As filed with the Securities and Exchange Commission on August 20, 2002
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
SOUTH JERSEY GAS COMPANY
(Exact name of registrant as specified in its charter)
New Jersey 21-0398330
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(State of incorporation) (I.R.S. Employer
Identification Number)
1 South Jersey Plaza, Route 54
Folsom, New Jersey 08037
(609) 561-9000
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
Richard H. Walker
South Jersey Gas Company
1 South Jersey Plaza, Route 54
Folsom, New Jersey 08037
(609) 561-9000
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(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copies of communications to:
Richard J. Busis, Esquire Jonathan A. Koff, Esquire
Cozen O'Connor Chapman and Cutler
1900 Market Street 111 West Monroe
Philadelphia, Pennsylvania 19103 Chicago, Illinois 60603
(215) 665-2000 (312) 845-3000
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Approximate date of commencement of proposed sale to the public: From
time to time after the effective date of the registration statement, as
determined by the registrant.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [_]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, check the following box: [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act of 1933 registration statement number of the earlier
effective registration statement for the same offering: [_]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act of 1933, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering: [_]
If delivery of the prospectus is expected to be made pursuant to Rule
434 under the Securities Act of 1933, please check the following box: [_]
CALCULATION OF REGISTRATION FEE
Title of Each Class Proposed Maximum Aggregate Amount of Registration
to be Registered Offering Price (1) Fee(1)
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Debt Securities..... $150,000,000 $13,800
(1) Estimated solely for the purpose of determining the registration fee
pursuant to Rule 457(o).
The registrant hereby amends this registration statement on such date
or dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
Subject to Completion, dated August 20, 2002
$150,000,000
South Jersey Gas Company
Medium Term Notes, Series B
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We may sell from time to time medium term notes with an aggregate
offering price of up to $150,000,000. All of the notes issued under this
prospectus will be secured by first mortgage bonds issued under our Indenture of
First Mortgage. We will provide specific terms of these medium term notes in
supplements to this prospectus.
You should read this prospectus and any prospectus supplement carefully
before you invest.
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Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
--------------------------------------------
This prospectus is dated _______, 2002.
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You should rely only on the information contained in or incorporated by
reference in this prospectus or any accompanying supplemental prospectus. We
have not authorized anyone to provide you with different information or make any
additional representations. We are not making an offer of these medium term
notes in any state where the offer is not permitted. You should not assume that
the information contained in or incorporated by reference in this prospectus or
any prospectus supplement is accurate as of any date other than the date on the
front of each of such documents.
TABLE OF CONTENTS
About this Prospectus..............................................3
Where You Can Find More Information................................3
Incorporation of Certain Documents by Reference....................3
Special Note Regarding Forward-Looking Statements..................4
South Jersey Gas...................................................6
Use of Proceeds....................................................6
Ratio of Earnings to Fixed Charges.................................6
Description of Debt Securities.....................................7
Description of Note Indenture......................................8
Description of the Pledged Bonds...................................21
Plan of Distribution...............................................31
Legal Matters......................................................32
Experts............................................................33
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ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with
the Securities and Exchange Commission utilizing a "shelf" registration process.
Under this shelf registration process, we may sell the debt securities described
in this prospectus in one or more offerings up to a total dollar amount of
$150,000,000. This prospectus provides you with a general description of the
debt securities we may offer. Each time we sell securities, we will provide a
prospectus supplement that will contain specific information about the terms of
that offering. The prospectus supplement may also add, update or change
information contained in this prospectus. You should read both this prospectus
and any prospectus supplement together with additional information described
under the next heading, "Where You Can Find More Information."
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports and other information
with the Securities and Exchange Commission. You may read and copy any document
we file at the Commission's public reference room at 450 Fifth Street, N.W.,
Washington, DC 20549 or at its regional offices located at Citicorp Center, 175
West Jackson Boulevard, Suite 900, Chicago, Illinois 60604 and at 233 Broadway,
New York, New York 10279. Please call the Commission at 1-800-SEC-0330 for
further information on the public reference rooms. Our Commission filings are
also available to the public through the Internet on the Commission's web site
at http://www.sec.gov.
The Commission allows us to "incorporate by reference" some information
into this document, which means that we can disclose important information to
you by referring you to another document we have filed separately with the
Commission. The information incorporated by reference is deemed to be part of
this document, except for any information superseded by information contained
directly in this document. This prospectus incorporates by reference the
documents set forth under "Incorporation of Certain Documents by Reference" that
we have previously filed with the Commission. These documents contain important
information about us and our financial condition.
We have filed a registration statement and related exhibits with the
Commission under the Securities Act of 1933. The registration statement contains
additional information about us and the debt securities. A copy of the
registration statement, including exhibits, may be read and copied from the
places listed above.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by us with the Commission are
incorporated herein by reference:
1. Our Annual Report on Form 10-K for the year ended
December 31, 2001.
2. Our Quarterly Report on Form 10-Q for the quarter ended
March 31, 2002.
3. Our Quarterly Report on Form 10-Q for the quarter ended
June 30, 2002.
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In addition, all documents filed by us with the Commission pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act after the date of this
prospectus and prior to the termination of this offering shall be deemed to be
incorporated by reference in and shall be a part of this prospectus from the
date of the filing of such documents.
The information incorporated by reference is considered to be part of
this prospectus, and later information filed with the Commission will modify or
supersede this information. Any statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this
prospectus.
This prospectus does not contain all the information contained in the
registration statement and its exhibits which we have filed with the Commission
under the Securities Act with respect to the debt securities offered hereby and
to which reference is hereby made. We will provide without charge to each person
to whom this prospectus is delivered, upon request, a copy of any document
incorporated by reference in this prospectus or in the registration statement,
other than exhibits to such documents. Requests should be made to Richard H.
Walker, Corporate Secretary, South Jersey Gas Company, 1 South Jersey Plaza,
Route 54, Folsom, New Jersey 08037, telephone: (609) 561-9000.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains or incorporates certain forward-looking
statements within the meaning of Section 27A of the Securities Act and Section
21E of the Securities Exchange Act. Such statements may be preceded by, followed
by or include words such as "anticipate," "believe," "expect," "intend,"
"estimate" or similar expressions. These forward-looking statements are made
based upon management's expectations and beliefs concerning future events
impacting South Jersey Gas and involve a number of risks and uncertainties. We
caution that forward-looking statements are not guarantees and actual results
could differ materially from those expressed or implied in the forward-looking
statements. In making forward-looking statements, we assume no duty to update
these statements should expectations change or actual results and events differ
from current expectations.
A number of factors could cause our actual results to differ materially
from those anticipated, including, but not limited to, the following:
* weather conditions in our marketing areas;
* changes in commodity costs;
* regulatory and court decisions;
* competition in our utility activities;
* the availability and cost of capital;
* costs and effects of legal proceedings and environmental
liabilities;
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* the failure of our customers or suppliers to fulfill their
contractual obligations; and
* changes in business strategies.
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SOUTH JERSEY GAS
South Jersey Gas Company is a regulated New Jersey public utility and
is the principal subsidiary of South Jersey Industries, Inc. We are a gas
distribution utility that supplies natural gas to residential, commercial and
industrial customers in the southern part of New Jersey. We also make off-system
sales of natural gas on a wholesale basis to various customers on the interstate
pipeline system and transport natural gas purchased by some of our customers
directly from producers or suppliers. In addition, we service appliances through
the sale of appliance warranty programs as well as on a time and materials
basis.
At June 30, 2002, we served approximately 292,000 residential,
commercial and industrial customers throughout 112 municipalities in Atlantic,
Cape May, Cumberland, and Salem Counties and portions of Burlington, Camden and
Gloucester Counties. Our service territory covers approximately 2,500 square
miles and has an estimated permanent population of 1.2 million. Gas sales,
transportation and capacity release for fiscal year 2001 amounted to 108,935
MMcf (thousand cubic feet), of which approximately 48,786 MMcf was firm sales
and transportation, 2,845 MMcf was interruptible sales and transportation and
57,304 MMcf was off-system sales and capacity release. For fiscal 2001, the
breakdown of firm sales consisted of 35.6% residential, 15.5% commercial, 3.1%
cogeneration and electric generation, 0.5% industrial and 45.3% transportation.
We are regulated as to rates and other matters by the New Jersey Board of Public
Utilities.
Our executive offices are located at 1 South Jersey Plaza, Route 54,
Folsom, New Jersey 08037, and our telephone number is (609) 561-9000.
USE OF PROCEEDS
Unless otherwise specified in the applicable prospectus supplement, the
net proceeds from the sale of the debt securities will be used by us to retire
short-term and long-term debt and to fund capital expenditure requirements. At
June 30, 2002, we had $102.9 million of short-term debt outstanding with a
weighted-average interest cost of 2.63%, with maturities not exceeding
forty-five days.
RATIO OF EARNINGS TO FIXED CHARGES
Our ratio of earnings to fixed charges for each of the periods
indicated is as follows:
Twelve Months
Ended June
Year Ended December 31, June 30,
------------------------------------ -------------
1997 1998 1999 2000 2001 2002
---- ---- ---- ---- ---- ----
Ratio of earnings to
fixed charges 2.6x 2.2x 2.5x 2.6x 2.6x 2.7x
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The ratio of earnings to fixed charges represents, on a pre-tax basis,
the number of times earnings cover fixed charges. Earnings consist of net
income, to which has been added fixed charges and taxes based on our income.
Fixed charges consist of interest charges and preferred securities dividend
requirements and an interest factor in rentals.
DESCRIPTION OF DEBT SECURITIES
This prospectus describes certain general terms and provisions of our
debt securities. When we offer to sell a particular series of debt securities,
we will describe the specific terms of the series in a supplement to this
prospectus.
We intend to offer and sell from time to time our secured debt
securities (the Notes), in an aggregate principal amount up to $150,000,000 and
having maturities ranging from one year to 40 years from their respective dates
of issue. The Notes will be issued only in fully registered form, in minimum
denominations of $1,000 and integral multiples of $1,000 in excess thereof.
Unless otherwise indicated in the applicable prospectus supplement, interest on
each Note will be payable semiannually in arrears on May 1 and November 1. The
purchase price, aggregate principal amount, interest rate, stated maturity date,
optional redemption provisions and any other material terms of each issue of
Notes not described in this prospectus will be set forth in an accompanying
prospectus supplement.
The Notes will be issued under an indenture of trust dated as of
October 1, 1998, as supplemented on June 29, 2000, July 5, 2000 and July 9, 2001
(the Note Indenture), between us and The Bank of New York, as the Note Trustee.
