SOUTH JERSEY GAS COMPANY
Secured Medium Term Notes, Series B
Due From One Year to Forty Years
From Date of Issue
Distribution Agreement
July 7, 2003
UBS Securities LLC
Wachovia Capital Markets, LLC
Edward D. Jones & Co., L.P.
A.G. Edwards & Sons, Inc.
c/o UBS Securities LLC
677 Washington Blvd.
Stamford, Connecticut 06901
Dear Sirs:
South Jersey Gas Company, a New Jersey corporation (the "Company"),
confirms its agreement with each of you with respect to the issue and sale by
the Company from time to time of up to $150,000,000 aggregate principal amount
of its Secured Medium Term Notes, Series B, Due from One Year to Forty Years
from Date of Issue (the "Notes"). The Notes will be issued under an indenture of
trust (the "Original Indenture") dated as of October 5, 1998 between the Company
and The Bank of New York, as trustee (the "Trustee"), as supplemented by the
First Supplement to Indenture, dated as of June 29, 2000, the Second Supplement
to Indenture, dated as of July 5, 2000, and the Third Supplement to Indenture,
dated as of July 9, 2001, each between the Company and the Trustee (the Original
Indenture, as supplemented, the "Indenture"). Prior to the Substitution Date (as
defined in the Indenture), the Notes will be secured by the delivery to the
Trustee of one or more first mortgage bonds issued under the Company's mortgage
indenture, as specified in the Prospectus referred to below (collectively, the
"Pledged Bonds"). Unless otherwise set forth in a supplement to the Prospectus
referred to below, the Notes will be issued in fully registered form in minimum
denominations of $1,000 and in denominations exceeding such amount by integral
multiples of $1,000 and will have the annual interest rates, maturities and, if
appropriate, other terms set forth in such supplement to the Prospectus. The
Notes will be issued, and the terms thereof established, in accordance with the
Indenture and, in the case of Notes sold pursuant to Section 2(a), the Secured
Medium Term Note Administrative Procedures attached hereto as Exhibit A (the
"Procedures") (unless a Terms Agreement (as defined in Section 2(b)), modifies
or supersedes such Procedures with respect to the Notes issued pursuant to such
Terms Agreement). The Procedures may only be amended by written agreement of the
Company and you after notice to, and with the approval of, the Trustee. For the
purposes of this Agreement, the term "Agent" shall refer to any of you acting
solely in the capacity as agent for the Company pursuant to Section 2(a) and not
as principal (collectively, the "Agents"), the term the "Purchaser" shall refer
to any one of you acting solely as principal pursuant to Section 2(b) and not as
agent, and the term "you" shall refer to you collectively whether at any time
any of you is acting in both such capacities or in either such capacity.
1. REPRESENTATIONS AND WARRANTIES.
The Company represents and warrants to, and agrees with, you as set
forth below in this Section 1. Certain terms used in this Section 1 are defined
in paragraph (y) hereof.
(a) At the time of filing and the Effective Date, the
Company meets the requirements for use of Form S-3 under the Securities
Act of 1933, as amended (the "Act"), for purposes of registering the
Notes and has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on such Form (File Number:
333-98411), including a prospectus, which registration statement, as
amended, has become effective, for the registration under the Act of
the issuance of $150,000,000 aggregate principal amount of the Notes.
Such registration statement, as amended at the date of this Agreement,
meets the requirements set forth in Rule 415(a)(1)(ix) or (x) under the
Act and complies in all other material respects with said Rule. In
connection with the sale of Notes, the Company proposes to file with
the Commission pursuant to the applicable paragraph of Rule 424(b)
under the Act supplements to the Prospectus (as defined by Section
1(y)) specifying the interest rates, maturity dates and, if
appropriate, other terms of the Notes sold pursuant hereto or the
offering thereof.
(b) As of the Execution Time (as defined by Section 1(y)),
on the Effective Date (as defined by Section 1(y)), when any supplement
to the Prospectus is filed with the Commission, as of the date of any
Terms Agreement (as defined by Section 2(b)) and at the date of
delivery by the Company of any Notes sold hereunder (a "Closing Date"),
(i) the Registration Statement (as defined by Section 1(y)), as amended
as of any such time, and the Prospectus, as supplemented as of any such
time, and the Indenture will comply in all material respects with the
applicable requirements of the Act, the Trust Indenture Act of 1939, as
amended (the "Trust Indenture Act"), and the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and the respective rules
thereunder; (ii) the Registration Statement, as amended as of any such
time, did not or will not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein not misleading;
and (iii) the Prospectus, as supplemented as of any such time, will not
contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
provided, however, that the Company makes no representations or
warranties as to (i) the Statement of Eligibility on Form T-1 or (ii)
the information contained in or omitted from the Registration Statement
or the Prospectus (or any supplement thereto) in reliance upon and in
conformity with information furnished in writing to the Company by any
of you specifically for use in connection with the preparation of the
Registration Statement or the Prospectus (or any supplement thereto).
(c) As of the time any Notes are issued and sold hereunder,
each of the Indenture and the Indenture of First Mortgage, dated
October 1, 1947, as supplemented and amended by twenty-three
supplemental indentures, including the Twenty-Third Supplemental
Indenture, dated as of July 1, 2003 (the "New Supplement"), between the
Company and The Bank of New York, as trustee (as so supplemented and
amended, the "Mortgage" and such trustee being the "Mortgage Trustee"),
assuming the due execution and delivery thereof by the Trustee and the
Mortgage Trustee, respectively, will constitute a legal, valid and
binding instrument enforceable against the Company in accordance with
its terms except, in each case, as enforceability may be limited by
bankruptcy, reorganization, moratorium, insolvency or other laws now or
hereafter in effect relating to or affecting mortgagees' or other
creditors' rights or general principles of equity (whether asserted in
a proceeding at law or in equity), and the Notes and the Pledged Bonds
will have been duly authorized, executed, authenticated and, when the
Notes have been paid for by the purchasers thereof, the Notes and the
Pledged Bonds will constitute legal, valid and binding obligations of
the Company entitled to the benefits of the Indenture or the Mortgage,
respectively, except, in each case, as enforceability may be limited by
bankruptcy, reorganization, moratorium, insolvency or other laws now or
hereafter in effect relating to or affecting mortgagees' or other
creditors' rights or general principles of equity (whether asserted in
a proceeding at law or in equity); the Notes, the Indenture, the
Mortgage and the Pledged Bonds will conform in all material respects to
all statements relating thereto contained in the Prospectus.
(d)(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
jurisdiction in which it is incorporated, with full corporate power and
authority to own or lease its properties and conduct its business as
described in the Prospectus. The properties now owned or leased and the
business now transacted by the Company do not require it to be
qualified as a foreign corporation in any jurisdiction.
(d)(ii) SJG Capital Trust (the "Subsidiary") has been duly
organized and is validly existing as a statutory trust in good standing
under the laws of the jurisdiction in which it is organized, with full
power and authority to own its properties and conduct its business as
described in the Prospectus, and is duly qualified to do business as a
foreign organization and is in good standing under the laws of each
jurisdiction which requires such qualification wherein it owns or
leases material properties or conducts material business, except where
the failure to be so qualified would not materially adversely affect
the Company and its Subsidiary taken as a whole.
(e) All the outstanding shares of capital stock of the
Subsidiary have been duly authorized and validly issued and are fully
paid and nonassessable, and, except as otherwise set forth in the
Prospectus, all outstanding shares of common stock of the Subsidiary
are owned directly by the Company free and clear of any perfected
security interest and, to the knowledge of the Company, any other
security interests, claims, liens or encumbrances.
(f) The Company's authorized equity capitalization is as set
forth in the Registration Statement; and the Notes and the Pledged
Bonds conform to the descriptions thereof contained in the Prospectus
(subject to the insertion in the Notes and the Pledged Bonds of the
maturity dates, the interest rates and other terms thereof which will
be described in supplements to the Prospectus as contemplated by the
last sentence of Section l(a) of this Agreement).
(g) No consent, approval, authorization or order of any
court or governmental agency or body (other than authorization from the
New Jersey Board of Public Utilities, referred to below) is required
for the consummation of the transactions contemplated herein except
such ashave been obtained under the Act, the Exchange Act and the Trust
Indenture Act, and such as may be required under the blue sky laws of
any jurisdiction in connection with the sale of the Notes as
contemplated by this Agreement and such other approvals as have been
obtained. The New Jersey Board of Public Utilities (the "BPU") has
entered an order, dated July 24, 2002, authorizing the issuance and
sale of the Notes and the issuance of the Pledged Bonds by the Company
on terms and conditions not inconsistent with the terms and conditions
set forth in or contemplated by this Agreement. The Notes, when issued
and sold by the Company, and the Pledged Bonds, when issued by the
Company, will comply in all material respects with the terms,
conditions and limitations set forth in such order. Such order is in
full force and effect and has not been amended, supplemented or
otherwise modified without the consent of the Agents, and the period
has expired during which any proceeding to review, suspend, limit,
modify, restrict or revoke such order may be instituted as of right by
any Person other than the BPU.
(h) Any accounting firm which audited the financial
statements included or incorporated by reference in the Registration
Statement and the Prospectus are independent accountants within the
meaning of the Act and the rules and regulations thereunder.
(i) The financial statements, selected financial information
and any supporting schedules of the Company and its consolidated
subsidiaries included or incorporated by reference in the Registration
Statement and the Prospectus fairly present the consolidated financial
position of the Company and its Subsidiary as of the dates indicated
and the consolidated results of their operations for the periods
specified; and, except as stated therein, said financial statements
have been prepared in conformity with generally accepted accounting
principles in the United States applied on a consistent basis; and the
supporting schedules included or incorporated by reference in the
Registration Statement present fairly the information required to be
stated therein. No other financial statements or schedules of the
Company are required by the Act or the rules and regulations
thereunder, or Exchange Act or the rules and regulations thereunder, to
be included in the Registration Statement or the Prospectus.
(j) This Agreement has been duly and validly authorized,
executed and delivered by the Company and, upon execution and delivery
by the Agents, will be a valid and binding agreement of the Company,
enforceable in accordance with its terms except as enforceability may
be limited by bankruptcy, reorganization, moratorium, insolvency or
other laws now or hereafter in effect relating to or affecting
mortgagees' or other creditors' rights or general principles of equity
(whether asserted in a proceeding at law or in equity).
(k) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, except as may
otherwise be stated therein or contemplated thereby, (a) there has been
no material adverse change, or any development known to the Company
involving a prospective material adverse change, in the condition,
financial or otherwise, or in the earnings or business affairs of the
Company and its Subsidiary taken as a whole, whether or not arising in
the ordinary course of business and (b) there has not been any material
transaction entered into by the Company or its Subsidiary, other than
transactions in the ordinary course of business and transactions
contemplated by the Registration Statement and the Prospectus.
(l) Neither the Company nor its Subsidiary is in violation
of its articles of incorporation, by-laws or other organizational
documents. No default exists, and no event has occurred which, with
notice or lapse of time or both, would constitute a default in the due
performance and observance of any obligation, agreement or condition by
the Company or its Subsidiary contained in any mortgage, indenture,
deed of trust, note, loan agreement or other agreement or instrument to
which the Company or its Subsidiary is a party or by which the Company
or its Subsidiary is bound or to which any property or asset of the
Company or its Subsidiary is subject, except for defaults the effect of
which would not materially adversely affect the Company and its
Subsidiary taken as a whole. The execution and delivery of this
Agreement, the Indenture and the New Supplement and the consummation of
the transactions contemplated herein, therein and pursuant to any
applicable Terms Agreement have been or will be duly authorized by all
necessary corporate action and will not conflict with, result in a
breach of any of the terms or provisions of, or constitute a default
under, or, except for the issuance of Notes and the Pledged Bonds,
secured by the lien of the Mortgage, result in the creation or
imposition of any lien, charge or encumbrance upon any property or
assets of the Company or its Subsidiary pursuant to the terms or
provisions of, or give any party a right to terminate any of its
obligations under, or result in the acceleration of any obligation
under: (i) the articles of incorporation or bylaws (or equivalent
documents) of the Company or its Subsidiary; or (ii) any indenture,
mortgage, deed of trust, loan agreement, bond, debenture, note or other
evidence of indebtedness, lease, contract or other material agreement
or instrument to which the Company or its Subsidiary is a party or by
which it or any of them may be bound or to which any of the property or
assets of the Company or any such Subsidiary is subject, except, in the
case of clause (ii) only, where the effect of which would not
materially adversely affect the Company and its Subsidiary taken as a
whole, nor will such action, to the knowledge of the Company, violate
or conflict with any judgment, ruling, decree, order, statute, rule or
regulation of any court or other governmental agency or body applicable
to the business or properties of the Company or its Subsidiary.
(m) The Company has good and marketable title to all the
real properties described in the granting clauses of the Mortgage,
subject (other than properties released from the lien of the Mortgage
pursuant to the terms thereof) to the lien of the Mortgage and no other
liens or encumbrances except liens permitted under the Mortgage. No
further deeds, conveyances, transfers or instruments, other than the
New Supplement and related documents, are necessary for the purpose of
effectively subjecting such properties to the direct lien and operation
of the Mortgage.
(n) As of the time any Notes are issued and sold hereunder,
the Mortgage will constitute a valid first mortgage lien of record upon
all real and personal property of the Company (including easements,
rights-of-way, and other rights relating to real estate and franchises)
specifically or generally described or referred to in the Mortgage as
subject to the lien thereof and owned by the Company at the time of the
actual issue of the Pledged Bonds, subject to no liens or encumbrances
other than "excepted encumbrances" (as defined in Subdivision A of
Section 3.04 of the Mortgage).
(o) As of the time any Notes are issued and sold hereunder,
the Mortgage will have been duly filed for recording in such manner and
in such places as are required by law in order to establish, preserve,
and protect the first lien of the Mortgage on all real and personal
property of the Company specifically or generally described or referred
to in the Mortgage as subject to the lien of the Mortgage (except that
(a) additional filings and recordings of the Mortgage will be required
if property is acquired by the Company subsequent to the date hereof
which is located in a county where the Mortgage has not previously been
filed for recording and (b) the Mortgage will not be a first lien on
property hereafter acquired by the Company which at the time of
acquisition is subject to prior liens or other encumbrances), and all
taxes, fees and other charges payable in connection therewith have been
paid in full.
