SOUTH JERSEY GAS COMPANY
Secured Medium Term Notes, Series C
Due From One Year to Forty Years
From Date of Issue
Distribution Agreement
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
________________, 2005
Ladies and Gentlemen:
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 C,
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-_____), 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 four
supplemental indentures, including the Twenty-Fourth
Supplemental
Indenture, dated as of __________, 2005 (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 as
have 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 _________, 2005, 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.
The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's
general or specific authorization, (ii) transactions are
recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting
principles and to maintain asset accountability, (iii) access
to assets is permitted only in accordance with management's
general or specific authorization and (iv) amounts reflected
on the Company's balance sheet for assets is compared with the
existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.
(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
materially
adversely 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.
(z) The Company is aware of no reason that its quarterly
report on Form 10-Q for the quarter ended June 30, 2005 would not
be
accompanied by the certifications required to be filed or submitted
by
the Company's chief executive officer and chief financial
officer
pursuant to the Sarbanes-Oxley Act of 2002 and the rules and
regulations promulgated thereunder.
2. APPOINTMENT OF AGENTS; SOLICITATION 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
Regist