The material provisions of the Note Indenture are described below under the
caption "Description of Note Indenture." A series of first mortgage bonds
designated as "South Jersey Gas Company First Mortgage Bonds, 10% Medium Term
Notes, Series B" (the Pledged Bonds) will be issued under the Indenture of First
Mortgage, dated October 1, 1947, as supplemented and amended by supplemental
indentures, including a new Twenty-Third Supplemental Indenture (the New
Supplement) (such Indenture of First Mortgage, as amended and supplemented, is
referred to as the Mortgage), from us to The Bank of New York, as successor
trustee (the Mortgage Trustee). The Pledged Bonds to be issued under the
Mortgage are described below under the caption "Description of the Pledged
Bonds." All first mortgage bonds issued or issuable under the Mortgage are
hereinafter sometime called Bonds.
Prior to the Substitution Date, the Notes will be secured by the
Pledged Bonds in an aggregate principal amount equal to the principal amount of
Notes issued. The "Substitution Date" will be the date that all of our
first mortgage bonds issued and outstanding under the Mortgage, other than the
first mortgage bonds pledged and delivered by us to the Note Trustee under the
Note Indenture, have been retired through payment, redemption or otherwise
(including those first mortgage bonds deemed to be paid within the meaning of
the Mortgage) at, before or after the maturity thereof. On the Substitution
Date, the Note Trustee shall deliver to us for cancellation the Pledged Bonds,
and we will cause the Note Trustee to provide notice to all holders of Notes of
the occurrence of the Substitution Date. As a result, on the Substitution Date,
the Pledged Bonds will cease to secure the Notes, and, at our option, the Notes
either will become our unsecured general obligations or will be secured by
Substituted Pledged Bonds (as defined below).
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The Pledged Bonds will be pledged to the Note Trustee in accordance
with the provisions of the Note Indenture. Prior to the Substitution Date, the
principal amount of the Pledged Bonds deemed outstanding will at all times be
equal to the outstanding principal amount of the Notes then outstanding. The
Pledged Bonds will be deemed to bear interest corresponding to the required
payments of interest in respect of the Notes. Payments of principal and interest
in respect of the Notes will constitute payments on the Pledged Bonds. The
Pledged Bonds constitute a separate series of our first mortgage bonds, all of
which are secured by a lien on substantially all of the property owned by us.
See "Description of the Pledged Bonds." On the Substitution Date, the Pledged
Bonds will cease to secure the Notes, and, at our option, the Notes either will
become our unsecured general obligations or will be secured by first mortgage
bonds issued (the Substituted Pledged Bonds) under a new mortgage indenture (a
Substituted Mortgage). See "Description of Note Indenture--General."
Each Note will be represented by a global note registered in the name
of The Depository Trust Company, as depository (DTC or the Depository), or its
nominee, unless otherwise specified in the applicable prospectus supplement.
Beneficial interests in global notes will be shown on, and transfers thereof
will be effected only through, records maintained by the Depository and its
participants. Global notes will not be issuable in certificated form except
under the limited circumstances described herein. See "Book-Entry System."
There is no requirement under either the Note Indenture or the Mortgage
that future issues of debt securities of South Jersey Gas be issued under the
Note Indenture or the Mortgage, and, subject to certain restrictions following
the Substitution Date which are described in "Description of Note
Indenture--Limitations on Liens," we will be free to use other indentures or
documentation, containing provisions different from those included in the
Indenture and the Mortgage, in connection with future issues of such other debt
securities.
The Notes will be offered on a continuing basis by us through one or
more agents that have been selected by us, each of which has agreed to use its
reasonable best efforts to solicit offers to purchase the Notes. We also may
sell Notes to an agent, as principal, for resale to one or more investors or
other purchasers. The Notes will not be listed on any securities exchange, and
there can be no assurance that any Notes will be sold or that there will be a
secondary market for the Notes. We reserve the right to withdraw, suspend,
cancel or modify the offer made hereby without notice. We or an agent, if it
solicits such offer, may reject any offer to purchase Notes, in whole or in
part. See "Plan of Distribution."
Our timely payment of the regularly scheduled principal and interest on
an issuance of Notes may be insured by a financial guaranty insurance policy
issued by Ambac Assurance Corporation. If we choose to have an issuance of Notes
so insured, the prospectus supplement relating to that issuance will so
indicate. See "Description of Note Indenture--Insured Notes."
DESCRIPTION OF NOTE INDENTURE
The following summaries of certain provisions of the Note Indenture do
not purport to be complete and are subject to, and qualified in their entirety
by, all of the provisions of the Note Indenture, which is incorporated herein by
reference and is an exhibit to the registration statement of which this
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prospectus is a part. References to Section numbers under this caption are
references to the Section numbers of the Note Indenture.
General
The Note Indenture provides that notes may be issued thereunder in one
or more series, may be issued at various times, may have differing maturity
dates and may bear interest at differing rates. The prospectus supplement
applicable to each issue of Notes will set forth the specific terms of such
Notes as well as any variation in the terms and provisions of such Notes from
those described in this prospectus.
Until the Substitution Date, the Notes will be secured by the Pledged
Bonds issued and delivered by us to the Note Trustee. See "Description of the
Pledged Bonds." On the Substitution Date, the Note Trustee shall deliver to us
for cancellation the Pledged Bonds, and we will cause the Note Trustee to
provide notice to all holders of Notes of the occurrence of the Substitution
Date. As a result, on the Substitution Date, the Pledged Bonds will cease to
secure the Notes, and, at our option, the Notes either will become our unsecured
general obligations or will be secured by Substituted Pledged Bonds. (Section
4.10)
Registration, Transfer and Exchange
With the exception of Notes issued in the form of global notes, Notes
of any issue will be exchangeable for one or more Notes of the same series and
issue of any authorized denominations and of a like aggregate principal amount
and tenor. (Section 2.6)
Unless otherwise indicated in the applicable prospectus supplement,
Notes may be presented for registration of transfer (duly endorsed or
accompanied by a duly executed written instrument of transfer) at the office of
the Note Trustee maintained for such purpose with respect to any issue of Notes
and referred to in the applicable prospectus supplement without service charge
but upon the payment of any taxes and other governmental charges as described in
the Note Indenture. Such transfer or exchange will be effected upon the
satisfaction of certain requirements relating to documentation of title and
indemnification. (Section 2.6)
In the event of any redemption of Notes, the Note Trustee will not be
required to exchange or register a transfer of any Notes selected, called or
being called for redemption except, in the case of any Note to be redeemed in
part, the portion thereof not to be so redeemed. (Section 2.6) See "Book-Entry
System."
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Certificated Notes
Each Note will be represented by a global note registered in the name
of the Depository or its nominee unless otherwise specified in the applicable
prospectus supplement. The Notes represented by the global note are exchangeable
for certificated Notes in definitive form of like tenor as such Notes in
denominations of $1,000 and integral multiples thereof if:
* the Depository notifies the Company that it is unwilling or unable
to continue as depositary for the global note or if at any time the
Depository ceases to be a clearing agency registered under the
Exchange Act; or
* we, in our discretion, at any time determine not to have all of the
Notes represented by the global note.
Any Note that is exchangeable pursuant to the preceding sentence is exchangeable
for certificated Notes issuable in authorized denominations and registered in
such names as the Depository shall direct. Subject to the foregoing, the global
note is not exchangeable except for a global note of the same aggregate
denomination to be registered in the name of the Depository or its nominee.
(Section 2.13)
Payment and Paying Agents
Principal of and interest on Notes issued in the form of global notes
will be paid in the manner described below under the caption "Book-Entry
System." Unless otherwise indicated in the applicable prospectus supplement,
interest on Notes that are in the form of certificated securities will be paid
by wire transfer of clearinghouse or similar next day funds or by check mailed
to the person entitled thereto at such person's address as it appears in the
register for the Notes maintained by the Note Trustee. However, a holder of
notes of one or more series under the Note Indenture in the aggregate principal
amount of $10,000,000 or more having the same interest payment dates will be
entitled to request to receive payments of interest on such series by wire
transfer of immediately available funds to a bank located within the continental
United States if an appropriate request including wire transfer instructions has
been received by the Note Trustee on or prior to the applicable regular record
date in accordance with the Note Indenture. Unless otherwise indicated in the
applicable prospectus supplement, the principal of and interest at maturity on
notes in the form of certificated notes will be payable at maturity in
immediately available funds at the office of the Note Trustee upon proper
presentment and surrender thereof. (Section 2.12)
All moneys paid by us to a paying agent for the payment of principal of
or interest on any Note which remain unclaimed at the end of one year after such
principal or interest shall have become due and payable will be repaid to us and
the holder of such Note will thereafter look only to us for payment thereof.
(Section 5.4)
Insured Notes
The Note Indenture provides that we may issue notes which are subject
to a financial guaranty insurance policy issued by Ambac Assurance Corporation
which insures payment when due of the principal and interest on such notes.
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Notwithstanding any other provision of the Note Indenture, in the event we issue
insured notes, so long as Ambac is not in default under the policy, it shall be
entitled to control and direct the enforcement of all rights and remedies with
respect to such notes. No amendment to the Note Indenture which requires
noteholder consent or which affects the rights of Ambac may be made without the
prior written consent of Ambac.
Limitations on Liens
Following the Substitution Date, we shall cause the Mortgage to be
terminated, and we shall not issue any additional bonds under the Mortgage. In
addition, following the Substitution Date, except as described below and unless
Substituted Pledged Bonds are issued to secure notes issued under the Note
Indenture, we may not create, assume or incur any mortgage, pledge, lien or
security interest (collectively referred to in this context as "mortgages") upon
any real property interest or other depreciable asset which is used in our gas
utility business, whether owned at the Substitution Date or thereafter acquired,
to secure any indebtedness for money borrowed other than indebtedness with
maturities of twelve months or less (Debt) of South Jersey Gas or any other
person (other than the Notes), without effectively securing all notes (other
than such notes, if any, which shall by their terms be expressly excluded from
such provision) equally and ratably with such Debt; provided, however, that this
restriction will not apply to:
* any mortgage upon property existing at the time of acquisition
thereof, including acquisition by means of merger or consolidation
(but excluding any extension thereof or addition thereto unless the
terms of the mortgage as of the date of acquisition of such property
provide that such mortgage shall be secured by such extensions or
additions);
* any mortgage to secure the payment of all or part of the purchase
price of property or to secure any Debt incurred prior to, at the
time of or within 180 days after the acquisition of such property
for the purpose of financing all or part of the purchase price of
such property;
* any mortgage existing as of the Substitution Date;
* any Permitted Encumbrance, as defined below; and
* any extension, refinancing, renewal or replacement (or successive
extensions, refinancings, renewals or replacements), in whole or in
part, of any mortgage referred to above; provided, however, that the
principal amount of Debt secured thereby shall not exceed the
principal amount of Debt (plus any premium or fee payable in
connection with such extension, refinancing, renewal or replacement)
so secured at the time of such extension, refinancing, renewal or
replacement; and provided, further, that such mortgage shall be
limited to all or such part of the property which was subject to the
mortgage so extended, refinanced, renewed or replaced (plus
improvements on such property).
