or defend)
any rights under this Agreement, the Notes or the Guaranty Agreement or in
responding to any subpoena or other legal process or informal investigative
demand issued in connection with this Agreement, the Notes or the Guaranty
Agreement, or by reason of being a holder of any Note and (b) the costs and
expenses, including financial advisors' fees, incurred in connection with the
insolvency or bankruptcy of the Company or any Subsidiary or in connection with
any work-out or restructuring of the transactions contemplated hereby and by the
Notes. The Company will pay, and will save the Purchasers and each other holder
of a Note harmless from, all claims in respect of any fees, costs or expenses,
if any, of brokers and finders (other than those retained by such Person).
Section 15.2. Survival. The obligations of the Company under this Section
15 will survive the payment or transfer of any Note, the enforcement, amendment
or waiver of any provision of this Agreement, the Notes or the Guaranty
Agreement, and the termination of this Agreement or the Guaranty Agreement.
SECTION 16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.
All representations and warranties contained herein shall survive the
execution and delivery of this Agreement and the Notes, the purchase or transfer
by any Purchaser of any Note or portion thereof or interest therein and the
payment of any Note, and may be relied upon by any
33
subsequent holder of a Note, regardless of any investigation made at any time by
or on behalf of any Purchaser or any other holder of a Note. All statements
contained in any certificate or other instrument delivered by or on behalf of
the Company pursuant to this Agreement shall be deemed representations and
warranties of the Company under this Agreement. Subject to the preceding
sentence, this Agreement and the Notes embody the entire agreement and
understanding between the Purchasers and the Company and supersede all prior
agreements and understandings relating to the subject matter hereof.
SECTION 17. AMENDMENT AND WAIVER.
Section 17.1. Requirements. This Agreement and the Notes may be amended,
and the observance of any term hereof or of the Notes may be waived (either
retroactively or prospectively), with (and only with) the written consent of the
Company and the Required Holders, except that (a) no amendment or waiver of any
of the provisions of Section 1, 2, 3, 4, 5, 6 or 21 hereof, or any defined term
(as it is used therein), will be effective as to any holder of a Note unless
consented to by such holder in writing and (b) no such amendment or waiver may,
without the written consent of the holder of each Note at the time outstanding
affected thereby, (1) subject to the provisions of Section 12 relating to
acceleration or rescission, change the amount or time of any prepayment or
payment of principal of, or reduce the rate or change the time of payment or
method of computation of interest or of the Make-Whole Amount on, the Notes, (2)
change the percentage of the principal amount of the Notes the holders of which
are required to consent to any such amendment or waiver or (3) amend any of
Sections 8, 11(a), 11(b), 12, 17 or 20.
Section 17.2. Solicitation of Holders of Notes.
(a) Solicitation. The Company will provide each holder of the Notes
(irrespective of the amount of Notes then owned by it) with sufficient
information, sufficiently far in advance of the date a decision is
required, to enable such holder to make an informed and considered
decision with respect to any proposed amendment, waiver or consent in
respect of any of the provisions hereof or of the Notes. The Company will
deliver executed or true and correct copies of each amendment, waiver or
consent effected pursuant to the provisions of this Section 17 to each
holder of outstanding Notes promptly following the date on which it is
executed and delivered by, or receives the consent or approval of, the
requisite holders of Notes.
(b) Payment. The Company will not, directly or indirectly, pay or
cause to be paid any remuneration, whether by way of supplemental or
additional interest, fee or otherwise, or grant any security, to any
holder of Notes as consideration for or as an inducement to the entering
into by any holder of Notes or any waiver or amendment of any of the terms
and provisions hereof unless such remuneration is concurrently paid, or
security is concurrently granted, on the same terms, ratably to each
holder of Notes then outstanding even if such holder did not consent to
such waiver or amendment.
(c) Consent in Contemplation of Transfer. Any consent made pursuant
to this Section 17 by a holder of Notes that has transferred a portion or
has agreed to transfer all or a portion of its Notes to the Company, any
Subsidiary or any Affiliate of the Company
34
and has provided or has agreed to provide such written consent as a
condition to such transfer shall be void and of no force and effect except
solely as to such holder, and any amendment effected or waivers granted or
to be effected or granted that would not have been or be so effected or
granted but for such consent (and the consents of all other holders of the
Notes that were acquired under the same or similar conditions) shall be
void and of no force and effect except solely as to such holder.
