10-K
1
10-K REPORT
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1994 Commission File Number 1-6364
SOUTH JERSEY INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
New Jersey 22-1901645
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
Number One South Jersey Plaza, Route 54
Folsom, New Jersey 08037
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (609) 561-9000
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
Common Stock New York Stock Exchange and
($1.25 par value per share) Philadelphia Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
The aggregate market value of approximately 9,120,500 shares of voting stock
held by non-affiliates of the registrant as of March 10, 1995 was $165,300,000.
As of March 10, 1995, there were 10,717,092 shares of the registrant's common
stock outstanding.
Documents Incorporated by Reference:
In Part I of Form 10-K: Pages 14, 16, 17, 18, 20 and 21 of 1994
Annual Report to Shareholders
In Part II of Form 10-K: Page 1 and Pages 10 through 22 of 1994
Annual Report to Shareholders
In Part III of Form 10-K: Pages 2 through 10 (except as stated in
Item 11 of this Form 10-K) of the Proxy Statement dated March 8,
1995 for the 1995 Annual Meeting of Shareholders
PART I
Item 1. Business
General
The registrant, South Jersey Industries, Inc. (the Company), a New Jersey
corporation, was formed in 1969 for the purpose of owning and holding all of the
outstanding common stock of South Jersey Gas Company (South Jersey Gas or SJG),
a public utility, and acquiring and developing nonutility lines of business.
Energy & Minerals, Inc. (EMI), a wholly-owned subsidiary of the Company, was
formed in 1977 to own, finance and further develop certain nonutility
businesses. Through a subsidiary, EMI is engaged in the mining, processing and
marketing of construction, commercial, industrial and other specialty sands and
gravels. South Jersey Energy Company (SJE), a wholly-owned subsidiary of the
Company, provides services for the acquisition and transportation of natural gas
for commercial and industrial users. R&T Group, Inc. (R&T), a wholly-owned
subsidiary of the Company, was formed in 1989 to own, finance and further
develop certain utility construction, general construction and environmental
remediation businesses. R&T engages in these businesses through several
operating subsidiaries.
Financial Information About Industry Segments
Information regarding Industry Segments is incorporated by reference
to Note 2 on page 16 of the Company's Annual Report to Shareholders for the year
ended December 31, 1994, which Annual Report is attached to this report.
See Item 14(c)(13).
Description of Business
The Company is engaged in the business of operating, through subsidiaries,
various business enterprises. The Company's most significant subsidiary is SJG.
SJG, a New Jersey corporation, is an operating public utility company
engaged in the purchase, transmission and sale of natural gas for residential,
commercial and industrial use in an area of approximately 2,500 square miles in
the southern part of New Jersey. SJG also makes off-system sales of natural gas
on a wholesale basis to various customers on the interstate pipeline system and
transports natural gas purchased directly from producers or suppliers by some of
its customers.
SJG's service territory includes 112 municipalities throughout Atlantic,
Cape May, Cumberland and Salem Counties and portions of Burlington, Camden and
Gloucester Counties, with an estimated permanent population of 1,007,000.
SJG serves 241,406 residential, commercial and industrial customers (at
December 31, 1994) in southern New Jersey. Gas sales and transportation for
1994 amounted to 74,042,000 Mcf (thousand cubic feet), of which 49,968,000 Mcf
was firm sales and transportation, 7,234,000 Mcf was interruptible sales and
transportation and 16,840,000 Mcf was off system sales. The breakdown of firm
sales includes 39.1% residential, 18.6% commercial, 10.8% cogeneration and
electric generation, 2.7% industrial and other, and 28.8% transportation. At
year-end 1994, SJG served 224,394 residential customers, 16,615 commercial
customers and 397 industrial customers. This includes 1994 net additions of
5,910 residential customers, 409 commercial customers and 20 industrial
customers.
-2-
Under a five-year agreement executed in 1990 with Atlantic Electric, an
electric utility serving southern New Jersey, SJG supplies natural gas to
Atlantic Electric's combustion turbine facility in Cumberland County. This gas
service is being provided under the terms of a firm electric service tariff
approved by the New Jersey Board of Public Utilities (BPU) on a demand/commodity
basis. In 1994, 3.6 Bcf (billion cubic feet) was delivered under this
agreement.
SJG serviced eight cogeneration facilities in 1994. Combined sales and
transportation of natural gas to such customers amounted to approximately 8.7
Bcf in 1994.
During 1994, SJG began making wholesale gas sales for resale to gas
marketers for ultimate delivery to end users. These "off-system" sales were
made possible through the issuance by the Federal Energy Regulatory Commission
(FERC) of Orders No. 547 and 636. Order No. 547 issued a blanket certificate
of public convenience and necessity authorizing all parties, which are not
interstate pipelines, to make FERC jurisdictional gas sales for resale at
negotiated rates, while Order No. 636 allowed SJG to deliver gas at delivery
points on the interstate pipeline system other than its own city gate stations.
During 1994, off-system sales amounted to 16.8 Bcf. Gas supply utilized to make
said sales was gas available in excess of the requirements of on-system
jurisdictional customers.
Supplies of natural gas available to SJG that are in excess of the quantity
required by those customers who use gas as their sole source of fuel (firm
customers) make possible the sale of gas on an interruptible basis to commercial
and industrial customers whose equipment is capable of using natural gas or
other fuels, such as fuel oil and propane. The term "interruptible" is used in
the sense that deliveries of natural gas may be terminated by SJG at any time if
this action is necessary to meet the needs of customers purchasing gas under
firm rate tariffs. Usage by interruptible customers, including off-system
customers, in 1994 amounted to approximately 24.1 Bcf. (Approximately 32.5
percent of the total volume of gas delivered).
No material part of SJG business is dependent upon a single customer or a
few customers.
The majority of the SJG residential customers reside in the
northern and western portions of its service territory in Burlington, Camden,
Salem and Gloucester counties. Approximately 50 percent of new customers
reside in this section of the service territory, which includes the
residential suburbs of Wilmington and Philadelphia. The franchise area to the
east is centered on Atlantic City and the neighboring resort communities in
Atlantic and Cape May counties, which experience large population increases in
the summer months. The impact of the casino gaming industry on the Atlantic
City area has resulted in the creation of new jobs and the expansion of the
residential and commercial infrastructure necessary to support a developing
year-round economy. Atlantic City is experiencing a second wave of development
as a result of casino gaming. The centerpiece of this development is the new
$254 million dollar multi-purpose convention center, accompanied with a planned
billion dollar hotel and entertainment complex. These facilities will be used
to attract large conventions as well as making Atlantic City into a family
resort on a year around basis. The convention center is expected to be in
operation as early as 1996.
Manufacturers or processors of sand, glass, farm products, paints,
chemicals and petroleum products are located in the western and southern
sectors of the service territory. New commercial establishments and high
technology industrial parks and complexes are part of the economic growth of
this area.
-3-
SJG's service area includes parts of the Pinelands region, a
largely undeveloped area in the heart of southern New Jersey. Future
construction in this area is expected to be limited by statute and by a master
plan adopted by the New Jersey Pinelands Commission; however, in terms of
potential growth, significant portions of SJG's service area are not affected by
these limitations.
As a public utility, SJG is subject to regulation by the BPU.
Additionally, the Natural Gas Policy Act, which was enacted in November 1978,
contains provisions for Federal regulation of certain aspects of SJG's business.
SJG is affected by Federal regulation with respect to transportation and pricing
policies applicable to its natural gas supplies from Transcontinental Gas
Pipeline Corporation (Transco), SJG's major supplier, and Columbia Gas
Transmission Corporation (Columbia), since such services are provided under
rates and terms established under the jurisdiction of the FERC.
Retail sales by SJG are made under rate schedules within a tariff filed
with and subject to the jurisdiction of the BPU. These rate schedules provide
primarily for either block rates or demand/commodity rate structures. The
tariff contains provisions permitting SJG to pass on to customers increases and
decreases in the cost of purchased gas supplies. The tariff also contains
provisions permitting the recovery of environmental remediation costs associated
with former gas plant sites and for the adjustment of revenues due to the impact
of degree day fluctuations as prescribed in SJG's tariff structure.
Revenue requirements for ratemaking purposes are established on the basis
of firm and interruptible sales projections. In December 1994, the BPU granted
SJG a rate increase of $12.07 million based on an overall rate of return of
9.51% including an 11.5% return on equity. As part of this rate increase, SJG
is allowed to retain the first $4.0 million of base revenues generated by
interruptible and off-system sales and 20% of base revenues generated by such
sales above that level until it realizes an 11.5% return on equity. Additional
information on regulatory affairs is incorporated by reference to Note 1 on page
14 and Note 9 on pages 17 and 18 of the Company's Annual Report to Shareholders
for the year ended December 31, 1994, which Annual Report is attached to this
report. See Item 14(c)(13).
SJE, a New Jersey corporation, is a wholly owned non-regulated subsidiary
of the Company and is engaged in providing services for the acquisition and
transportation of natural gas for industrial and commercial users.
EMI, a New Jersey corporation, is a holding company that owns all of the
outstanding common stock of The Morie Company, Inc. (Morie Company), and an
inactive company, South Jersey Fuel, Inc. (Fuel Company).
Morie Company, a New Jersey corporation, is engaged in the mining,
processing and marketing of a broad range of industrial and commercial sands and
gravels. Its principal products are glass sand used for manufacturing cookware,
containers and flat glass, foundry sand used as the core and molding medium in
iron and steel foundries, and construction sand and gravels. Morie Company also
produces sandblasting sands, filter sands and gravels, well gravels, special
sand mixes for athletic tracks and golf courses, resin-coated sands, clay
products and a wide variety of specialty products, including ready-mix concrete
and specially processed silica for the electronics industry.
Total customers of Morie Company number in the thousands, and no single
customer accounts for as much as 10% of annual sales. Tonnage sales in 1994
were approximately 12.8% higher than 1993, and Morie Company attributes this
increase to the improving economy as well as additional customers and new
products. Keen competition and railroad deregulation are factors affecting
-4-
prices on a delivered basis. All Morie Company facilities are in good operating
condition and, along with ample high-quality mineral reserves, are capable of
handling expanding markets and of supporting increased market share.
Fuel Company, a New Jersey corporation, sold its operating assets in
November 1985 and is no longer in the business of distributing petroleum
products.
R&T, a New Jersey corporation, is a holding company that owns all the
common stock of R and T Castellini Company, Inc. (Castellini Company), S.W.
Downer, Jr. Company, Inc. (Downer Company), Onshore Construction Company, Inc.
(Onshore), Cape Atlantic Crane Co., Inc. (Cape Atlantic) and, beginning in 1993,
R & T Castellini Construction Company, Inc. (R & T Construction). In 1994,
approximately 45% of R&T net sales related to competitive-bid work performed for
SJG. No other customer accounted for as much as 10% of R&T's consolidated
revenues in 1994.
Castellini Company, a New Jersey corporation, is engaged in the
installation of gas, water and sewer lines, plant maintenance, site work and
environmental cleanup and remediation.
Downer Company, a New Jersey corporation, is engaged in the installation of
gas, water and sewer lines, plant maintenance, site work and environmental
cleanup and remediation.
Onshore, a New Jersey corporation, is principally engaged in the
installation of large diameter pipe, sewerage plants, bridges, dams and other
heavy construction projects.
Cape Atlantic, a New Jersey corporation, is principally engaged in the
rental of cranes.
R & T Construction, a Delaware Corporation, is engaged in the installation
of gas, water and sewer lines, plant maintenance, site work and environmental
cleanup and remediation.
In 1994, the Company made no public announcement of, or otherwise made
public information about, a new product or industry segment that would require
the investment of a material amount of the assets of the Company or which
otherwise was material.
Raw Materials
South Jersey Gas
Pipeline Supply
SJG has direct connections to two interstate pipelines, Transco and
Columbia. During 1994, services provided to SJG from these pipelines along with
same provided by CNG Transmission Corporation (CNG) were subject to changes as
directed by FERC when it issued its Order No. 636 "Pipeline Service Obligations
and Revisions to Regulations Governing Self-Implemented Transportation Under
Part 284 of the Commission's Regulations" issued on April 8, 1992. This order
required significant alterations in the structure of interstate natural gas
pipeline services.
Order No. 636 and its companion series of orders (636-A and 636-B) were
intended by the FERC to complete the transition to a competitive natural gas
industry initiated by the Natural Gas Policy Act of 1978 whereby all natural gas
suppliers are able to compete for gas purchases on an equal footing.
-5-
The pipeline suppliers mentioned above filed Order No. 636 compliance
filings late in 1992 and also submitted revised compliance filings during 1993.
In these compliance filings each pipeline was required to submit a comprehensive
explanation as to how it intended to implement the restructuring of its pipeline
system services.
The FERC subsequently approved these revised compliance filings in time for
the pipelines to implement the provisions of Order No. 636 in advance of the
1993-94 winter heating season.
Transco
Transco, during 1991, unbundled its sales and transportation services as a
result of a FERC approved settlement that was negotiated with its customers. At
that time SJG replaced its Commodity and Demand (CD) gas purchase contract with
Transco with a Firm Transportation (FT) service and a gas purchase agreement (FS
service). The FS service is a FERC approved service that provides a guaranteed
supply of up to 111,869 Mcf per day of gas and gives the Company the option to
buy gas from other suppliers to be transported under the firm transportation
capacity if such supplies are available at lower costs. The initial term of the
FS agreement extends through March 31, 2001.
On December 1, 1994, the Company entered into an NS Service Agreement
(Negotiated Sales Service) with Transco Gas Marketing Company (TGMC) as agent
for TRANSCO. Under the terms and provisions of the NS Service Agreement, the
Company has contract quantity of 30,000 Mcf per day.
The NS service has a limited swing capability whereby prior to the
nomination deadline for the first of the month, the Company must inform TGMC of
the estimated quantity (up to 30,000 Mcf per day) it intends to purchase under
the NS service for the month. The Company is then obligated to take a minimum
55 percent of the daily quantity it nominates multiplied times the number of
days in the month. If the Company takes on any day during the month a quantity
in excess of 81,869 Mcf under its FS Service Agreement, it will forfeit the NS
Demand Credit of $.09 per Mcf for that portion taken above 81,869 Mcf multiplied
times the number of days in the month. The daily quantity taken under a
combination of NS service and FS service cannot exceed 111,869 Mcf per day.
On May 14, 1993, in response to Transco's compliance filing, the FERC
issued an order in Transco's Order No. 636 restructuring proceeding. In said
order, the FERC required, among other things, that Transco unbundle that portion
of its Eminence Storage Field (approximately 3.1 billion cubic feet (Bcf)),
previously reserved for use by Transco in rendering "swing supply" service to
its sales (FS) customers. The FERC also directed that Transco should make its
unbundled Eminence Storage Service (ESS) capacity available on a priority basis
to its existing FS customers and SJG was allocated 316,177 Mcf of this storage
capacity. Through subsequent expansions of the Eminence Storage Field, Transco
has increased the Company's allocation of ESS storage capacity to 480,535 Mcf in
December 1993 and to 633,829 Mcf in December 1994.
In addition to FS and NS service, SJG has a ten-year gas supply agreement
with Vastar Gas Marketing (Vastar - formerly Arco Natural Gas) for delivery to
its service territory by way of Transco FT service.
Since the 1992-93 winter season, SJG began receiving delivery of up to
24,700 Mcf per day of gas under a firm transportation agreement that was entered
into with Transco as part of the Texas Gas-CNG Transmission-Transco project that
was developed to provide additional firm pipeline capacity to
deliver gas to the U.S. Northeast under Transco's Rate Schedule FT-NT. The gas
source that is available for transportation on the Transco-CNG Transmission-
Texas Gas pipeline capacity is purchased from Amerada Hess under a 15 year gas
supply agreement.
-6-
Additionally, SJG has a winter season peaking transportation service on the
Transco system which is available for the period December 1 through the last day
of February of each year. SJG's maximum daily entitlement under this service is
2,900 Mcf per day. SJG can transport third party gas via said service and has
contracted with Amerada Hess for a long-term firm gas supply to fill its
capacity during each winter season.