(p) Except as may be set forth in the Registration Statement
and Prospectus, there is no action, suit or proceeding before or by any
court or governmental agency or body, domestic or foreign, now pending,
or, to the knowledge of the Company, threatened against or affecting,
the Company or its Subsidiary, wherein an unfavorable ruling, decision
or finding would be expected to materially and adversely affect the
Company and its Subsidiary taken as a whole or the business,
properties, condition (financial or otherwise) or results of operations
of the Company and its Subsidiary as a whole or which in the aggregate
might affect the ability of the Company to enter into this Agreement,
the Indenture or the New Supplement or issue and sell the Notes or
issue the Pledged Bonds; and there are no contracts or documents of the
Company or its Subsidiary which are required to be described in or
filed as exhibits to the Registration Statement by the Act or the rules
and regulations thereunder, or the Exchange Act or the rules and
regulations thereunder, which have not been so described or filed as
required.
(q) Each of the Company and its Subsidiary has valid and
sufficient grants, franchises, licenses and permits, adequate for the
conduct of its business in the territories in which it is now
conducting such business and the ownership of the properties now owned
by it and, except as otherwise set forth in the Registration Statement
and the Prospectus, there are no legal or governmental proceedings
pending or, to the knowledge of the Company, threatened which might
result in a material modification, suspension or revocation thereof.
Each of the Company and its Subsidiary has, and is operating in
compliance with, in all material respects, all material and necessary
authorizations, approvals, orders, licenses, certificates and permits
of and from all governmental regulatory officials and bodies, to own,
lease, license and operate its properties and conduct its business as
presently conducted and as contemplated by the Registration Statement
and the Prospectus, and the Company and its Subsidiary have filed all
material reports and taken all other action required by the authority
issuing the same where the failure to file or take other action would
be expected to give rise to a right in such authority to seek to
revoke, suspend or materially limit any such material license,
certificate or permit. The Company has all requisite power, authority,
authorizations, approvals, orders, licenses, certificates and permits
to enter into this Agreement and to carry out the provisions and
conditions hereof. Neither the Company nor its Subsidiary has received
any notice of conflict with asserted rights of others in any respect
(nor is the Company aware of any existing violation or breach of any
authorizations, approvals, orders, licenses, certificates or permits by
the Company or its Subsidiary providing a basis therefor) which would
be expected to materially adversely affect its business, except as
described in the Registration Statement and Prospectus.
(r) Except as set forth in the Registration Statement and
the Prospectus, no labor disturbance by the employees of the Company or
its Subsidiary exists or is imminent which would be expected to
materiallyadversely affect the conduct of the business, operations,
financial condition or income of the Company and its Subsidiary, taken
as a whole.
(s) South Jersey Industries, Inc., a New Jersey corporation
("SJI"), owns all of the common stock of the Company. SJI is a "holding
company" and the Company is a "subsidiary" of a "holding company" as
such terms are defined under the Public Utility Holding Company Act of
1935, as amended (the "1935 Act"). The Company SJI are exempt from all
provisions of the 1935 Act (except Section 9(a)(2) thereof) pursuant to
Section 3(a)(1) and Rule 2 of the 1935 Act and SJI has duly filed all
exemption statements required by Rule 2 of such Act. There are no
actions, proceedings or investigations pending or (to the knowledge of
the Company) threatened to terminate such exemptions.
(t) Except as set forth in the Registration Statement and
the Prospectus, neither the Company nor its Subsidiary (in the case of
matters relating to environmental protection, occupational safety and
health and equal employment opportunity, to its knowledge) is in
violation of any laws, ordinances, governmental rules and regulations
to which it is subject, which violation would be expected to materially
adversely affect the financial condition, business or operations of the
Company and the Subsidiary taken as a whole.
(u) The Company is not an "investment company" or an
"affiliated person" of, or "promoter" or "principal underwriter" for,
an "investment company," as such terms are defined in the Investment
Company Act of 1940, as amended.
(v) No stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that
purpose are pending or, to the knowledge of the Company, threatened by
the Commission.
(w) Immediately after any sale of Notes by the Company
hereunder or under any Terms Agreement, the aggregate amount of debt
securities which shall have been issued and sold by the Company
hereunder will not exceed the aggregate amount of debt securities
registered under the Registration Statement.
(x) Except as set forth in the Registration Statement, to
the knowledge of the Company, the Company is not in violation of any
applicable federal, state, or local laws, statutes, rules, regulations
or ordinances relating to public health, safety or the environment,
including, without limitation, relating to releases, discharges,
emissions or disposals to air, water, land or ground water, to the
withdrawal or use of ground water, to the use, handling or disposal of
polychlorinated biphenyls (PCBs), asbestos or urea formaldehyde, to the
treatment, storage, disposal or management of hazardous substances
(including, without limitation, petroleum, crude oil or any fraction
thereof, or other hydrocarbons), pollutants or contaminants, to
exposure to toxic, hazardous or other controlled, prohibited or
regulated substances or to the use and restoration of land, which
violation would be expected to have a material adverse effect on the
business, financial condition or results of operations of the Company.
Except as set forth in the Registration Statement and the Prospectus,
the Company does not know of any liability or class of liability of the
Company under the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended (42 U.S.C. Section 9601 et seq.),
the Resource Conservation and Recovery Act of 1976, as amended (42
U.S.C. Section 6901 et seq.), the New Jersey Spill Compensation and
Control Act, as amended (N.J.S.A. 58:10-23.11 et seq.), or the
Environmental Cleanup Responsibility Act, as amended (N.J.S.A. 13:1 K-6
et seq.), for the release of a non-deminimus quantity of hazardous or
toxic substances or wastes.
(y) The terms which follow, when used in this Agreement,
shall have the meanings indicated. The term "the Effective Date" shall
mean each date that the Registration Statement and any subsequent post
effective amendment or amendments thereto became or become effective.
"Execution Time" shall mean the date and time that this Agreement is
executed and delivered by the parties hereto. "Prospectus" shall mean
the form of prospectus relating to the Notes contained in the
Registration Statement at the Effective Date. "Registration Statement"
shall mean the registration statement referred to in paragraph (a)
above, including incorporated documents, exhibits and financial
statements, as amended at the Execution Time. "Rule 415" and "Rule 424"
refer to such rules under the Act. Any reference herein to the
Registration Statement or the Prospectus shall be deemed to refer to
and include the documents incorporated by reference therein pursuant to
Item 12 of Form S-3 which were filed under the Exchange Act on or
before the Effective Date of the Registration Statement or the issue
date of the Prospectus, as the case may be; and any reference herein to
the terms "amend," "amendment" or "supplement" with respect to the
Registration Statement or the Prospectus shall be deemed to refer to
and include the filing of any document under the Exchange Act after the
Effective Date of the Registration Statement or the issue date of the
Prospectus, as the case may be, deemed to be incorporated therein by
reference.
2. APPOINTMENT OF AGENTS; SOLICAITION BY THE AGENTS OF OFFERS TO PURCHASE;
SALES OF NOTES TO A PURCHASER.
(a) Subject to the terms and conditions set forth herein, the
Company hereby authorizes each of the Agents to act as its agent to solicit
offers for the purchase of all or part of the Notes from the Company.
On the basis of the representations and warranties, and subject to the
terms and conditions set forth herein, each of the Agents agrees, as agent of
the Company, to use its reasonable best efforts to solicit offers to purchase
the Notes from the Company upon the terms and conditions set forth in the
Prospectus (and any supplement thereto) and in the Procedures. Each Agent shall
make reasonable efforts to assist the Company in obtaining performance by each
purchaser whose offer to purchase Notes has been solicited by such Agent and
accepted by the Company, but such Agent shall not, except as otherwise provided
in this Agreement, have any liability to the Company in the event any such
purchase is not consummated for any reason. Except as provided in Section 2(b),
under no circumstances will any Agent be obligated to purchase any Notes for its
own account. It is understood and agreed, however, that any Agent may purchase
Notes as principal pursuant to Section 2(b).
The Company shall have the sole right to accept offers to purchase
Notes in whole or, if permitted by the terms thereof, in part. The Company
reserves the right, in its sole discretion, to instruct the Agents to suspend at
any time, for any period of time or permanently, the solicitation of offers to
purchase the Notes. Upon receipt of instructions from the Company, the Agents
will forthwith suspend solicitation of offers to purchase Notes from the Company
until such time as the Company has advised them that such solicitation may be
resumed.
The Company agrees to pay each Agent a commission, on the Closing Date
with respect to each sale of Notes by the Company as a result of a solicitation
made by such Agent, in an amount equal to that percentage specified in Schedule
I hereto of the aggregate principal amount of the Notes so sold by the Company.
Such commission shall be payable as specified in the Procedures.
Subject to the provisions of this Section and to the Procedures, offers
for the purchase of Notes may be solicited by an Agent as agent for the Company
at such time and in such amounts as such Agent deems advisable. The Company may
from time to time offer Notes for sale otherwise than through an Agent;
provided, however, that so long as this Agreement shall be in effect the Company
shall not solicit or accept offers to purchase Notes in this registered offering
through any agent other than an Agent.
If the Company shall default in its obligations to deliver Notes to a
purchaser whose offer it has accepted, the Company shall indemnify and hold each
Agent harmless against any loss, claim or damage arising from or as a result of
such default by the Company.
(b) Subject to the terms and conditions stated herein, whenever the
Company and any Agent determine that the Company shall sell Notes directly to
such Agent as Purchaser, each such sale of Notes shall be made in accordance
with the terms of this Agreement, unless otherwise agreed by the Company and
such Agent, and any supplemental agreement relating thereto (which may be an
oral or written agreement) between the Company and the Purchaser. Each such
supplemental agreement (which shall be substantially in the form of Exhibit B)
is herein referred to as a "Terms Agreement." Each Terms Agreement shall
describe (whether orally or in writing) the Notes to be purchased by the
Purchaser pursuant thereto, and shall specify the principal amount of such
Notes, the maturity date of such Notes, the rate at which interest will be paid
on the Notes and the record dates for each payment of interest, the Closing Date
for the purchase of such Notes, the place of delivery of the Notes and payment
therefor, the method of payment and any requirements for the delivery of
opinions of counsel, certificates from the Company or its officers, or letter
from the Company's independent public accountants as described in Section 6(b).
Such Terms Agreement shall also specify the period of time referred to in
Section 4(m). The Purchaser's commitment to purchase Notes pursuant to any Terms
Agreement shall be deemed to have been made on the basis of the representations
and warranties of the Company herein contained and shall be subject to the terms
and conditions herein set forth.
Delivery of the certificates for Notes sold to the Purchaser pursuant
to any Terms Agreement shall be made as agreed to between the Company and the
Purchaser as set forth in the respective Terms Agreement, not later than the
Closing Date set forth in such Terms Agreement, against payment of funds to the
Company in the net amount due to the Company for such Notes by the method and in
the form set forth in the Procedures unless otherwise agreed to between the
Company and the Purchaser in such Terms Agreement.
Unless otherwise agreed to between the Company and the Purchaser in a
Terms Agreement, any Note sold to a Purchaser (i) shall be purchased by such
Purchaser at a price equal to 100% of the principal amount thereof less a
percentage equal to the commission applicable to an agency sale of a Note of
identical maturity and (ii) may be resold by such Purchaser at varying prices
related to prevailing market prices at the time of resale or, if so agreed, at a
fixed public offering price, as determined by such Purchaser. In connection with
any resale of Notes purchased, a Purchaser may use a selling or dealer group and
may reallow any portion of the discount or commission payable pursuant hereto to
dealers or purchasers.
3. OFFERING AND SALE OF NOTES.
Each Agent and the Company agree to perform the respective duties and
obligations specifically provided to be performed by them in the Procedures.
4. AGREEMENTS.
The Company agrees with you that:
(a) Prior to the termination of the offering of the Notes, the
Company will not file any amendment to the Registration Statement or supplement
to the Prospectus except (i) periodic or current reports filed under the
Exchange Act (including, without limitation, pursuant to Sections 13 and 15 of
the Exchange Act) or (ii) a supplement relating to any offering of Notes
providing solely for the specification of or a change in the maturity dates,
interest rates, issuance prices or other similar terms of any Notes, unless the
Company shall have furnished to each of you a copy for your review prior to
filing and given each of you a reasonable opportunity to comment on such
proposed amendment or supplement. Subject to the foregoing sentence, the Company
will cause each supplement to the Prospectus to be filed with the Commission
pursuant to the applicable paragraph of Rule 424(b) within the time period
prescribed and will provide evidence satisfactory to you of such filing. The
Company will promptly advise each of you (i) when the Prospectus, and any
supplement thereto, shall have been filed with the Commission pursuant to Rule
424(b), (ii) when, prior to the termination of the offering of the Notes, any
amendment of the Registration Statement shall have been filed or become
effective, (iii) of any request by the Commission for any amendment of the
Registration Statement or supplement to the Prospectus or for any additional
information, (iv) of the issuance by the Commission of any stop order suspending
the effectiveness of the Registration Statement, or any part thereof, or the
institution of any proceeding for that purpose, or if the Company has knowledge
that any such action is contemplated by the Commission, and (v) of the receipt
by the Company of any notification with respect to the suspension of the
qualification of the Notes for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose. The Company will use its
reasonable best efforts to prevent the issuance of any such stop order and, if
issued, to obtain as soon as reasonably possible the withdrawal thereof.
(b) If, at any time when a prospectus relating to the Notes is
required to be delivered under the Act, any event occurs as a result of which
the Prospectus as then supplemented would include any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, or if it shall be necessary to amend the Registration
Statement or to supplement the Prospectus to comply with the Act or the Exchange
Act or the respective rules thereunder, the Company promptly will (i) notify
each of you to suspend solicitation of offers to purchase Notes (and, if so
notified by the Company, each of you shall forthwith suspend such solicitation
and cease using the Prospectus as then supplemented), (ii) prepare and file with
the Commission, subject to the first sentence of paragraph (a) of this
Section 4, an amendment or supplement which will correct such statement or
omission or effect such compliance and (iii) supply any supplemented Prospectus
to each of you in such quantities as you may reasonably request. If such
amendment or supplement, and any documents, certificates and opinions furnished
to each of you pursuant to paragraph (g) of this Section 4 in connection with
the preparation or filing of such amendment or supplement are reasonably
satisfactory in all respects to you, you will, upon the filing of such amendment
or supplement with the Commission and upon the effectiveness of an amendment to
the Registration Statement, if such an amendment is required, resume your
obligation to solicit offers to purchase Notes hereunder.