Section 17.3. Binding Effect, Etc. Any amendment or waiver consented to as
provided in this Section 17 applies equally to all holders of Notes and is
binding upon them and upon each future holder of any Note and upon the Company
without regard to whether such Note has been marked to indicate such amendment
or waiver. No such amendment or waiver will extend to or affect any obligation,
covenant, agreement, Default or Event of Default not expressly amended or waived
or impair any right consequent thereon. No course of dealing between the Company
and the holder of any Note nor any delay in exercising any rights hereunder or
under any Note shall operate as a waiver of any rights of any holder of such
Note. As used herein, the term "this Agreement" and references thereto shall
mean this Agreement as it may from time to time be amended or supplemented.
Section 17.4. Notes Held by Company, Etc. Solely for the purpose of
determining whether the holders of the requisite percentage of the aggregate
principal amount of Notes then outstanding approved or consented to any
amendment, waiver or consent to be given under this Agreement or the Notes, or
have directed the taking of any action provided herein or in the Notes to be
taken upon the direction of the holders of a specified percentage of the
aggregate principal amount of Notes then outstanding, Notes directly or
indirectly owned by the Company or any of its Affiliates shall be deemed not to
be outstanding.
SECTION 18. NOTICES.
All notices and communications provided for hereunder shall be in writing
and sent (a) by telefacsimile if the sender on the same day sends a confirming
copy of such notice by a recognized overnight delivery service (charges
prepaid), (b) by registered or certified mail with return receipt requested
(postage prepaid) or (c) by a recognized overnight delivery service (charges
prepaid). Any such notice must be sent:
(1) if to any Purchaser or its nominee, to such Purchaser or its
nominee at the address specified for such communications in Schedule A, or
at such other address as such Purchaser or its nominee shall have
specified to the Company in writing,
(2) if to any other holder of any Note, to such holder at such
address as such other holder shall have specified to the Company in
writing, or
(3) if to the Company, to the Company at its address set forth at
the beginning hereof to the attention of the Chief Financial Officer of
the Company, or at such other address as the Company shall have specified
to the holder of each Note in writing.
Notices under this Section 18 will be deemed given only when actually received.
35
SECTION 19. REPRODUCTION OF DOCUMENTS.
This Agreement and all documents relating hereto, including, without
limitation, (a) consents, waivers and modifications that may hereafter be
executed, (b) documents received by the Purchasers at the Closing (except the
Notes themselves) and (c) financial statements, certificates and other
information previously or hereafter furnished to any holder of the Notes, may be
reproduced by such holder by any photographic, photostatic, microfilm,
microcard, miniature photographic or other similar process and such holder may
destroy any original document so reproduced. The Company agrees and stipulates
that, to the extent permitted by applicable law, any such reproduction shall be
admissible in evidence as the original itself in any judicial or administrative
proceeding (whether or not the original is in existence and whether or not such
reproduction was made by any holder of the Notes in the regular course of
business) and any enlargement, facsimile or further reproduction of such
reproduction shall likewise be admissible in evidence. This Section 19 shall not
prohibit the Company or any other holder of Notes from contesting any such
reproduction to the same extent that it could contest the original, or from
introducing evidence to demonstrate the inaccuracy of any such reproduction.
SECTION 20. CONFIDENTIAL INFORMATION.