Columbia
As part of its FERC Order No. 636 restructuring, Columbia unbundled its
traditional sales service from its firm transportation service and as such has
eliminated its previous long term sales service under Rate Schedule CDS. SJG
previously held a CDS sales agreement with Columbia which provided for a maximum
daily sales entitlement of 33,816 Mcf per day. As a result of Columbia's
restructuring, SJG has been assigned an equivalent 33,816 Mcf per day of firm
transportation capacity on both Columbia and its affiliate Columbia Gulf
Transmission Company (Columbia Gulf).
As a result of the above, in 1993, SJG entered into long-term gas purchase
agreements with Vastar, Texaco Natural Gas (formerly Texaco Gas Marketing) and
Union Pacific Fuels for a total of 33,816 Mcf of gas per day to fill this firm
pipeline capacity on the Columbia and Columbia Gulf pipeline systems.
Additionally during 1993, 483,092 Mcf of storage capacity previously
rendered to SJG under Columbia's Rate Schedule WS was converted to storage
service rendered under Rate Schedule FSS on a one-for-one basis.
On July 31, 1991, Columbia and its parent, Columbia Gas Systems, Inc. filed
for Chapter 11 bankruptcy protection. Columbia has stated to its customers that
it would fulfil all contractual obligations pending reorganization. To date
Columbia has met all contractual obligations and it is anticipated this will be
the case in the future.
On January 18, 1994 Columbia filed a reorganization plan with the U.S.
Bankruptcy Court for the District of Delaware. An order on this filing is still
pending.
CNG
As part of its Order No. 636 restructuring, CNG has abandoned gas sales
service under its Rate Schedule SCQ. SJG previously had an SCQ Service
Agreement with CNG which provided for the delivery of 9,662 Mcf per day to
Transco at Leidy, PA for ultimate delivery to the Company during the period
November 16 through March 31 of each winter season. As a result of Order No.
636 CNG has replaced the 9,662 Mcf per day of SCQ sales service with 5,357 Mcf
per day of Firm Transportation (FT) service from various Appalachian aggregation
points located in Pennsylvania and West Virginia and 408,670 Mcf of storage
capacity with 4,305 Mcf per day of storage withdrawal demand in CNG's GSS
Storage Service. In 1993, to facilitate the utilization of these new services,
SJG entered into separate gas sales and capacity management agreements with CNG
Energy Services (formerly CNG Gas Services Corporation), a non-jurisdictional
affiliate of CNG. Through these agreements SJG has assigned to CNG Energy
Services its pipeline FT and storage entitlements on the CNG pipeline system for
use to provide SJG with up to 9,662 Mcf per day of gas during the winter
seasons, November 16 through March 31 of each year.
Peak-Day Supply
SJG plans for a winter season peak-day demand on the basis of an average
daily temperature of 5 degrees F. Gas demand on such a design day was estimated
for the 1994-95 winter season to be 373,741 Mcf versus a design day supply of
-7-
400,521 Mcf. On January 19, 1994, SJG experienced its highest peak-day demand
of 366,382 Mcf with an average temperature of 2.68 degrees F.
Storage Services
In addition to its normal gas suppliers, SJG has nine storage services that
are capable of storing 11.7 Bcf of gas and provide a total daily delivery
capacity of 111,526 Mcf. While these storage services do not represent an
additional source of gas, they do provide SJG with flexibility to acquire gas
during periods of low demand and store it until it is needed during winter
heating seasons and other times of high demand.
SJG has the following contracts for gas storage service:
Contract Term Storage Capacity
1972 - 1995 1,362,980 Mcf
1980 - 1998 4,257,135 Mcf
Year-to-Year 137,813 Mcf
Year-to-Year 207,770 Mcf (1)
1984 - 1995 1,182,609 Mcf
1987 - 2002 500,000 Mcf
1988 - 2008 1,307,400 Mcf
1989 - 2009 1,099,346 Mcf
1990 - 2005 1,705,000 Mcf
(1) Contract is for storage of liquefied natural gas; the amount shown is
natural gas equivalent.
Supplemental Gas Supplies
In 1994, SJG injected 310,946 Mcf of vaporized liquefied natural gas (LNG)
into its distribution system from its McKee City, New Jersey LNG facility. This
LNG was obtained through a long-term LNG purchase agreement with Distrigas of
Massachusetts Corporation and from gas liquefaction service that was provided by
Transco.
SJG's three propane-air vaporization plants enable it to augment natural
gas supplies during periods of peak demand by vaporizing liquid propane and
mixing the vaporized propane with air to form a gas that is compatible with
natural gas. During 1994, 17,908 Mcf of propane-air gas was utilized by SJG.
Gas Prices
During 1994 SJG purchased and had delivered to it approximately 55.3 Bcf of
natural gas for distribution to its customers in New Jersey. Of this total,
41.4 Bcf was transported on the Transco pipeline system and 13.9 Bcf was
transported on the Columbia pipeline system.
The Company's average cost of gas purchased in 1994 was $3.09 per Mcf,
which unit cost includes all demand and commodity charges.
Energy & Minerals, Inc.
Morie Company
Morie Company obtains substantially all of the materials which it
processes from its owned or leased properties in New Jersey, Tennessee,
Georgia and Alabama. (See Item 2. "Properties.")
-8-
R&T
Raw materials are not significant to the operations of the R&T Companies.
Patents and Franchises
SJG holds nonexclusive franchises granted by municipalities in the seven-
county area of southern New Jersey that it serves. No other natural gas public
utility presently serves the territory covered by SJG's franchises. Otherwise,
patents, trademarks, licenses, franchises and concessions are not material to
the business of the Company or any of its subsidiaries.
Seasonal Aspects
SJG experiences seasonal fluctuations in sales when selling
fuel for heating purposes. SJG meets this seasonal fluctuation
in demand from its firm customers by buying and storing gas during the summer
months, and by drawing from storage and purchasing supplemental supplies
during the heating season. As a result of this seasonality, SJG experiences
reductions of revenues and net income during the second and third quarters of
the year.
Morie Company's mining activities in New Jersey and Tennessee are
normally curtailed during the winter months. Sales during the winter months
are made from inventories accumulated during the previous months. Nevertheless,
the volume of sales during the winter is lower than the volume of sales made
during other seasons, particularly the summer, and Morie Company regularly
shows reductions in revenues and net income during the winter season.
The utility and general construction companies of R&T experience lower
construction activity during the winter months as construction activity in the
northeast is usually reduced or curtailed because of colder temperatures.
Working Capital Practices
As previously indicated under Seasonal Aspects, SJG buys and stores natural
gas during the summer months. These purchases are financed by short-term loans
which are substantially paid down during the winter months when gas revenues are
higher. Reference is also made to "Liquidity" on pages 20 and 21 of the
Company's Annual Report to Shareholders for the year ended December 31, 1994,
which annual report is attached to this report. See Item 14(c)(13).
Customers
Except for R&T, no material part of the Company's business or that of any
of its subsidiaries is dependent upon a single customer or a few customers, the
loss of which would have a material adverse effect on any such business. (See
pages
3 and 5).
Backlog
Backlog is not material to an understanding of the Company's business or
that of any of its subsidiaries.
Government Contracts
No material portion of the business of the Company or any of its
subsidiaries is subject to renegotiation of profits or termination of
contracts or subcontracts at the election of any government.
-9-
Competition
Although the SJG franchises are nonexclusive, none of its service territory
is presently served by any other natural gas public utility. Competition does
exist, however, from suppliers of oil, propane and electricity for residential,
commercial and industrial uses. Additional competition for certain industrial
gas sales may result from the implementation of the "open access" provision of
the FERC Order No. 636 which unbundled the services which are provided by
interstate pipeline suppliers; although the full effect of unbundling is not yet
known, SJG has dealt with the unbundled structure since 1991 and believes it has
structured its rates to enable it to compete effectively with any marketer
within the service territory of SJG.
Morie Company competes with a number of other sand and gravel mining
companies in the eastern part of the United States.
SJE competes with a number of other marketors/brokers to supply gas to end
users including SJG and other utilities
The operating companies of R&T Group compete with a number of other
utility and general construction companies.
Research
During the last three fiscal years, neither the Company nor any of its
subsidiaries engaged in research activities to any material extent.
Environmental Matters
Information on environmental matters for SJI and its subsidiaries is
incorporated by reference to Note 9 on pages 17 and 18 of the Company's Annual
Report to Shareholders for the year ended December 31, 1994, which Annual Report
is attached to this report. See Item 14(c)(13).
EMI and its subsidiaries are subject to, and have a corporate policy of
compliance with, legislation and regulation by federal, state and local
authorities with regard to air and water quality control, and other
environmental considerations. Expenditures for environmental purposes are
not expected to materially affect future operations or earnings.
At December 31, 1994, Morie Company had an accrued land reclamation
liability of $978,000 for lands currently being mined. Morie Company believes
that it is in substantial compliance with all applicable environmental laws
and regulations.
Employees
The Company and its subsidiaries had a total of 1,105 employees as of
December 31, 1994.
-10-
Financial Information About Foreign and Domestic Operations and Export Sales
The Company has no foreign operations and export sales have not been a
significant part of the Company's business.
Item 2. Properties
The principal property of SJG consists of its gas transmission and
distribution systems that include mains, service connections and meters. The
transmission facilities carry the gas from the connections with Transco and
Columbia to SJG's distribution systems for delivery to customers. As of
December 31, 1994, there were approximately 343 miles of mains in the
transmission systems and 4,476 miles of mains in the distribution systems.
SJG owns office and service buildings, including its corporate
headquarters, at eight locations in the territory, a liquefied natural gas
storage and vaporization facility, and three propane-air vaporization plants.
Also, SJG owns a bus parking lot in Atlantic City, N.J.
As of December 31, 1994, the SJG utility plant had a gross book value of
$506,409,713 and a net book value, after accumulated depreciation, of
$370,298,124. In 1994, $36,247,958 was spent on additions to utility plant and
there were retirements of property having an aggregate gross book cost of
$3,537,268. Construction expenditures for 1995 are currently expected to
approximate $31.2 million.
Virtually all of the SJG transmission pipeline, distribution mains and
service connections are in streets or highways or on the property of others.
The SJG transmission and distribution systems are maintained under franchises or
permits or rights-of-way, many of which are perpetual. The SJG properties
(other than property specifically excluded) are subject to a lien of mortgage
under which its first mortgage bonds are outstanding. Such properties are well-
maintained and in good operating condition.
EMI owns two properties in Atlantic City, N.J., one of which includes
commercial space that is being rented to others. EMI also owns and rents to
others two commercial properties in Millville, N.J., one of which is rented to
Morie Company.
Morie Company owns eleven plants, seven of which are located in New Jersey,
two in Tennessee, one in Georgia and one in Alabama. The Morie Company owns
approximately 6,000 acres of land and leases approximately 4,800 acres of land.
The combined acreage includes approximately 1,450 acres of mineable reserves.
The mineral leases typically grant the right to mine sand and gravel for an
initial period with several renewal options. The mineral leases typically
provide for a royalty per ton mined and sold. Morie Company estimates its
proven reserves of sand at approximately 130,800,000 tons of raw aggregates
which may be profitably extracted and processed, based on present methods of
operation and prevailing prices. Reserves have been estimated on the basis of
laboratory and field analyses of samples produced by techniques such as split
spoon, core drillings and excavating experience on the sites.
R&T operating companies share land and buildings at two principal
locations used for administrative operations and housing facilities for
vehicles, heavy equipment and supplies.
-11-
The Company owns approximately 139 acres of land in Folsom, New Jersey,
approximately 9.29 acres of land in Linwood, New Jersey, and an office building
in Chester, Pennsylvania.
Item 3. Legal Proceedings
The Company is not aware of any pending or potential legal proceedings
that it believes will have a material effect on its operations or consolidated
financial position. Reference is made to Note 9 on pages 17 and 18 of the
Company's Annual Report to Shareholders for the year ended December 31, 1994,
which Annual Report is attached to this report. See Item 14(c)(13).
Item 4. Submission Of Matters To A Vote of Security Holders
No matter was submitted to a vote of security holders during the fourth
quarter of the 1994 fiscal year.
Item 4-A. Executive Officers (Other Than Directors) of the Registrant
Name Age Positions with the Company
Gerald S. Levitt 50 Vice President
George L. Baulig 52 Secretary and
Assistant Treasurer
Richard B. Tonielli 55 Treasurer
There is no family relationship among the officers of the registrant.
Gerald S. Levitt was elected Vice President of the Company and Senior
Vice President of South Jersey Gas effective November 1, 1983. He has served
as Chief Financial Officer of the Company since October 1, 1989. He was
elected Executive Vice President of South Jersey Gas on November 1, 1986. Mr.
Levitt was Vice President of EMI from November 1983 to November 1986. Mr.
Levitt is also a member of the Board of Directors of Morie Company.
Richard B. Tonielli was elected Treasurer of the Company effective
September 1981. He has served as Senior Vice President, Finance since April 1,
1988 and he has served in other officer positions of South Jersey Gas since
1983. Mr. Tonielli serves as Vice President and Treasurer of EMI (September
1981 to date) and Treasurer of R&T Group, Inc. (October 1989 to date).
George L. Baulig was elected Secretary and Assistant Treasurer of the
Company, South Jersey Gas and EMI effective November 1, 1980. Mr. Baulig is
also Secretary of R&T Group, Inc. (October 1989 to date), South Jersey Energy
Company and Morie Company.
Executive officers of the Company are elected annually and serve at the
pleasure of the Board of Directors.
-12-
PART II
Item 5. Market for the Registrant's Common Stock and Related Stockholder
Matters
Information required by this Item is incorporated by reference to Note 6
on page 17 and the bottom of page 22 of the Company's Annual Report to
Shareholders for the year ended December 31, 1994, which Annual Report is
attached to this report. See Item 14(c)(13).
Item 6. Selected Financial Data
Information required by this Item is incorporated by reference to page 1
of the Company's Annual Report to Shareholders for the year ended December 31,
1994, which Annual Report is attached to this report. See Item 14(c)(13).
Item 7. Management's Discussion and Analysis of Results of Operations and
Financial Condition
Information required by this Item is incorporated by reference to pages
19, 20 and 21 of the Company's Annual Report to Shareholders for the year ended
December 31, 1994, which Annual Report is attached to this report. See Item
14(c)(13).
Item 8. Financial Statements and Supplementary Data
Information required by this Item is incorporated by reference to pages
10 through 19 and page 22 of the Company's Annual Report to Shareholders for
the year ended December 31, 1994, which Annual Report is attached to this
report. See Item 14(c)(13).
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure
None
-13-
PART III
Item 10. Directors and Executive Officers of the Registrant
Information required by this Item relating to the directors of the
Company is incorporated by reference to pages 2 through 6 of the Company's
definitive Proxy Statement, dated March 8, 1995, filed with the Commission,
File number 1-6364, in connection with the Company's 1995 Annual Meeting of
Shareholders. Information required by this Item relating to the executive
officers (other than Directors) of the Company is set forth in Item 4-A of
this report.
Item 11. Executive Compensation
Information required by this Item is incorporated by reference to pages
5 through 10 (except for the Report of the Compensation/Pension Committee on
pages 9 and 10, and the Stock Performance Graph on page 10, which are not so
incorporated) of the Company's definitive Proxy Statement, dated March 8, 1995,
filed with the Commission, File number 1-6364, in connection with the Company's
1995 Annual Meeting of Shareholders.
Item 12. Security Ownership of Certain Beneficial Owners and Management
Information required by this Item is incorporated by reference to pages
2 through 6 of the Company's definitive Proxy Statement, dated March 8, 1995,
filed with the Commission, File number 1-6364, in connection with the
Company's 1995 Annual Meeting of Shareholders.
Item 13. Certain Relationships and Related Transactions
Information required by this Item is incorporated by reference to page 6 of
the company's definitive Proxy Statement, dated March 8, 1995, filed with the
Commission, File number 1-6364, in connection with the Company's 1995 Annual
Meeting of Shareholders.