(c) The Company, during the period when a prospectus relating to the
Notes is required to be delivered under the Act, will file promptly all
documents required to be filed with the Commission pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act and will furnish to each of you copies of
such documents. In addition, except as otherwise provided in Section 4(n)
hereof, on or prior to the date on which the Company makes any announcement to
the general public concerning earnings or concerning any other event which is
required to be described, or which the Company proposes to describe, in a
document filed pursuant to the Exchange Act, the Company will furnish to each of
you the information contained or to be contained in such announcement and will
also furnish to each of you copies of all other press releases or announcements
to the general public. The Company will immediately notify each of you of any
downgrading in the rating of the Notes or any other debt securities or preferred
stock of the Company, or any proposal to downgrade the rating of the Notes or
any other debt securities or preferred stock of the Company, by any "nationally
recognized statistical rating organization" (as defined for purposes of Rule
436(g) under the Act), as soon as the Company learns of any such downgrading or
proposal to downgrade.
(d) As soon as practicable, the Company will make generally
available to its security holders and to each of you an earnings statement or
statements of the Company and its Subsidiary which will satisfy the provisions
of Section 11(a) of the Act and Rule 158 under the Act.
(e) The Company will furnish to each of you and your counsel,
without charge, copies of the Registration Statement (including all amendments
and exhibits thereto) and, so long as delivery of a prospectus may be required
by the Act, as many copies of the Prospectus and any supplement thereto as you
may reasonably request.
(f) The Company will arrange for the qualification of the Notes for
sale under the laws of such jurisdictions as any of you may designate, will
maintain such qualifications in effect so long as required for the distribution
of the Notes, and will provide access to information to assist in the
determination of the legality of the Notes for purchase by institutional
investors; provided, that the Company shall not be required to qualify as a
foreign corporation or to consent generally to the service of process or
taxation under the laws of any such jurisdiction.
(g) The Company shall furnish to each of you such information,
documents, certificates of officers of the Company and opinions of counsel for
the Company relating to the business, operations and affairs of the Company, the
Registration Statement, the Prospectus, and any amendments thereof or
supplements thereto, the Indenture, the Notes, this Agreement, the Procedures
and the performance by the Company and you of its and your respective
obligations hereunder and thereunder as any of you may from time to time and at
any time prior to the termination of this Agreement reasonably request.
(h) The Company shall, whether or not any sale of the Notes is
consummated, (i) pay all expenses incident to the performance of its obligations
under this Agreement, including the fees and disbursements of its accountants
and counsel, the cost of printing or other production and delivery of the
Registration Statement, the Prospectus, all amendments thereof and supplements
thereto, the Indenture, the New Supplement, this Agreement and all other
documents relating to the offering, the cost of preparing, printing, packaging
and delivering the Notes, the fees and disbursements, including reasonable fees
of counsel, incurred in compliance with Section 4(f), the fees and disbursements
of the Trustee and the fees of any agency that rates the Notes, (ii) reimburse
each of you on a monthly basis for all reasonable out-of-pocket expenses
(including without limitation advertising expenses), if any, incurred by you in
connection with this Agreement, but not during a period when the Company has
instructed the Agents not to solicit purchasers for the Notes and (iii) pay the
reasonable fees and expenses of your counsel incurred in connection with this
Agreement.
(i) Each acceptance by the Company of an offer to purchase Notes
will be deemed to be an affirmation that its representations and warranties
contained in this Agreement are true and correct at the time of such acceptance,
as though made at and as of such time, and a covenant that such representations
and warranties will be true and correct at the time of delivery to the purchaser
of the Notes relating to such acceptance, as though made at and as of such time
(it being understood that for purposes of the foregoing affirmation and covenant
such representations and warranties shall relate to the Registration Statement
and Prospectus as amended or supplemented at each such time). Each such
acceptance by the Company of an offer for the purchase of Notes shall be deemed
to constitute an additional representation, warranty and agreement by the
Company that, as of the settlement date for the sale of such Notes, after giving
effect to the issuance of such Notes and of any other Notes to be issued on or
prior to such settlement date, the aggregate amount of Notes which have been
issued and sold by the Company will not exceed the amount of Notes registered
pursuant to the Registration Statement.
(j) Each time that the Registration Statement or the Prospectus is
amended or supplemented (other than by an amendment or supplement providing
solely for the specification of or a change in the maturity dates, the interest
rates, the issuance prices or other similar terms of any Notes sold pursuant
hereto), the Company will deliver or cause to be delivered promptly to each of
you a certificate of the Company, signed by the Chairman of the Board or the
President and the principal financial or accounting officer of the Company,
dated the date of the effectiveness of such amendment or the date of the filing
of such supplement, in form reasonably satisfactory to you, of the same tenor as
the certificate referred to in Section 5(d) but modified to relate to the last
day of the fiscal quarter for which financial statements of the Company were
last filed with the Commission and to the Registration Statement and the
Prospectus as amended and supplemented to the time of the effectiveness of such
amendment or the filing of such supplement.
(k) Each time that the Registration Statement or the Prospectus is
amended or supplemented (other than by an amendment or supplement (i) providing
solely for the specification of or a change in the maturity dates, the interest
rates, the issuance prices or other similar terms of any Notes sold pursuant
hereto or (ii) consisting of a current or periodic report under the Exchange Act
unless, in the case of clause (ii) above, in the reasonable judgment of any of
you, such financial statements or other information are of such a nature that an
opinion of counsel should be furnished), the Company shall furnish or cause to
be furnished promptly to each of you written opinions of counsel to the Company
reasonably satisfactory to each of you, dated the date of the effectiveness of
such amendment or the date of the filing of such supplement, in form reasonably
satisfactory to each of you, of the same tenor as the opinions referred to in
Sections 5(b) and 5(c) but modified to relate to the Registration Statement and
the Prospectus as amended and supplemented to the time of the effectiveness of
such amendment or the filing of such supplement or, in lieu of such opinion,
counsel last furnishing such an opinion to you may furnish each of you with a
letter to the effect that you may rely on such last opinion to the same extent
as though it were dated the date of such letter authorizing reliance (except
that statements in such last opinion will be deemed to relate to the
Registration Statement and the Prospectus as amended and supplemented to the
time of the effectiveness of such amendment or the filing of such supplement).
(l) Each time that the Registration Statement or the Prospectus is
amended or supplemented to set forth amended or supplemental financial
information (except for current reports on Form 8-K which only announce
quarterly earnings), the Company shall cause its independent public accountants
promptly to furnish to each of you a letter, dated the date of the effectiveness
of such amendment or the date of the filing of such supplement, in form
satisfactory to each of you, of the same tenor as the letter referred to in
Section 5(e) with such changes as may be necessary to reflect the amended and
supplemental financial information included or incorporated by reference in the
Registration Statement and the Prospectus, as amended or supplemented to the
date of such letter; provided, however, that, if the Registration Statement or
the Prospectus is amended or supplemented solely to include or incorporate by
reference financial information as of and for a fiscal quarter, the Company's
independent public accountants may limit the scope of such letter, which shall
be reasonably satisfactory in form to each of you, to the unaudited financial
statements, the related "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and any other information of an accounting,
financial or statistical nature included in such amendment or supplement,
unless, in the reasonable judgment of any of you, such letter should cover other
information or changes in specified financial statement line items.
(m) If required pursuant to any Terms Agreement, during the period,
if any, specified (whether orally or in writing) in such Terms Agreement, the
Company shall not, without the prior consent of the Purchaser thereunder, offer,
sell, contract to sell or announce the proposed issuance of any debt securities,
including Notes (other than the Notes being sold under such Terms Agreement),
with terms substantially similar to the Notes being purchased pursuant to such
Terms Agreement, other than borrowings under its revolving credit agreement and
lines of credit and issuances of its commercial paper.
(n) The Company shall not be required to comply with the second
sentence of Section 4(c) and the provisions of Sections 4(g), 4(j), 4(k) and
4(l) hereof during any period (x) from any time when (i) the Agents shall have
suspended solicitation of purchasers of the Notes, in their capacity as agents
pursuant to Section 2(a) hereof, and (ii) the Agents shall not then hold any
Notes as principal purchased pursuant to a Terms Agreement, (y) to the time the
Company shall determine that solicitation of purchasers of the Notes should be
resumed or shall subsequently enter into a new Terms Agreement with any or all
of the Agents, at which time all such action specified in the aforementioned
provisions will be taken, as applicable.
5. CONDITIONS TO THE OBLIGATIONS OF THE AGENTS.
The obligation of each Agent to solicit offers to purchase the Notes
shall be subject to the accuracy of the representations and warranties on the
part of the Company contained herein as of the Execution Time, on the Effective
Date, when any supplement to the Prospectus is filed with the Commission, as of
each Closing Date and on the date of each solicitation, to the accuracy of the
statements of the Company made in any certificates pursuant to the provisions
hereof, to the performance by the Company of its obligations hereunder and to
the following additional conditions:
(a) If filing of the Prospectus, or any supplement thereto, is required
pursuant to Rule 424(b), the Prospectus, and any such supplement, shall have
been filed in the manner and within the time period required by Rule 424(b); and
no stop order suspending the effectiveness of the Registration Statement, or any
part thereof, shall have been issued and no proceedings for that purpose shall
have been instituted or threatened, or, to the knowledge of the Company or any
Agent, be contemplated by the Commission.
(b) The Company shall have furnished to each Agent the opinion of Cozen
O'Connor, Philadelphia, Pennsylvania, counsel for the Company, dated the
Execution Time, substantially to the effect, as appropriate, that (except that,
after the Substitution Date, such opinion need not be given with respect to the
New Supplement, the Mortgage, the Mortgage Trustee or the Pledged Bond):
(i)(a) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of New Jersey, with full corporate power and corporate authority to own
its properties and conduct its business as described in the Prospectus.