For the purposes of this Section 20, "Confidential Information" shall mean
information delivered to any Purchaser by or on behalf of the Company or any
Subsidiary in connection with the transactions contemplated by or otherwise
pursuant to this Agreement that is proprietary in nature and that was clearly
marked or labeled or otherwise adequately identified when received by such
Purchaser as being confidential information of the Company or such Subsidiary,
provided that such term does not include information that (a) was publicly known
or otherwise known to such Purchaser prior to the time of such disclosure
(provided, however, that to such Purchaser's actual knowledge, the source of
such information was not, at the time of disclosure to such Purchaser, bound by
a confidentiality agreement with the Company or its Subsidiaries relating to
such information), (b) subsequently becomes publicly known through no act or
omission by such Purchaser or any Person acting on such Purchaser's behalf, (c)
otherwise becomes known to such Purchaser other than through disclosure by the
Company or any Subsidiary (provided, however, that to such Purchaser's actual
knowledge, the source of such information was not, at the time of disclosure to
such Purchaser, bound by a confidentiality agreement with the Company or its
Subsidiaries relating to such information) or (d) constitutes financial
statements delivered to such Purchaser under Section 7.1 that are otherwise
publicly available. Each Purchaser will maintain the confidentiality of such
Confidential Information in accordance with procedures adopted by such Purchaser
in good faith to protect confidential information of third parties delivered to
such Purchaser, provided that such Purchaser may deliver or disclose
Confidential Information to (1) its directors, officers, trustees, employees,
agents, attorneys and affiliates (to the extent such disclosure reasonably
relates to the administration of the investment represented by its Notes and
such individuals are bound by the terms of this Section 20 or agree to hold
confidential the Confidential Information substantially in accordance with the
terms of this Section 20), (2) its financial advisors and other professional
advisors who agree to hold confidential the Confidential Information
substantially in accordance with the terms of this Section 20, (3) any other
holder of any Note, (4) any Institutional Investor to which such Purchaser sells
or offers to sell such Note or any part thereof or any participation
36
therein (if such Person has agreed in writing prior to its receipt of such
Confidential Information to be bound by the provisions of this Section 20), (5)
any Person from which such Purchaser offers to purchase any security of the
Company (if such Person has agreed in writing prior to its receipt of such
Confidential Information to be bound by the provisions of this Section 20), (6)
any Federal or state regulatory authority having jurisdiction over such
Purchaser, (7) the National Association of Insurance Commissioners or any
similar organization, or any nationally recognized rating agency that requires
access to information about such Purchaser's investment portfolio or (8) any
other Person to which such delivery or disclosure may be necessary or
appropriate (i) to effect compliance with any law, rule, regulation or order
applicable to such Purchaser, (ii) in response to any subpoena or other legal
process, (iii) in connection with any litigation to which such Purchaser is a
party or (iv) if an Event of Default has occurred and is continuing, to the
extent such Purchaser may reasonably determine such delivery and disclosure to
be necessary or appropriate in the enforcement or for the protection of the
rights and remedies under such Purchaser's Notes and this Agreement. Each holder
of a Note, by its acceptance of a Note, will be deemed to have agreed to be
bound by and to be entitled to the benefits of this Section 20 as though it were
a party to this Agreement. On reasonable request by the Company in connection
with the delivery to any holder of a Note of information required to be
delivered to such holder under this Agreement or requested by such holder (other
than a holder that is a party to this Agreement or its nominee), such holder
will enter into an agreement with the Company embodying the provisions of this
Section 20.
Notwithstanding any provision of this Agreement to the contrary,
including, without limitation, the first paragraph of this Section 20, each of
the Company and the Purchasers, any subsequent holders of the Notes and their
respective employees, representatives and agents, may disclose to any and all
Persons, without limitation of any kind, the United States Federal income tax
treatment and the tax structure of this Agreement and the Notes, and all
materials of any kind (including opinions or other tax analyses) that have been
provided to such Person directly related to such United States Federal income
tax treatment and tax structure.
SECTION 21. SUBSTITUTION OF PURCHASER.
Each Purchaser shall have the right to substitute any one of its
Affiliates as the purchaser of the Notes that such Purchaser has agreed to
purchase hereunder, by written notice to the Company, which notice shall be
signed by both such Purchaser and such Affiliate, shall contain such Affiliate's
agreement to be bound by this Agreement and shall contain a confirmation by such
Affiliate of the accuracy with respect to it of the representations set forth in
Section 6. Upon receipt of such notice, wherever the word "Purchaser" is used in
this Agreement (other than in this Section 21), such word shall be deemed to
refer to such Affiliate in lieu of such Purchaser. In the event that such
Affiliate is so substituted as a purchaser hereunder and such Affiliate
thereafter transfers to such Purchaser all of the Notes then held by such
Affiliate, upon receipt by the Company of notice of such transfer, wherever the
word "Purchaser" is used in this Agreement (other than in this Section 21), such
word shall no longer be deemed to refer to such Affiliate, but shall refer to
such Purchaser, and such Purchaser shall have all the rights of an original
holder of the Notes under this Agreement.
37
SECTION 22. MISCELLANEOUS.