-14-
PART IV
Item 14. Exhibits, Financial Statement Schedule, and Reports on Form 8-K.
(a) Listed below are all financial statements and schedules filed as
part of this report:
1 - The consolidated financial statements and notes to consolidated
financial statements together with the report thereon of Deloitte
& Touche LLP, dated February 15, 1995, are incorporated herein by
reference to pages 10 through 19 of the Company's Annual Report to
Shareholders for the year ended December 31, 1994, which Annual Report
is attached to this report. See Item 14(c)(13).
2 - Supplementary Financial Information Page(s)
Information regarding selected quarterly financial
data is incorporated herein by reference to page 22 of
the Company's Annual Report to Shareholders for the year
ended December 31, 1994, which Annual Report is
attached to this report. See Item 14(c)(13).
Supplemental Schedules as of December 31, 1994, 1993 and 1992
and for the three years ended December 31, 1994, 1993, and 1992:
The Independent Auditors' Report of Deloitte & Touche LLP,
Auditors of the Company 25
Schedule II - Valuation and Qualifying Accounts 26
(All Schedules, other than that listed above, are
omitted because the information called for is
included in the financial statements filed or
because they are not applicable or are not
required. Separate financial statements are
not presented because all consolidated subsidiaries
are wholly-owned.)
3 - See Item 14(c)(13)
(b) No reports on Form 8-K have been filed by the Company during the quarter
ended December 31, 1994.
-15-
(c) List of Exhibits (Exhibit Number is in Accordance with the Exhibit Table
in Item 601 of Regulation S-K)
Exhibit Incorporated by Reference From
Number Exhibit Reference Document
(3)(a)(i) Certificate of Incorporation (4)(a) Form S-2
of the Company, as amended (2-91515)
through April 19, 1984.
(3)(a)(ii) Amendment to Certificate of (4)(e)(1) Form S-3
Incorporation relating to (33-1320)
two-for-one stock split
effective as of April 28,
1987.
(3)(a)(iii) Amendment to Certificate of (4)(e)(2) Form S-3
Incorporation relating to (33-1320)
director and officer
liability.
(3)(b) Bylaws of the Company as
amended and restated
through April 20, 1995
(filed herewith).
(4)(a) Form of Stock Certificate (4)(a) Form 10-K
for common stock. for 1985
(1-6364)
(4)(b)(i) First Mortgage Indenture (4)(b)(i) Form 10-K
dated October 1, 1947. for 1987
(1-6364)
(4)(b)(vii) Form of South Jersey Gas (4)(b)(vii) Form 10-K
Company First Mortgage for 1980
Bond, 8-1/4% Series due 1996. (1-6364)
(4)(b)(viii) Form of South Jersey Gas (4)(b)(viii) Form 10-K
Company First Mortgage for 1980
Bond, 8-1/4% Series due 1998. (1-6364)
(4)(b)(x) Twelfth Supplemental Inden- 5(b) Form S-7
ture, dated as of June 1, (2-68038)
1980.
-16-
Exhibit Incorporated by Reference From
Number Exhibit Reference Document
(4)(b)(xii) Fifteenth Supplemental (4)(b)(xiii) Form 10-K
Indenture, dated July for 1986
1, 1986, 9.2% Series (1-6364)
due 1998.
(4)(b)(xiv) Sixteenth Supplemental (4)(b)(xv) Form 10-Q
Indenture dated as of for quarter
April 1, 1988, 10-1/4% ended
Series due 2008. March 31,
1988 (1-6364)
(4)(b)(xv) Seventeenth Supplemental (4)(b)(xv) Form 10-K
Indenture dated as of for 1989
May 1, 1989. (1-6364)
(4)(b)(xvi) Eighteenth Supplemental (4)(e) Form S-3
Indenture, dated as of (33-36581)
March 1, 1990.
(4)(b)(xvii) Nineteenth Supplemental (4)(b)(xvii) Form 10-K
Indenture, dated as of for 1992
April 1, 1992. (1-6364)
(4)(b)(xviii) Twentieth Supplemental (4)(b)(xviii) Form 10-K
Indenture, dated as of for 1993
June 1, 1993. (1-6364)
(4)(c) Indenture dated as of
January 31, 1995; 8.60%
Debenture Notes due
February 1, 2010
(filed herewith).
(9) None
(10)(d) Gas storage agreement (GSS) (10)(d) Form 10-K
between South Jersey Gas for 1993
Company and Transco, (1-6364)
dated October 1, 1993.
(10)(e) Gas storage agreement (S-2) (5)(h) Form S-7
between South Jersey Gas (2-56223)
Company and Transco,
dated December 16, 1953.
(10)(f) Gas storage agreement (LG-A) (5)(f) Form S-7
between South Jersey Gas (2-56223)
Company and Transco,
dated June 3, 1974.
-17-
Exhibit Incorporated by Reference From
Number Exhibit Reference Document
(10)(h) Gas storage agreement (WSS) (10)(h) Form 10-K
between South Jersey Gas for 1991
Company and Transco, dated (1-6364)
August 1, 1991.
(10)(i) Gas storage agreement (LSS) (10)(i) Form 10-K
between South Jersey Gas for 1993
Company and Transco, (1-6364)
dated October 1, 1993.
(10)(i)(a) Gas storage agreement (10)(i)(a) Form 10-K
(SS-1) between South Jersey for 1988
Gas Company and Transco, (1-6364)
dated May 10, 1987 (effective
April 1, 1988).
(10)(i)(b) Gas storage agreement (10)(i)(b) Form 10-K
(ESS) between South Jersey for 1993
Gas Company and Transco, (1-6364)
dated November 1, 1993.
(10)(i)(c) Gas transportation service (10)(i)(c) Form 10-K
agreement between South for 1989
Jersey Gas Company and (1-6364)
Transco, dated April 1,
1986.
(10)(i)(e) Service agreement (FS) (10)(i)(e) Form 10-K
between South Jersey Gas for 1991
Company and Transco, dated (1-6364)
August 1, 1991.
(10)(i)(f) Service agreement (FT) (10)(i)(f) Form 10-K
between South Jersey Gas for 1991
Company and Transco, dated (1-6364)
February 1, 1992.
(10)(i)(g) Service agreement (10)(i)(g) Form 10-K
(Incremental FT) for 1991
between South Jersey Gas Company (1-6364)
and Transco, dated August 1,
1991.
(10)(i)(i) Gas storage agreement (SS-2) (10)(i)(i) Form 10-K
between South Jersey Gas for 1991
company and Transco, dated (1-6364)
July 25, 1990.
-18-
Exhibit Incorporated by Reference From
Number Exhibit Reference Document
(10)(i)(j) Gas Transportation Service (10)(i)(j) Form 10-K
Agreement between South for 1993
Jersey Gas Company and (1-6364)
Transco, dated December 20,
1991.
(10)(i)(k) Amendment to Gas (10)(i)(k) Form 10-K
Transportation Agreement, for 1993
dated December 20, 1991 (1-6364)
between South Jersey Gas
Company and Transco, dated
October 5, 1993.
(10)(j)(a) Gas Transportation Service (10)(j)(a) Form 10-K
Agreement (FTS) between South for 1989
Jersey Gas Company and (1-6364)
Equitable Gas Company,
dated November 1, 1986.
(10)(k)(h) Gas Transportation Service (10)(k)(h) Form 10-K
Agreement (TF) between for 1993
South Jersey Gas Company (1-6364)
CNG Transmission Corporation
dated October 1, 1993.
(10)(k)(i) Gas purchase agreement (10)(k)(i) Form 10-K
between South Jersey Gas for 1989
Company and ARCO Gas Market- (1-6364)
ing, Inc., dated March 5, 1990.
(10)(k)(k) Gas Transportation Service (10)(k)(k) Form 10-K
Agreement (FTS 1) between for 1993
South Jersey Gas Company and (1-6364)
Columbia Gulf Transmission
Company, dated November 1,
1993.
(10)(k)(l) Assignment Agreement (10)(k)(i) Form 10-K
capacity and service rights for 1993
(FTS-2) between South Jersey (1-6364)
Gas Company and Columbia
Gulf Transmission Company,
dated November 1, 1993.
-19-
Exhibit Incorporated by Reference From
Number Exhibit Reference Document
(10)(k)(m) FTS Service Agreement (10)(k)(m) Form 10-K
No. 39556 between South for 1993
Jersey Gas Company and (1-6364)
Columbia Gas Transmission
Corporation, dated
November 1, 1993.
(10)(k)(n) FTS Service Agreement (10)(k)(n) Form 10-K
No. 38099 between South for 1993
Jersey Gas Company and (1-6364)
Columbia Gas Transmission
Corporation, dated
November 1, 1993.
(10)(k)(o) NTS Service Agreement (10)(k)(o) Form 10-K
No. 39305 between South for 1993
Jersey Gas Company and (1-6364)
Columbia Gas Transmission
Corporation, dated
November 1, 1993.
(10)(k)(p) FSS Service Agreement (10)(k)(p) Form 10-K
No. 38130 between South for 1993
Jersey Gas Company and (1-6364)
Columbia Gas Transmission
Corporation, dated
November 1, 1993.
(10)(k)(q) SST Service Agreement (10)(k)(q) Form 10-K
No. 38086 between South for 1993
Jersey Gas Company and (1-6364)
Columbia Gas Transmission
Corporation, dated
November 1, 1993.
(10)(k)(r) NS (Negotiated Sales) Service
Agreement dated December
1, 1994 between South Jersey
Gas Company and Transco Gas
Marketing Company as agent
for Transcontinental Gas
Pipe Line
(filed herewith).
-20-
Exhibit Incorporated by Reference From
Number Exhibit Reference Document
(10)(l) Deferred Payment Plan for
Directors of South Jersey
Industries, Inc., South
Jersey Gas Company, Energy
& Minerals, Inc., R&T Group,
Inc. and South Jersey Energy
Company as amended and
restated October 21, 1994
(filed herewith).
(10)(l)(a) Form of Deferred Compen- (10)(j)(a) Form 10-K
sation Agreement between for 1980
the Company and/or a sub- (1-6364)
sidiary and eleven of its
officers.
(10)(l)(b) Schedule of Deferred Com- (10)(l)(b) Form 10-K
pensation Agreements. for 1992
(1-6364)
(10)(l)(c) Supplemental Executive (10)(l)(c) Form 10-K
Retirement Program, as for 1992
amended and restated ef- (1-6364)
fective September 1, 1991,
and form of Agreement
between certain Company
or subsidiary Company officers.
(10)(l)(d) Form of Officer Employment
Agreement between certain
officers and either the Company
or its Subsidiaries
(filed herewith).
(10)(l)(e) Schedule of Officer
Employment Agreements
(filed herewith).
(10)(l)(f) Officer Severance Benefit (10)(l)(g) Form 10-K
Program for all officers. for 1985
(1-6364)
(10)(l)(g) Discretionary Incentive (10(l)(h) Form 10-K
Bonus Program for all for 1985
officers and management (1-6364)
employees.
(10)(l)(h) The 1987 Stock Option and (10)(l)(i) Form 10-K
Stock Appreciation Rights for 1987
Plan including Form of (1-6364)
Agreement.
-21-
Exhibit Incorporated by Reference From
Number Exhibit Reference Document
(10)(p) Retirement Plan for Non- (10)(p) Form 10-K
employee Members of the for 1988
Board of Directors. (1-6364)
(10)(q) Executive Employment
Agreement dated June 17,
1994 between the Company
and William F. Ryan, President
and Chief Executive Officer
(filed herewith).
(11) Not Applicable
(12) Calculation of Ratio of
Earnings to Fixed Charges
(Before Federal Income
Taxes) (filed herewith).
(13) The Annual Report to
Shareholders of the Company
for the year ended December 31,
1994 is filed as an exhibit
hereto solely to the extent
portions are specifically
incorporated by reference
herein.
(16) Not Applicable
(18) Not Applicable
(21) Subsidiaries of the Registrant
(filed herewith).
(22) None
(23) Independent Auditors'
Consent (filed herewith).
(24) Power of Attorney (filed
herewith).
(27) Financial Data Schedule
(Submitted only in electronic
format to the Securities
and Exchange Commission.
(99) None
-22-
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
SOUTH JERSEY INDUSTRIES, INC.
BY /s/ G. S. Levitt
G. S. Levitt, Vice President
Date March 27, 1995
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Signature Title Date
/s/ William F. Ryan President and Director March 27, 1995
(William F. Ryan) (Principal Executive Officer)
/s/ G. S. Levitt Vice President March 27, 1995
(G. S. Levitt) (Principal Financial Officer)
/s/ Richard B. Tonielli Treasurer (Principal March 27, 1995
(Richard B. Tonielli) Accounting Officer)
/s/ Frank L. Bradley, Jr. Director March 27, 1995
(Frank L. Bradley, Jr.)
/s/ Richard L. Dunham Director March 27, 1995
(Richard L. Dunham)
/s/ W. Cary Edwards Director March 27, 1995
(W. Cary Edwards)
/s/ Thomas L. Glenn, Jr. Director March 27, 1995
(Thomas L. Glenn, Jr.)
/s/ Vincent E. Hoyer Director March 27, 1995
(Vincent E. Hoyer)
/s/ Herman D. James Director March 27, 1995
(Herman D. James)
/s/ Marilyn Ware Lewis Director March 27, 1995
(Marilyn Ware Lewis)
/s/ Clarence D. McCormick Director March 27, 1995
(Clarence D. McCormick)
-23-
/s/ Peter M. Mitchell Director March 27, 1995
(Peter M. Mitchell)
/s/ Jackson Neall Director March 27, 1995
(Jackson Neall)
/s/ Shirli M. Vioni Director March 27, 1995
(Shirli M. Vioni)
-24-
INDEPENDENT AUDITORS' REPORT
South Jersey Industries, Inc.:
We have audited the consolidated financial statements of South Jersey
Industries, Inc. and its subsidiaries as of December 31, 1994 and 1993 and for
each of the three years in the period ended December 31, 1994 and have issued
our report thereon dated February 15, 1995, which report includes an explanatory
paragraph as to the Company changing its method of accounting for income taxes,
effective January 1, 1993, to conform with Statement of Financial Standards No.
109 and its method of accounting for postretirement benefits other than
pensions, effective January 1, 1993, to conform with Statement of Financial
Accounting Standards No. 106; such financial statements and report are included
in your 1994 Annual Report to Shareholders and are incorporated herein by
reference. Our audits also included the financial statement schedule of South
Jersey Industries, Inc. and its subsidiaries, listed in Item 14. This financial
statement schedule is the responsibility of the Company's management. Our
responsibility is to express an opinion based on our audits. In our opinion,
such financial statement schedule, when considered in relation to the basic
consolidated financial statements taken as a whole, presents fairly in all
material respects the information set forth therein.
DELOITTE & TOUCHE LLP
Philadelphia, Pennsylvania
February 15, 1995
-25-
SOUTH JERSEY INDUSTRIES, INC. AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
Col. A. Col. B. Col. C. Col. D. Col. E.
------------------------------------------------------------------------------------------------------------------------------
Additions
---------
(1) (2)
Charged to
Balance at Charged to Other Balance at
Beginning Costs and Accounts- Deductions- End
Classification of Period Expenses Describe * Describe ** of Period
------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, 1994
Provision for Uncollectible Accounts $ 1,026,329 $ 1,292,762 $ 388,104 $ 1,716,067 $ 991,128
YEAR ENDED DECEMBER 31, 1993
Provision for Uncollectible Accounts $ 1,071,200 $ 912,929 $ 320,337 $ 1,278,137 $ 1,026,329
YEAR ENDED DECEMBER 31, 1992
Provision for Uncollectible Accounts $ 1,162,200 $ 1,090,310 $ 562,613 $ 1,743,923 $ 1,071,200
* Recoveries of accounts previously written off and minor adjustments.
** Uncollectible accounts written off.
-26-
SOUTH JERSEY INDUSTRIES, INC.