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Notwithstanding the foregoing restriction, we may create, assume or
incur any mortgage not excepted above without equally and ratably securing the
notes if the aggregate amount of all Debt then outstanding and secured by such
mortgage or any other mortgage not excepted above does not exceed 15% of our
total consolidated capitalization as shown on the audited consolidated balance
sheet contained in our latest annual report as filed with the Commission. For
the purposes of this provision, any mortgage in favor of the United States or
any state, or any other country, or any political subdivision of any of the
foregoing, to secure partial, progress, advance or other payments pursuant to
the provisions of any contract or statute, or any mortgage securing industrial
development, pollution control or similar revenue bonds, shall not be deemed to
create a mortgage to secure any Debt. (Section 6.8)
The term "Permitted Encumbrance" means:
* liens for taxes, assessments or governmental charges or levies for
the then current year and taxes, assessments or governmental charges
or levies not then delinquent or which thereafter can be paid
without penalty or are being contested in good faith; liens for
worker's compensation awards and similar obligations not then
delinquent or which thereafter can be paid without penalty or are
being contested in good faith; liens imposed by law, such as
carriers', warehousemen's, landlords', suppliers', mechanics',
laborers', materialmen's and other similar liens not then delinquent
or which are being contested in good faith;
* liens and charges incidental to construction or current operation
which have not at such time been filed or asserted or the payment of
which has been adequately secured or which are insignificant in
amount;
* liens securing obligations not assumed by us and on account of which
we have not customarily paid and do not expect to pay interest and
existing upon real estate over or in respect of which we have a
right of way or other easement or right for pipelines, rights of
way, transmission, distribution or similar purposes; provided that
the loss of all such easements would not materially adversely affect
our operations;
* any right which the United States or any municipal or governmental
body or agency may have by virtue of any franchise, license,
contract or statute to recapture or to purchase, or designate a
purchaser of or order the sale of, any of our property upon payment
of reasonable compensation therefor, or upon reasonable compensation
or conditions to terminate any franchise, license or other rights
before the expiration date thereof or to regulate our property and
business;
* liens of judgments covered by insurance, or upon appeal or other
proceeding for review, or not exceeding at any one time $10,000,000
in aggregate amount;
* easements or reservations in respect of any of our property for the
purpose of transmission or distribution lines or other rights-of-
way, including overhead and underground transmission and
distribution lines and pipelines, or similar purposes, zoning
ordinances, regulations, reservations, survey exceptions, building
restrictions, covenants, party wall agreements, conditions of
records and such other encumbrances or charges against real property
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as are of a nature generally existing with respect to properties of
a similar character;
* liens on our property incurred in the ordinary course of business to
secure performance of obligations with respect to statutory or
regulatory requirements, performance or return-of-money bonds,
surety bonds or other obligations of a like nature, in each case
which are not incurred in connection with the borrowing of money,
the obtaining of advances or credit or the payment of the deferred
purchase price of property;
* pledges or deposits by us under workmen's compensation laws,
unemployment insurance laws or similar legislation, or good faith
deposits in connection with bids, tenders, contracts (other than for
the payment of Debt) or leases to which we are a party, or deposits
to secure our public or statutory obligations, or deposits of cash
or United States government bonds to secure surety or appeals bonds
obtained in the ordinary course of business to which we are a party,
or deposits as security for taxes (that shall not at the time be
delinquent or thereafter can be paid without penalty or are being
contested in good faith) or import duties incurred in the ordinary
course of business, or deposits for the payment of rent or
performance of other obligations under a lease, in each case
incurred in the ordinary course of business;
* rights reserved to or vested in any municipality or public authority
by the terms of any franchise, grant, license, or governmental
consent or permit, or by any provision of law, to acquire, purchase,
or recapture at fair value, or to designate a purchaser of such
property;
* rights reserved to or vested in any municipality or public authority
to use or control or regulate such property;
* any obligations or duties, affecting such property, to any
municipality or public authority with respect to any franchise,
grant, license or permit;
* exceptions or reservations therefrom of minerals, precious metals,
gas, oil, petroleum, hydrocarbons, or any other substances, which
exceptions or reservations exist at the time of our acquisition of
the property and which do not materially and adversely affect the
use made or proposed to be made by it of such property; or
* liens existing on the Substitution Date not otherwise described
above.
Redemption
The prospectus supplement relating to each Note will indicate whether
we have the right to redeem such Note prior to its stated maturity. If we have
the right to redeem a Note, the prospectus supplement will state that such Note
will be redeemable at our option in whole or in part on any date on or after the
date specified in such prospectus supplement at prices declining from a
specified premium, if any, to par, together with accrued interest to the date of
redemption.
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In addition, the Notes shall be subject to redemption upon payment of
the principal amount thereof, either as a whole or in part, from time to time
through the application of proceeds available under the Mortgage upon redemption
of the Pledged Bonds from the condemnation of property subject to the lien of
the Mortgage, or proceeds of sale of such property to a governmental body or
agency having the power of eminent domain made as a result of the threat
(evidenced in writing by such body or agency) of condemnation of such property
together with accrued interest to the date fixed for redemption in accordance
with the terms of the Mortgage. See "Description of the Pledged
Bonds--Redemption." (Section 3)
The Note Indenture allows us to issue Notes that are subject to
redemption at the request of representatives of deceased noteholders under
certain conditions (the RHO Notes). The Note Indenture provides that unless the
RHO Notes have been declared due and payable prior to their maturity by reason
of an event of default or unless the RHO Notes have been defeased, the
representative of a deceased beneficial owner has the right to request
redemption of RHO Notes prior to their maturity. RHO Notes are redeemable at
100% of the principal amount plus any accrued but unpaid interest of all or part
of interest in integral multiples of $1,000 principal amount, subject to any
limitations that will be set forth in the applicable prospectus supplement.
In the case of any redemption request which is presented on behalf of a
deceased beneficial owner and which has not been fulfilled at the time we give
notice of our election to partially redeem RHO Notes, the interests in the RHO
Notes which are the subject of such redemption request shall not be eligible for
redemption pursuant to our option to redeem but shall remain subject to
redemption pursuant to such redemption request.
Events of Default
Each of the following constitutes an event of default under the Note
Indenture:
* default in the payment of interest on any note issued under the Note
Indenture when due which continues for 30 days;
* default in the payment of principal or premium, if any, on any note
issued under the Note Indenture when due and payable which continues
for five days;
* our default in the performance or breach of any other covenant or
agreement in the Note Indenture or any note issued under the Note
Indenture which continues for 90 days after written notice to us as
provided in the Note Indenture;
* prior to the Substitution Date, the occurrence of a default under
the Mortgage, of which default the Mortgage Trustee or the holders
of a majority in aggregate principal amount of the outstanding notes
issued under the Note Indenture have given written notice to the
Note Trustee;
* if any Substituted Pledged Bonds are outstanding, the occurrence of
a default under the Substituted Mortgage, of which default the
trustee under such Substituted Mortgage or the holders of a majority
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in aggregate principal amount of the outstanding notes issued under
the Note Indenture have given written notice to the Note Trustee;
and
* certain events of bankruptcy, insolvency or reorganization of South
Jersey Gas. (Section 8.1)
If an event of default, other than one relating to an event of default
under the Mortgage or the Substituted Mortgage, as applicable, occurs and is
continuing, either the Note Trustee or the registered holders of a majority in
aggregate principal amount of the outstanding notes issued under the Note
Indenture of such series may declare the principal amount of all notes of such
series to be due and payable immediately. At any time after an acceleration of
the notes of such series has been declared but before a judgment or decree for
the immediate payment of the principal amount of such notes has been obtained
and so long as all of our Bonds have not been accelerated, the registered
holders of a majority in aggregate principal amount of the outstanding notes of
such series may, under certain circumstances, rescind and annul such
acceleration and its consequences. If an event of default relating to an event
of default under the Mortgage or the Substituted Mortgage and the acceleration
of the principal of the first mortgage bonds issued under either the Mortgage or
the Substituted Mortgage in accordance with the Mortgage or the Substituted
Mortgage, as applicable, occurs (see "Description of the Pledged Bonds--Defaults
and Notice Thereof"), the principal of all of the outstanding notes issued under
the Note Indenture, together with interest accrued thereon, shall become due and
payable immediately without the necessity of any action by the Note Trustee or
the registered holders of any notes; provided, however, that a rescission and
annulment of the declaration that our first mortgage bonds outstanding under the
Mortgage or the Substituted Mortgage, as applicable, be due and payable prior to
their stated maturities shall constitute a waiver of such event of default under
the Note Indenture and of its consequences. (Section 8.1)
The Note Indenture provides that the Note Trustee generally will be
under no obligation to exercise any of its rights or powers under the Note
Indenture at the request or direction of any of the holders unless such holders
have offered to the Note Trustee reasonable security or indemnity against the
liabilities and costs which may be incurred by such exercise. (Section 9.2) The
holders of a majority in principal amount of the outstanding notes generally
will have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Note Trustee, or of exercising any
trust or power conferred on the Note Trustee, with respect to the Notes.
(Section 8.7) Each holder of a Note has the right to institute a proceeding with
respect to the Note Indenture, but such right is subject to certain conditions
precedent specified in the Note Indenture. (Section 8.4) The Note Indenture
provides that the Note Trustee, within 90 days after the occurrence of a default
with respect to the Notes, is required to give the holders of the Notes notice
of such default, unless cured or waived, but, except in the case of default in
the payment of principal of, or premium, if any, or interest on any Notes, the
Note Trustee may withhold such notice if it determines in good faith that it is
in the interest of such holders to do so. (Section 8.8) We are required to
deliver to the Note Trustee each year a certificate as to whether or not, to the
knowledge of the officers signing such certificate, we are is in compliance with
the conditions and covenants under the Note Indenture. (Section 6.6) We are
required to notify the Note Trustee within five days of becoming aware of an
event of default. (Section 6.7)
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Modification
Modification and amendment of the Note Indenture may be effected by us
and the Note Trustee with the consent of the holders of a majority in principal
amount of the outstanding notes affected thereby, provided that no such
modification or amendment may, without the consent of the holder of each
outstanding note affected thereby:
* change the maturity date of any Note;
* reduce the rate or extend the time of payment of interest on any
Note;
* reduce the principal amount of, or premium payable on, any Note;
* change the coin or currency of any payment of principal of, or any
premium or interest on, any Note; o change the date on which any
Note may be redeemed; o adversely affect the rights of a holder to
institute suit for the enforcement of any payment on or with respect
to any Note;
* impair the interest of the Note Trustee in the Pledged Bonds or
Substituted Pledged Bonds held by it or reduce the principal amount
of the Pledged Bonds (except as permitted on the Substitution Date)
or Substituted Pledged Bonds securing the Notes to an amount less
than the principal amount of the related series of Notes or alter
the payment provisions of such Pledged Bonds or Substituted Pledged
Bonds in a manner adverse to the holders of the Notes; or
* modify the foregoing requirements or reduce the percentage of
outstanding notes necessary to modify or amend the Note Indenture or
to waive any past default to less than a majority.