To such counsel's knowledge, the nature of the business conducted by
the Company and the location and character of the property owned or
leased by it do not require its qualification as a foreign corporation
in any jurisdiction. The Company holds all franchises, certificates of
public convenience, licenses and permits necessary to carry on the
utility business in which it is engaged;
(i)(b) The Subsidiary has been duly organized and is validly
existing as a statutory trust in good standing under the laws of the
jurisdiction in which it is organized, with full power and authority to
own its properties and conduct its business as described in the
Prospectus;
(ii) All the outstanding shares of common stock of the
Subsidiary have been duly and validly authorized and issued and are
fully paid and nonassessable, and, except as otherwise set forth in the
Prospectus, all outstanding shares of common stock of the Subsidiary
are owned directly by the Company free and clear of any perfected
security interest and, to the knowledge of such counsel, any other
security interests, claims, liens or encumbrances;
(iii) The Company's authorized equity capitalization is as set
forth in the Registration Statement; and the Notes and the Pledged Bond
conform to the descriptions thereof contained in the Prospectus
(subject to the insertion in the Notes of the maturity dates, the
interest rates and other similar terms thereof which will be described
in supplements to the Prospectus as contemplated by the last sentence
of Section l(a) of this Agreement);
(iv) Each of the Indenture, the New Supplement, the Notes and
the Pledged Bond has been duly authorized by all necessary corporate
action on the part of the Company (no shareholder approval being
required with respect to such authorization) and has been duly executed
and delivered by authorized officers of the Company, and the Indenture,
the Mortgage (including the New Supplement), the Notes and the Pledged
Bond are each valid and binding instruments enforceable against the
Company in accordance with their respective terms except (A) that the
enforceability thereof may be limited by bankruptcy, insolvency,
moratorium, reorganization or other similar laws relating to or
affecting the enforcement of creditors' or mortgagees' rights
generally, (B) to the extent that the availability of the remedy of
specific performance or injunctive relief is subject to the discretion
of the court before which any proceeding therefor may be brought, (C)
that rights of acceleration arising from defaults other than payment
defaults and the availability of equitable remedies may be limited by
equitable principles of general applicability, (D) general principles
of equity (whether asserted at a proceeding at law or in equity), (E)
the discretion of the court before which any proceeding therefor may be
brought, and (F) that the laws of the State of New Jersey may limit
certain remedies provided therein, but none of such principles or
limitations will, in the opinion of such counsel, materially interfere
with the practical realization of the benefits of the security intended
to be provided by the Mortgage, and, in the opinion of such counsel,
the Mortgage contains adequate provisions for enforcing payment of the
Pledged Bond and realizing upon such security; and the Notes when
executed and authenticated in accordance with the provisions of the
Indenture and the Procedures and delivered by the Trustee and paid for
by the purchasers thereof, will constitute legal, valid and binding
obligations of the Company entitled to the benefits and the security of
the Indenture except, in each case, as enforceability may be limited by
bankruptcy, reorganization, moratorium, insolvency or other laws now or
hereafter in effect relating to or affecting mortgagees' or other
creditors' rights or general principles of equity (whether asserted in
a proceeding at law or in equity);
(v) The Pledged Bond is entitled to the benefits and
security intended to be granted and afforded by the Mortgage, and is so
secured equally and ratably with all other bonds outstanding under the
Mortgage (except as to any sinking or other fund established for the
bonds of any particular series);
(vi) SJI which owns all of the common stock of the Company,
is a "holding company" and the Company is a "subsidiary" of a "holding
company" as such terms are defined under the 1935 Act, but SJI, having
filed with the Commission an annual exemption statement for the current
year pursuant to Rule 2 promulgated under the 1935 Act, and the Company
are exempt from all provisions of the 1935 Act except Section 9(a)(2)
thereof, relating to the acquisition of securities of a "public utility
company;"
(vii) To the knowledge of such counsel, (a) there is no
pending or threatened action, suit or proceeding before any court or
governmental agency, authority or body involving the Company or its
Subsidiary not disclosed in the Prospectus, of a character required to
be disclosed in the Registration Statement which is not adequately
disclosed in the Prospectus; (b) there is no franchise, contract or
other document of a character required to be described in the
Registration Statement or Prospectus, or to be filed as an exhibit,
which is not described or filed as required; and (c) the statements
included or incorporated in the Prospectus describing any legal
proceedings or material contracts or agreements relating to the Company
fairly summarize such matters;
(viii) The Registration Statement and the Prospectus comply, and
any document incorporated by reference into the Prospectus at the time
it was filed complied, in all material respects as to form with the
requirements of the Act, the Exchange Act, the rules and regulations
under the Exchange Act and the rules and regulations under the Act
(except that no opinion need be expressed as to (a) financial
statements, schedules and other financial and statistical data
contained in the Registration Statement or the Prospectus or
incorporated by reference therein; (b) the Trustee's Statement of
Eligibility on Form T-1; or (c) information relating to Ambac Assurance
Company, if any, included or incorporated by reference in the
Registration Statement or Prospectus;
(ix) The Registration Statement has become effective under
the Act; any required filing of the Prospectus, and any supplements
thereto, pursuant to Rule 424(b) has been made in the manner and, to
such counsel's knowledge, within the time period required by Rule
424(b); to the knowledge of such counsel, (a) no stop order suspending
the effectiveness of the Registration Statement has been issued, and
(b) no proceedings for that purpose have been instituted or threatened;
(x) This Agreement has been duly authorized, executed and
delivered by the Company, and the Company has full corporate power and
corporate authority to enter into the Agreement;
(xi) No consent, approval, authorization or order of any
court or governmental agency or body (other than authorization from the
New Jersey Board of Public Utilities, referred to below) is required
for the consummation of the transactions contemplated herein except
such as have been obtained under the Act and such as may be required
under the blue sky laws of any jurisdiction in connection with the sale
of the Notes as contemplated by this Agreement and such other approvals
(specified in such opinion) as have been obtained. The BPU has entered
an order, dated July 24, 2002, authorizing the issuance and sale of the
Notes and the issuance of the Pledged Bond by the Company on terms and
conditions not inconsistent with the terms and conditions set forth in
or contemplated by this Agreement. The Notes, when issued and sold by
the Company, and the Pledged Bond, when issued by the Company, will
comply in all material respects with the terms, conditions and
limitations set forth in such order. To such counsel's knowledge, such
order is in full force and effect and has not been amended,
supplemented or otherwise modified without the consent of the Agents
and the period has expired during which any proceeding to review,
suspend, limit, modify, restrict or revoke such order may be instituted
as of right by any Person other than the BPU;
(xii) Neither the execution and delivery of the Indenture or
the New Supplement, the issue and sale of the Notes or the issuance of
the Pledged Bond, nor the consummation of any other of the transactions
herein contemplated nor the fulfillment of the terms hereof does or
will, as the case may be, conflict with, result in a breach or
violation of, or constitute a default under, any law or the charter or
bylaws of the Company or the terms of any indenture or other agreement
or instrument known to such counsel and to which the Company or its
Subsidiary is a party or bound, or any judgment, order, decree or
regulation known to such counsel to be applicable to the Company or its
Subsidiary of any court, regulatory body, administrative agency, or
governmental body having jurisdiction over the Company or its
Subsidiary; and except for the issuance of the Notes and the Pledged
Bonds which are secured by the lien of the Mortgage, the execution and
delivery of this Agreement by the Company, the consummation by the
Company of the transactions therein contemplated and the compliance by
the Company with the terms of this Agreement do not and will not result
in the creation or imposition of any other lien, charge or encumbrance
upon any of the assets of the Company or its Subsidiary pursuant to the
terms or provisions of any of the aforesaid documents, instruments or
matters;
(xiii) To the knowledge of such counsel, neither the Company nor
its Subsidiary is in violation of its organizational documents or in
default (nor has an event occurred which with notice or lapse of time
or both would constitute a default or acceleration) in the performance
of any obligation, agreement or condition contained in any indenture,
mortgage, deed of trust, voting trust agreement, loan agreement, bond,
debenture, note agreement or other evidence of indebtedness, lease,
contract or other agreement or instrument known to such counsel to
which the Company or its Subsidiary is a party or by which it or its
properties is bound or affected, except for defaults which are not
reasonably expected to have a materially adverse effect on the
business, properties, condition (financial or otherwise) or results of
operations of the Company and its Subsidiary considered as one
enterprise, and neither the Company nor its Subsidiary is in violation
of any judgment, ruling, decree, order, franchise, license or permit
known to such counsel or, to the knowledge of such counsel, any
statute, rule or regulation of any court or other governmental agency
or body applicable to the business or properties of the Company or its
Subsidiary, in any such case which violation or default would be
reasonably expected to have a materially adverse effect on the
business, properties, condition (financial or otherwise) or results of
operations of the Company or its Subsidiary considered as one
enterprise;
(xiv) To the knowledge of such counsel, no holders of
securities of the Company have the right to require registration of any
of the Company's securities in connection with the filing of the
Registration Statement;
(xv) All descriptions in the Prospectus of statutes,
regulations or legal or governmental proceedings are accurate and
fairly present the information required to be shown;
(xvi) The Company has good and marketable title in fee simple
to all the real property and good and merchantable title to all the
personal property specifically or generally described or referred to in
the Mortgage as subject to the lien thereof, except properties
expressly excepted therefrom and properties properly released from the
lien thereof pursuant to the terms thereof; the description in the
Mortgage of such properties is legally sufficient to constitute a lien
thereon; and to such counsel's knowledge, such properties constitute
substantially all the permanent physical properties of the Company and
are held by the Company free and clear of all liens and encumbrances
except the lien of the Mortgage and "excepted encumbrances" (as defined
in Subdivision A of Section 3.04 of the Mortgage);
(xvii) The Mortgage and the UCC-1 financing statement constitute
a valid first mortgage lien or first security interest of record upon
all real and personal property of the Company (including easements,
rights-of-way, and other rights relating to real estate and franchises)
specifically or generally described or referred to in the Mortgage as
subject to the lien thereof and owned by the Company at the time of the
actual issue of the Pledged Bond, subject to no liens or encumbrances
other than "excepted encumbrances" (as defined in Subdivision A of
Section 3.04 of the Mortgage);
(xviii) The Mortgage and the UCC-1 financing statement have been
duly filed for recording and filing in such manner and in such places
as are required by law in order to establish, preserve, and protect the
first lien of the Mortgage on all real and personal property of the
Company specifically or generally described or referred to in such
instruments as subject to the lien of the Mortgage (except that (a)
additional filings and recordings of the Mortgage will be required if
property is acquired by the Company subsequent to the date hereof which
is located in a county where the Mortgage has not previously been filed
for recording and (b) the Mortgage will not be a first lien on property
hereafter acquired by the Company which at the time of acquisition is
subject to prior liens or other encumbrances), and, to the knowledge of
such counsel, all taxes, fees and other charges payable in connection
therewith have been paid in full.
(xix) In addition, such counsel shall state that it has
participated in conferences with officers and other representatives of
the Company, representatives of the independent accountants of the
Company, representatives of the Agents and counsel for the Agents at
which the contents of the Registration Statement and the Prospectus and
related matters were reviewed and discussed and, although such counsel
has not independently verified and is not passing upon, and does not
assume any responsibility for, the accuracy, completeness or fairness
of the statements contained in the Registration Statement or the
Prospectus or any documents incorporated, or deemed to be incorporated,
by reference therein on the basis of the foregoing, no facts have come
to such counsel's attention that have led such counsel to believe that
either the Registration Statement or the Prospectus at the Execution
Time contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances
under which they were made, not misleading (it being understood that
such counsel need express no opinion or belief with respect to (a) the
financial statements, schedules and other financial information
included therein or incorporated, or deemed to be incorporated, by
reference in the Registration Statement or the Prospectus or excluded
therefrom; (b) exhibits to the Registration Statement, including the
Form T-1; or (c) information relating to Ambac Assurance Company, if
any, included or incorporated by reference in the Registration
Statement or Prospectus).
In rendering such opinion, such counsel may rely (i) as to matters of
New Jersey law, upon local New Jersey counsel and (ii) as to matters of fact, to
the extent deemed proper, on certificates of responsible officers of the Company
and public officials. References to the Prospectus in this paragraph (b) include
any supplements thereto at the date such opinion is rendered.
(c) Each Agent shall have received from Chapman and Cutler LLP,
Chicago, Illinois, counsel for the Agents, such opinion or opinions, dated the
Execution Time, with respect to the issuance and sale of the Notes, the
Indenture, the Registration Statement, the Prospectus (together with any
supplement thereto) and other related matters as the Agents may reasonably
require, and the Company shall have furnished to such counsel such documents as
they reasonably request for the purpose of enabling them to pass upon such
matters.
(d) The Company shall have furnished to each Agent a certificate of
the Company, signed by the Chairman of the Board or the President and the
principal financial or accounting officer of the Company, dated the Execution
Time, to the effect that the signers of such certificate have carefully examined
the Registration Statement, the Prospectus, any supplement to the Prospectus and
this Agreement and that:
(i) the representations and warranties of the Company in this
Agreement are true and correct in all material respects upon and as of
such date the same effect as if made on such date and the Company has
complied with all the agreements and satisfied all the conditions on
its part to be performed or satisfied as a condition to the obligation
of the Agents to solicit offers to purchase the Notes (except that,
after the Substitution Date, such certificate need not confirm any
representation and warranties with respect to the New Supplement, the
Mortgage or the Pledged Bonds);
(ii) no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that
purpose have been instituted or, to the Company's knowledge,
threatened; and
(iii) since the date of the most recent financial statements
included in the Prospectus (exclusive of any supplement thereto dated
after the Execution Time), there has been no material adverse change in
the condition (financial or other), earnings, business or properties of
the Company and its Subsidiary, whether or not arising from
transactions in the ordinary course of business, except as set forth in
or contemplated in the Prospectus (exclusive of any supplement thereto
dated after the Execution Time).
(e) At the Execution Time, Deloitte & Touche LLP shall have furnished
to each Agent a letter or letters (which may refer to letters previously
delivered to the Agents), dated as of the Execution Time, in form and substance
satisfactory to the Agents, confirming that they are independent accountants
within the meaning of the Act and the Exchange Act and the respective applicable
published rules and regulations thereunder and stating in effect that:
(i) in their opinion the audited financial statements and
financial statement schedules, if any, included or incorporated in the
Registration Statement and the Prospectus and reported on by them
comply in form in all material respects with the applicable accounting
requirements of the Act and the Exchange Act and the related published
rules and regulations;
(ii) on the basis of specified procedures (but not an
examination in accordance with generally accepted auditing standards)
which would not necessarily reveal matters of significance with respect
to the comments set forth in such letter, a reading of the minutes of
the meetings of the stockholders, directors and executive committee of
the Company and the Subsidiary; a reading of the latest available
interim unaudited consolidated financial statements of the Company and
its Subsidiary; and inquiries of certain officials of the Company who
have responsibility for financial and accounting matters of the Company
and its Subsidiary as to transactions and events subsequent to the date
of the most recent audited financial statements included or
incorporated in the Prospectus, nothing came to their attention which
caused them to believe that:
(1) any unaudited consolidated financial statements
and pro forma financial statements, if any, included or
incorporated in the Registration Statement and the Prospectus
do not comply in form in all material respects with applicable
accounting requirements and with the published rules and
regulations of the Commission with respect to financial
statements included or incorporated in quarterly reports on
Form 10-Q under the Exchange Act; and said unaudited financial
statements are not in conformity with generally accepted
accounting principles applied on a basis substantially
consistent with that of the audited financial statements
included or incorporated in the Registration Statement and the
Prospectus;
(2) with respect to the period subsequent to the
date of the most recent consolidated financial statements
(other than any capsule information), audited or unaudited,
included or incorporated in the Registration Statement and the
Prospectus, there were any changes, at a specified date not
more than five business days prior to the date of the letter,
in the long-term or short-term debt, common equity or
preferred stock (not subject to purchase or sinking funds) of
the Company and its Subsidiary, or decreases in the
consolidated net current assets or common equity of the
Company and its Subsidiary, as compared with the amounts shown
on the most recent consolidated balance sheet included or
incorporated in the Registration Statement and the Prospectus,
or for the period from the date of the most recent financial
statements included or incorporated in the Registration
Statement and the Prospectus to such specified date there were
any decreases, as compared with the corresponding period in
the preceding year in operating revenues or operating income
or net income applicable to common stock of the Company and
its Subsidiary, except in all instances for (i) changes
resulting from the issuance of the Notes and (ii) changes or
decreases set forth in such letter, in which case the letter
shall be accompanied by an explanation by the Company as to
the significance thereof unless said explanation is not deemed
necessary by the Agents; or
(3) the amounts included under the caption "Selected
Financial Data" of the Company's Annual Report on Form 10-K,
incorporated in the Registration Statement and the Prospectus,
were not determined on a basis substantially consistent with
that of the corresponding amounts in the audited financial
statements included or incorporated in the Registration
Statement and the Prospectus;
(iii) they have performed certain other specified procedures
as a result of which they determined that certain information of an
accounting, financial or statistical nature (which is limited to
accounting, financial or statistical information derived from the
general accounting records of the Company and its Subsidiary) set forth
in the Registration Statement and the Prospectus, including certain of
the information included or incorporated under the caption "Selected
Financial Data" and in Items 1, 6, 7, 10 and 11 of the Company's Annual
Report on Form 10-K, incorporated in the Registration Statement and the
Prospectus, certain of the information included in the "Management's
Discussion and Analysis of Financial Condition and Results of
Operations" included or incorporated in the Company's Quarterly Reports
on Form 10-Q, incorporated in the Registration Statement and the
Prospectus, and the information included in the Prospectus under the
captions "Ratio of Earnings to Fixed Charges" agrees with the
accounting records of the Company and its Subsidiary, excluding any
questions of legal interpretation; and
(iv) if unaudited pro forma financial statements are
included or incorporated in the Registration Statement and the
Prospectus, on the basis of a reading of the unaudited pro forma
financial statements, carrying out certain specified procedures,
inquiries of certain officials of the Company and its Subsidiary
(including any entity which is acquired, by merger or otherwise,
after the Execution Time, and including any entity which is the subject
of any contract to acquire, by merger or otherwise, on the date of such
financial statements) who have responsibility for financial and
accounting matters, and proving the arithmetic accuracy of the
application of the pro forma adjustments to the historical amounts in
the pro forma financial statements, nothing came to their attention
which caused them to believe that the pro forma financial statements
do not comply in form in all material respects with the applicable
accounting requirements of Rule 11-02 of Regulation S-X or that the pro
forma adjustments have not been properly applied to the historical
amounts in the compilation of such statements.