NUMBER ONE SOUTH JERSEY PLAZA
ROUTE 54
FOLSOM, NEW JERSEY 08037
FORM 10-K FYE 12/31/94
EXHIBIT INDEX
Incorporated by
Reference From
Reference Reference
Number Description of Exhibit Exhibit Document
(3)(a)(i) Certificate of Incorporation (4)(a) Form S-2
of the Company, as amended (2-91515)
through April 19, 1984.
(3)(a)(ii) Amendment to Certificate of (4)(e)(1) Form S-3
Incorporation relating to (33-1320)
two-for-one stock split
effective as of April 28,
1987.
(3)(a)(iii) Amendment to Certificate of (4)(e)(2) Form S-3
Incorporation relating to (33-1320)
director and officer
liability.
(3)(b) Bylaws of the Company as
amended and restated
through April 20, 1995
(filed herewith).
(4)(a) Form of Stock Certificate (4)(a) Form 10-K
for common stock. for 1985
(1-6364)
(4)(b)(i) First Mortgage Indenture (4)(b)(i) Form 10-K
dated October 1, 1947. for 1987
(1-6364)
(4)(b)(vii) Form of South Jersey Gas (4)(b)(vii) Form 10-K
Company First Mortgage for 1980
Bond, 8-1/4% Series due 1996. (1-6364)
(4)(b)(viii) Form of South Jersey Gas (4)(b)(viii) Form 10-K
Company First Mortgage for 1980
Bond, 8-1/4% Series due 1998. (1-6364)
(4)(b)(x) Twelfth Supplemental Inden- 5(b) Form S-7
ture, dated as of June 1, (2-68038)
1980.
-27-
SOUTH JERSEY INDUSTRIES, INC.
NUMBER ONE SOUTH JERSEY PLAZA
ROUTE 54
FOLSOM, NEW JERSEY 08037
FORM 10-K FYE 12/31/94
EXHIBIT INDEX
Incorporated by
Reference From
Reference Reference
Number Description of Exhibit Exhibit Document
(4)(b)(xii) Fifteenth Supplemental (4)(b)(xiii) Form 10-K
Indenture, dated July for 1986
1, 1986, 9.2% Series (1-6364)
due 1998.
(4)(b)(xiv) Sixteenth Supplemental (4)(b)(xv) Form 10-Q
Indenture dated as of for quarter
April 1, 1988, 10-1/4% ended
Series due 2008. March 31,
1988 (1-6364)
(4)(b)(xv) Seventeenth Supplemental (4)(b)(xv) Form 10-K
Indenture dated as of for 1989
May 1, 1989. (1-6364)
(4)(b)(xvi) Eighteenth Supplemental (4)(e) Form S-3
Indenture, dated as of (33-36581)
March 1, 1990.
(4)(b)(xvii) Nineteenth Supplemental (4)(b)(xvii) Form 10-K
Indenture, dated as of for 1992
April 1, 1992. (1-6364)
(4)(b)(xviii) Twentieth Supplemental (4)(b)(xviii) Form 10-K
Indenture, dated as of for 1993
June 1, 1993. (1-6364)
(4)(c) Indenture dated as of
January 31, 1995; 8.60%
Debenture Notes due
February 1, 2010
(filed herewith).
(9) None
(10)(d) Gas storage agreement (GSS) (10)(d) Form 10-K
between South Jersey Gas for 1993
Company and Transco, (1-6364)
dated October 1, 1993.
-28-
SOUTH JERSEY INDUSTRIES, INC.
NUMBER ONE SOUTH JERSEY PLAZA
ROUTE 54
FOLSOM, NEW JERSEY 08037
FORM 10-K FYE 12/31/94
EXHIBIT INDEX
Incorporated by
Reference From
Reference Reference
Number Description of Exhibit Exhibit Document
(10)(e) Gas storage agreement (S-2) (5)(h) Form S-7
between South Jersey Gas (2-56223)
Company and Transco,
dated December 16, 1953.
(10)(f) Gas storage agreement (LG-A) (5)(f) Form S-7
between South Jersey Gas (2-56223)
Company and Transco,
dated June 3, 1974.
(10)(h) Gas storage agreement (WSS) (10)(h) Form 10-K
between South Jersey Gas for 1991
Company and Transco, dated (1-6364)
August 1, 1991.
(10)(i) Gas storage agreement (LSS) (10)(i) Form 10-K
between South Jersey Gas for 1993
Company and Transco, (1-6364)
dated October 1, 1993.
(10)(i)(a) Gas storage agreement (10)(i)(a) Form 10-K
(SS-1) between South Jersey for 1988
Gas Company and Transco, (1-6364)
dated May 10, 1987 (effective
April 1, 1988).
(10)(i)(b) Gas storage agreement (10)(i)(b) Form 10-K
(ESS) between South Jersey for 1993
Gas Company and Transco, (1-6364)
dated November 1, 1993.
(10)(i)(c) Gas transportation service (10)(i)(c) Form 10-K
agreement between South for 1989
Jersey Gas Company and (1-6364)
Transco, dated April 1,
1986.
(10)(i)(e) Service agreement (FS) (10)(i)(e) Form 10-K
between South Jersey Gas for 1991
Company and Transco, dated (1-6364)
August 1, 1991.
-29-
SOUTH JERSEY INDUSTRIES, INC.
NUMBER ONE SOUTH JERSEY PLAZA
ROUTE 54
FOLSOM, NEW JERSEY 08037
FORM 10-K FYE 12/31/94
EXHIBIT INDEX
Incorporated by
Reference From
Reference Reference
Number Description of Exhibit Exhibit Document
(10)(i)(f) Service agreement (FT) (10)(i)(f) Form 10-K
between South Jersey Gas for 1991
Company and Transco, dated (1-6364)
February 1, 1992.
(10)(i)(g) Service agreement (10)(i)(g) Form 10-K
(Incremental FT) for 1991
between South Jersey Gas Company (1-6364)
and Transco, dated August 1,
1991.
(10)(i)(i) Gas storage agreement (SS-2) (10)(i)(i) Form 10-K
between South Jersey Gas for 1991
company and Transco, dated (1-6364)
July 25, 1990.
(10)(i)(j) Gas Transportation Service (10)(i)(j) Form 10-K
Agreement between South for 1993
Jersey Gas Company and (1-6364)
Transco, dated December 20,
1991.
(10)(i)(k) Amendment to Gas (10)(i)(k) Form 10-K
Transportation Agreement, for 1993
dated December 20, 1991 (1-6364)
between South Jersey Gas
Company and Transco, dated
October 5, 1993.
(10)(j)(a) Gas Transportation Service (10)(j)(a) Form 10-K
Agreement (FTS) between South for 1989
Jersey Gas Company and (1-6364)
Equitable Gas Company,
dated November 1, 1986.
(10)(k)(h) Gas Transportation Service (10)(k)(h) Form 10-K
Agreement (TF) between for 1993
South Jersey Gas Company (1-6364)
CNG Transmission Corporation
dated October 1, 1993.
-30-
SOUTH JERSEY INDUSTRIES, INC.
NUMBER ONE SOUTH JERSEY PLAZA
ROUTE 54
FOLSOM, NEW JERSEY 08037
FORM 10-K FYE 12/31/94
EXHIBIT INDEX
Incorporated by
Reference From
Reference Reference
Number Description of Exhibit Exhibit Document
(10)(k)(i) Gas purchase agreement (10)(k)(i) Form 10-K
between South Jersey Gas for 1989
Company and ARCO Gas Market- (1-6364)
ing, Inc., dated March 5, 1990.
(10)(k)(k) Gas Transportation Service (10)(k)(k) Form 10-K
Agreement (FTS 1) between for 1993
South Jersey Gas Company and (1-6364)
Columbia Gulf Transmission
Company, dated November 1,
1993.
(10)(k)(l) Assignment Agreement (10)(k)(i) Form 10-K
capacity and service rights for 1993
(FTS-2) between South Jersey (1-6364)
Gas Company and Columbia
Gulf Transmission Company,
dated November 1, 1993.
(10)(k)(m) FTS Service Agreement (10)(k)(m) Form 10-K
No. 39556 between South for 1993
Jersey Gas Company and (1-6364)
Columbia Gas Transmission
Corporation, dated
November 1, 1993.
(10)(k)(n) FTS Service Agreement (10)(k)(n) Form 10-K
No. 38099 between South for 1993
Jersey Gas Company and (1-6364)
Columbia Gas Transmission
Corporation, dated
November 1, 1993.
(10)(k)(o) NTS Service Agreement (10)(k)(o) Form 10-K
No. 39305 between South for 1993
Jersey Gas Company and (1-6364)
Columbia Gas Transmission
Corporation, dated
November 1, 1993.
-31-
SOUTH JERSEY INDUSTRIES, INC.
NUMBER ONE SOUTH JERSEY PLAZA
ROUTE 54
FOLSOM, NEW JERSEY 08037
FORM 10-K FYE 12/31/94
EXHIBIT INDEX
Incorporated by
Reference From
Reference Reference
Number Description of Exhibit Exhibit Document
(10)(k)(p) FSS Service Agreement (10)(k)(p) Form 10-K
No. 38130 between South for 1993
Jersey Gas Company and (1-6364)
Columbia Gas Transmission
Corporation, dated
November 1, 1993.
(10)(k)(q) SST Service Agreement (10)(k)(q) Form 10-K
No. 38086 between South for 1993
Jersey Gas Company and (1-6364)
Columbia Gas Transmission
Corporation, dated
November 1, 1993.
(10)(k)(r) NS (Negotiated Sales) Service
Agreement dated December
1, 1994 between South Jersey
Gas Company and Transco Gas
Marketing Company as agent
for Transcontinental Gas
Pipe Line
(filed herewith).
(10)(l) Deferred Payment Plan for
Directors of South Jersey
Industries, Inc., South
Jersey Gas Company, Energy
& Minerals, Inc., R&T Group,
Inc. and South Jersey Energy
Company as amended and
restated October 21, 1994
(filed herewith).
(10)(l)(a) Form of Deferred Compen- (10)(j)(a) Form 10-K
sation Agreement between for 1980
the Company and/or a sub- (1-6364)
sidiary and eleven of its
officers.
(10)(l)(b) Schedule of Deferred Com- (10)(l)(b) Form 10-K
pensation Agreements. for 1992
(1-6364)
-32-
SOUTH JERSEY INDUSTRIES, INC.
NUMBER ONE SOUTH JERSEY PLAZA
ROUTE 54
FOLSOM, NEW JERSEY 08037
FORM 10-K FYE 12/31/94
EXHIBIT INDEX
Incorporated by
Reference From
Reference Reference
Number Description of Exhibit Exhibit Document
(10)(l)(c) Supplemental Executive (10)(l)(c) Form 10-K
Retirement Program, as for 1992
amended and restated ef- (1-6364)
fective September 1, 1991,
and form of Agreement
between certain Company
or subsidiary Company officers.
(10)(l)(d) Form of Officer Employment
Agreement between certain
officers and either the Company
or its Subsidiaries
(filed herewith).
(10)(l)(e) Schedule of Officer
Employment Agreements
(filed herewith).
(10)(l)(f) Officer Severance Benefit (10)(l)(g) Form 10-K
Program for all officers. for 1985
(1-6364)
(10)(l)(g) Discretionary Incentive (10(l)(h) Form 10-K
Bonus Program for all for 1985
officers and management (1-6364)
employees.
(10)(l)(h) The 1987 Stock Option and (10)(l)(i) Form 10-K
Stock Appreciation Rights for 1987
Plan including Form of (1-6364)
Agreement.
(10)(p) Retirement Plan for Non- (10)(p) Form 10-K
employee Members of the for 1988
Board of Directors. (1-6364)
(10)(q) Executive Employment
Agreement dated June 17,
1994 between the Company
and William F. Ryan, President
and Chief Executive Officer
(filed herewith).
-33-
SOUTH JERSEY INDUSTRIES, INC.
NUMBER ONE SOUTH JERSEY PLAZA
ROUTE 54
FOLSOM, NEW JERSEY 08037
FORM 10-K FYE 12/31/94
EXHIBIT INDEX
Incorporated by
Reference From
Reference Reference
Number Description of Exhibit Exhibit Document
(11) Not Applicable
(12) Calculation of Ratio of
Earnings to Fixed Charges
(Before Federal Income
Taxes) (filed herewith).
(13) The Annual Report to
Shareholders of the Company
for the year ended December 31,
1994 is filed as an exhibit
hereto solely to the extent
portions are specifically
incorporated by reference
herein.
(16) Not Applicable
(18) Not Applicable
(21) Subsidiaries of the Registrant
(filed herewith).
(22) None
(23) Independent Auditors'
Consent (filed herewith).
(24) Power of Attorney
(filed herewith).
(27) Financial Data Schedule
(Submitted only in electronic
format to the Securities
and Exchange Commission.
(99) None
-34-
EX-3.B
2
EXHIBIT (3)(B)
BYLAWS
SOUTH JERSEY INDUSTRIES, INC.
ARTICLE I
SHAREHOLDERS
1.1 Place of Meetings. Meetings of the shareholders shall
be held at such place as may be designated by the Board of Directors
in the notice of meeting.
1.2 Annual Meeting. An annual meeting of the shareholders
for the election of Directors and for other business shall be held on
the next to the last Thursday in April of each year, if not a legal
holiday, and if a legal holiday, then on the first day following which
is not a legal holiday, or on such other day as may be designated by
the Board of Directors.
1.3 Special Meetings. Special meetings of the shareholders
may be called at any time by the President or a majority of the Board
of Directors at a meeting or in writing without a meeting or by the
holders of not less than 10% of all the shares entitled to vote at a
meeting. Business transacted at any special meeting shall be confined
to the purpose or purposes stated in the notice thereof.
1.4 Notice. Written notice of the time, place and purpose of
every meeting of shareholders shall be given not less than ten nor
more than 60 days before such meeting, either personally or by mail,
by or at the direction of the President, the Secretary, or the officer
or persons calling the meeting, to each shareholder of record entitled
to vote at the meeting.
1.5 Quorum. At all meetings of shareholders, a majority of
the outstanding shares of capital stock entitled to vote, represented
by shareholders in person or by proxy, shall constitute a quorum for
the transaction of business. In the absence of a quorum, the
shareholders present in person or by proxy by majority vote may
adjourn the meeting from time to time without notice other than by
oral announcement at the meeting, until a quorum shall be present. At
any such adjourned meeting at which a quorum shall be present, any
business may be transacted which might have been transacted at the
original meeting.
ARTICLE II
DIRECTORS
2.1 Powers, Number, Classification and Election. The
business and affairs of the Company shall be conducted and managed by
its Board of Directors, which shall have all the powers of the Company
except such as are by statute, by the Certificate of Incorporation, or
by these Bylaws conferred upon or reserved to the shareholders.
The number of Directors constituting the entire Board of Directors
shall be 14. The members of the Board of Directors shall be divided
into classes in the manner provided by Article SEVENTH of the
Company's Certificate of Incorporation and shall be elected and serve
for such terms of office as are provided therein.
2.2 Meetings.
(a) Place of Meetings. Meetings of the Board of Directors
shall be held at such place as may be designated by the Board or in
the notice of the meeting.
(b) Regular Meetings. Regular meetings of the Board of
Directors shall be held on such dates as may be fixed, from time to
time, by a majority of the Directors at a meeting or in writing
without a meeting.
(c) Special Meetings. Special meetings of the Board of
Directors shall be held whenever called by the President or by a
majority of the Board of Directors at a meeting or in writing without
a meeting.
(d) Notice. Notice of the time and place of every meeting,
which need not be in writing, shall be given to each Director at least
two days before the meeting.
(e) Quorum. At all meetings of the Board of Directors, or
any committee thereof, a majority of the total number of the members
shall constitute a quorum for the transaction of business, provided
that a quorum shall never be less than two persons. Except in cases
in which it is by law, by the Certificate of Incorporation, or by
these Bylaws otherwise provided, a majority of members present at a
meeting of the full Board or of a committee at which a quorum is
present shall decide any questions that may come before the meeting.