Modification and amendment of the Note Indenture may be effected by us
and the Note Trustee without the consent of the holders:
* to add to the covenants of South Jersey Gas for the benefit of the
holders or to surrender a right conferred on us in the Note
Indenture;
* to add further security for the Notes;
* to make certain other modifications, generally of a ministerial or
immaterial nature; or
* to make certain other modifications which are not prejudicial to the
interests of the holders of the Notes. (Sections 13.1 and 13.2)
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Defeasance and Discharge
The Note Indenture provides that we will be discharged from any and all
obligations in respect to the Notes and the Note Indenture (except for certain
obligations such as obligations to register the transfer or exchange of Notes,
replace stolen, lost or mutilated Notes and maintain paying agencies) if, among
other things, we irrevocably deposit with the Note Trustee, in trust for the
benefit of holders of Notes, money or certain United States government
obligations, or any combination thereof, which through the payment of interest
thereon and principal thereof in accordance with their terms will provide money
in an amount sufficient, without reinvestment, to make all payments of principal
of and any premium and interest on the Notes on the dates such payments are due
in accordance with the terms of the Note Indenture and the Notes. Thereafter,
the holders of Notes must look only to such deposit for payment of the principal
of and interest and any premium on the Notes.
(Section 5.1)
Consolidation, Merger and Sale or Disposition of Assets
We will not consolidate with or merge into any other corporation or
sell, transfer or otherwise dispose of all or substantially all of our assets
unless the successor or transferee corporation assumes by supplemental indenture
the due and punctual payment of the principal of and premium and interest on all
of the Notes and the performance of every covenant of the Note Indenture to be
performed or observed by us, and:
* if such transaction occurs prior to the Substitution Date, unless
the successor or transferee corporation assumes our obligations
under the Mortgage with respect to the Pledged Bonds; and
* if such transaction occurs on or after the Substitution Date and if
Substituted Pledged Bonds are outstanding, unless the successor or
transferee corporation assumes our obligations under the Substituted
Mortgage with respect to the Substituted Pledged Bonds.
Upon any such consolidation, merger, sale, transfer or other
disposition of all or substantially all of our assets, the successor corporation
formed by such consolidation or into which we are merged or to which such
transfer is made shall succeed to and be substituted for, and may exercise every
right and power of, South Jersey Gas under the Note Indenture with the same
effect as if such successor corporation had been named as South Jersey Gas
therein, and we will be released from all obligations under the Note Indenture.
The Note Indenture defines all or substantially all of our assets as being 50%
or more of our total assets as shown on our balance sheet as of the end of the
prior year and specifically permits any such sale, transfer or other disposition
during a calendar year of less than 50% of total assets without the consent of
the holders of the Notes and without the assumption by the transferee of our
obligations on the Notes and covenants contained in the Note Indenture.
(Sections 12.1 and 12.2)
Voting of the Pledged Bonds Held by Note Trustee
The Note Trustee, as a holder of the Pledged Bonds, may attend any
meeting of bondholders under the Mortgage to which it receives due notice or, at
its option, may deliver its proxy in connection therewith. Either at such
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meeting or where any action, amendment, modification, waiver or consent to or in
respect of the Mortgage or Bonds issued under the Mortgage is sought without a
meeting (a "proposed action"), the Note Trustee will vote the Pledged Bonds held
by it or will consent with respect thereto as described below. The Note Trustee
may agree to any proposed action without the consent of or notice to holders of
Notes of a series where such proposed action would not adversely affect the
holders of the Notes of such series. In the event that the proposed action would
adversely affect the holders of the Notes of a series, the Note Trustee shall
not vote the Pledged Bonds that secured such series without notice to and the
approval of holders of at least a majority in aggregate principal amount of the
Notes of such series then outstanding. (Section 4.3)
Resignation or Removal of Note Trustee
The Note Trustee may resign at any time upon written notice to us
specifying the day upon which the resignation is to take effect, and such
resignation will take effect immediately upon the later of the appointment of a
successor Note Trustee and such specified day. (Section 9.10)
The Note Trustee may be removed at any time by an instrument or
concurrent instruments in writing filed with the Note Trustee and signed by the
holders, or their attorneys-in-fact, of at least a majority in principal amount
of the then outstanding notes issued under the Note Indenture. In addition, so
long as no event of default or event which, with the giving of notice or lapse
of time or both, would become an event of default has occurred and is
continuing, we may remove the Note Trustee upon notice to the holder of each
outstanding note issued under the Note Indenture and the Note Trustee, and
appointment of a successor Note Trustee. (Section 9.10)
Book-Entry System
Each Note will be represented by either a permanent global note
registered in the name of, or a nominee of, the Depository or a certificate
issued in definitive registered form, without coupons, as set forth in the
applicable prospectus supplement. Each Note represented by a global note is
referred to below as a "Book-Entry Note." Except as set forth below, Book-Entry
Notes will not be issuable in certificated form. So long as the Depository or
its nominee is the registered holder of any permanent global note, the
Depository or its nominee will be considered the sole holder of the Book-Entry
Notes or Notes represented by the applicable permanent global note for all
purposes under the Note Indenture and the Notes.
For a further description of the respective forms, denominations and
transfer and exchange procedures for any such permanent global note and the
Book-Entry Notes, refer to the following discussion and to the applicable
prospectus supplement.
Upon issuance, all Book-Entry Notes of like tenor and having the same
date of issue will be represented by a single permanent global note. Each
permanent global note representing Book-Entry Notes will be deposited with, or
on behalf of, the Depository, as depositary, located in the Borough of
Manhattan, the City of New York, and will be registered in the name of the
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Depository or a nominee of the Depository. Currently, the Depository will accept
the deposit of only permanent global notes denominated in U.S. dollars.
Ownership of beneficial interests in a permanent global note
representing Book-Entry Notes will be limited to institutions that have accounts
with the Depository or its nominee (such institutions are referred to as
participants) or persons that may hold interests through participants. In
addition, ownership of beneficial interests by participants in such a permanent
global note will be evidenced only by, and the transfer of that ownership
interest will be effected only through, records maintained by the Depository or
its nominee for such permanent global note. Ownership of beneficial interests in
such a permanent global note by persons that hold through participants will be
evidenced only by, and the transfer of that ownership interest within such
participant will be effected only through, records maintained by such
participant. The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of such securities in definitive form. Such
laws may impair the ability to transfer beneficial interests in such a permanent
global note.
We have been advised by the Depository that upon the issuance of a
permanent global note representing Book-Entry Notes, and upon the deposit of
such permanent global note with the Depository, the Depository will immediately
credit, on its book-entry registration and transfer system, the respective
principal amounts of the Book-Entry Notes represented by such permanent global
note to the accounts of participants. The accounts to be credited shall be
designated by the soliciting agent or, to the extent that the Book-Entry Notes
are offered and sold directly, by us.
Payment of principal of and any premium and interest on Book-Entry
Notes represented by any permanent global note registered in the name of or held
by the Depository or its nominee will be made to the Depository or its nominee,
as the case may be, as the registered owner and holder of the permanent global
note representing such Book-Entry Notes. Neither South Jersey Gas, the trustee,
nor any agent of the trustee, will have any responsibility or liability for any
aspect of the Depository's records or any participant's records relating to or
payments made on account of beneficial ownership interests in a permanent global
note representing such Book-Entry Notes or for maintaining, supervising or
reviewing any of the Depository's records or any participant's records relating
to such beneficial ownership interests.
We have been advised by the Depository that upon receipt of any payment
of principal of or any premium or interest in respect of a permanent global
note, the Depository will immediately credit, on its book-entry registration and
transfer system, accounts of participants with payments in amounts proportionate
to their respective beneficial interests in the principal amount of such
permanent global note as shown on the records of the Depository. Payments by
participants to owners of beneficial interests in a permanent global note held
through such participants will be governed by standing instructions and
customary practices, as is now the case with securities held for the accounts of
customers registered in "street name," and will be the sole responsibility of
such participants.
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No permanent global note described above may be transferred except as a
whole by the Depository for such permanent global note to a nominee of the
Depository or by a nominee of the Depository to the Depository or another
nominee of the Depository.
A permanent global note representing Book-Entry Notes is exchangeable
for definitive notes registered in the name of, and a transfer of a permanent
global note may be registered to, any person other than the Depository or its
nominee, only if:
* we are notified by the Depository that it is unwilling or unable to
continue as depositary for such permanent global note or if at any
time the Depository ceases to be a clearing agency registered under
the Exchange Act; or
* we, in our sole discretion, at any time determine not to have all of
the Notes represented by the permanent global note.
Any permanent global note that is exchangeable pursuant to the preceding
sentence shall be exchangeable in whole for definitive notes in registered form,
of like tenor and of an equal aggregate principal amount, in denominations of
$1,000 and integral multiples of $1,000 in excess thereof. Such definitive notes
shall be registered in the name or names of such person or persons as the
Depository shall instruct the trustee. It is expected that such instructions may
be based upon directions received by the Depository from its participants with
respect to ownership of beneficial interests in such permanent global note.
Except as provided above, owners of beneficial interests in such
permanent global note will not be entitled to receive physical delivery of notes
in definitive form and will not be considered the holders thereof for any
purpose under the Note Indenture, and no permanent global note representing
Book-Entry Notes shall be exchangeable, except for another permanent global note
of like denomination and tenor to be registered in the name of the Depository or
its nominee. Accordingly, each person owning a beneficial interest in such
permanent global note must rely on the procedures of the Depository and, if such
person is not a participant, on the procedures of the participant through which
such person owns its interest, to exercise any rights of a holder under the Note
Indenture.
The Note Indenture provides that the Depository, as a holder, may
appoint agents and otherwise authorize participants to give or take any request,
demand, authorization, direction, notice, consent, waiver or other action which
a holder is entitled to give or take under the Note Indenture. We understand
that, under existing industry practices, in the event that we request any action
of holders of notes or an owner of a beneficial interest in such permanent
global note desires to give or take any action that a holder of a note is
entitled to give or take under the Note Indenture, the Depository would
authorize the participants holding the relevant beneficial interests to give or
take such action, and such participants would authorize beneficial owners owning
through such participants to give or take such action or would otherwise act
upon the instructions of beneficial owners owning through them.