References to the Prospectus in this paragraph (e) include any
supplement thereto at the date of the letter.
(f) Prior to the Execution Time, the Company shall have furnished to
each Agent such further information, documents, certificates, letters from
accountants and opinions of counsel as the Agents may reasonably request.
If any of the conditions specified in this Section 5 shall not have
been fulfilled in all material respects when and as provided in this Agreement,
or if any of the opinions and certificates mentioned above or elsewhere in this
Agreement shall not be in all material respects reasonably satisfactory in form
and substance to such Agents and its counsel, this Agreement and all obligations
of any Agent hereunder may be canceled at any time by the Agents. Notice of such
cancellation shall be given to the Company in writing or by telephone or
telegraph confirmed in writing.
The documents required to be delivered by this Section 5 shall be
delivered at the office of Chapman and Cutler LLP, counsel for the Agents, at
111 West Monroe Street, Chicago, Illinois, at the Execution Time.
6. CONDITIONS TO THE OBLIGATIONS OF THE PURCHASER.
The obligations of the Purchaser to purchase any Notes will be subject
to the accuracy of the representations and warranties on the part of the Company
herein as of the date of any related Terms Agreement and as of the Closing Date
for such Notes, to the performance and observance by the Company of all
covenants and agreements herein contained on its part to be performed and
observed and to the following additional conditions precedent:
(a) No stop order suspending the effectiveness of the Registration
Statement or any part thereof shall have been issued and no proceedings for that
purpose shall have been instituted or, to the knowledge of the Company,
threatened by the Commission.
(b) If specified by any related Terms Agreement and except to the
extent modified by such Terms Agreement, the Purchaser shall have received,
appropriately updated, (i) a certificate of the Company, dated as of the Closing
Date, to the effect set forth in Section 5(d) (except that references to the
Prospectus shall be to the Prospectus as supplemented at the time of execution
of the Terms Agreement), (ii) the opinion of Cozen O'Connor, counsel for the
Company, dated as of the Closing Date, to the effect set forth in Section 5(b),
(iii) the opinion of Chapman and Cutler LLP, counsel for the Purchaser, dated as
of the Closing Date, to the effect set forth in Section 5(c), and (iv) a letter
of Deloitte & Touche LLP, independent accountants for the Company, dated as of
the Closing Date, to the effect set forth in Section 5(e).
(c) Prior to the Closing Date, the Company shall have furnished to
the Purchaser such further information, certificates and documents as the
Purchaser may reasonably request.
(d) There shall not have occurred: (i) any change in the capital
stock or long-term debt of the Company or its Subsidiary or any change, or any
development involving a prospective change, in or affecting the general affairs,
management, stockholders' equity, business, properties, condition (financial or
other), results of operations or prospects of the Company and its Subsidiary,
which in the judgment of the Agents, materially impairs the investment quality
of the Notes; (ii) any decrease in the rating of any of the Company's debt
securities or preferred securities by any "nationally recognized statistical
rating organization" (as defined for purposes of Rule 436(g) under the Act) or
any notice given of any intended or potential decrease in any such rating or of
a possible change in any such rating that does not indicate the direction of the
possible change; (iii) a suspension in trading in any of the Company's
securities by the Commission or a suspension in trading securities generally on
the New York Stock Exchange or the establishment of limited trading or minimum
prices on such Exchange; (iv) a declaration of a banking moratorium by either
Federal or New York State authorities or a material disruption in commercial
banking or securities settlement or clearance services in the United States; (v)
any outbreak or escalation of major hostilities in which the United States is
involved, any declaration of a national emergency or war by the United States,
an act of terrorism committed against the United States or any of its nationals
or properties; or (vi) the occurrence of such a calamity or crisis or such a
material adverse change in general domestic or international economic, political
or financial conditions, including without limitation as a result of terrorist
activities (and including a material adverse effect of international conditions
on the financial markets in the United States), that in the judgment of the
Agents, makes it impracticable or inadvisable to proceed with the solicitation
of offers to purchase Notes or the purchase of Notes from the Company as
principals pursuant to a Purchase Agreement, as the case may be.
If any of the conditions specified in this Section 6 shall not have
been fulfilled in all material respects when and as provided in this Agreement
and any Terms Agreement, or if any of the opinions and certificates mentioned
above or such Terms Agreement shall not be in all material respects reasonably
satisfactory in form and substance to the Purchaser and its counsel, such Term
Agreement and all obligations of the Purchaser thereunder and with respect to
the Notes subject thereto may be canceled at, or at any time prior to, the
respective Closing Date by the Purchaser. Notice of such cancellation shall be
given to the Company in writing or by telephone or telegraph confirmed in
writing.
7. RIGHT OF PERSON WHO AGREED TO PURCHASE TO REFUSE TO PURCHASE.
(a) The Company agrees that any person who has agreed to purchase
and pay for any Note, including a Purchaser and any person who purchases
pursuant to a solicitation by any of the Agents, shall have the right to refuse
to purchase such Note if, at the Closing Date therefor, any condition set forth
in Section 5 or 6, as applicable, shall not be satisfied.
(b) The Company agrees that any person who has agreed to purchase
and pay for any Note pursuant to a solicitation by any of the Agents shall have
the right to refuse to purchase such Note if, subsequent to the agreement to
purchase such Note, any change, condition or development specified in any of the
Sections 9(b)(i) through (v) shall have occurred (without regard to any judgment
of a Purchaser required therein) the effect of which is, in the judgment of the
Agent which presented the offer to purchase such Note, so material and adverse
as to make it impractical or inadvisable to proceed with the delivery of such
Note (it being understood that under no circumstance shall any such Agent have
any duty or obligation to exercise the judgment permitted to be exercised under
this Section 7(b) and Section 9(b)).
8. IMDEMNIFICATION AND CONTRIBUTION.
(a) The Company agrees to indemnify and hold harmless each of you, the
directors, officers, employees and agents of each of you and each person who
controls each of you within the meaning of either Section 15 of the Act or
Section 20 of the Exchange Act against any and all losses, claims, damages or
liabilities, joint or several, to which you, they or any of you or them may
become subject under the Act, the Exchange Act or other Federal or state
statutory law or regulation, at common law or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement for the registration of the Notes
as originally filed or in any amendment thereof, or in the Prospectus or any
preliminary Prospectus, or in any amendment thereof or supplement thereto, or
arise out of or are based upon the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading, and agrees to reimburse each such indemnified
party, as incurred, for any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that (i) the Company will not be liable
in any such case to the extent that any such loss, claim, damage or liability
arises out of or is based upon any such untrue statement or alleged untrue
statement or omission or alleged omission made therein in reliance upon and in
conformity with written information furnished to the Company by any of you
specifically for use in connection with the preparation thereof, and (ii) such
indemnity with respect to the Prospectus or any preliminary Prospectus shall not
inure to the benefit of any of you (or any person controlling any of you) from
whom the person asserting any such loss, claim, damage or liability purchased
the Notes which are the subject thereof if such person did not receive a copy of
the Prospectus (or the Prospectus as amended or supplemented) excluding
documents incorporated therein by reference at or prior to the confirmation of
the sale of such Notes to such person in any case where such delivery is
required by the Act and the untrue statement or omission of a material fact
contained in the Prospectus or any preliminary Prospectus was corrected in the
Prospectus (or the Prospectus as amended or supplemented). This indemnity
agreement will be in addition to any liability which the Company may otherwise
have.
(b) Each of you, severally and not jointly, agrees to indemnify and
hold harmless the Company, each of its directors, each of its officers who signs
the Registration Statement and each person who controls the Company within the
meaning of either Section 15 of the Act or Section 20 of the Exchange Act, to
the same extent as the foregoing indemnity from the Company to you, but only
with reference to written information relating to such of you furnished to the
Company by such of you specifically for use in the preparation of the documents
referred to in the foregoing indemnity. This indemnity agreement will be in
addition to any liability which you may otherwise have. The Company acknowledges
that the statements concerning the Agents set forth in the fifth and sixth
paragraphs under the heading "Plan of Distribution" in the Prospectus (or any
supplement thereto) constitute the only information furnished in writing by any
of you for inclusion in the documents referred to in the foregoing indemnity,
and you confirm that such statements are correct.
(c) Promptly after receipt by an indemnified party under this Section 8
of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 8, notify the indemnifying party in writing of the commencement thereof;
but the omission so to notify the indemnifying party will not relieve it from
any liability which it may have to any indemnified party otherwise than under
this Section 8. In case any such action is brought against any indemnified
party, and it notifies the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein, and to the extent
that it may elect by written notice delivered to the indemnified party promptly
after receiving the aforesaid notice from such indemnified party, to assume the
defense thereof, with counsel reasonably satisfactory to such indemnified party;
provided, however, that if the defendants in any such action include both the
indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be legal defenses available to it
and/or other indemnified parties which are different from or additional to those
available to the indemnifying party, the indemnified party or parties shall have
the right to select one separate counsel (in addition to local counsel) to
assert such legal defenses and to otherwise participate in the defense of such
action on behalf of such indemnified party or parties. Upon receipt of notice
from the indemnifying party to such indemnified party of its election so to
assume the defense of such action and approval by the indemnified party of
counsel, the indemnifying party will not be liable to such indemnified party
under this Section 8 for any legal or other expenses subsequently incurred by
such indemnified party in connection with the defense thereof unless (i) the
indemnified party shall have employed separate counsel in connection with the
assertion of legal defenses in accordance with the proviso to the next preceding
sentence (it being understood, however, that the indemnifying party shall not be
liable for the expenses of more than one separate counsel, approved by you in
the case of paragraph (a) of this Section 8, representing the indemnified
parties under such paragraph (a) who are parties to such action), (ii) the
indemnifying party shall not have employed counsel reasonably satisfactory to
the indemnified party to represent the indemnified party within a reasonable
time after notice of commencement of the action or (iii) the indemnifying party
has authorized the employment of counsel for the indemnified party at the
expense of the indemnifying party.
(d) If the indemnification provided for in this Section 8 is
unavailable to an indemnified party under paragraphs (a) and (b) of this Section
8 or insufficient to hold an indemnified party harmless in respect of any
losses, damages, expenses, liabilities or claims referred to therein, then each
applicable indemnifying party shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, damages, expenses,
liabilities or claims (i) in such proportion as is appropriate to reflect the
relative benefits received by the Company on the one hand and the Agents on the
other hand from the offering of the Notes or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company on the one hand and of the
Agents on the other in connection with the statements or omissions which
resulted in such losses, damages, expenses, liabilities or claims, as well as
any other relevant equitable considerations. The relative benefits received by
the Company on the one hand and the Agents on the other shall be deemed to be in
the same respective proportions as the total proceeds from the offering (net of
commissions but before deducting expenses) received by the Company bears to the
total commissions received by the Agents with respect to such offering. The
relative fault of the Company on the one hand and of the Agents on the other
shall be determined by reference to whether the untrue statement or alleged
untrue statement of a material fact or omission or alleged omission to state a
material fact relates to information supplied by the Company or by the Agents
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The amount paid or
payable by a party as a result of the losses, damages, expenses, liabilities and
claims referred to in this subsection shall be deemed to include any legal or
other fees or expenses reasonably incurred by such party in connection with
investigating, preparing to defend or defending any proceeding.
(e) The Company and the Agents agree that it would not be just and
equitable if contribution pursuant to paragraph (d) above were determined by pro
rata allocation (even if the Agents were treated as one entity for such purpose)
or by any other method of allocation that does not take account of the equitable
considerations referred to in paragraph (d) above. Notwithstanding the
provisions of this Section 8, no Agent shall be required to contribute any
amount in excess of the amount by which the total price at which the Notes sold
through the Agents and distributed to the public were offered to the public
exceeds the amount of any damage which the Agents have otherwise been required
to pay by reason of such untrue statement or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The respective Agents' obligations pursuant to this Section 8
are several and not joint.
For purposes of this Section 8, each person who controls any of you within the
meaning of Section 15 of the Act shall have the same rights to contribution as
you and each person who controls the Company within the meaning of either
Section 15 of the Act or Section 20 of the Exchange Act, each officer of the
Company who shall have signed the Registration Statement and each director of
the Company shall have the same rights to contribution as the Company, subject
in each case to the penultimate sentence of paragraph (e) above. Any party
entitled to contribution will, promptly after receipt of notice of commencement
of any action, suit or proceeding against such party in respect of which a claim
for contribution may be made against another party or parties under paragraph
(d) above, notify such party or parties from whom contribution may be sought,
but the omission to so notify such party or parties shall not relieve the party
or parties from whom contribution may be sought from any other obligation it or
they may have hereunder or otherwise than under paragraph (d) above.
9. TERMINATION.
This Agreement will continue in effect until terminated as provided in
this Section 9. In the event of such termination, no party shall have any
liability to the other party hereto, except as provided in the fourth paragraph
of Section 2(a), Section 4(h), Section 8 and Section 10.
(a) This Agreement may be terminated by either the Company as to any of
you or by any of you insofar as this Agreement relates to such of you, by giving
written notice of such termination to such of you or the Company, as the case
may be. This Agreement shall so terminate at the close of business on the first
business day following the receipt of such notice by the party to whom such
notice is given.