In the absence of a quorum, the members present by majority vote may
adjourn the meeting from time to time without notice other than by
oral announcement at the meeting, until a quorum shall be present. At
any such adjourned meeting at which a quorum shall be present, any
business may be transacted which might have been transacted at the
meeting as originally notified.
2.3 Newly Created Directorships and Vacancies. Newly created
Directorships resulting from an increase in the number of Directors
and vacancies occurring in the Board of Directors for any reason may
be filled by vote of a majority of the Directors then in office,
although less than a quorum, or by a sole remaining director, at any
meeting of the Board of Directors. Newly created Directorships shall
be assigned by the Board of Directors to one of the classes described
in Article SEVENTH of the Company's Certificate of Incorporation in
the manner provided in such Article. The person so elected by the
Board of Directors to fill a newly created Directorship or a vacancy
shall be elected to hold office until the next succeeding annual
meeting of shareholders and until his successor shall be duly elected
and qualified or until his earlier death, resignation or removal.
2.4 Committees. The Board of Directors may by resolution
adopted by a majority of the whole Board designate one or more
committees, each committee to consist of three or more Directors, one
of whom shall be designated by the Board as Chairman, and such
alternate members (also Directors) as may be designated by the Board.
The Chief Executive Officer of the Company shall be ex officio a
member of each such committee unless the Board shall otherwise direct.
The Board may provide by resolution for compensation and payment of
expenses to committee members and alternate members. Any such
committee, to the extent permitted by law and provided in such
resolution, shall have and exercise the authority of the Board of
Directors in the management of the business and affairs of the
Company, and shall have power to fix its own rules of procedure. In
the absence or disqualification of any member of a committee or other
person authorized to act as such, the member or members thereof
present and not disqualified from voting, whether or not he or they
constitute a quorum, may unanimously appoint another Director to act
at the meeting in the place of any such absent or disqualified member.
2.5 Removal. No member of the Board of Directors may be removed
except for cause.
ARTICLE III
OFFICERS
3.1 Executive Officers. The Executive officers of the
Company shall be a President, one or more Vice Presidents (one or more
of whom may be designated as Executive Vice President or Senior Vice
President), a Secretary, and a Treasurer. The Executive officers
shall be elected annually by the Board of Directors at its first
meeting following the annual meeting of the shareholders and each such
Officer shall hold office until the corresponding meeting in the next
year and until his successor shall have been duly chosen and
qualified, or until he shall have resigned or shall have been removed.
Any vacancy in any of the above-mentioned offices may be filled for
the unexpired portion of the term by the Board of Directors at any
regular or special meeting.
3.2 Authority, Duties and Compensation. The Executive
officers shall have such authority, perform such duties and serve for
such compensation as shall be provided in these Bylaws or as may be
determined by resolution of the Board of Directors. The President
shall be the Chief Executive Officer. The Chief Executive Officer
shall preside at all meetings of the Board of Directors and the
shareholders at which he is present, shall carry out policies adopted
or approved by the Board of Directors, shall have general charge and
supervision of the business of the Company, subject to the control of
the Board of Directors, and may perform any act and execute any
instrument in the conduct of the business of the Company. The other
Executive Officers shall have the duties and powers usually related to
their offices, except as the Board of Directors or the Chief Executive
Officer shall otherwise determine from time to time.
3.3 Assistant and Subordinate Officers. The Board of
Directors may choose one or more Assistant Vice Presidents, one or
more Assistant Secretaries, one or more Assistant Treasurers, and such
subordinate Officers as it may deem desirable. Each Assistant and
subordinate Officer, if any, shall hold office for such period, shall
have such authority and perform such duties, and shall receive such
compensation as the Board of Directors or the Chief Executive Officer,
or such other Officer as the Board shall so authorize, may prescribe.
3.4 Officers Holding Two or More Offices. Any two of the
above-mentioned offices may be held by the same person, but no
officers shall execute, acknowledge, or verify any instrument in more
than one capacity, if such instrument be required by statute, by the
Certificate of Incorporation, or by these Bylaws, to be executed,
acknowledged, or verified by any two or more officers.
ARTICLE IV
INDEMNIFICATION
4.1 Right to Indemnification. The Company shall indemnify
any corporate agent against his expenses and liabilities in connection
with any proceedings involving the corporate agent by reason of his
being or having been such a corporate agent to the extent that (a)
such corporate agent is not otherwise indemnified; and (b) the power
to do so has been or may be granted by statute; and for this purpose
the Board of Directors may, and on request of any such corporate agent
shall be required to, determine in each case whether or not the
applicable standards in any such statute have been met, or such
determination shall be made by independent legal counsel if the Board
so directs or if the Board is not empowered by statute to make such
determination.
4.2 Prepayment of Expenses. To the extent that the power
to do so has been or may be granted by statute, the Company shall pay
expenses incurred by a corporate agent in connection with a proceeding
in advance of the final disposition of the proceeding upon receipt of
an undertaking by or on behalf of such corporate agent to repay such
amount unless it shall ultimately be determined that he is entitled to
be indemnified as provided by statute.
4.3 Indemnification Not Exclusive. This indemnification
shall not be exclusive of any other rights to which a corporate agent
may be entitled, both as to any action in his official capacity or
as to any action in another capacity while holding such office, and
shall inure to the benefits of the heirs, executors or administrators
of any such corporate agent.
4.4 Insurance and Other Indemnification. The Board of Directors
shall have the power to (a) purchase and maintain, at the Company's
expense, insurance on behalf of the Company and on behalf of others to
the extent that power to do so has been or may be granted by statute
and (b) give other indemnification to the extent permitted by law.
4.5 Definitions. As used in this Article,
(a) "corporate agent" means any person who is or was a
Director, officer, employee or agent of the Company and any
person who is or was a Director, officer, trustee, employee or agent
of any other enterprise, serving as such at the request of the
Company, or the legal representative of any such Director, officer,
trustee, employee or agent;
(b) "other enterprise" means any domestic or foreign
corporation, other than the Company, and any partnership, joint
venture, sole proprietorship, trust or other enterprise whether or not
for profit, served by a corporate agent;
(c) "expenses" means reasonable costs, disbursements and counsel
fees;
(d) "liabilities" means amounts paid or incurred in satisfaction
of settlements, judgments, fines and penalties;
(e) "proceedings" means any pending, threatened or completed
civil, criminal, administrative or arbitrative action, suit or
proceeding, and any appeal therein and any inquiry or investigation
which could lead to such action, suit or proceeding.
ARTICLE V
SHARE CERTIFICATES AND
UNCERTIFICATED SHARES
5.1 Share Certificates. Except as provided in Section 5.4,
every shareholder of record shall be entitled to a share certificate
representing the shares held by him and such certificates shall
conform to all applicable provisions of law.
5.2 Transfer of Shares. The Board of Directors shall have power
and authority to make all such rules and regulations as it may deem
expedient and in accordance with law concerning the issue, transfer,
and registration of share certificates.
5.3 Mutilated, Lost or Destroyed Certificates. The Board of
Directors may direct a new certificate to be issued in place of any
certificate theretofore issued by the Company alleged to have been
mutilated, lost or destroyed. When authorizing such issue of a new
certificate, the Board of Directors, in its discretion and as a
condition precedent to the issuance thereof, may prescribe such terms
and conditions as it deems expedient, and may require such indemnities
as it deems adequate, to protect the Company from any claim that may
be made against it with respect to any such certificate alleged to
have been lost or destroyed.
5.4 Uncertificated Shares. The Board of Directors may
provide that some or all of the shares of any class or series of stock
of the Company shall be represented by uncertificated shares. Within
20 days after the issuance or transfer of uncertificated shares, the
Company shall send to the registered owner thereof a written notice
stating that the Company is organized under the laws of New Jersey,
the name of the person to whom the shares were issued, the number and
class, and the designation of the series, if any, of such shares, and
containing any other information required by law or deemed advisable
by the Company to be included in such notice. Except as otherwise
expressly provided by law, the rights and obligations of the holders
of uncertificated shares and the rights and obligations of the holders
of certificates representing shares of the same class and series shall
be identical.
ARTICLE VI
MISCELLANEOUS
6.1 Fiscal Year. The fiscal year of the Company shall be the
calendar year, unless otherwise provided by the Board of Directors.
6.2 Amendments. These Bylaws may be amended or repealed
(i) by action of a majority of the Board of Directors at any regular
or special meeting of the Board of Directors, provided notice of any
such alteration, amendment, or repeal shall be given in the notice of
any such meeting, (ii) or except as otherwise provided in Article
TENTH of the Certificate of Incorporation of the Company, as amended,
by action of the holders of a majority of the outstanding shares of
capital stock of the Company entitled to vote generally in the
election of Directors, considered for this purpose as one class.
AMENDMENTS
Article I Section 1.2 Amended March 19, 1970
Article I Section 1.2 Amended April 16, 1970
Article II Section 2.1 Amended February l8, 1971
Article II Section 2.1 Amended June 22, 1972
Article II Section 2.1 Amended August 23, 1973
Article II Section 2.1 Amended February 20, 1975
Article II Section 2.1 Amended February 19, 1976
Article II Section 2.1 Amended February 17, 1977
Article II Section 2.1 Amended February 16, 1978
Article II Section 2.1 Amended February 15, 1979
Article II Section 2.1 Amended August 23, 1979
Article I Section 1.3 Amended November 16, 1979
Article I Section 1.4 Amended November 16, 1979
Article II Section 2.2 (c) Amended November 16, 1979
Article II Section 2.4 Amended November 16, 1979
Article III Section 3.1 Amended November 16, 1979
Article III Section 3.2 Amended November 16, 1979
Article III Section 3.3 Amended November 16, 1979
Article III Section 3.4 Amended November 16, 1979
Article V Section 5.1 Amended November 16, 1979
Article II Section 2.4 Amended October 24, 1980
Article II Section 2.1 Amended April 22, 1981 (Special Mtg.)
Article II Section 2.1 Amended October 23, 1981
Article III Section 3.1, 3.2, and 3.3 Amended October 23, 1981
Article II Section 2.1, 2.3 Amended January 21, 1983
Article II Section 2.5 Amended by including new section Jan. 21, 1983
Article IV Section 6.2 Amended January 21, 1983
Article II Section 2.1 Amended January 24, 1986
Article I Section 1.3 Amended April 18, 1989, eff. April 19, 1989 (Spl.Mtg.)
Article I Section 1.4 Amended April 18, 1989, eff. April 19, 1989 (Spl.Mtg.)
Article II Section 2.1 Amended April 18, 1989, eff. April 19, 1989 (Spl.Mtg.)
Article II Section 2.2 Amended April 18, 1989, eff. April 19, 1989 (Spl.Mtg.)
Article III Section 3.1 Amended April 18, 1989, eff. April 19, 1989 (Spl.Mtg.)
Article III Section 3.2 Amended April 18, 1989, eff. April 19, 1989 (Spl.Mtg.)
Article V Section 5.1 Amended April 18, 1989, eff. April 19, 1989 (Spl.Mtg.)
Article V Section 5.1 Amended November 17, 1989
Article V Section 5.4 Amended by including new section November 17, 1989
Article II Section 2.1 Amended October 1, 1990.
Article II Section 2.1 Amended April 23, 1992.
Article II Section 2.1 Amended April 22, 1993.
Article II Section 2.1 Amended September 1, 1993.
Article II Section 2.1 Amended April 21, 1994.
Article II Section 2.1 Amended February 17, 1995.