Section 22.1. Successors and Assigns. All covenants and other agreements
contained in this Agreement by or on behalf of any of the parties hereto bind
and inure to the benefit of their respective successors and assigns (including,
without limitation, any subsequent holder of a Note) whether so expressed or
not.
Section 22.2. Submission to Jurisdiction. The Company hereby irrevocably
submits to the non-exclusive jurisdiction of any State of New York court or any
Federal court located in New York County, New York, New York for the
adjudication of any matter arising out of or relating to this Agreement, and
consents to the service of all writs, process and summonses by registered or
certified mail out of any such court or by service of process on the Company at
its address to which notices are to be given pursuant to Section 18 hereof and
hereby waives any requirement to have an agent for service of process in the
State of New York. Nothing contained herein shall affect the right of any holder
of the Notes to serve legal process in any other manner or to bring any
proceeding hereunder in any jurisdiction where the Company may be amenable to
suit. The Company hereby irrevocably waives any objection to any suit, action or
proceeding in any New York court or Federal court located in New York County,
New York, New York on the grounds of venue and hereby further irrevocably waives
any claim that any such suit, action or proceeding brought in any such court has
been brought in an inconvenient forum.
Section 22.3. Payments Due on Non-Business Days. Anything in this
Agreement or the Notes to the contrary notwithstanding, any payment of principal
of or Make-Whole Amount, if any, or interest on any Note that is due on a date
other than a Business Day shall be made on the next succeeding Business Day
without including the additional days elapsed in the computation of the interest
payable on such next succeeding Business Day.
Section 22.4. Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall (to the full extent permitted by law)
not invalidate or render unenforceable such provision in any other jurisdiction.
Section 22.5. Construction. (a) Each covenant contained herein shall be
construed (absent express provision to the contrary) as being independent of
each other covenant contained herein, so that compliance with any one covenant
shall not (absent such an express contrary provision) be deemed to excuse
compliance with any other covenant. Where any provision herein refers to action
to be taken by any Person, or which such Person is prohibited from taking, such
provision shall be applicable whether such action is taken directly or
indirectly by such Person.
(b) Where the character or amount of any asset or liability or item of
income or expense is required to be determined or any consolidation or other
accounting computation is required to be made by the Company for the purposes of
this Agreement, the same shall be done by the Company in accordance with GAAP,
to the extent applicable, except where such principles are inconsistent with the
requirements of this Agreement.
38
Section 22.6. Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be an original but all of which together
shall constitute one instrument. Each counterpart may consist of a number of
copies hereof, each signed by less than all, but together signed by all, of the
parties hereto.
Section 22.7. Governing Law. This Agreement shall be construed and
enforced in accordance with, and the rights of the parties shall be governed by,
the law of the State of New York excluding choice-of-law principles of the law
of such State that would require the application of the laws of a jurisdiction
other than such State.
* * * * *
39
The execution hereof by the Purchasers shall constitute a contract among
the Company and the Purchasers for the uses and purposes hereinabove set forth.
Very truly yours,
NEW JERSEY RESOURCES CORPORATION
By_______________________________________
Its___________________________________
40
The foregoing is hereby agreed
to as of the date thereof.
ING LIFE INSURANCE AND ANNUITY COMPANY
By: ING Investment Management LLC,
as Agent
By:______________________________________
Name:
Title:
41
The foregoing is hereby agreed
to as of the date thereof.
RELIASTAR LIFE INSURANCE COMPANY
By: ING Investment Management LLC,
as Agent
By:______________________________________
Name:
Title:
42
The foregoing is hereby agreed
to as of the date thereof.
NEW YORK LIFE INSURANCE COMPANY
By:______________________________________
Name:
Title:
43
The foregoing is hereby agreed
to as of the date thereof.
NEW YORK LIFE INSURANCE AND ANNUITY
CORPORATION
By: New York Life Investment Management
LLC,
Its Investment Manager
By:______________________________________
Name:
Title:
44
The foregoing is hereby agreed
to as of the date thereof.
METROPOLITAN LIFE INSURANCE COMPANY
By:______________________________________
Name:
Title:
45
The foregoing is hereby agreed
to as of the date thereof.
TEXAS LIFE INSURANCE COMPANY
By: Metropolitan Life Insurance Company,
as its Investment Manager
By:______________________________________
Name:
Title:
46