DTC is a limited-purpose trust company organized under the New York
Banking Law, a "banking organization" within the meaning of the New York Banking
Law, a member of the Federal Reserve System, a "clearing corporation" within the
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meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Securities Exchange
Act of 1934. DTC holds and provides asset servicing for U.S. and non-U.S. equity
issues, corporate and municipal debt issues, and money market instruments that
DTC's participants ("Direct Participants") deposit with DTC. DTC also
facilitates the post-trade settlement among Direct Participants of sales and
other securities transactions in deposited securities, through electronic
computerized book-entry transfers and pledges between Direct Participants'
accounts. This eliminates the need for physical movement of securities
certificates. Direct Participants include both U.S. and non-U.S. securities
brokers and dealers, banks, trust companies, clearing corporations, and certain
other organizations. DTC is a wholly-owned subsidiary of The Depository Trust &
Clearing Corporation ("DTCC"). DTCC, in turn, is owned by a number of the Direct
Participants of DTC and Members of the National Securities Clearing Corporation,
Government Securities Clearing Corporation, MBS Clearing Corporation, and
Emerging Markets Clearing Corporation, as well as by the New York Stock
Exchange, Inc., the American Stock Exchange LLC and the National Association of
Securities Dealers, Inc. Access to the DTC system is also available to others
such as both U.S. and non-U.S. securities brokers and dealers, banks, trust
companies, and clearing corporations that clear through or maintain a custodial
relationship with a Direct Participant, either directly or indirectly ("Indirect
Participants"). The DTC rules applicable to its Participants are on file with
the Commission. More information about DTC can be found at www.dtcc.com.
The information in this section concerning DTC and DTC's book-entry
system has been obtained from DTC, and South Jersey Gas and any underwriters,
dealers or agents take no responsibility for the accuracy thereof.
The underwriters, dealers or agents of any Notes may be Direct
Participants of DTC.
Concerning the Note Trustee
The Bank of New York is the Note Trustee under the Note Indenture. The
Note Trustee also acts as trustee for our Bonds. We also currently maintain
other banking relationships with the Note Trustee in the ordinary course of
business.
DESCRIPTION OF THE PLEDGED BONDS
General
The Pledged Bonds are to be issued under and secured by the Mortgage
and the New Supplement providing for the Pledged Bonds. The Pledged Bonds
constitute the Twenty-First Series of our first mortgage bonds and are
designated as "South Jersey Gas Company First Mortgage Bonds, 10% Medium Term
Notes, Series B." The New Supplement provides that we may issue Pledged Bonds in
an aggregate principal amount not to exceed $150,000,000. However, the Mortgage
limits the amount of new debt, such as the Notes, that can be ratably secured
under the Mortgage. The limit is determined by a formula based on the value of
certain property additions as provided in the Mortgage. As of the date of this
Prospectus, the maximum principal amount of Pledged Bonds that can be issued
(and, therefore, the maximum principal amount of Notes that can be secured under
the Mortgage through Pledged Bonds) is approximately $99,746,000. We may issue
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from time to time one or more additional Pledged Bonds when so permitted under
the Mortgage. Prior to the Substitution Date, we will not issue Notes in an
amount greater than the outstanding Pledged Bonds.
The following statement includes brief summaries of certain provisions
of the Mortgage. For a complete statement of such provisions, reference is made
to the actual provisions of the Mortgage. A copy of the Mortgage, including the
New Supplement, may be inspected at the office of the Mortgage Trustee at 101
Barclay Street, Floor 21 West, New York, New York 10286 or at the office of the
Commission, 450 Fifth Street, N.W., Washington, D.C. References to articles and
sections under this caption are reference to articles and sections of the
Mortgage.
The Pledged Bonds will be issued initially to the Note Trustee and will
be issuable only in fully registered form in any denomination authorized by us.
The Pledged Bonds will be transferable, and the several denominations thereof
will be exchangeable for Bonds of other authorized denominations but of the same
series and aggregate principal amount, upon compliance with the applicable
provisions of the Mortgage and the Note Indenture. No service charge will be
made for any such transfer or exchange, but we may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
relation thereto.
The Pledged Bonds have not been registered under the Securities Act.
Interest, Maturity and Payment
Interest on the Pledged Bonds shall accrue at the rate of 10% per annum
computed on the basis of a 360-day year of twelve 30-day months and shall be
payable semi-annually in arrears on May 1 and November 1 of each year, payable
initially on November 1, 2002, subject to receipt of certain credits against
principal and interest and such obligations as set forth below.
In addition to any other credit, payment or satisfaction to which we
are entitled with respect to the Pledged Bonds, we shall be entitled to credits
against amounts otherwise payable in respect of the Pledged Bonds in an amount
corresponding to:
* the principal amount of any of the Notes issued under the Note
Indenture secured thereby surrendered to the Note Trustee by us, or
purchased by the Note Trustee, for cancellation;
* the amount of money held by the Note Trustee and available and
designated for the payment of principal of and/or interest on the
Notes secured thereby, regardless of the source of payment to the
Note Trustee of such moneys; and
* the amount by which principal of and interest due on the Pledged
Bonds exceeds principal of and interest due on the Notes secured
thereby. (Section 2.1, 23rd Supp.)
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Lien and Security
The Pledged Bonds are secured by the lien of the Mortgage equally and
proportionately with all other Bonds. The Mortgage constitutes a first lien
(subject to "excepted encumbrances" as defined in the Mortgage) on substantially
all of our property and franchises now owned or hereafter acquired for the equal
and ratable benefit of all Bonds now or hereafter outstanding under the
Mortgage. The Mortgage excepts from its lien materials and supplies consumable
in the operation of our business, merchandise and products acquired,
manufactured, produced or held for sale in the usual course of business, motor
vehicles, and cash, accounts receivable, stocks, bonds, notes, and securities
which are neither specifically pledged with the Mortgage Trustee nor required by
the Mortgage to be so pledged. (Granting Clause) There are certain conditions
which must be complied with relating to the lien of the Mortgage in case of a
merger, consolidation or sale of all the assets of South Jersey Gas. (Section 5)
Issuance of Additional Bonds
Additional Bonds, ranking equally with all outstanding Bonds, may be
issued under the Mortgage, without limit as to aggregate principal amount, upon
compliance with Article III of the Mortgage and after obtaining the approval of
the New Jersey Board of Public Utilities. The principal provisions for the
issuance of additional Bonds are summarized below.
Additional Bonds may be issued in principal amount not exceeding:
* 60% of the cost or fair value (whichever is less) of property
additions which consist of real and personal property constructed or
acquired by us subject to the lien of the Mortgage and not
previously utilized under the Mortgage as the basis for additional
bonds or certain other purposes, located in the State of New Jersey,
and used or useful by us in connection with our business, after
deducting from such cost or fair value the excess, if any, of the
cost of mortgaged property retired (as defined in the Mortgage) and
certain amounts relating to depreciation of the mortgaged property
which are calculated in the annual certificate for the replacement
fund hereafter referred to; provided that:
- our net earnings (as defined in the Mortgage) for 12
consecutive months within the preceding 15 months shall
have been at least two times the annual interest charges
on all prior lien obligations and all Bonds to be
outstanding after the authentication of those about to be
authenticated; and
- if such property additions are subject to a prior lien:
(x) 166 2/3% of the principal amount of the outstanding
obligations secured by such prior lien shall be deducted
from the cost or fair value of such property additions
(unless such deduction has been made previously); and (y)
if the deduction referred to in clause (x) has not
previously been made, then the aggregate principal amount
of all outstanding prior lien obligations upon all
property additions used as the basis for authentication of
Bonds, withdrawal of money, or release of property under
the Mortgage or as a credit against a payment to any
improvement or sinking fund for Bonds of a particular
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series, or the replacement fund hereinafter referred to,
shall not exceed 10% of the principal amount of all Bonds
to be outstanding after authentication of those about to
be authenticated (Section 3.04);
* the principal amount of other Bonds acquired, paid, retired, or with
respect to which payment has been provided for, excluding, however,
any such Bonds paid or retired by the operation of any sinking,
replacement, purchase or other analogous fund or otherwise used as a
credit against the obligations of South Jersey Gas, with certain
specified exceptions; provided that if such Bonds were not
theretofore bonafide issued and bear interest at a lower rate than
the Bonds to be authenticated, the net earnings condition specified
in the bullet point above must be complied with (Sections 3.04 and
3.06); and
* the amount of money deposited with the Mortgage Trustee for that
purpose. (Sections 3.03, 3.06 and 3.07)
Money so deposited may be withdrawn by us upon the same conditions as
would entitle us to obtain the authentication of Bonds of an equal principal
amount under the first two bullet points above, except that if the net earnings
condition specified in the first bullet point was complied with at the time of
the deposit of such money and included all interest charges on prior lien
obligations existing at the time of the requested withdrawal, it need not be
again complied with upon the withdrawal thereof. Pending such withdrawal, such
money may be invested by the Mortgage Trustee in obligations of the United
States and the net proceeds of any sale thereof withdrawn as aforesaid.
(Sections 3.08 and 3.09)
If the additional Bonds are to be issued on the basis of property
additions, the Mortgage requires the delivery to the Mortgage Trustee of a
certificate of an engineer, appraiser or other expert as to the fair value of
such additions to South Jersey Gas as of a specified date not more than three
months before the application for the additional Bonds is filed with the
Mortgage Trustee. If any of such additions were acquired from another gas
utility, the Mortgage requires that the initial appraisal be performed by an
engineer, appraiser or other expert who is independent of South Jersey Gas.
(Section 3.04, as amended by 17th Supp.)
Upon the earlier to occur of (a) the date as of which no Bonds remain
outstanding that were part of a series of Bonds initially issued prior to the
Nineteenth Series and (b) the date as of which a Supplemental Indenture is
executed amending Section 3.06 of the Mortgage as adopted by the holders of at
least 66 2/3% of all Bonds then outstanding, we will be permitted to use the
collateral underlying Bonds that are retired, acquired, paid or surrendered by
us as collateral for subsequently issued Bonds.
Replacement Fund
The Mortgage requires that, on or before April 1 of each year, we
deliver a replacement fund certificate and pay to the Mortgage Trustee for a
replacement fund an amount equal to $198,000 plus 2% of the cost of all
additions made to its depreciable public utility property during the period from
October 1, 1947, to the end of the preceding calendar year, less 2% of the cost
of all depreciable public utility property retired by it during such period. We
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may take as a credit against such payment 166 2/3% times the principal amount of
Bonds which could then be issued on the basis of property additions and the
principal amount of Bonds paid, acquired or retired by us, to the extent that
the same have not been otherwise included in a prior Replacement Fund
Certificate filed with the Mortgage Trustee. So long as any Bonds of the
Fourteenth Series, Fifteenth Series, Sixteenth Series, Seventeenth Series,
Eighteenth Series, Nineteenth Series, Twentieth Series or Twenty-First Series
remain outstanding, we will satisfy our obligations under the replacement fund
through the use of cash only if we have first used all available property
additions and retired Bonds, and then only to the extent such amounts are not
sufficient to satisfy such obligations. All money in the replacement fund shall,
upon our request, be applied as described below under "Release and Substitution
of Property" in the case of proceeds from the sale of released property.