EX-4.C
3
EXHIBIT (4)(C)
SOUTH JERSEY GAS COMPANY
and
NEW JERSEY NATIONAL BANK
as Trustee
Indenture
Dated as of January 31, 1995
$30,000,000
8.60% Debenture Notes
Due February 1, 2010
Table Of Contents
ARTICLE 1
Definitions. . . . . . . . . 1
Section 1.1. Definitions. . . . . . . . . . . . . . . . . . . . 1
"Accountants' Letter" . . . . . . . . . . . . . . . . 1
"Affiliate" . . . . . . . . . . . . . . . . . . . . . 1
"Agent" . . . . . . . . . . . . . . . . . . . . . . . 1
"Board of Directors" . . . . . . . . . . . . . . . . . 1
"Business Day" . . . . . . . . . . . . . . . . . . . . 1
"Capitalized Lease" . . . . . . . . . . . . . . . . . 1
"Capitalized Rentals" . . . . . . . . . . . . . . . . 1
"Capital Stock" . . . . . . . . . . . . . . . . . . . 1
"Code" . . . . . . . . . . . . . . . . . . . . . . . . 1
"Company" . . . . . . . . . . . . . . . . . . . . . . 1
"Consolidated" or "consolidated" . . . . . . . . . . 2
"Consolidated Net Tangible Assets" . . . . . . . . . . 2
"Corporate Trust Office" . . . . . . . . . . . . . . . 2
"Current Debt" . . . . . . . . . . . . . . . . . . . . 2
"Default" . . . . . . . . . . . . . . . . . . . . . . 2
"ERISA" . . . . . . . . . . . . . . . . . . . . . . . 2
"ERISA Affiliate" . . . . . . . . . . . . . . . . . . 2
"Event of Default" . . . . . . . . . . . . . . . . . . 2
"Funded Debt" . . . . . . . . . . . . . . . . . . . . 2
"GAAP" . . . . . . . . . . . . . . . . . . . . . . . . 2
"Guaranties" . . . . . . . . . . . . . . . . . . . . . 2
"Holder" or "Securityholder" . . . . . . . . . . . . 3
"Indebtedness" . . . . . . . . . . . . . . . . . . . . 3
"Indenture" . . . . . . . . . . . . . . . . . . . . . 3
"Indenture of Mortgage" . . . . . . . . . . . . . . . 3
"Interest Payment Date" . . . . . . . . . . . . . . . 3
"Investments" . . . . . . . . . . . . . . . . . . . . 3
"Lien" . . . . . . . . . . . . . . . . . . . . . . . . 3
"Multiemployer Plan" . . . . . . . . . . . . . . . . . 4
"PBGC" . . . . . . . . . . . . . . . . . . . . . . . . 4
"Officer" . . . . . . . . . . . . . . . . . . . . . . 4
"Officers' Certificate" . . . . . . . . . . . . . . . 4
"Opinion of Counsel" . . . . . . . . . . . . . . . . . 4
"Person" . . . . . . . . . . . . . . . . . . . . . . . 4
"Plan" . . . . . . . . . . . . . . . . . . . . . . . . 4
"principal" . . . . . . . . . . . . . . . . . . . . . 4
"Property" . . . . . . . . . . . . . . . . . . . . . . 4
"Record Date" . . . . . . . . . . . . . . . . . . . . 4
"Redemption Date" . . . . . . . . . . . . . . . . . . 4
"Redemption Price" . . . . . . . . . . . . . . . . . . 5
"Rentals" . . . . . . . . . . . . . . . . . . . . . . 5
"Reportable Event" . . . . . . . . . . . . . . . . . . 5
"SEC" . . . . . . . . . . . . . . . . . . . . . . . . 5
"Securities" . . . . . . . . . . . . . . . . . . . . . 5
"Subsidiary" . . . . . . . . . . . . . . . . . . . . . 5
"Tangible Assets" . . . . . . . . . . . . . . . . . . 5
"TIA" . . . . . . . . . . . . . . . . . . . . . . . . 5
"Total Capitalization" . . . . . . . . . . . . . . . . 5
"Trustee" . . . . . . . . . . . . . . . . . . . . . . 5
"Trust Officer" . . . . . . . . . . . . . . . . . . . 5
"Voting Stock" . . . . . . . . . . . . . . . . . . . . 6
Section 1.2. Other Definitions. . . . . . . . . . . . . . . . . 6
Section 1.3. Rules of Construction. . . . . . . . . . . . . . . 6
ARTICLE 2
The Securities . . . . . . . . . . 6
Section 2.1. Form and Dating. . . . . . . . . . . . . . . . . . . . 6
Section 2.2. Execution and Authentication . . . . . . . . . . . . . 7
Section 2.3. Registrar and Paying Agent . . . . . . . . . . . . . . 7
Section 2.4. Paying Agent to Hold Money in Trust. . . . . . . . . . 8
Section 2.5. Securityholder Lists . . . . . . . . . . . . . . . . . 8
Section 2.6. Registration of Transfer and Exchange. . . . . . . . . 8
Section 2.7. Replacement Securities . . . . . . . . . . . . . . . . 9
Section 2.8. Outstanding Securities . . . . . . . . . . . . . . . . 9
Section 2.9. Treasury Securities. . . . . . . . . . . . . . . . . . 10
Section 2.10. Temporary Securities. . . . . . . . . . . . . . . . . 10
Section 2.11. Cancellation. . . . . . . . . . . . . . . . . . . . . 10
Section 2.12. CUSIP Numbers . . . . . . . . . . . . . . . . . . . . 11
Section 2.13. Defaulted Interest. . . . . . . . . . . . . . . . . . 11
ARTICLE 3
Redemption . . . . . . . . . . . 11
Section 3.1. Notices to Trustee . . . . . . . . . . . . . . . . . . 11
Section 3.2. Selection of Securities to Be Redeemed . . . . . . . . 11
Section 3.3. Notice of Redemption . . . . . . . . . . . . . . . . . 12
Section 3.4. Effect of Notice of Redemption . . . . . . . . . . . . 13
Section 3.5. Deposit of Redemption Price. . . . . . . . . . . . . . 13
Section 3.6. Securities Redeemed in Part. . . . . . . . . . . . . . 13
ARTICLE 4
Covenants . .. . . . . 13
Section 4.1. Payment of Securities. . . . . . . . . . . . . . . . . 13
Section 4.2. Maintenance of Office or Agency. . . . . . . . . . . . 14
Section 4.3. Corporate Existence. . . . . . . . . . . . . . . . . . 14
Section 4.4. Compliance Certificate . . . . . . . . . . . . . . . . 14
Section 4.5. Reports. . . . . . . . . . . . . . . . . . . . . . . . 15
Section 4.6. Waiver of Stay, Extension or Usury Laws. . . . . . . . 16
Section 4.7. Payment of Taxes and Other Claims. . . . . . . . . . . 16
Section 4.8. Maintenance of Properties and Insurance. . . . . . . . 17
Section 4.9. Nature of Business . . . . . . . . . . . . . . . . . . 17
Section 4.10. Repurchase of Securities. . . . . . . . . . . . . . . 17
Section 4.11. Transactions with Affiliates. . . . . . . . . . . . . 17
Section 4.12. ERISA Compliance. . . . . . . . . . . . . . . . . . . 17
Section 4.13. Limitations on Current Debt and Funded Debt . . . . . 18
ARTICLE 5
Merger, Etc.. . . . . . . . . . . 18
Section 5.1. When Company May Merge, etc. . . . . . . . . . . . . . 18
Section 5.2. Successor Corporation Substituted. . . . . . . . . . . 19
ARTICLE 6
Defaults and Remedies . . . . . . . . 19
Section 6.1. Events of Default. . . . . . . . . . . . . . . . . . . 19
Section 6.2. Acceleration . . . . . . . . . . . . . . . . . . . . . 22
Section 6.3. Other Remedies . . . . . . . . . . . . . . . . . . . . 22
Section 6.4. Waiver of Past Defaults. . . . . . . . . . . . . . . . 22
Section 6.5. Control by Holders . . . . . . . . . . . . . . . . . . 23
Section 6.6. Limitation on Suits. . . . . . . . . . . . . . . . . . 23
Section 6.7. Rights of Holders to Receive Payment . . . . . . . . . 23
Section 6.8. Collection Suit by Trustee . . . . . . . . . . . . . . 23
Section 6.9. Trustee May File Proofs of Claim . . . . . . . . . . . 24
Section 6.10. Priorities. . . . . . . . . . . . . . . . . . . . . . 24
Section 6.11. Undertaking for Costs . . . . . . . . . . . . . . . . 25
ARTICLE 7
Trustee. . . . . . . . . . . . 25
Section 7.1. Duties of Trustee. . . . . . . . . . . . . . . . . . . 25
Section 7.2. Rights of Trustee. . . . . . . . . . . . . . . . . . . 26
Section 7.3. Individual Rights of Trustee . . . . . . . . . . . . . 27
Section 7.4. Trustee's Disclaimer . . . . . . . . . . . . . . . . . 27
Section 7.5. Notice of Defaults . . . . . . . . . . . . . . . . . . 27
Section 7.6. Reports by Trustee to Holders. . . . . . . . . . . . . 27
Section 7.7. Compensation and Indemnity . . . . . . . . . . . . . . 27
Section 7.8. Replacement of Trustee . . . . . . . . . . . . . . . . 28
Section 7.9. Successor Trustee or Agent by Merger, etc. . . . . . . 29
Section 7.10. Eligibility; Disqualification . . . . . . . . . . . . 29
Section 7.11. Preferential Collection of Claims Against the
Company . . . . . . . . . . . . . . . . . . . . . 29
ARTICLE 8
Discharge of Indenture . . . . . . . . 30
Section 8.1. Termination of Company's Obligations . . . . . . . . . 30
Section 8.2. Application of Trust Money . . . . . . . . . . . . . . 31
Section 8.3. Repayment to Company . . . . . . . . . . . . . . . . . 31
Section 8.4. Reinstatement. . . . . . . . . . . . . . . . . . . . . 31
ARTICLE 9
Amendments . . . . . . . . . . . 32
Section 9.1. Without Consent of Holders . . . . . . . . . . . . . . 32
Section 9.2. With Consent of Holders. . . . . . . . . . . . . . . . 32
Section 9.3. Revocation and Effect of Consents. . . . . . . . . . . 33
Section 9.4. Notation on or Exchange of Securities. . . . . . . . . 33
Section 9.5. Trustee to Sign Amendments, etc. . . . . . . . . . . . 33
ARTICLE 10
Miscellaneous . . . . . . . . . . 34
Section 10.1. Notices . . . . . . . . . . . . . . . . . . . . . . . 34
Section 10.2. Certificate and Opinion as to Conditions Precedent. . 35
Section 10.3. Statements Required in Certificate or Opinion . . . . 35
Section 10.4. Rules by Trustee and Agents . . . . . . . . . . . . . 35
Section 10.5. Legal Holidays. . . . . . . . . . . . . . . . . . . . 36
Section 10.6. Duplicate Originals . . . . . . . . . . . . . . . . . 36
Section 10.7. Governing Law . . . . . . . . . . . . . . . . . . . . 36
Section 10.8. No Adverse Interpretation of Other Agreements . . . . 36
Section 10.9. Successors. . . . . . . . . . . . . . . . . . . . . . 36
Section 10.10. Severability . . . . . . . . . . . . . . . . . . . . 36
Section 10.11. No Recourse Against Others . . . . . . . . . . . . . 36
Section 10.12. Table of Contents, Headings, etc.. . . . . . . . . . 37
Section 10.13. Counterpart Originals. . . . . . . . . . . . . . . . 37
SIGNATURES. . . . . . . . . . . . . . . . . . . . . . . . . .. . . . 38
EXHIBIT A (Form of Security). . . . . . . . . . . . . . . . . . . . A-1
INDENTURE dated as of January 31, 1995 between SOUTH JERSEY GAS COMPANY, a New
Jersey corporation (the "Company"), and NEW JERSEY NATIONAL BANK, a national
banking association organized and existing under the laws of the United States
of America, as trustee ("Trustee").
The Company agrees as follows with the Trustee for the equal and
ratable benefit of the Holders of the Company's 8.60% Debenture Notes due
February 1, 2010 (the "Securities"):
ARTICLE 1
Definitions
Section 1.1. Definitions.
"Accountants' Letter" means a certificate from Deloitte & Touche or
other independent certified public accountants of national standing.
"Affiliate" means any Person which directly or indirectly through one
or more intermediaries controls, or is controlled by, or is under common control
with, the Company. The term ``control'' means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of Voting Stock, by contract
or otherwise.
"Agent" means any Registrar, Paying Agent, co-registrar or agent for
service of notices and demands.
"Board of Directors" means the Board of Directors of the Company or any
duly authorized committee of such Board of Directors.
"Business Day" means a day that is not a Legal Holiday as defined in
Section 10.5.
"Capitalized Lease" means any lease, the obligation for Rentals with
respect to which is required to be capitalized on a consolidated balance sheet
of the lessee and its subsidiaries in accordance with GAAP.
"Capitalized Rentals" of any Person means, as of the date of any
determination thereof, the amount of the aggregate Rentals due and to become due
under all Capitalized Leases then in effect under which such Person is a lessee
are required to be reflected as a liability on a consolidated balance sheet of
such Person and its subsidiaries in accordance with GAAP.
"Capital Stock" means any and all shares, interests, participation
rights or other equivalents (however designated) of corporate stock.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" means the party named as such in the first paragraph of this
Indenture until a successor replaces it pursuant to this Indenture and
thereafter means the successor.
"Consolidated" or "consolidated" means, when used with reference to any
amount, such amount determined on a consolidated basis in accordance with GAAP,
consistently applied.
"Consolidated Net Tangible Assets" of the Company means, as of the date
of any determination thereof, the total amount of all Tangible Assets of the
Company and deducting all items which in accordance with GAAP would be included
on the liability side of a consolidated balance sheet, except deferred income
taxes, deferred investment tax credits, capital stock of any class, surplus and
Funded Debt.
"Corporate Trust Office" means the address of the Trustee specified in
Section 10.1 or such other address as the Trustee may give by notice to the
Company.
"Current Debt" of any Person as of the date of any determination
thereof means (i) all Indebtedness of such Person for borrowed money other than
Funded Debt of such Person and (ii) Guaranties by such Person of Current Debt of
others.
"Default" means any event which is, or after notice or lapse of time or
both would be, an Event of Default.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute of similar import, together with the
regulations thereunder, in each case as in effect from time to time. References
to sections of ERISA shall be construed to also refer to any successor sections.
"ERISA Affiliate" means any employer that is, or was at any relevant
time, together with the Company, treated as a "single employer" under Sections
414(b), 414(c) or 414(m) of the Code.
"Event of Default" has the meaning provided in Section 6.1.
"Funded Debt" of any Person means (i) all Indebtedness of such person
for borrowed money or which has been incurred in connection with the acquisition
of assets, in each case having a final maturity of one year or more from the
date of origin thereof (or which is renewable or extendible at the option of the
obligor for a period or periods of more than one year from the date of origin),
excluding all payments in respect thereof that are required to be made within
one year from the date of any determination of Funded Debt, (ii) all Capitalized
Rentals of such Person, and (iii) all Guaranties by such Person of Funded Debt
of others.
"GAAP" means generally accepted accounting principles in effect in the
United States as of the time and for the period as to which such accounting
principles are to be applied.
"Guaranties" by any Person means all obligations (other than
endorsements in the ordinary course of business of negotiable instruments for
deposit or collection) of such Person guaranteeing or in effect, guaranteeing
any Indebtedness, dividend or other obligation, of any other Person (the
"primary obligor") in any manner, whether directly or indirectly, including,
without limitation, all obligations incurred through an agreement, contingent or
otherwise, by such Person: (i) to purchase such Indebtedness or obligation or
any property or assets constituting security therefor, (ii) to advance or supply
funds (x) for the purchase or payment of such Indebtedness or obligation, or (y)
to maintain working capital or other balance sheet condition or otherwise to
advance or make available funds for the purchase or payment of such Indebtedness
or obligation, (iii) to lease property or to purchase Securities or other
Property or services primarily for the purpose of assuring the owner of such
Indebtedness or obligation of the ability of the primary obligor to make payment
of the Indebtedness or obligation, or (iv) otherwise to assure the owner of the
Indebtedness or obligation of the primary obligor against loss in respect
thereof. For the purposes of all computations made under this Indenture, a
Guaranty in respect of any Indebtedness for borrowed money shall be deemed to be
Indebtedness equal to the outstanding principal amount of such Indebtedness for
borrowed money which has been guaranteed, and a Guaranty in respect of any other
obligation or liability or any dividend shall be deemed to be Indebtedness equal
to the maximum aggregate amount of such obligation, liability or dividend.
"Holder" or "Securityholder" means the Person in whose name a Security
is registered on the Registrar's books.
"Indebtedness" of any Person means and includes all obligations of such
Person which in accordance with GAAP shall be classified upon a balance sheet of
such Person as liabilities of such Person, and in any event shall include all
(i) obligations of such Person for borrowed money or which has been incurred in
connection with the acquisition of property or assets, (ii) obligations secured
by any Lien upon property or assets owned by such Person, even though such
Person has not assumed or become liable for the payment of such obligations,
(iii) obligations created or arising under any conditional sale or other title
retention agreement with respect to property acquired by such Person,
notwithstanding the fact that the rights and remedies of the seller, lender or
lessor under such agreement in the event of default are limited to repossession
or sale of property, (iv) Capitalized Rentals under any Capitalized Lease and
(v) Guaranties of Indebtedness of others.
"Indenture" means this Indenture, as amended or supplemented from time
to time.
"Indenture of Mortgage" means that certain Indenture of Mortgage of the
Company dated October 1, 1947, as supplemented and amended from time to time.
"Interest Payment Date" means the interest payment dates specified in
paragraph 1 of the form of Security annexed hereto as Exhibit A.
"Investments" means all investments, in cash or by delivery of
Property, made directly or indirectly in any Person, whether by acquisition of
shares of capital stock, indebtedness or other obligations or Security or by
loan, advance, capital contribution or otherwise; provided, however, that
"Investments" shall not mean or include routine investments in Property to be
used or consumed in the ordinary course of business or investments in accounts
receivable or notes receivable arising in the ordinary course of business.
"Lien" means any interest in Property securing an obligation owed to,
or a claim by, a Person other than the owner of the Property, whether such
interest is based on the common law, statute or contract, and including but not
limited to the security interest lien arising from a mortgage, encumbrance,
pledge, conditional sale or trust receipt or a lease, consignment or bailment
for security purposes. The term ``Lien'' shall include reservations,
exceptions, encroachments, easements, rights-of-way, covenants, conditions,
restrictions, leases and other title exceptions and encumbrances (including,
with respect to stock, stockholder agreements, voting trust agreements, buy-back
agreements and all similar arrangements) affecting Property. For the purposes
of this Indenture, the Company shall be deemed to be the owner of any Property
which it has acquired or holds subject to a conditional sale agreement,
Capitalized Lease or other arrangement pursuant to which title to the Property
has been retained by or vested in some other Person for security purposes and
such retention or vesting shall constitute a Lien.
"Multiemployer Plan" has the same meaning as in Section 3(37) of ERISA.
"PBGC" means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
"Officer" of any Person means the President, any Executive or Senior
Vice-President, any Vice-President, the Treasurer, the Secretary, the
Controller, any Assistant Treasurer, any Assistant Secretary or any Assistant
Controller of such Person.
"Officers' Certificate" means a certificate signed by two Officers of
any Person conforming to the requirements set forth in Sections 10.2 and 10.3.
"Opinion of Counsel" means a written opinion of legal counsel
reasonably acceptable to the Trustee conforming to the requirements set forth in
Sections 10.2 and 10.3. The counsel may be an employee of or counsel to the
Company. For the purpose of rendering an opinion, such counsel may rely as to
factual matters upon certificates or other documents furnished by Officers and
directors of the Company and upon such other documents as such counsel deems
appropriate as a basis of their opinion, copies of which shall be delivered with
such opinion.
"Person" means any individual, corporation, partnership, joint venture,
trust, unincorporated organization or government or any agency or political
subdivision thereof.
"Plan" means a "pension plan," as such term is defined in ERISA,
subject to the provisions of Title IV of ERISA.
"Principal" of any debt security means the principal of the security
plus, the premium, if any, payable on such security upon redemption of such
security.
"Property" means any interest in any kind of property or asset, whether
real, personal or mixed, and whether tangible or intangible.
"Record Date" means the record dates specified on the face of the form
of Security annexed hereto as Exhibit A.
"Redemption Date" means, with respect to any Security to be redeemed,
the date fixed for such redemption pursuant to this Indenture.