(b) Each Terms Agreement (whether oral or written) shall be subject to
termination in the absolute discretion of the Purchaser, by notice given to the
Company prior to delivery of any payment for any Note to be purchased
thereunder, if prior to such time (i) there shall have occurred, subsequent to
the agreement to purchase such Note, any change in the capital stock or
long-term debt of the Company or its Subsidiary or any change, or any
development involving a prospective change, in or affecting the general affairs,
management, stockholders' equity, business, properties, condition (financial or
other), results of operations or prospects of the Company and its Subsidiary,
which in the judgment of the Purchaser, materially impairs the investment
quality of the Notes; (ii) there shall have been, subsequent to the agreement to
purchase such Note, any decrease in the rating of any of the Company's debt
securities or preferred securities by any "nationally recognized statistical
rating organization" (as defined for purposes of Rule 436(g) under the Act) or
any notice given of any intended or potential decrease in any such rating or of
a possible change in any such rating that does not indicate the direction of the
possible change; (iii) trading in any of the Company's securities shall have
been suspended by the Commission or trading in securities generally on the New
York Stock Exchange shall have been suspended or limited or minimum prices shall
have been established on such Exchange; (iv) a banking moratorium shall have
been declared by either Federal or New York State authorities or a material
disruption shall have occurred in commercial banking or securities settlement or
clearance services in the United States; (v) there shall have occurred any
outbreak or escalation of major hostilities in which the United States is
involved, any declaration of a national emergency or war by the United States,
an act of terrorism has been committed against the United States or any of its
nationals or properties; or (vi) there shall have occurred such a calamity or
crisis or such a material adverse change in general domestic or international
economic, political or financial conditions, including without limitation as a
result of terrorist activities and including a material adverse effect of
international conditions on the financial markets in the United States, that in
the judgment of the Agents makes it impracticable or inadvisable to proceed with
the offering or delivery of such Notes as contemplated by the Prospectus.
10. REPRESENTATIONS AND INDEMNITIES TO SURVIVE.
The respective agreements, representations, warranties, indemnities and
other statements of the Company or its officers and of you set forth in or made
pursuant to this Agreement will remain in full force and effect, regardless of
any investigation made by or on behalf of you or the Company or any of the
officers, directors or controlling persons referred to in Section 8 hereof, and
will survive delivery of and payment for the Notes. The provisions of Sections
4(h) and 8 hereof shall survive the termination or cancellation of this
Agreement. The provisions of this Agreement (including without limitation
Section 7 hereof) applicable to any purchase of a Note for which an agreement to
purchase exists prior to the termination hereof shall survive any termination of
this Agreement.
11. NOTICES.
All communications hereunder will be in writing and effective only on
receipt, and, if sent to any of you, will be mailed, delivered or telegraphed
and confirmed to such of you, at the address specified in Schedule I hereto,
with a copy to Chapman and Cutler LLP, 111 W. Monroe Street, Chicago, IL 60603,
Attention: Jonathan A. Koff, Esq.; or, if sent to the Company, will be mailed,
delivered or telegraphed and confirmed to it at Number One South Jersey Plaza,
Route 54, Folsom, NJ 08037, Attention: President, with a copy to Cozen O'Connor,
1900 Market Street, Philadelphia, PA 19103, Attention: Richard J. Busis, Esq.
12. SUCCESSORS.
This Agreement will inure to the benefit of and be binding upon the
parties hereto and their respective successors, directors, officers, employees,
agents and controlling persons referred to in Section 8 hereof, and, to the
extent provided in Section 7, any person who has agreed to purchase Notes, and
no other person will have any right or obligation hereunder.
13. APPLICABLE LAW.
This Agreement will be governed by and construed in accordance with the
internal laws of the State of New York without giving effect to conflict of laws
rules thereof.
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicate hereof, whereupon
this letter and your acceptance shall represent a binding agreement among the
Company and you.
Very truly yours,
South JERSEY GAS COMPANY
By: /s/ DAVID A. KINDLICK
-------------------------------
Its: EXECUTIVE VICE PRESIDENT AND
CHIEF FINANCIAL OFFICER
-------------------------------
The foregoing Agreement is hereby confirmed and accepted as of the date
hereof.
UBS SECURITIES LLC
By: /s/ SCOTT D. WHITNEY
-----------------------
Its: DIRECTOR
-------------------
By: /s/ RYAN DONOVAN
-----------------------
Its: ASSOCIATE DIRECTOR
-------------------
WACHOVIA CAPITAL MARKETS, LLC
By: /s/ JAMES WILLIAMS
------------------------
Its: DIRECTOR
-------------------
EDWARD D. JONES & CO., L.P.
By: /s/ JAMES A. KREKELER
------------------------
Its: PRINCIPAL
-------------------
A.G. EDEARDS & SONS, INC.
By: /s/ LESTER H. KRONE
------------------------
Its: MANAGING DIRECTOR
------------------
SCHEDULE I
The Company agrees to pay each Agent a commission equal to the
following percentage of the principal amount of each Note sold by such Agent,
and to pay the Purchasers a commission in the form of a discount to the purchase
price equal to the following percentage of the principal amount of each Note
purchased by the Agent under Section 2(b):
MATURITY RANGE OF NOTES AMOUNT PERCENTAGE OF PRINCIPAL
From 1 year to less than 18 months .150%
From 18 months to less than 2 years .200%
From 2 years to less than 3 years .250%
From 3 years to less than 4 years .350%
From 4 years to less than 5 years .450%
From 5 years to less than 6 years .500%
From 6 years to less than 7 years .550%
From 7 years to less than 10 years .600%
From 10 years to less than 15 years .625%
From 15 years to less than 20 years .700%
From 20 years or longer .750%
The commission rate payable to any Agent with respect to any Notes, and
the discount with respect to any Notes sold to a Purchaser, may be increased by
agreement between the Company and such Agent or Purchaser, with no requirement
that the other Agents or Purchasers receive notice of, or consent to, such
higher commission rate or discount.
Address for Notice to you:
Notices to UBS Securities LLC shall be directed to it at 677
Washington Blvd., Stamford, CT 06901, Attention: Syndicate Desk.
Notices to Wachovia Capital Markets, LLC shall be directed to it at One
First Union Center, TW-10, 301 South College Street, Charlotte, NC 28288-0604,
Attention: Utilities and Strategic Finance.
Notices to Edward D. Jones & Co., L.P. shall be directed to it at
12555 Manchester Road, St. Louis, MO 63131, Attention: James A. Krekeler.
Notices to A.G. Edwards & Sons, Inc. shall be directed to it at
1 North Jefferson Avenue, St. Louis, MO 63103, Attention: Taxable Debt
Syndicate.
Exhibit A
MEDIUM TERM NOTE ADMINISTRATIVE PROCEDURES
July 7, 2003
The Secured Medium-Term Notes, Series B (the "Notes") are to be offered
on a continuing basis, unless suspended pursuant to Section 2(a) of the
Agreement (as defined below). UBS Securities LLC, Wachovia Capital Markets, LLC,
Edward D. Jones & Co., L.P. and A.G. Edwards & Sons, Inc., as agents (the
"Agents"), have agreed to use reasonable efforts to solicit offers to purchase
Notes. No Agent will be obligated to purchase Notes for its own account. The
Notes are being sold pursuant to a Distribution Agreement between South Jersey
Gas Company (the "Issuer" or the "Company") and the Agents dated as of the date
hereof (the "Agreement"). The Notes will be issued under an indenture (the
"Original Indenture") dated as of October 1, 1998, between the Issuer and The
Bank of New York, as trustee (the "Trustee"), as supplemented by the First
Supplement to Indenture, dated as of June 29, 2000, the Second Supplement to
Indenture dated as of July 5, 2000 and the Third Supplement to Indenture, dated
as of July 9, 2001, each between the Company and the Trustee (the Original
Indenture, as supplemented, the "Indenture").
The procedures to be followed during, and the specific terms of, the
solicitation of offers by each Agent and the sale as a result thereof by the
Issuer are explained below. Administrative and record-keeping responsibilities
will be handled for the Issuer by its Director, Finance. The Issuer will advise
each Agent and the Trustee in writing of those persons handling administrative
responsibilities with whom the Agents and the Trustee are to communicate
regarding offers to purchase Notes and the details of their delivery and will
promptly advise each Agent and the Trustee in writing if any such person shall
cease to handle such responsibilities or of the authorization of any additional
person to handle such responsibilities.
The Notes will either be issued (a) in book-entry form and represented
by one or more fully registered Notes (each, a "Book-Entry Note") delivered to
the Trustee, as agent for The Depository Trust Company ("DTC"), and recorded in
the book-entry system maintained by DTC, or (b) in certificated form delivered
to the purchaser thereof or a person designated by such purchaser. Except in the
limited circumstances described in the Prospectus, owners of beneficial
interests in Book-Entry Notes will not be entitled to physical delivery of Notes
in certificated form.
General procedures relating to the issuance of all Notes are set forth
in Part I hereof. Book-Entry Notes will be issued in accordance with the
procedures set forth in Part II, as adjusted in accordance with changes in DTC's
operating requirements. Notes issued in certificated form will be issued in
accordance with the procedures set forth in Part III hereof. Capitalized terms
used herein that are not otherwise defined shall have the meanings ascribed
thereto in the Indenture or the Notes, as the case may be. To the extent the
procedures set forth below conflict with the provisions of the Notes, the
Indenture, DTC's operating requirements or the Agreement, the relevant
provisions of the Notes, the Indenture, DTC's operating requirements or the
Agreement shall control.
PART I: PROCEDURES OF GENERAL APPLICABILITY
Maturities: Each Note will mature on a Business Day
not less than one year nor more than 40
years after the Original Issue Date
(as defined below) for such Note.
Denominations: The denomination of any Note will be
in U.S. dollars and a minimum of
$1,000 or any larger amount that is
an integral multiple of $1,000.
Form: Notes will be issued only in
fully registered form in accordance
with the Indenture.
Date of Issuance: Each Note will be
dated the date of its authentication by
the Trustee. Each Note will also bear
an "Original Issue Date," which will be
the date of its original issue, or in
the case of any Note (or portion
thereof) issued subsequently upon
transfer or exchange of a Note or in
lieu of a destroyed, mutilated,
defaced, lost or stolen Note, the
Original Issue Date of the predecessor
Note, regardless of the date of
authentication of such subsequently
issued Note.
Preparation of Pricing Supplement: If any offer to purchase a Note is
accepted by the Company, the Company,
with the approval of the Agent
presenting the offer (the "Presenting
Agent"), will prepare a Pricing
Supplement reflecting the terms of such
Note and file the Pricing Supplement
relating to the Notes and the plan of
distribution thereof with the
Commission in accordance with Rule 424
under the Act and the provisions of
Regulation S-T under the Act. The
Presenting Agent will cause a Pricing
Supplement and a Prospectus to be
delivered to the purchaser of such
Notes.
The Company shall have delivered a
completed Pricing Supplement, via next
day mail or telecopy to arrive no later
than 11 a.m. on the Business Day
following the trade date, to the
Presenting Agent at the following
address:
If UBS Securities LLC is the Presenting
Agent, to it at 677 Washington Blvd.,
Stamford, CT 06901, Attention:
Syndicate Desk. Facsimile number (203)
719-0495.
If Wachovia Capital Markets, LLC. is
the Presenting Agent, to it at One
First Union Center, TW-10, 301 South
College Street, Charlotte, NC
28288-0604, Attention: Utilities and
Strategic Finance. Facsimile number
(704) 383-6670.
If Edward D. Jones & Co., L.P. is the
Presenting Agent, to it at 12555
Manchester Road, St. Louis, MO 63131,
Attention: James A. Krekeler. Facsimile
number (314) 515-2664.
If A.G. Edwards & Sons, Inc. is the
Presenting Agent, to it at 1 North
Jefferson Avenue, St. Louis, MO 63103,
Attention: Taxable Debt Syndicate.
Facsimile number (314) 955-4898.
In each instance that a Pricing
Supplement is prepared, the Presenting
Agent will affix the Pricing Supplement
to Prospectuses prior to their use.
Outdated Pricing Supplements, and the
Prospectuses to which they are attached
(other than those retained for files),
will be destroyed.
Acceptance of Offers: Any Agent may, in its reasonable
discretion, reject any offer to
purchase Notes received by it, in whole
or, if permitted by the terms thereof,
in part. Each Agent will promptly
advise the Issuer of any offers to
purchase Notes received by such Agent,
other than offers rejected by such
Agent and, if such Agent or any of its
affiliates shall be the offeror, shall
advise the Issuer of that fact. The
Issuer will have the sole right to
accept offers to purchase Notes in
whole or, if permitted by the terms
thereof, in part. The Issuer may reject
any such offer in whole or, if
permitted by the terms thereof, in
part. The Issuer will forthwith advise
the Presenting Agent of the acceptance
or rejection of any offer received
through the Presenting Agent and the
Presenting Agent will so advise the
offeror.
Suspension of Solicitation;
Amendment or Supplement: The Company may instruct the Agents to
suspend solicitation of purchases at
any time. Upon receipt of such
instructions, the Agents will promptly
suspend solicitation of offers to
purchase Notes, which, in any event,
shall not be later than the close of
business on the day such instructions
are received, from the Company until
such time as the Company has advised it
that solicitation of offers to purchase
may be resumed. If the Company decides
to amend the Registration Statement
(including incorporating any documents
by reference therein) or supplement any
of such documents (other than to change
rates or other variable terms), it will
promptly furnish the Agents and their
counsel with copies of the amendment
(including any document proposed to be
incorporated by reference therein) or
supplement. One copy of such filed
document, along with a copy of the
cover letter sent to the Commission,
will be delivered or mailed to the
Agents at the following addresses:
If UBS Securities LLC is the Presenting
Agent, to it at 677 Washington Blvd.,
Stamford, CT 06901, Attention:
Syndicate Desk. Facsimile number (203)
719-0495.
If Wachovia Capital Markets, LLC is the
Presenting Agent, to it at One First
Union Center, TW-10, 301 South College
Street, Charlotte, NC 28288-0604,
Attention: Utilities and Strategic
Finance. Facsimile number (704)
383-6670.
If Edward D. Jones & Co., L.P. is the
Presenting Agent, to it at 12555
Manchester Road, St. Louis, MO 63131,
Attention: James A. Krekeler. Facsimile
number (314) 515-2664.
If A.G. Edwards & Sons, Inc. is the
Presenting Agent, to it at 1 North
Jefferson, St. Louis, MO 63103,
Attention: Taxable Debt Syndicate.
Facsimile number (314) 955-4898.