(Sections 5.19 and 6.07; 15th Supp., Section 3.2; 16th Supp., Section 3.2; 18th
Supp., Section 3.2.; 19th Supp., Section 3.2.; 20th Supp., Section 3.2; 21st
Supp., Section 3.2; 22nd Supp., Section 3.2; and 23rd Supp., Section 3.2)
Release and Substitution of Property
Upon substitution of other property of equal value, we may dispose of,
free from the lien of the Mortgage and without procuring a release therefrom,
any machinery, tools, implements, fixtures, or equipment unsuitable or not
required for the conduct of our business. (Section 6.03) Any property no longer
necessary for the proper conduct of our business may be sold, exchanged or
disposed of by us, and released from the lien of the Mortgage upon receipt by us
of a consideration, which shall be paid or delivered to the Mortgage Trustee
(unless required to be paid or delivered to the trustee of a prior lien), equal
to at least the fair value thereof and which shall consist of
* money;
* obligations of any federal, state, municipal or other governmental
body or agency purchasing such property;
* obligations maturing within 15 years, secured by a purchase money
mortgage on such property and constituting not more than 60% of such
consideration; and/or
* property additions (not otherwise utilized under the Mortgage) which
might have formed the basis for the authentication of additional
Bonds. (Sections 6.04 and 6.05)
Property taken by eminent domain proceedings or under governmental power of
purchase shall be released from the Mortgage and the proceeds of such taking or
purchase shall be paid to the Trustee. (Section 6.08) Proceeds received by the
condemnation or from the sale of property released from the Mortgage:
* may be withdrawn by us upon compliance with the same conditions that
would authorize the authentication of Bonds of an equal principal
amount, except that no earnings condition shall be applicable and
except that money may be withdrawn on the basis of property
additions up to 100% of the cost or fair value (whichever is less)
thereof after deducting the required amount on account of any prior
lien obligations and without any deduction for the cost of property
retired;
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* may be temporarily invested by the Mortgage Trustee in obligations
of the United States; or
* may be applied to the purchase or redemption of Bonds;
provided that all such proceeds (including proceeds temporarily invested as
aforesaid) not withdrawn or applied for five years after receipt by the Mortgage
Trustee shall be applied to the purchase or redemption of Bonds. (Section 6.07)
Proceeds of insurance on mortgaged property, except on losses of less than
$10,000, are payable to the Mortgage Trustee and may be applied by it to
reimburse us for the cost of repairing, renewing or replacing property damaged
or destroyed or as above provided in the case of proceeds of the sale of
property released from the Mortgage. (Section 5.12) No prior notice is required
in connection with any releases or substitutions of property, but Section 8.03
contains provisions relating to the transmission by the Mortgage Trustee to
Bondholders, from time to time, of reports of such releases or substitutions and
the consideration received therefor.
Restrictions on Dividends
So long as any Bonds of the Twenty-First Series shall remain
outstanding, we will not declare or pay any dividend on any shares of our common
stock (other than dividends payable in shares of our common stock) or make any
distribution on such shares, or purchase or otherwise acquire any such shares
(except shares acquired without cost to us), or advance any amount to or invest
any amount in the property, securities or indebtedness of, or guarantee any
indebtedness of, any subsidiary if, after giving effect to such action, the sum
of the aggregate amounts so declared, paid, distributed, purchased, acquired,
advanced, invested or guaranteed after December 31, 2001, would exceed the
aggregate net income of South Jersey Gas available for dividends on our Common
Stock earned after such date plus the sum of $69,000,000 (Section 3.1, 23rd
Supp.). For the purposes of this restriction, "subsidiary" shall mean any
corporation directly or indirectly controlled by or under common control with
South Jersey Gas. For the purpose of calculating the requirements of this
restriction, the net income of South Jersey Gas available for dividends on our
common stock shall be determined in accordance with such system of accounts as
may be prescribed by any governmental authority having jurisdiction in the
premises or in the absence thereof in accordance with generally accepted
accounting principles as in effect at such time; provided, however, that:
* deductions for depreciation or renewal or replacement reserves in
respect of each year shall be the amount taken therefor on the
accounts of South Jersey Gas or the amount required to be stated in
item (1) of the Replacement Fund Certificate to be filed under the
Mortgage with respect to the period ending at the close of such
year, whichever is greater; and
* no deduction or adjustment shall be made from gross income for or in
respect of: (a) expenses in connection with the redemption or
retirement of any securities issued by us, including any amount paid
in excess of the principal or par or stated value of securities
redeemed or retired, and, if such redemption or retirement is
effected with the proceeds of sale of other securities of South
Jersey Gas, interest on the securities redeemed or retired from the
date on which the funds required for such redemption or retirement
shall be deposited in trust for such purpose to the date of such
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redemption or retirement; (b) profits or losses from sales of
capital assets or taxes in respect of such profits; (c) any
adjustments to retained earnings (including tax adjustments)
applicable to any period prior to January 1, 2002; (d) charges for
the write-off of unamortized debt discount and expense carried on
our books at December 31, 2001; or (e) charges for the write-off or
write-down of the amount at which any of our property was carried on
our books at December 31, 2001, to the extent that the same shall be
approved by, or be made pursuant to any rule, regulation or order
of, any governmental authority having jurisdiction in the premises
and shall not be required by such authority to be charged against
earning accumulated after December 31, 2001. (Section 3.1, 23rd
Supp.)
Redemption
The Pledged Bonds shall be subject to redemption, either as a whole or
in part, from time to time upon payment of the principal amount thereof through
the application of proceeds available under the Mortgage from the condemnation
of property subject to the lien of the Mortgage or proceeds of sale of such
property to a governmental body or agency having the power of eminent domain
made as a result of the threat (evidenced in writing by such body or agency) of
condemnation of such property together with accrued interest to the date fixed
for redemption in accordance with the terms of the Mortgage, which provides that
if less than all Bonds of all Series are redeemed, then proceeds from the sale
of such property will be applied to the redemption of all Bonds, including the
Pledged Bonds, on a pro rata basis based on the amount of the Bonds then
outstanding. (Section 1.7, 23rd Supp.)
Consolidation, Merger or Sale
Subject to the approval of the New Jersey Board of Public Utilities,
the Mortgage does not prevent our consolidation or merger with or into any other
corporation or a conveyance and transfer of all of our property and franchises
to any other corporation if:
* the consolidation, merger or conveyance and transfer is subject to
the continuing lien of the Mortgage on the mortgaged property and
will not impair the lien or any of the rights or powers of the
Trustee or Bondholders;
* the corporation formed by the consolidation or into which we are
merged or which acquires the mortgaged property assumes and agrees
in writing to pay the Bondholders the principal of and interest on
all the Bonds, as and when due;
* any such successor corporation executes and delivers a supplemental
indenture which contains, among other things: (a) an agreement to
perform all of our obligations under the Mortgage; (b) a stipulation
that such consolidation, merger or conveyance and transfer is not a
waiver or release of any rights or powers of the Mortgage Trustee or
the Bondholders; (c) a grant confirming the lien of the Mortgage
Trustee upon the mortgaged property; and (d) a grant to the Mortgage
Trustee subjecting to the lien of the Mortgage property additions to
be used in the future and certain after-acquired property; and
- 27 -
* the Mortgage Trustee shall have consented to the consolidation,
merger or conveyance and transfer, which consent the Mortgage
Trustee is required to give upon receiving an opinion of counsel
that the foregoing conditions in the Mortgage have been satisfied,
unless in the Mortgage Trustee's opinion the transaction would be
prejudicial to the interests of the Bondholders. (Section 7.01)
Modifications of Mortgage
With the written consent of the holders of 66 2/3% in principal amount
of the Bonds outstanding, any of the provisions of the Mortgage or of the Bonds
may be altered, amended or eliminated, or additional provisions added. If such
change pertains only to the Bonds of one or more series but less than all
series, only the written consent of the holders of 66 2/3% in principal amount
of the then outstanding Bonds of each series to which such change pertains is
needed. However, no such change may
* alter or modify the right (expressed in Section 9.16) of any
Bondholder to receive payment of the principal of and interest on
his Bonds on or after the respective due dates thereof;
* change any of the provisions of any Bond with respect to the time,
terms, manner, or amount of any payment of the principal thereof or
interest thereon without the consent of the holder of such Bonds; or
* reduce the percentage of Bondholders whose consent shall be required
for the execution of any subsequent supplemental indenture.
The consent of the Board of Public Utilities may be required before certain of
the above actions may be taken. (Section 10.02) Certain other modifications and
amendments described in the Mortgage may be made without the consent of the
Bondholders. (Section 10.01)
- 28 -
Percentage of Bondholders Required to Take Certain Action
Upon the occurrence of an event of default under the Mortgage, the
Mortgage Trustee or the holders of 25% in principal amount of the Bonds then
outstanding may by written declaration accelerate the maturity of the principal
of all the Bonds (Section 9.03); but if we shall cure all events of default
under the Mortgage, the holders of a majority in principal amount of the Bonds
then outstanding may rescind, or require the Mortgage Trustee to rescind, such
acceleration. (Section 9.13) The holders of 66 2/3% in principal amount of the
Bonds then outstanding may waive any past default under the Mortgage and its
consequences, except a default in the payment of principal of or interest on any
of the Bonds. (Section 9.13) No Bondholder may enforce the lien of the Mortgage
unless the holders of 25% in principal amount of the Bonds then outstanding have
requested the Mortgage Trustee to do so and have offered to indemnify it against
expenses and liabilities in connection therewith, and unless the Mortgage
Trustee has failed to take such action within 60 days. (Section 9.15) The
holders of a majority in principal amount of the Bonds then outstanding may
direct the time, method and place of conducting any proceeding for any remedy
available to the Mortgage Trustee or exercising any trust or power conferred on
it, unless such action would be contrary to law or the provisions of the
Mortgage or would, in the opinion of the Mortgage Trustee, be unjustly
prejudicial to the other Bondholders. (Section 9.18)
For the purpose of computing the percentage of holders of Bonds
requisite for the taking of any action permitted under the Mortgage (including
the modification of the Mortgage), the calculation will be on the basis of the
principal amount of all Bonds outstanding exclusive of Bonds held by us, and all
Bonds known to the Mortgage Trustee to be held by us or any person controlling
or controlled by or under common control with us shall be disregarded.