"Redemption Price" means, when used with respect to any Security to be
redeemed, the price fixed for such redemption pursuant to this Indenture as set
forth in paragraph 5 of the form of Security annexed hereto as Exhibit A.
"Rentals" means and includes as of the date of any determination
thereof, all fixed payments (including as such all payments which the lessee is
obligated to make to the lessor on termination of the lease or surrender of the
Property) payable by the Company either as lessee or sublessee under a lease of
real or personal property, but shall be exclusive of any amounts required to be
paid by the Company (whether or not designated as rents or additional rents) on
account of maintenance, repairs, insurance, taxes and similar charges. Fixed
rents under any so-called "percentage leases" shall be computed solely on the
basis of the minimum rents, if any, required to be paid by the lessee regardless
of sales volume or gross revenues.
"Reportable Event" has the meaning set out in Section 4043(b) of ERISA,
but excluding any event described therein as to which the 30-day notice
requirement has been waived by applicable PBGC regulations.
"SEC" means the Securities and Exchange Commission.
"Securities" means the 8.60% Debenture Notes due February 1, 2010 of
the Company issued pursuant to this Indenture.
"Subsidiary" means, with respect to the Company, any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Capital Stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, officers or trustees
thereof is at the time owned in the aggregate, directly or indirectly, by the
Company and its Subsidiaries.
"Tangible Assets" of the Company means, as of the date of any
determination thereof, the total amount of all assets of the Company (less
depreciation, depletion and other properly deductible valuation reserves) after
deducting goodwill, patents, trade names, trade marks, copyrights, experimental
expense, organization expense, the cash surrender value of insurance policies,
unamortized debt discount and expense, deferred assets other than prepaid
insurance and prepaid taxes, the excess of cost of shares acquired over book
value of related assets and such other assets as are properly classified as
"intangible assets" in accordance with GAAP.
"TIA" means the Trust Indenture Act of 1939, as in effect on the date
of this Indenture.
"Total Capitalization" of a Person means, as of the date of
determination thereof, the sum of such Person's Funded Debt, the book value of
any preferred stock of such Person and owner's equity (including paid in
capital, premium on common stock and retained earnings of such Person)
determined in accordance with GAAP.
"Trustee" means the party named as such above until a successor
replaces it pursuant to this Indenture and thereafter means the successor.
"Trust Officer", when used with respect to the Trustee, means any
officer assigned by the Trustee to administer the corporate trust business of
the Trustee, including without limitation any vice president, any assistant vice
president, any assistant secretary or any other officer of the Trustee
customarily performing functions similar to those performed by any of the above
designated officers, who shall, in any case, be responsible for the
administration of this document or have familiarity with it, and also means,
with respect to a particular corporate trust matter, any other officer to whom
such matter is referred because of his knowledge of and familiarity with the
particular subject.
"Voting Stock" means Capital Stock which ordinarily has voting power
for the election of directors, whether at all times or only so long as no senior
class of Capital Stock has such voting power by reason of any contingency.
Section 1.2. Other Definitions.
Defined in
Term Section
"Bankruptcy Law" . . . . . . . . . . . . . . . . . . . 6.1
"Custodian" . . . . . . . . . . . . . . . . . . . 6.1
"Legal Holiday" . . . . . . . . . . . . . . . . . . . . 10.5
"Paying Agent" . . . . . . . . . . . . . . . . . . . . 2.3
"Registrar" . . . . . . . . . . . . . . . . . . . 2.3
"U.S. Government Obligations" . . . . . . . . . . . . . 8.1
Section 1.3. Rules of Construction.
Unless the context otherwise requires:
(i) a term has the meaning assigned to it;
(ii) an accounting term not otherwise defined has the
meaning assigned to it in accordance with GAAP;
(iii) "or" is not exclusive;
(iv) words in the singular include the plural, and in the
plural include the singular; and
(v) provisions apply to successive events and
transactions.
ARTICLE 2
The Securities
Section 2.1. Form and Dating.
The Securities and the Trustee's certificate of authentication
shall be substantially in the form of Exhibit A, which is part of this
Indenture. The Securities may have notations, legends or endorsements required
by law, stock exchange rule or usage, which shall be provided in writing by the
Company to the Trustee. Each Security shall be dated the date of its
authentication.
The terms and provisions contained in each of the Securities,
annexed hereto as Exhibit A, shall constitute, and are hereby expressly made, a
part of this Indenture. To the extent applicable, the Company and the Trustee,
by their execution and delivery of this Indenture, expressly agree to such terms
and provisions and to be bound thereby.
Section 2.2. Execution and Authentication.
Two Officers shall sign the Securities for the Company by
manual or facsimile signature. The Company's seal shall be reproduced on the
Securities and may be in facsimile form.
If an Officer whose signature is on a Security no longer holds
that office at the time the Security is authenticated, the Security shall
nevertheless be valid.
A Security shall not be valid until executed on behalf of the
Company and authenticated by the manual signature of the Trustee. The signature
of the Trustee or an authenticating agent shall be conclusive evidence that the
Security has been authenticated under this Indenture.
The Trustee shall authenticate Securities for original issue
in the aggregate principal amount of not more than $30,000,000 pursuant to a
written order of the Company signed by two Officers. The order shall specify
the amount of Securities to be authenticated and the date upon which the
original issue of Securities is to be authenticated. The aggregate principal
amount of Securities outstanding at any time may not exceed $30,000,000, except
as provided in Section 2.7.
The Trustee may appoint an authenticating agent acceptable to
the Company to authenticate Securities. Unless limited by the terms of such
appointment, an authenticating agent may authenticate Securities whenever the
Trustee may do so. An authenticating agent may authenticate Securities on
behalf of the Trustee, except upon original issuance and pursuant to Section
2.7. Each reference in this Indenture to authentication by the Trustee includes
authentication by such agent. An authenticating agent has the same rights as an
Agent to deal with the Company, a Subsidiary or an Affiliate of the Company.
Except as provided in Section 3.6, the Securities shall be
issuable only in registered form without coupons and only in a principle amount
of not less than $100,000 and in multiples of $1,000 for amounts in excess of
$100,000.
Section 2.3. Registrar and Paying Agent.
The Company shall maintain an office or agency where
Securities may be presented for registration of transfer or for exchange
(``Registrar''), an office or agency where Securities may be presented for
payment (``Paying Agent'') and an office or agency where notices or demands to
or upon the Company in respect of the Securities and the Indenture may be
served. The Registrar shall keep a register of the Securities and of their
transfer and exchange. The Company may appoint one or more co-registrars and
one or more additional paying agents. The term ``Paying Agent'' includes any
additional Paying Agent. The Company may change any Paying Agent, Registrar or
co-registrar without notice to any Securityholder.
The Company shall enter into an appropriate agency agreement
with any Agent not a party to this Indenture. The agreement shall implement the
provisions of this Indenture that relate to such Agent. The Company shall give
prompt written notice to the Trustee of the name and address of any Agent who is
not a party to this Indenture. If the Company fails to appoint or maintain
another entity as Registrar or Paying Agent, the Trustee shall act as such. The
Company, any Subsidiary or any of their Affiliates may act as Paying Agent,
Registrar or co-registrar.
The Company initially appoints the Trustee as Registrar and
Paying Agent and agent for service of notices and demands.
Section 2.4. Paying Agent to Hold Money in Trust.
On or prior to the due date of principal of, premium, if any,
and interest on any Securities, the Company shall deposit with the Paying Agent
money sufficient to pay such principal, premium, if any, and interest so
becoming due. The Company shall require each Paying Agent other than the
Trustee to agree in writing that the Paying Agent shall hold in trust for the
benefit of Securityholders or the Trustee all money held by the Paying Agent for
the payment of principal of, premium, if any, and interest on the Securities
(whether such money has been paid to it by the Company or any other obligor on
the Securities) and shall notify the Trustee in writing of any failure by the
Company (or any other obligor on the Securities) in making any such payment.
While any such failure continues, the Trustee may require a Paying Agent to pay
all money held by it to the Trustee and to account for any funds disbursed. The
Company at any time may require a Paying Agent to pay all money held by it to
the Trustee. Upon payment over to the Trustee, the Paying Agent (if other than
the Company) shall have no further liability for the money so paid over to the
Trustee. If the Company acts as Paying Agent, it shall segregate and hold in a
separate trust fund for the benefit of the Securityholders all money held by
it as Paying Agent.
Section 2.5. Securityholder Lists.
The Trustee shall preserve in as current a form as is
reasonably practicable the most recent list available to it of the names and
addresses of Securityholders. If the Trustee is not the Registrar, the Company
shall furnish to the Trustee on or before the Record Date for each interest
payment date for the Securities and at such other times as the Trustee may
request in writing, a list in such form and as of such date as the Trustee may
reasonably require, containing all of the information in the possession or
control of the Registrar, the Company or any of its Paying Agents other than the
Trustee, as to the names and addresses of Securityholders.
Section 2.6. Registration of Transfer and Exchange.
When Securities are presented to the Registrar or a co-
registrar with a request to register their transfer or to exchange them for an
equal principal amount of Securities of other authorized denominations, the
Registrar shall register the transfer or make the exchange if its procedural
requirements for such transaction are met; provided that a Security presented or
surrendered for registration of transfer or exchange shall be duly endorsed or
accompanied by a written instrument of transfer in form satisfactory to the
Registrar duly executed by the Holder thereof or his attorney duly authorized in
writing. The registration of any Security upon transfer or exchange shall be
effective only after the surrender of the Security and the issuance by the
Company and authentication by the Trustee of a replacement Security. To permit
registrations of transfer and exchanges, the Company shall issue and the Trustee
shall authenticate Securities at the Registrar's request. The Company will not
make any service charge for any registration of transfer or exchange but may
require payment by the party requesting such registration of transfer or
exchange of a sum sufficient to cover any tax or other governmental charge
payable in connection therewith. The Company shall not be required to, and
without the prior written consent of the Company, the Registrar shall not be
required to register the transfer or exchange of (i) any Security selected for
redemption in whole or in part, except the unredeemed portion of any Security
being redeemed in part, or (ii) any Security for a period of fifteen (15) days
before a selection of Securities to be redeemed.
Section 2.7. Replacement Securities.
If a mutilated Security is surrendered to the Trustee or if
the Holder of a Security claims that the Security has been lost, destroyed or
wrongfully taken, the Company shall issue and the Trustee, at the Company's
request, shall authenticate a replacement Security if the requirements of the
Trustee and the Company are met, provided that the Trustee shall not be required
to authenticate or replace any such Security which has been called for
redemption in accordance with the terms thereof or has matured or is about to
mature and, in any such case, the principal and premium, if any, then due or
becoming due and interest due to the date of redemption or maturity shall be
paid by the Trustee from funds held by the Trustee for redemption or payment
upon maturity in accordance with the terms of the mutilated, lost, destroyed or
wrongfully taken Security without substitution therefor. If required by the
Trustee or the Company, the Securityholder must post an indemnity bond with the
Trustee sufficient in the judgment of each of the foregoing to protect the
Company, the Trustee, any Agent or any authenticating agent from any loss which
any of them may suffer if a Security is replaced and provide satisfactory
evidence to the Company and the Trustee that the Security has been lost,
destroyed or wrongfully taken. The Company may charge the Securityholder who
has lost a Security for its expenses in replacing a Security.
Every replacement Security is an additional obligation of the
Company and shall be entitled to the benefits of this Indenture.
Section 2.8. Outstanding Securities.
The Securities outstanding at any time are all the Securities
authenticated by the Trustee except for those cancelled by it, those delivered
to it for cancellation and those described in this Section as not outstanding.
If a Security is replaced pursuant to Section 2.7, it ceases
to be outstanding and interest ceases to accrue unless the Trustee receives
proof satisfactory to it that the replaced Security is held by a bona fide
purchaser.
If all principal of, premium, if any, and any interest on any
of the Securities are considered paid under Section 4.1, such Securities shall
cease to be outstanding and interest on them shall cease to accrue.
A Security does not cease to be outstanding because the
Company, a Subsidiary or an Affiliate holds such Security, provided that such
Security shall not be outstanding for purposes of determining the aggregate
principal amount of Securities which consented to an amendment or waiver of this
Indenture pursuant to Section 9.2.
Section 2.9. Treasury Securities.
In determining whether the Holders of the required principal
amount of Securities have concurred in any direction, waiver or consent,
Securities owned by the Company, a Subsidiary or an Affiliate of the Company
shall be considered as though they are not outstanding, except that for the
purposes of determining whether the Trustee shall be protected in relying on any
such direction, waiver or consent, only Securities which the Trustee actually
knows are owned by the Company or an Affiliate shall be so disregarded.
Securities owned by the Company, a Subsidiary or an Affiliate of the Company
which have been pledged in good faith may be regarded as outstanding if the
Trustee receives an Officer's Certificate stating that said Securities have been
so pledged, that the pledgee is entitled to vote with respect to such Securities
and that the pledgee is not the Company or any other obligor on the Securities,
a Subsidiary or an Affiliate of the Company, a Subsidiary or such other obligor.
Section 2.10. Temporary Securities.
Until definitive Securities are ready for delivery, the
Company may prepare and execute and the Trustee shall authenticate temporary
Securities. Temporary Securities shall be substantially in the form of
definitive Securities but may have variations that the Company considers
appropriate for temporary Securities. Without unreasonable delay, the Company
shall prepare and the Trustee upon receipt of a written order of the Company
signed by two officers, shall authenticate definitive Securities in exchange for
temporary Securities. Until such exchange, temporary Securities shall be
entitled to the same rights, benefits and privileges as definitive Securities.
Section 2.11. Cancellation.
The Company at any time may deliver Securities to the Trustee
for cancellation. The Registrar and Paying Agent shall forward to the Trustee
any Securities surrendered to them for registration of transfer, exchange or
payment. The Trustee shall cancel all Securities surrendered for registration
of transfer, exchange, payment, replacement or cancellation and shall destroy
cancelled Securities. The Company may not issue new Securities to replace
Securities that it has paid or that have been delivered to the Trustee for
cancellation. All cancelled Securities held by the Trustee shall be destroyed
and certification of their destruction delivered to the Company.
Section 2.12. CUSIP Numbers.
The Company in issuing the Securities may use ``CUSIP''
Private Placement numbers (if then generally in use), and the Trustee shall use
CUSIP Private Placement numbers (if such have been obtained) in notices of
redemption or exchange as a convenience to Holders; provided that any such
notice shall state that no representation is made as to the correctness of such
numbers either as printed on the Securities or as contained in any notice of
redemption or exchange and that reliance may be placed only on the other
identification numbers printed on the Securities.
Section 2.13. Defaulted Interest.
If the Company fails to make a payment of interest on the
Securities, it shall pay such interest plus, to the extent lawful, interest
payable on the defaulted interest, to the Persons who are Securityholders on a
subsequent special record date in each case at the rate and in the manner
specified in the Securities. The Company shall fix the special record date and
payment date in a manner reasonably satisfactory to the Trustee. The payment
date shall be no less than 15 days after such record date. At least 15 days
before the special record date, the Company shall mail to Securityholders a
notice that states the special record date, payment date and amount of such
interest to be paid.
ARTICLE 3
Redemption
Section 3.1. Notices to Trustee.
If the Company elects to redeem Securities pursuant to the
optional redemption provisions of the Securities, at least 60 days (or such
shorter period as shall be satisfactory to the Trustee) before a Redemption
Date, it shall deliver to the Trustee an Officers' Certificate specifying the
Redemption Date, the principal amount of Securities to be redeemed on the
Redemption Date and the specific paragraph of the Securities pursuant to which
the Securities being called for redemption are being redeemed and the Redemption
Price. If less than all the Securities are to be redeemed, the record date
relating to such redemption shall be selected by the Trustee, which record date
shall not be more than fifteen (15) days after the date of the Officer's
Certificate notifying the Trustee of the redemption.
Section 3.2. Selection of Securities to Be Redeemed.