In the event that at the time the
solicitation of offers to purchase from
the Company is suspended there shall be
any orders outstanding which have not
been settled, the Company will promptly
advise the Agents and the Trustee
whether such orders may be settled and
whether copies of the Prospectus as in
effect at the time of the suspension
may be delivered in connection with the
settlement of such orders. The Company
will have the sole responsibility for
such decision and for any arrangements
which may be made in the event that the
Company determines that such orders may
not be settled or that copies of such
Prospectus may not be so delivered.
Delivery of Prospectus: The Agents will cause a copy of the
most recent Prospectus and Pricing
Supplement to accompany or precede the
earlier of (a) the written confirmation
of a sale sent to a customer or the
agent of such customer, and (b) the
delivery of Notes to a customer or the
agent of such customer.
Documents incorporated
by reference: The Company shall supply each Agent
with an adequate supply of all
documents incorporated by reference in
the Registration Statement that are
reasonably requested by such Agent.
Confirmation: For each offer to purchase a Note
solicited by an Agent and accepted by
the Issuer, such Agent will issue a
confirmation to the purchaser, with a
copy to the Issuer.
Settlement Date: Subject to Section 6 of the Agreement,
the Settlement Date with respect to any
offer to purchase Notes accepted by the
Issuer will be the third Business Day
next succeeding the date of acceptance
unless otherwise agreed by the
purchaser and the Issuer and shall be
specified upon acceptance of such
offer.
Trustee
Not to Risk Funds: Nothing herein shall be deemed to
require the Trustee to risk or expend
its own funds in connection with any
payment to the Issuer or the Agents or
any purchaser, it being understood by
all parties that payments made by the
Trustee to the Issuer or the Agents or
a purchaser shall be made only to the
extent that immediately available funds
are provided to the Trustee for such
purpose.
Authenticity of Signatures: The Issuer will cause the Trustee to
furnish the Agents from time to time
with the specimen signatures of each of
the Trustee's officers, employees or
agents who have been authorized by the
Trustee to authenticate Notes, but the
Agents will have no obligation or
liability to the Issuer or to the
Trustee in respect of the authenticity
of the signature of any officer,
employee or agent of the Issuer or the
Trustee on any Note.
Payment of Expenses: Each Agent shall forward to the Issuer,
on a quarterly basis, a statement of
the out-of-pocket expenses incurred by
such Agent during that quarter that are
reimbursable to it pursuant to the
terms of the Agreement. The Issuer will
remit payment to each Agent currently
on a quarterly basis.
Part II: PROCEDURES FOR NOTES ISSUED
IN BOOK-ENTRY FORM
In connection with the qualification of the Book-Entry Notes for
eligibility in the book-entry system maintained by DTC, the Trustee will perform
the custodial, document control and administrative functions described below, in
accordance with its respective obligations under a Letter of Representations
from the Company and the Trustee to DTC, to be dated July 16, 2003 and a Medium
Term Note Certificate Agreement, dated August 17, 1989, between the Trustee and
DTC (the "Certificate Agreement"), and its obligations as a participant in DTC,
including DTC's Same-Day Funds Settlement System ("SDFS").
Issuance: All Book-Entry Notes having the same
Original Issue Date, redemption
provisions, interest payment dates,
interest rate, and stated maturity
(collectively, the "Terms") will be
represented initially by a single
Global Note in fully registered form
without coupons.
Each Book-Entry Note will be dated and
issued as of the date of its
authentication by the Trustee. Each
Book-Entry Note will bear an Original
Issue Date, which will be (i) with
respect to an original Book-Entry Note
(or any portion thereof), the original
issue date specified in such Book-Entry
Note and (ii) following a consolidation
of Global Notes, with respect to the
Book-Entry Note resulting from such
consolidation, the most recent Interest
Payment Date to which interest has been
paid or duly provided for on the
predecessor Global Notes, regardless of
the date of authentication of such
resulting Book-Entry Note. No
Book-Entry Note will represent any
securities in certificated form.
Identification: The Issuer has arranged with the CUSIP
Service Bureau of Standard & Poor's
Ratings Group, a division of
McGraw-Hill (the "CUSIP Service
Bureau"), for the reservation of
approximately 900 CUSIP numbers which
have been reserved for and relating to
Book-Entry Notes, and the Company has
delivered to the Trustee and DTC a
written list of such CUSIP numbers. The
Trustee will assign CUSIP numbers to
Book-Entry Notes as described below
under Settlement Procedure B. DTC will
notify the CUSIP Service Bureau
periodically of the CUSIP numbers that
the Company has assigned to Book-Entry
Notes. The Trustee will notify the
Company at any time when fewer than 50
of the reserved CUSIP numbers remain
unassigned to Book-Entry Notes, and, if
it deems necessary, the Company will
reserve additional CUSIP numbers for
assignment to Book-Entry Notes. Upon
obtaining such additional CUSIP
numbers, the Company will deliver a
list of such additional numbers to the
Trustee and DTC.
Registration: Each Book-Entry Note will be registered
in the name of Cede & Co., as nominee
for DTC, on the register maintained by
the Trustee under the Indenture. The
beneficial owner of a Note issued in
book-entry form (i.e., an owner of a
beneficial interest in a Book-Entry
Note) (or one or more indirect
participants in DTC designated by such
owner) will designate one or more
participants in DTC (with respect to
such Note issued in book-entry form,
the "Participants") to act as agent or
agents for such beneficial owner in
connection with the book-entry system
maintained by DTC, and DTC will record
in book-entry form, in accordance with
instructions provided by such
Participants, a credit balance with
respect to such Note issued in
book-entry form in the account of such
Participants. The ownership interest of
such beneficial owner in such Note
issued in book-entry form will be
recorded through the records of such
Participants or through the separate
records of such Participants and one or
more indirect participants in DTC.
Transfers: Transfers of a Book-Entry Note will be
accomplished by book entries made by
DTC and, in turn, by Participants (and
in certain cases, one or more indirect
participants in DTC) acting on behalf
of beneficial transferors and
transferees of such Book-Entry Note.
Exchanges: The Trustee may deliver to DTC and the
CUSIP Service Bureau at any time a
written notice specifying (a) the CUSIP
numbers of two or more Book-Entry Notes
outstanding on such date that represent
Book-Entry Notes having the same terms
(other than Original Issue Dates) and
for which interest has been paid to the
same date; (b) a date, occurring at
least 30 days after such written notice
is delivered and at least 30 days
before the next Interest Payment Date
for the related Notes issued in
book-entry form, on which such
Book-Entry Notes shall be exchanged for
a single replacement Book-Entry Note;
and (c) a new CUSIP number, obtained
from the Company, to be assigned to
such replacement Book-Entry Note. Upon
receipt of such a notice, DTC will send
to its participants (including the
Trustee) a written reorganization
notice to the effect that such exchange
will occur on such date. Prior to the
specified exchange date, the Trustee
will deliver to the CUSIP Service
Bureau written notice setting forth
such exchange date and the new CUSIP
number and stating that, as of such
exchange date, the CUSIP numbers of the
Book-Entry Notes to be exchanged will
no longer be valid. On the specified
exchange date, the Trustee will
exchange such Book-Entry Notes for a
single Book-Entry Note bearing the new
CUSIP number and the CUSIP numbers of
the exchanged Book-Entry Notes will, in
accord with CUSIP Service Bureau
procedures, be canceled and not
reassigned.
Interest Payments: General. Interest (if any) on each Note
will accrue from the Original Issue
Date of such Note, and will be
calculated and paid in the manner
described in such Note.
Unless otherwise provided in the
Indenture or the Notes, the first
payment of interest on any Note
originally issued after a Record Date
(as defined below) and on or before the
next succeeding Interest Payment Date
(as defined below) will be made no
earlier than the Interest Payment Date
following the next succeeding Record
Date. Interest payable at maturity of a
Note, or upon earlier redemption or
repayment, will be payable to the
person to whom the principal of such
Note is payable. DTC will arrange for
each pending deposit message described
under Settlement Procedure C below to
be transmitted to Standard & Poor's
Ratings Group, which will use the
information in the message to include
certain terms of the related Book-Entry
Note in the appropriate daily bond
report published by Standard & Poor's
Ratings Group.
Record Dates. The Record Dates with
respect to the Interest Payment Dates
shall be the April 15 or October 15
(whether or not a business day) next
preceding such Interest Payment Date.
Interest Payment Dates. Unless
otherwise specified pursuant to
Settlement Procedure A below, interest
payments on Book-Entry Notes will be
made semiannually on May 1 and November
1 of each year and at Maturity;
provided, however, that if an Interest
Payment Date for a Book-Entry Note is
not a Business Day, the payment due on
such day shall be made on the next
succeeding Business Day and no interest
shall accrue on such payment for the
period from and after such Interest
Payment Date; provided further, that in
the case of a Book-Entry Note issued
between a Record Date and an Interest
Payment Date, the first interest
payment will be made on the Interest
Payment Date following the next
succeeding Regular Record Date.
Payments of Principal and
Interest: Payments of Interest Only. Not later
than five Business Days following each
Record Date, the Trustee will deliver
to the Issuer and DTC a written notice
specifying by CUSIP number the amount
of interest to be paid on each
Book-Entry Note on the following
Interest Payment Date (other than an
Interest Payment Date coinciding with a
Maturity Date) and the total of such
amounts. DTC will confirm the amount
payable on each Book-Entry Note on such
Interest Payment Date by reference to
the daily bond reports published by
Standard & Poor's. On such Interest
Payment Date, the Issuer will pay to
the Trustee, and the Trustee in turn
will pay to DTC, such total amount of
interest due (other than at Maturity
Date), at the times and in the manner
set forth below under "Manner of
Payment."
Payments at Maturity Date. Prior to the
first Business Day of each month in
which principal and/or interest is to
be paid, the Trustee will deliver to
the Issuer and DTC a written list of
principal, interest and premium, if
any, to be paid on each Book-Entry Note
maturing either at Stated Maturity or
on a Redemption Date in the following
month. The Trustee, the Issuer and DTC
will confirm the amounts of such
principal and interest payments with
respect to a Book-Entry Note on or
about the fifth Business Day preceding
the Maturity of such Book-Entry Note.
On or before Maturity Date, the Issuer
will pay to the Trustee, and the
Trustee in turn will pay to DTC, the
principal amount of such Note, together
with interest and premium, if any, due
at such Maturity Date, at the times and
in the manner set forth below under
"Manner of Payment." Promptly after
payment to DTC of the principal and
interest due at Maturity of such
Book-Entry Note, the Trustee will
cancel such Book-Entry Note in
accordance with the Indenture and so
advise the Issuer. If any Maturity Date
of a Book-Entry Note is not a Business
Day, the payment due on such day shall
be made on the next succeeding Business
Day and no interest shall accrue on
such payment for the period from and
after such Maturity.
Manner of Payment. The total amount of
any principal, premium, if any, and
interest due on Book-Entry Notes on any
Interest Payment Date or at Maturity
shall be transferred by the Issuer to
the Trustee to an account designated by
the Trustee in funds available for use
by the Trustee as of 12:00 noon, New
York City time, on such date. The
Issuer will confirm such instructions
in writing to the Trustee. Prior to
2:00 p.m., New York City time, on such
date or as soon as possible thereafter,
the Trustee will pay (but only from
funds withdrawn from such account) by
separate wire transfer (using Fedwire
message entry instructions in a form
previously specified by DTC) to an
account at the Federal Reserve Bank of
New York previously specified by DTC,
in funds available for immediate use by
DTC, each payment of interest,
principal and premium, if any, due on a
Book-Entry Note on such date.
Thereafter on such date, DTC will pay,
in accordance with its SDFS operating
procedures then in effect, such amounts
in funds available for immediate use to
the respective Participants in whose
names such Notes are recorded in the
book-entry system maintained by DTC.
Neither the Issuer nor the Trustee
shall have any responsibility or
liability for the payment by DTC of the
principal of, or premium, if any, or
interest on, the Book-Entry Notes to
such Participants.
Withholding Taxes. The amount of any
taxes required under applicable law to
be withheld from any interest payment
on a Note will be determined and
withheld by the Participant, indirect
participant in DTC or other Person
responsible for forwarding payments and
materials directly to the beneficial
owner of such Note.
Settlement Procedures: Settlement Procedures with regard to
each Book-Entry Note sold by the
Presenting Agent, as agent of the
Company, and accepted by the Company
will be as follows:
A. The Presenting Agent will advise the
Issuer by telephone (confirmed in
writing) or telecopy of the
following Settlement information:
1. Taxpayer identification
number of the purchaser.
2. Principal amount of the Note.
3. Interest rate, and interest
payment dates.
4. Price to public of the Note.
5. Trade date.
6. Settlement Date (Original
Issue Date).
7. Maturity.
8. Net proceeds to the Company.
9. Agent's commission.
10. Redemption provisions,if any.
B. The Issuer will advise the Trustee
by telephone (confirmed in writing)
or telecopy by 10:00 a.m. on the
second Business Day preceding the
Settlement Date of the above
settlement information received
from the Presenting Agent with
respect to the Book-Entry Note
representing such Note.
C. The Issuer will assign a CUSIP
number to such Note and the Trustee
will communicate to DTC through
DTC's Participant Terminal System,
a pending deposit message
specifying the following settlement
information, which will route such
relevant information to the
Presenting Agent, Standard & Poor's
Ratings Group and Interactive Data
Corporation:
1. The information set forth in
Settlement Procedure A.
2. Identification numbers of the
participant accounts maintained
by DTC on behalf of the Trustee
and the Agent.
3. Initial Interest Payment Date
for such Note, number of days by
which such date succeeds the
related Record Date for DTC
purposes and, if then
calculable, the amount of
interest payable on such
Interest Payment Date (which
amount shall have been confirmed
by the Trustee).
4. CUSIP number of the Book-Entry
Note representing such Note.
D. The Trustee will complete a
Book-Entry Note representing such
Note in a form that has been
approved by the Company, the
Presenting Agent and the Trustee.
E. The Trustee will authenticate the
Book-Entry Note representing such
Note.
F. DTC will credit such Note to the
participant account of the Trustee
maintained by DTC.