(Article I)
Defaults and Notice Thereof
The following constitute events of default under the Mortgage:
* defaults in the payment of principal of any Bond or prior lien
obligation;
* default for 60 days in the payment of interest on any Bond or any
prior lien obligations, or in the payment of any sinking,
replacement, purchase or analogous fund;
* default for 60 days after notice in the performance of any other
covenant in the Mortgage;
* default occurs in observing or performing any covenant or condition
in any mortgage constituting a prior lien on mortgaged property and
the mortgagee or trustee thereunder institutes proceedings to invoke
rights or remedies available by reason of such default; and
* certain events of bankruptcy, insolvency or reorganization. (Section
9.02)
- 29 -
The 15th, 16th, 18th, 19th, 20th, 21st, 22nd and 23rd Supplements provide that
the following also constitute events of default under the Mortgage:
* default in the payment of principal of any Bond of the Fourteenth
Series, Fifteenth Series, Sixteenth Series, Seventeenth Series,
Eighteenth Series, Nineteenth Series, Twentieth Series or
Twenty-First Series, respectively, at maturity or upon redemption
pursuant to the provisions of any sinking, replacement, purchase or
analogous fund or pursuant to any optional or other redemption or
otherwise; provided if payment is made by wire transfer reasonably
expected to be effective on such due date, which transfer is not
credited to the Bondholder's account on such date, default shall not
occur until after five days following the due date; and
* default for ten days in the payment of interest on any Bond of the
Fourteenth Series, Fifteenth Series, Sixteenth Series, Seventeenth
Series, Eighteenth Series, Nineteenth Series, Twentieth Series or
Twenty-First Series, respectively (15th Supp., Section 6.1; 16th
Supp., Section 6.1; 18th Supp., Section 6.1; 19th Supp., Section
6.1; 20th Supp., Section 7.1; 21st Supp., Section 7.1, 22nd Supp.,
Section 7.1 and 23rd Supp., Section 7.1).
The 15th, 16th, 18th, 19th, 20th, 21st, 22nd and 23rd Supplements also
provide that it shall be an event of default under the Mortgage if we shall
default in the performance of or compliance with any covenant, condition or term
in the Mortgage or the 15th, 16th, 18th, 19th, 20th, 21st, 22nd or 23rd
Supplements, respectively, and such default shall continue for 30 days after we
shall have knowledge thereof. Within 90 days after the occurrence thereof, the
Mortgage Trustee shall give notice of any defaults to the Bondholders, provided
that in the case of default in the payment of principal of or interest on any
Bond or of any sinking fund or purchase fund installment, the Mortgage Trustee
is not required to give notice to the Bondholders of any default under the
Mortgage if the Mortgage Trustee in good faith determines that the withholding
of such notice is in the interest of the Bondholders. (Section 11.05) Periodic
evidence of compliance with certain provisions of the Mortgage is required to be
submitted to the Mortgage Trustee. (Sections 5.09, 5.12, 5.18 and 5.19) The
Mortgage Trustee, subject to its duty to use the same degree of care and skill
as a prudent man would use in the conduct of his own affairs, before proceeding
to enforce the lien of the Mortgage, is entitled to be indemnified to its
satisfaction against all its prospective costs, expenses, and liability in
connection therewith. (Sections 11.01 and 11.02)
Discharge and Satisfaction
Whenever all amounts due or to become due on all outstanding Bonds
issued under the Mortgage shall have been paid or provision for the payment
thereof shall have been made (as such provision for payment is defined below)
and all amounts payable by us to the Mortgage Trustee under the Mortgage shall
have been paid, the Mortgage Trustee shall, upon our request and at our expense,
satisfy or discharge the Mortgage of record wherever recorded and convey,
transfer, assign and deliver the mortgaged property to or upon the order of
South Jersey Gas, and all the title, estate, rights and powers of the Mortgage
Trustee shall forthwith cease and the mortgaged property shall revert to us, and
- 30 -
all responsibility of the Mortgage Trustee and all of our obligations under the
Mortgage (except as expressly provided therein) shall then cease. (Section
12.01).
"Provision for payment of a Bond" shall be deemed to have been made if:
* when the principal of such Bond shall have become due and payable,
whether by maturity, call for redemption, declaration, or otherwise,
all amounts due thereon shall have been paid or shall have been
deposited in trust with and shall be held by the Mortgage Trustee
for the account of the holder thereof; or
* at any time in advance of the maturity thereof, we (a) shall have
either (1) deposited with the Mortgage Trustee in trust all amounts
to become due thereon up to and upon the maturity date thereof or
(2) duly called such Bond for redemption on a date specified, in
accordance with the provisions of the Mortgage, given all notices
required to make such call effective or made provision satisfactory
to the Mortgage Trustee for giving all such notices, and deposited
with the Mortgage Trustee in trust all amounts to become due upon
such Bond up to and upon such redemption date, and (b) shall have
irrevocably authorized the Mortgage Trustee forthwith to pay to the
holder thereof, out of the funds so deposited with it, all amounts
so to become due on such Bond up to and upon the maturity date or
the redemption date, as the case may be, such payment to be made
upon such Bond whenever the same shall be presented for that purpose
without awaiting the maturity date or the redemption date, and shall
have given at least one notice by publication of such deposit and
authorization or shall have made provision satisfactory to the
Mortgage Trustee for giving such notice. (Article I)
PLAN OF DISTRIBUTION
The Notes are being offered on a continuing basis by us through agents.
The prospectus supplement will identify those agents and will describe the plan
of distribution, including commissions to be paid. It is anticipated that the
agents will agree to use reasonable efforts to solicit purchases of the Notes.
The Notes may also be sold to an agent as principal for reoffering as described
below. We will have the sole right to accept offers to purchase Notes and may
reject any proposed purchase of Notes in whole or in part. Each agent will have
the right, in its discretion reasonably exercised, to reject any proposed
purchase of Notes through it in whole or in part. Unless otherwise specified in
a prospectus supplement, we will pay a commission to an agent, depending upon
the length of maturity of the Notes then being offered, ranging from 0.15% to
0.75% of the principal amount of any Notes sold through such agent.
Unless otherwise specified in the applicable prospectus supplement, any
Notes sold to an agent as principal will be purchased by such agent at a price
equal to 100% of the principal amount thereof less a percentage equal to the
commission applicable to any agency sale of a Note of identical maturity. Such
Note may be resold by an agent to investors and other purchasers from time to
time in one or more transactions, including negotiated transactions, at a fixed
public offering price or at varying prices determined at the time of sale or may
be resold to certain dealers. Resales of notes by an agent to a dealer may be
- 31 -
made at a discount, which will not be in excess of the discount to be received
by such agent from us. After the initial public offering of Notes, the public
offering price (in the case of Notes to be resold on a fixed public offering
price basis), the commission and the discount may be changed.
We reserve the right to withdraw, cancel or modify the offer made
hereby without notice and may reject orders in whole or in part placed through
an agent.
Unless otherwise specified in an applicable prospectus supplement,
payment of the purchase price of the Notes will be required to be made in
immediately available funds in New York City on the date of settlement.
No Note will have an established trading market when issued. The Notes
will not be listed on any securities exchange. Each agent may from time to time
purchase and sell Notes in the secondary market, but no agent is obligated to do
so, and there can be no assurance that there will be a secondary market for the
Notes or liquidity in the secondary market if one develops. From time to time,
the agents may make a market in the Notes but are not obligated to do so and may
discontinue such market-making activity at any time.
In connection with certain offerings of the Notes, the agents may
engage in overallotment, stabilizing transactions and syndicate covering
transactions in accordance with Regulation M under the Exchange Act.
Overallotment involves sales in excess of the offering size which create a short
position for the agents. Stabilizing transactions involve bids to purchase the
Notes in the open market for the purpose of pegging, fixing or maintaining the
price of the Notes. Syndicate covering transactions involve purchases of the
Notes in the open market after the distribution has been completed in order to
cover short positions. Stabilizing transactions and syndicate covering
transactions may cause the price of the Notes to be higher than it would
otherwise be in the absence of those transactions. Those activities, if
commenced, may be discontinued at any time.
Neither we nor any of the agents makes any representation or prediction
as to the direction or magnitude of any effect that the transactions described
above might have on the price of the Notes. In addition, neither we nor any of
the agents make any representation that they will engage in such transactions or
that such transactions, once commenced, will not be discontinued without notice.
The agents may be deemed to be "underwriters" within the meaning of the
Securities Act of 1933. We have agreed to indemnify the agents against certain
liabilities, including liabilities under the Securities Act, and to contribute
to payments the agents may be required to make in respect thereof. In addition,
we have agreed to reimburse the agents for certain expenses related to the
offering made hereby.
LEGAL MATTERS
Certain legal matters will be passed upon for us by Cozen O'Connor,
Philadelphia, Pennsylvania, and for the agents by Chapman and Cutler, Chicago,
Illinois.
- 32 -
EXPERTS
The financial statements and the related financial statement schedules
included in our Annual Report on Form 10-K incorporated in this prospectus by
reference have been audited by Deloitte & Touche LLP, independent auditors, as
stated in their report, which is incorporated herein by reference, and have been
so incorporated in reliance upon the report of such firm given upon their
authority as experts in accounting and auditing.
- 33 -
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
SEC Registration Fee.......................................$13,800
Legal Fees and Expenses....................................200,000
Accounting Fees and Expenses...............................110,000
Rating Agency Fees.........................................105,000
Printing...................................................150,000
Miscellaneous (including Blue Sky Fees and Expenses)........21,200
--------
Total.....................................................$600,000
--------
Each amount set forth above, except for the SEC registration fee, is
estimated.
Item 15. Indemnification of Directors and Officers.
Under Section 14A:3-5 of the New Jersey Business Corporation Act, South
Jersey Gas:
(1) has the power to indemnify each director and officer of South
Jersey Gas (as well our employees and agents) against expenses and liabilities
in connection with any proceeding involving him or her by reason of his or her
being or having been a director or officer, other than a proceeding by or in the
right of South Jersey Gas, if (a) such director or officer acted in good faith
and in a manner he reasonably believed to be in or not opposed to our best
interests, and (b) with respect to any criminal proceeding, such director or
officer had no reasonable cause to believe his conduct was unlawful;
(2) has the power to indemnify each director and officer of South
Jersey Gas against expenses in connection with any proceeding by or in the right
of South Jersey Gas to procure a judgment in our favor which involves such
director or officer by reason of his or her being or having been a director or
officer if he or she acted in good faith and in a manner he or she reasonably
believed to be in or not opposed to our best interest; however, in such
proceeding no indemnification may be provided in respect to any claim, issue or
matter as to which such director or officer shall have been adjudged to be
liable to South Jersey Gas, unless and only to the extent that the court
determines that the director or officer is fairly and reasonably entitled to
indemnity for such expenses as the court shall deem proper;
(3) must indemnify each director and officer against expenses to the
extent that he or she has been successful on the merits or otherwise in any
proceeding referred to in (1) and (2) above or in defense of any claim, issue or
matter therein; and
(4) has the power to purchase and maintain insurance on behalf of a
director or officer against any expenses incurred in any proceeding and any
liabilities asserted against him or her by reason of his or her being or having
been a director or officer, whether or not we would have the power to indemnify
him or her against such expenses and liabilities under the statute.
- 34 -
As used in the statute, "expenses" means reasonable costs,
disbursements and counsel fees, "liabilities" means amounts paid or incurred in
satisfaction of settlements, judgments, fines and penalties, and "proceedings"
means any pending, threatened or completed civil, criminal, administrative or
arbitrative action, suit or proceeding, and any appeal therein and any inquiry
or investigation which could lead to such action, suit or proceeding.
Indemnification may be awarded by a court under (1) or (2) as well as
under (3) above, notwithstanding a prior determination by us that the director
or officer has not met the applicable standard of conduct.
Indemnification under the statute does not exclude any other rights to
which a director or officer may be entitled under a certificate of
incorporation, bylaws, or otherwise.
Article VII of our Bylaws provides, in pertinent part, as follows:
(1) we shall indemnify any corporate agent against his or her
expenses and liabilities in connection with any proceedings involving
the corporate agent by reason of his or her being or having been such a
corporate agent to the extent that (a) such corporate agent is not
otherwise indemnified and (b) the power to do so has been or may be
granted by statute; and for this purpose our board of directors may,
and on request of any such corporate agent shall be required to,
determine in each case whether or not the applicable standards in any
such statute have been met, or such determination shall be made by
independent legal counsel if the board so directs or if the board is
not empowered by statute to make such determination;
(2) to the extent that the power to do so has been or may be
granted by statute, we shall pay expenses incurred by a corporate agent
in connection with a proceeding in advance of the final disposition of
the proceeding upon receipt of an undertaking by or on behalf of such
corporate agent to repay such amount unless it shall ultimately be
determined that he or she is entitled to be indemnified as provided by
statute;
(3) the indemnification provided in our Bylaws shall not be
exclusive of any other rights to which a corporate agent may be
entitled, both as to any action in his or her official capacity or as
to any action in another capacity while holding such office, and shall
inure to the benefits of the heirs, executors, or administrators of any
such corporate agent; and
(4) our board of directors shall have the power to (a)
purchase and maintain, at our expense, insurance on our behalf and on
behalf of others to the extent that power to do so has been or may be
granted by statute and (b) give other indemnification to the extent
permitted by law.
We maintain and pay all premiums on directors and officers liability
insurance policies with a primary liability limit of $35,000,000.
- 35 -
Item 16. Exhibits.
Exhibit
Number Description
1 Form of Distribution Agreement.
4(a)(i) Indenture of Trust dated as of October 1,
1998 between South Jersey Gas and The Bank
of New York (incorporated by reference from
exhibit 4(e) of Form S-3 of South Jersey Gas
(333-62019)).
4(a)(ii) First Supplement to Indenture of Trust dated
as of June 29, 2000 (incorporated by
reference from exhibit 4.1 of Form 8-K of
South Jersey Gas dated July 12, 2001).
4(a)(iii) Second Supplement to Indenture of Trust
dated as of July 5, 2000 (incorporated by
reference from exhibit 4.2 of Form 8-K of
South Jersey Gas dated July 12, 2001).
4(a)(iv) Third Supplement to Indenture of Trust dated
as of July 9, 2001 (incorporated by
reference from exhibit 4.3 of Form 8-K of
South Jersey Gas dated July 12, 2001).
4(b)(i) First Mortgage Indenture dated October 1,
1947 (incorporated by reference from Exhibit
4(b)(i) of Form 10-K of South Jersey
Industries, Inc. for the year ended December
31, 1987).
4(b)(ii) Twelfth Supplemental Indenture dated as of
June 1, 1980 (incorporated by reference from
Exhibit 5(b) of Form S-7 of South Jersey
Industries, Inc.).
4(b)(iii) Sixteenth Supplemental Indenture dated as of
April 1, 1989 (incorporated by reference
from Exhibit 4(b)(xv) of Form 10-Q of South
Jersey Industries, Inc. for the quarter
ended March 31, 1988).
4(b)(iv) Seventeenth Supplemental Indenture dated as
of May 1, 1989 (incorporated by reference
from Exhibit 4(b)(xv) of Form 10-K of South
Jersey Industries, Inc. for the year ended
December 31, 1989).
4(b)(v) Eighteenth Supplemental Indenture dated as
of Mach 1, 1990 (incorporated by reference
from Exhibit 4(e) of Form S-3 of South
Jersey Gas (33-36581)).
4(b)(vi) Nineteenth Supplemental Indenture dated as
of April 1, 1992 (incorporated by reference
from Exhibit 4(b)(xvii) of Form 10-K of
South Jersey Industries, Inc. for the year
ended December 31, 1992).
4(b)(vii) Twentieth Supplemental Indenture dated as of
June 1, 1993 (incorporated by reference from
Exhibit 4(b)(xviii) of Form10-K of South
Jersey Industries, Inc. for the year ended
December 31, 1993).
4(b)(viii) Twenty-First Supplemental Indenture dated as
of March 1, 1997 (incorporated by reference
from Exhibit 4(b)(xviv) of Form 10-K of
South Jersey Industries, Inc. for the year
ended December 31, 1997).
- 36 -
4(b)(ix) Twenty-Second Supplemental Indenture dated
as of October 1, 1998 (incorporated by
reference from exhibit 4(b)(ix) of Form S-3
of South Jersey Gas (333-62019)).
4(b)(x) Form of Twenty-Third Supplemental Indenture.
5 Opinion of Cozen O'Connor.
12 Statement regarding computation of earnings
to fixed charges.
23(a) Consent of Deloitte & Touche LLP.
23(b) Consent of Cozen O'Connor (included in
Exhibit 5).
24 Power of Attorney (included on the signature
page hereto).
25 Statement of Eligibility of Trustee on Form
T-1 under the Trust Indenture Act of 1939
(incorporated by reference from Exhibit
25(a) of Form S-3 of South Jersey Gas
(333-62019)).
Item 17. Undertakings.
The undersigned registrant hereby undertakes:
(1) to file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement
to include any material information with respect to the plan of
distribution not previously disclosed in this registration statement or
any material change to such information in this registration statement;
(2) that, for the purpose of determining any liability under
the Securities Act of 1933 each post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof; and
(3) to remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in this
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act of 1933 and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
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precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, South
Jersey Gas Company has duly caused this Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in Folsom, New Jersey,
on the 20th day of August, 2002.
SOUTH JERSEY GAS COMPANY
By: /s/ Charles Biscieglia
-------------------------------------------------
Charles Biscieglia
President and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Charles Biscieglia and David A. Kindlick
his or her true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him or her and in his or her name, place
and stead, in any and all capacities, to sign any and all amendments (including
post-effective amendments) to this registration statement and any and all
additional registration statements pursuant to Rule 462(b) of the Securities Act
of 1933 and to file the same, with all exhibits thereto, and all other documents
in connection therewith, with the Securities and Exchange Commission, granting
unto said attorney-in-fact and agent full power and authority to do and perform
each and every act in person, hereby ratifying and confirming all that said
attorney-in-fact and agent or his or her substitute or substitutes may lawfully
do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
Name Capacity Date
/s/ Charles Biscieglia Director, President and Chief August 20, 2002
- ----------------------------- Executive Officer (principal
Charles Biscieglia executive officer)
/s/ David A. Kindlick Executive Vice President and August 20, 2002
- ----------------------------- Chief Financial Officer
David A. Kindlick (principal financial and
accounting officer)
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/s/ Shirli M. Billings Director August 20, 2002
- -----------------------------
Shirli M. Billings
/s/ Sheila Hartnett-Devlin Director August 20, 2002
- -----------------------------
Sheila Hartnett-Devlin
/s/ Clarence D. McCormick Director August 20, 2002
- -----------------------------
Clarence D. McCormick
/s/ Frederick R. Raring Director August 20, 2002
- -----------------------------
Frederick R. Raring
/s/ William J. Hughes Director August 20, 2002
- -----------------------------
William J. Hughes
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EXHIBIT INDEX
Exhibit
Number Description
1 Form of Distribution Agreement
4(a)(i) Indenture of Trust dated as of October 1,
1998 between South Jersey Gas and The Bank
of New York (incorporated by reference from
exhibit 4(e) of Form S-3 of South Jersey Gas
(333-62019)).
4(a)(ii) First Supplement to Indenture of Trust dated
as of June 29, 2000 (incorporated by
reference from exhibit 4.1 of Form 8-K of
South Jersey Gas dated July 12, 2001).
4(a)(iii) Second Supplement to Indenture of Trust
dated as of July 5, 2000 (incorporated by
reference from exhibit 4.2 of Form 8-K of
South Jersey Gas dated July 12, 2001).
4(a)(iv) Third Supplement to Indenture of Trust dated
as of July 9, 2001 (incorporated by
reference from exhibit 4.3 of Form 8-K of
South Jersey Gas dated July 12, 2001).
4(b)(i) First Mortgage Indenture dated October 1,
1947 (incorporated by reference from Exhibit
4(b)(i) of Form 10-K of South Jersey
Industries, Inc. for the year ended December
31, 1987).
4(b)(ii) Twelfth Supplemental Indenture dated as of
June 1, 1980 (incorporated by reference from
Exhibit 5(b) of Form S-7 of South Jersey
Industries, Inc.).
4(b)(iii) Sixteenth Supplemental Indenture dated as of
April 1, 1989 (incorporated by reference
from Exhibit 4(b)(xv) of Form 10-Q of South
Jersey Industries, Inc. for the quarter
ended March 31, 1988).
4(b)(iv) Seventeenth Supplemental Indenture dated as
of May 1, 1989 (incorporated by reference
from Exhibit 4(b)(xv) of Form 10-K of South
Jersey Industries, Inc. for the year ended
December 31, 1989).
4(b)(v) Eighteenth Supplemental Indenture dated as
of Mach 1, 1990 (incorporated by reference
from Exhibit 4(e) of Form S-3 of South
Jersey Gas (33-36581)).
4(b)(vi) Nineteenth Supplemental Indenture dated as
of April 1, 1992 (incorporated by reference
from Exhibit 4(b)(xvii) of Form 10-K of
South Jersey Industries, Inc. for the year
ended December 31, 1992).
4(b)(vii) Twentieth Supplemental Indenture dated as of
June 1, 1993 (incorporated by reference from
Exhibit 4(b)(xviii) of Form10-K of South
Jersey Industries, Inc. for the year ended
December 31, 1993).
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4(b)(viii) Twenty-First Supplemental Indenture dated as
of March 1, 1997 (incorporated by reference
from Exhibit 4(b)(xviv) of Form 10-K of
South Jersey Industries, Inc. for the year
ended December 31, 1997).
4(b)(ix) Twenty-Second Supplemental Indenture dated
as of October 1, 1998 (incorporated by
reference from exhibit 4(b)(ix) of Form S-3
of South Jersey Gas (333-62019)).
4(b)(x) Form of Twenty-Third Supplemental Indenture.
5 Opinion of Cozen O'Connor.
12 Statement regarding computation of earnings
to fixed charges.
23(a) Consent of Deloitte & Touche LLP.
23(b) Consent of Cozen O'Connor (included in
Exhibit 5).
24 Power of Attorney (included on the signature
page hereto).
25 Statement of Eligibility of Trustee on
Form T-1 under the Trust Indenture Act
of 1939 (incorporated by reference from
Exhibit 25(a) of Form S-3 of South
Jersey Gas (333-62019)).
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