G. The Trustee will enter an SDFS
deliver order through DTC's
Participant Terminal System
instructing DTC (i) to debit such
Note to the Trustee's participant
account and credit such Note to the
participant account of the
Presenting Agent maintained by DTC
and (ii) to debit the settlement
account of the Presenting Agent and
credit the settlement account of
the Trustee maintained by DTC, in
an amount equal to the price of
such Note less such Agent's
commission. Any entry of such a
deliver order shall be deemed to
constitute a representation and
warranty by the Trustee to DTC that
(i) the Book-Entry Note
representing such Note has been
issued and authenticated and (ii)
the Trustee is holding such
Book-Entry Note pursuant to the
Note Certificate Agreement between
the Trustee and DTC.
H. The Presenting Agent will enter an
SDFS deliver order through DTC's
Participant Terminal System
instructing DTC (i) to debit such
Note to the Presenting Agent's
participant account and credit such
Note to the participant account of
the Participants maintained by DTC
and (ii) to debit the settlement
accounts of such Participants and
credit the settlement account of
the Presenting Agent maintained by
DTC, in an amount equal to the
public offering price of such Note.
I. Transfers of funds in accordance
with SDFS deliver orders described
in Settlement Procedures G and H
will be settled in accordance with
SDFS operating procedures in effect
on the Settlement Date.
J. Upon receipt of such funds, the
Trustee will credit to an account
of the Company identified to the
Trustee funds available for
immediate use in the amount
transferred to the Trustee in
accordance with Settlement
Procedure G.
K. The Presenting Agent will confirm
the purchase of such Note to the
purchaser either by transmitting to
the Participant with respect to
such Note a confirmation order
through DTC's Participant Terminal
System or by mailing a written
confirmation to such purchaser.
Settlement Procedures Timetable:
For orders of Notes accepted by the
Company, Settlement Procedures A
through K set forth above shall be
completed as soon as possible but not
later than the respective times (New
York City time) set forth below:
SETTLEMENT
PRPCEDURE TIME
A 11:00 a.m. on the trade date
B 10:00 a.m. on the second
Business Day
preceding Settlement Date
C 2:00 p.m. on the trade date
D 3:00 p.m. on the Business
Day before Settlement Date
E 9:00 a.m. on Settlement Date
F 10:00 a.m. on Settlement Date
G-H 2:00 p.m. on the Settlement
Date
I 4:45 p.m. on Settlement Date
J-K 5:00 p.m. on Settlement Date
If a sale is to be settled more than
one Business Day after the trade date,
Settlement Procedures A, B, and C shall
be completed as soon as practicable but
in no event later than 11:00 a.m. and
12:00 noon on the first Business Day
after such sale date but no later than
2:00 p.m. on the Business Day before
the Settlement Date, respectively.
Settlement Procedure I is subject to
extension in accordance with any
extension of Fedwire closing deadlines
and in the other events specified in
the SDFS operating procedures in effect
on the Settlement Date.
If settlement of a Book-Entry Note is
rescheduled or canceled, the Trustee,
if notified in time, will deliver to
DTC, through DTC's Participant Terminal
System, a cancellation message to such
effect by no later than 2:00 p.m., New
York City time, on the Business Day
immediately preceding the scheduled
Settlement Date.
Failure to Settle: If the Trustee fails to enter an SDFS
deliver order with respect to a
Book-Entry Note pursuant to Settlement
Procedure G, the Trustee may deliver to
DTC, through DTC's Participant Terminal
System, as soon as practicable a
withdrawal message instructing DTC to
debit such Note to the participant
account of the Trustee maintained at
DTC. DTC will process the withdrawal
message, provided that such participant
account contains a principal amount of
the Book-Entry Note representing such
Note that is at least equal to the
principal amount to be debited. If
withdrawal messages are processed with
respect to all the Notes represented by
a Book-Entry Note, the Trustee will
mark such Book-Entry Note "canceled,"
make appropriate entries in its records
and send such canceled Book-Entry Note
to the Company. The CUSIP number
assigned to such Book-Entry Note shall,
in accordance with CUSIP Service Bureau
procedures, be canceled and not
immediately reassigned. If withdrawal
messages are processed with respect to
a portion of the Notes represented by a
Book-Entry Note, the Trustee will
exchange such Book-Entry Note for two
Book-Entry Notes, one of which shall
represent the Book-Entry Notes for
which withdrawal messages are processed
and shall be canceled immediately after
issuance, and the other of which shall
represent the other Notes previously
represented by the surrendered
Book-Entry Note and shall bear the
CUSIP number of the surrendered
Book-Entry Note.
If the purchase price for any
Book-Entry Note is not timely paid to
the Participants with respect to such
Note by the beneficial purchaser
thereof (or a person, including an
indirect participant in DTC, acting on
behalf of such purchaser), such
Participants and, in turn, the related
Agent may enter SDFS deliver orders
through DTC's Participant Terminal
System reversing the orders entered
pursuant to Settlement Procedures G and
H, respectively. Thereafter, the
Trustee will deliver the withdrawal
message and take the related actions
described in the preceding paragraph.
If such failure shall have occurred for
any reason other than default by the
applicable Agent to perform its
obligations hereunder or under the
Agreement, the Company will reimburse
such Agent on an equitable basis for
its loss of the use of funds during the
period when the funds were credited to
the account of the Company.
Notwithstanding the foregoing, upon any
failure to settle with respect to a
Book-Entry Note, DTC may take any
actions in accordance with its SDFS
operating procedures then in effect. In
the event of a failure to settle with
respect to a Note that was to have been
represented by a Book-Entry Note also
representing other Notes, the Trustee
will provide, in accordance with
Settlement Procedures D and E, for the
authentication and issuance of a
Book-Entry Note representing such
remaining Notes and will make
appropriate entries in its records.
PART III: PROCEDURES FOR NOTES ISSUED
IN CERTIFICATED FORM
Interest Payments: Interest (if any) on each Note will
accrue from the Original Issue Date of
such Note, and will be calculated and
paid in the manner described in such
Note.
Unless otherwise provided in the
Indenture or the Notes, the first
payment of interest on any Note
originally issued after a Record Date
and on or before the next succeeding
Interest Payment Date will be made no
earlier than the Interest Payment Date
following the next succeeding Record
Date. Interest payable at maturity of a
Note, or upon earlier redemption or
repayment, will be payable to the
person to whom the principal of such
Note is payable. All interest payments
for each Interest Payment Date
(excluding interest payments made on
the Maturity Date or upon the
acceleration thereof or on earlier
redemption) will be made by check
mailed to the person entitled thereto
as provided above, or at the option of
the registered holder, at such other
place in the United States as the
registered holder shall designate to
the Trustee in writing, except that a
holder of the equivalent of $10,000,000
or more in aggregate principal amount
of Notes with the same Interest Payment
Date shall be entitled to receive such
payments in immediately available funds
paid to an account at a bank in New
York, New York (or other bank consented
to by the Issuer and the Trustee), but
only if appropriate payment
instructions have been received in
writing by the Trustee on or prior to
the applicable Record Date (provided
that such bank designated by the
registered holder has appropriate
facilities therefor).
Within five Business Days following
each Record Date, the Trustee will
provide to the Issuer a list of
interest payments to be made for each
Note on the next succeeding Interest
Payment Date and the total amount of
the interest payments. The Trustee will
provide monthly to the Issuer a list of
the principal, premium, if any, and
interest to be paid on Notes maturing
or being redeemed in the next
succeeding month.
Settlement: The Issuer will instruct the Trustee to
effect delivery of each Note no later
than 1:00 p.m., New York City time, on
the Settlement Date to the Presenting
Agent for delivery to the purchaser.
Details for Settlement: For each offer to purchase a Note that
is accepted by the Issuer, the
Presenting Agent will provide (unless
provided by the purchaser directly to
the Issuer) by telephone the following
information to the Issuer:
1. The exact name of the Registered
Owner.
2. The exact address of the Registered
Owner and the address for delivery,
notices and payments of principal
and interest.
3. The taxpayer identification number
of the Registered Owner.
4. A description of the terms and
provisions of the Notes that
includes the information identified
in Exhibit B to the Agreement and
any other information required to
describe such Notes properly.
5. The Issue Price.
6. The Trade Date.
7. The Settlement Date.
8. The Presenting Agent's commission,
determined as provided in Schedule
I to the Agreement.
The Issuer will advise the Trustee of
the foregoing information for each
offer to purchase a Note solicited by
the Presenting Agent and accepted by
the Issuer in time for the Trustee to
prepare and authenticate the required
Note, but not later than 10:00 a.m. New
York City time on the second Business
Day preceding the Settlement Date.
Before accepting any offer to purchase
a Note to be settled in less than three
Business Days, the Issuer shall verify
that the Trustee will have adequate
time to prepare and authenticate such
Note.
After receiving from the Presenting
Agent the details for each offer to
purchase a Note, the Issuer will, after
recording the details and any necessary
calculations, provide appropriate
documentation to the Trustee, including
the information provided by the
Presenting Agent necessary for the
preparation and authentication of such
Note. Prior to preparing the Note for
delivery (but in any case no later than
10:00 a.m. on the Business Day next
preceding the Settlement Date
therefor), the Trustee will confirm the
details of such issue with the Issuer,
and the Issuer will confirm such
instruction to the Presenting Agent, in
each case by telephone, telecopy or
telex.
Deliveries and Cash Payment: Upon receipt of appropriate
documentation and instructions with
respect to the Notes, the Issuer will
cause the Trustee to prepare and
authenticate the form of Note
previously approved by the Issuer, the
Presenting Agent and the Trustee and
deliver such Note and a customer
receipt to the purchaser.
If the form of Note is not pre-printed,
the Trustee shall deliver a photocopy
of such authenticated Note to the
Presenting Agent and the Issuer and
shall retain one copy. Otherwise, it
shall deliver the copies in the
four-ply Note as follows:
Stub 1--For the Presenting Agent.
Stub 2--For the Issuer.
Stub 3--For the Trustee.
Each Note shall be authenticated on the
Settlement Date therefor. The Trustee
will authenticate each Note and deliver
it to the Presenting Agent (and deliver
the stubs as indicated above), all in
accordance with written instructions
(or oral instructions confirmed in
writing, which may be given by telex or
telecopy, on the next Business Day)
from the Issuer.
Upon verification by the Presenting
Agent that a Note has been prepared and
properly authenticated by the Trustee
and registered in the name of the
purchaser in the proper principal
amount, payment will be made to the
Issuer by the Presenting Agent the same
day in immediately available funds.
Such payment shall be made only upon
prior receipt by the Presenting Agent
of immediately available funds from or
on behalf of the purchaser unless the
Presenting Agent decides, at its
option, exercised in the sole
discretion of such Presenting Agent, to
advance its own funds for such payment
against subsequent receipt of funds
from the purchaser. The Presenting
Agent shall immediately notify the
Issuer of its decision to advance its
own funds for payment against
subsequent receipt of funds from a
purchaser.
Upon delivery of a Note to the
Presenting Agent, the Presenting Agent
shall promptly deliver such Note to the
purchaser.
In the event any Note is incorrectly
prepared, the Trustee shall promptly
issue a replacement Note in exchange
for the incorrectly prepared Note.
Failure to Settle: If the Presenting Agent, at its own
option, has advanced its own funds for
payment against subsequent receipt of
funds from a purchaser, and if such
purchaser shall fail to make payment
for the Note on the Settlement Date
therefor, the Presenting Agent will
promptly notify the Trustee and the
Issuer by telephone, promptly confirmed
in writing, which may be given by telex
or telecopy (but no later than the next
Business Day). In such event, the
Issuer shall promptly provide the
Trustee with appropriate documentation
and instructions consistent with these
procedures for the return of the Note
to the Trustee, and the Presenting
Agent will promptly return the Note to
the Trustee. Upon (i) confirmation from
the Trustee in writing which may be
given by telex or telecopy) that the
Trustee has received the Note and upon
(ii) confirmation from the Presenting
Agent in writing (which may be given by
telex or telecopy) that the Presenting
Agent has not received payment from
such purchaser (the matters referred to
in clauses (i) and (ii) are referred to
hereinafter as the ("confirmations")),
the Issuer will promptly pay to the
Presenting Agent an amount in
immediately available funds equal to
the amount previously paid by the
Presenting Agent in respect of such
Note. Assuming receipt of such Note by
the Trustee and of the confirmations by
the Issuer, such payment will be made
on the Settlement Date if reasonably
practical, and in any event not later
than the Business Day following the
date of receipt of the Note and the
confirmations. If a purchaser shall
fail to make payment for such Note for
any reason other than the failure of
the Presenting Agent to provide the
necessary information to the Issuer as
described above for settlement or to
provide a confirmation to the purchaser
within a reasonable period of time as
described above or otherwise to satisfy
its obligations hereunder or in the
Agreement, and if the Presenting Agent
shall have otherwise complied with its
obligations hereunder and in the
Agreement, the Issuer will reimburse
the Presenting Agent for its loss of
the use of funds during the period when
they were credited to the account of
the Issuer.
Immediately upon receipt of the Note in
respect of which the failure occurred,
the Trustee will void said Note, make
appropriate entries in its records and
destroy such Note; and upon such
action, such Note will be deemed not to
have been issued, authenticated or
delivered.
Exhibit B
SOUTH JERSEY GAS COMPANY
Secured Medium Term Notes, Series A
Due from One Year to Forty Years
from Date of Issue
TERMS AGREEMENT
South Jersey Gas Company
Number One South Jersey Plaza
Route 54
Folsum, NJ 08037
____________, 2003
Attention:
Subject in all respects to the terms and conditions of the
Distribution Agreement (the "Agreement")dated July 7, 2003, among UBS
Securities LLC, Wachovia Capital Markets, LLC, Edward D. Jones & Co., L.P.,
A.G.Edwards & Sons, Inc. and you, the undersigned agrees to purchase the
following Notes of:
Aggregate Principal Amount:
Interest Rate:
Date of Maturity:
Interest Payment Dates:
Regular Record Dates:
[Redemption Dates and Prices:]
[Repayment Dates and Prices:]
Purchase Price: % of Principal Amount [Plus accrued interest from
____________, 20___]
Purchase Date and Time:
Place for Delivery of Notes and
Payment Therefor:
Method of Payment:
Modification, if any, in the
requirements to deliver the
documents specified in
Section 6(b) of the Agreement:
Period during which additional
Notes may not be sold pursuant
to Section 4(m) of the Agreement:
[Purchaser]
By:
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Accepted:
By:
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Title:
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