If less than all of the Securities are to be redeemed, whether
pursuant to the optional or mandatory redemption provisions of the securities,
the Trustee shall select the Securities to be redeemed among all Securityholders
on a pro rata basis. Securities and portions of them redeemed shall be in
amounts of $1,000 or integral multiples of $1,000. Provisions of this Indenture
that apply to Securities called for redemption also apply to portions of
Securities called for redemption. The Trustee shall notify the Company promptly
of the Securities or portions of Securities to be called for redemption.
Section 3.3. Notice of Redemption.
At least 30 days but not more than 60 days before any
Redemption Date, the Company, or at the request of the Company, the Trustee,
shall mail a notice of redemption by first-class mail to each Holder whose
Securities are to be redeemed.
The notice shall identify the Securities to be redeemed and
shall state:
(i) the Redemption Date;
(ii) the Redemption Price;
(iii) if any Security is being redeemed in part,
the portion of the principal amount (in integral multiples of
$1,000) of such Security to be redeemed and that, on or after
the Redemption Date, upon surrender of such Security, a new
Security or Securities in principal amount equal to the
unredeemed portion shall be issued;
(iv) the name and address of the Paying Agent;
(v) that Securities called for redemption must
be surrendered to the Paying Agent to
collect the Redemption Price plus accrued interest to the
Redemption Date;
(vi) that, unless the Company defaults in making
payment of the Redemption Price and accrued
interest to the Redemption Date, interest on Securities called
for redemption ceases to accrue on and after the Redemption
Date and the only remaining right of the Holders is to receive
payment of the Redemption Price plus accrued interest to the
Redemption Date upon surrender of the Securities to the Paying
Agent; and
(vii) if obtained, the Security's CUSIP Private
Placement number (subject to the proviso in Section 2.12).
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at its expense; provided, however, that the
Company shall deliver to the Trustee, at least 40 days prior to the Redemption
Date, an Officers' Certificate requesting that the Trustee give such notice and
setting forth the information to be stated in such notice as provided in the
preceding paragraph. Concurrently with the giving of any such notice by the
Company to the Securityholders, the Company shall deliver to the Trustee an
Officers' Certificate stating that such notice has been given. The notice
mailed in the manner herein provided shall be conclusively presumed to have been
duly given whether or not the Holder receives such notice. In any case, failure
to give such notice by mail or any defect in the notice to the Holder of any
Security shall not affect the validity of the proceeding for the redemption of
any other Security.
Section 3.4. Effect of Notice of Redemption.
Once notice of redemption is mailed, Securities called for
redemption become due and payable on the Redemption Date at the Redemption Price
plus accrued interest to the Redemption Date. Upon surrender to the Paying
Agent, such Securities shall be paid at the Redemption Price plus accrued
interest to the Redemption Date.
Section 3.5. Deposit of Redemption Price.
On or prior to the Redemption Date, the Company shall deposit
with the Trustee or with the Paying Agent (or if the Company is acting as its
own Paying Agent the Company shall segregate and hold in trust) money sufficient
to pay the Redemption Price of and accrued interest to the Redemption Date on
all Securities to be redeemed on that date.
If any Security called for Redemption shall not be so paid (in
the manner provided in Section 4.1) on the applicable Redemption Date, interest
shall be paid, from the Redemption Date until such Redemption Price is paid, on
the unpaid principal of, premium, if any, and, to the extent lawful, on any
interest not paid on such unpaid principal, in each case at the rate and in the
manner provided in the Securities. Prior to the date such Redemption Price and
accrued interest is paid, the Company shall deposit with the Trustee or the
Paying Agent (or if the Company is acting as its own Paying Agent, the Company
shall segregate or hold in trust) money to pay the additional interest
contemplated by the previous sentence.
Section 3.6. Securities Redeemed in Part.
Upon surrender of a Security that is redeemed in part, the
Company shall issue, and the Trustee shall authenticate for the Holder at the
expense of the Company, a new Security in an authorized denomination equal in
principal amount to the unredeemed portion of the Security surrendered.
ARTICLE 4
Covenants
Section 4.1. Payment of Securities.
The Company shall pay the principal of, premium, if any, and
interest on the Securities on the dates and in the manner provided in the
Securities and in this Indenture. An installment of principal, plus premium, if
any, (including any redemption of Securities pursuant to paragraph 5 of the
Securities) or interest shall be considered paid on the date it is due if the
Trustee or Paying Agent (other than the Company, a Subsidiary or an Affiliate)
holds on that date money designated for and sufficient to pay the installment.
The Company shall pay interest (including post-petition
interest in any proceeding under any Bankruptcy Law to the extent that such
interest is an allowed claim enforceable against the debtor in a bankruptcy case
under Title 11 of the U.S. Code) on overdue principal at the rate then borne by
the Securities; it shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law to the extent that such interest is an
allowed claim enforceable against the debtor in a bankruptcy case under Title 11
of the U.S. Code) on overdue installments of interest at the same rate to the
extent legally permitted.
Section 4.2. Maintenance of Office or Agency.
The Company shall designate in the City of Philadelphia,
Pennsylvania, an office or agency (which may be an office of the Trustee,
Registrar or co-registrar) where at all times the Securities may be surrendered
for registration of transfer or exchange and where at all times the notices and
demands to or upon the Company in respect of the Securities and this Indenture
may be served. The Company shall give prompt written notice to the Trustee of
the location, and any change in the location, of such office or agency. If at
any time the Company shall fail so to designate any such required office or
agency or shall fail to furnish the Trustee with the address thereof, such
presentations, surrenders, notices and demands may be made or served at the
address of the Trustee set forth in Section 10.1.
The Company may also designate from time to time one or more
other offices or agencies where the Securities may be presented or surrendered
for any or all such purposes and may from time to time rescind such
designations; provided that no such designation or rescission shall in any
manner relieve the Company of its obligation so to designate as aforesaid an
office or agency in the City of Philadelphia, Pennsylvania, for such purposes.
The Company will give prompt written notice to the Trustee of any such
designation or rescission and of any change in the location of any such other
office or agency.
The Company hereby designates the Trustee's Corporate Trust
Office in the City of Philadelphia, Pennsylvania, as one such office or agency
of the Company in accordance with Section 2.3.
Section 4.3. Corporate Existence.
The Company will preserve and keep in full force and effect,
its corporate existence and all licenses, rights, franchises and permits
necessary to the proper conduct of its business, provided that the foregoing
shall not prevent any transaction permitted by Section 5 and, provided, further,
that the Company shall not be required to preserve and keep in full force and
effect any license, right, franchise or permit not considered necessary or
desirable by the Company if in the judgment of the Board of Directors of the
Company, the nonpreservation of such license, right, franchise or permit would
not be detrimental to the interests of the Securityholders.
Section 4.4. Compliance Certificate.
The Company shall deliver to the Trustee within 90 days after
the end of each fiscal year of the Company, an Officers' Certificate, which
shall comply with Section 10.3, stating whether or not the signers know of any
Default or Event of Default, provided, if they do know of such a Default or
Event of Default, the certificate shall describe the Default or Event of Default
and its status.
Section 4.5. Reports.
The Company will keep proper books of record and account in
which full and correct entries will be made of all dealings or transactions of
or in relation to the business and affairs of the Company, in accordance with
GAAP consistently applied (except for changes disclosed in the financial
statements furnished to the Trustee pursuant to this Section 4.5 and concurred
in by the independent public accountants referred to in Section 4.5(ii)(B)
hereof), and will furnish to the Trustee:
(i) Unaudited Quarterly Statements: As soon as
available and in any event within 45 days after the end of each quarterly fiscal
period (except the last) of each fiscal year, copies of:
(A) an unaudited consolidated balance sheet
of the Company as of the close of such quarterly fiscal period, setting forth
in comparative form the figures for the fiscal year then most recently ended,
(B) an unaudited statement of operations of
the Company for such quarterly fiscal period and for the portion of the fiscal
year ending with such period, in each case setting forth in comparative form the
consolidated figures for the corresponding periods of the preceding fiscal year,
and
(C) an unaudited statement of cash flows of
the Company for the portion of the fiscal year ending with such quarterly fiscal
period, setting forth in comparative form the consolidated figures for the
corresponding period of the preceding fiscal year,
all in reasonable detail and certified as complete and correct by an officer of
the Company responsible for the production of the financial statements of the
Company, including but not limited to the Treasurer, any Assistant Treasurer,
the Controller and any Assistant Controller of the Company;
(ii) Annual Statements: As soon as available and
in any event within 90 days after the close of each fiscal year of the Company,
copies of:
(A) a balance sheet of the Company as of
the close of such fiscal year, and
(B) a statement of income and retained
earnings and cash flows of the Company for such fiscal year,
in each case setting forth in comparative form the consolidated figures for the
preceding fiscal year, all in reasonable detail and accompanied by a report
thereon of a firm of independent public accountants of recognized national
standing selected by the Company to the effect that the financial statements
have been prepared in conformity with GAAP and present fairly, in all material
respects, the financial position of such Company as at the dates indicated,
except as otherwise specifically set forth in such report and that the
examination of such accountants in connection with such financial statements has
been made in accordance with generally accepted auditing standards;
(iii) SEC and Other Reports: In the event that
the Company becomes subject to the periodic reporting requirements or the proxy
soliciting requirements of the Securities Exchange Act of 1934, as amended,
promptly upon their becoming available, one copy of each financial statement,
report, notice or proxy statement sent by the Company to stockholders generally
and of each regular or periodic report, and any registration statement or
prospectus filed by the Company with any securities exchange or the SEC or any
successor agency, and copies of any orders in any proceedings to which the
Company or any of its Subsidiaries is a party, issued by any governmental
agency, Federal or state, having jurisdiction over the Company;
(iv) ERISA Reports: The Company shall promptly
provide upon occurrence thereof, written notice of (i) a material Reportable
Event with respect to any Plan maintained by the Company or an ERISA Affiliate
thereof; (ii) the institution of any steps by the Company or an ERISA Affiliate
thereof, the PBGC or any other Person to terminate any such Plan; (iii) the
institution of any steps by the Company or any ERISA Affiliate thereof to
withdraw from any such Plan; (iv) a ``prohibited transaction'' within the
meaning of Section 406 of ERISA that could subject the Company to excise tax
liability under Section 502(i) or ERISA or Section 4975 of the Code; (v) any
material increase in the contingent liability of such Company with respect to
any post-retirement welfare liability; or (vi) the taking of any action by, or
the threatening of the taking of any action by, the Internal Revenue Service,
the Department of Labor or the PBGC with respect to any of the foregoing.
Section 4.6. Waiver of Stay, Extension or Usury Laws.
The Company covenants (to the extent that it may lawfully do
so) that it shall not at any time insist upon, or plead, or in any manner
whatsoever claim, and shall resist any and all efforts to be compelled to take
the benefit or advantage of, any stay or extension law or any usury law or other
law which would prohibit or forgive the Company from paying all or any portion
of the principal of and/or interest on the Securities as contemplated herein,
wherever enacted, now or at any time hereafter in force, or which may affect the
covenants or the performance of this Indenture; and (to the extent that it may
lawfully do so) the Company hereby expressly waives all benefit or advantage of
any such law and covenants that it shall not hinder, delay or impede the
execution of any power herein granted to the Trustee but shall suffer and
permit the execution of every such power as though no such law had been enacted.
Section 4.7. Payment of Taxes and Other Claims.
The Company will promptly pay and discharge, when due and
payable, all lawful taxes, assessments and governmental charges or levies
imposed upon the Company, or upon or in respect of all or any part of the
Property or business of the Company, all trade accounts payable in accordance
with usual and customary business terms, and all claims for work, labor or
materials, unless (i) the validity, applicability or amount thereof is being
contested in good faith by appropriate actions or proceedings and (ii) the
Company shall set aside on its books, reserves deemed by it to be adequate with
respect thereto, provided, that the Company shall pay all such taxes,
assessments, charges, levies, accounts or claims forthwith upon the commencement
of proceedings to foreclose any liens which may have attached as security
therefor for any such obligations aggregating $1,000,000 or more. The Company
will promptly comply with all laws, ordinances or governmental rules and
regulations to which it is subject (except those the validity or applicability
of which is being contested in good faith by appropriate proceedings) including,
without limitation, all laws, ordinances, governmental rules and regulations
relating to environmental protection in all applicable jurisdictions, the
violation of which would materially adversely affect the business, financial
condition, results of operations or prospects of the Company.
Section 4.8. Maintenance of Properties and Insurance.
The Company will maintain, preserve and keep its tangible
Properties which are used or useful in the conduct of its business (whether
owned in fee or a leasehold interest) in good repair and working order and from
time to time will make all necessary repairs, replacements, renewals and
additions thereto.
The Company will maintain insurance coverage by financially
sound and reputable insurers and in such forms and amounts and against such
risks as are customary for corporations of established reputation engaged in the
same or a similar business and owning and operating similar properties.
Section Nature of Business.
The Company will not engage in any business or operations if,
as a result, the general nature of the business would be substantially changed
from the general nature of the business engaged in by the Company on the date of
this Indenture, provided, that, notwithstanding the foregoing, the Company may
engage in any other business or terminate any existing business if, in the
judgment of the Board of Directors of the Company, such engagement or
termination is in the best interests of the Company and is not detrimental to
the interest of the Securityholders.
Section 4.10. Repurchase of Securities.
The Company may not, directly or indirectly, repurchase or
make any offer to repurchase any Securities except pursuant to a concurrent
offer to repurchase Securities, pro rata, from all Securityholders at the same
time and upon the same terms. In case the Company repurchases any Securities,
such Securities shall thereafter be cancelled and no Securities shall be issued
in substitution therefor.
Section 4.11. Transactions with Affiliates.
The Company will not, enter into or be a party to any
transaction or arrangement with any Affiliate (including, without limitation,
the purchase from, sale to or exchange of property with, or the rendering of any
service by or for, any Affiliate), except in the ordinary course of and pursuant
to the reasonable requirements of its Company's business and upon fair and
reasonable terms no less favorable to the Company than the Company would obtain
in a comparable arm's-length transaction with a Person other than an Affiliate.
Section 4.12. ERISA Compliance.
(i) The Company will not, and will not permit
any ERISA Affiliate thereof to:
(A) engage in any ``prohibited
transaction'' (as such term is defined in ERISA), except pursuant to an
applicable exception;
(B) allow a Plan to incur any material
``accumulated funding deficiency'' (as such term is defined in ERISA), whether
or not waived; or
(C) terminate a Plan in a manner which
could result in the imposition of a Lien on any Property of the Company pursuant
to ERISA.
(ii) The Company will not, and will not permit
any ERISA Affiliate thereof to permit any condition described in Sections
4042(a)(1), 4042(a)(2) or 4042(a)(3) of ERISA, nor will the Company, nor will
the Company permit any ERISA Affiliate thereof to, knowingly permit any
condition described Section 4042(a)(4) of ERISA to exist in connection with any
Plan maintained by either of them which might constitute grounds for the PBGC to
institute proceedings to have such Plan terminated or a trustee appointed to
administer such Plan.
(iii) The Company will not, and will not permit
any ERISA Affiliate thereof to, withdraw from any Multiemployer Plan if such
withdrawal shall subject the Company to any material withdrawal liability (as
described under Part 1 of Subtitle E of Title IV of ERISA).
Section 4.13. Limitations on Current Debt and Funded Debt.
The Company will not create, assume or incur or in any manner
be or become liable in respect of any Current Debt or Funded Debt, except:
(i) Funded Debt evidenced by the Securities;
(ii) Funded Debt issued pursuant to the Indenture
of Mortgage;
(iii) Funded Debt of the Company outstanding as of
the date hereof; and
(iv) Funded Debt of the Company issued or
incurred after the date hereof, provided that at the time of issuance thereof
and after giving effect thereto and to the application of the proceeds thereof
Funded Debt shall not exceed 70% of Total Capitalization.
ARTICLE 5
Merger, Etc.
Section 5.1. When Company May Merge, etc.
(i) The Company, a subsidiary of South Jersey
Industries, Inc. ("SJI") will not, (x) consolidate with or be a party to a
merger with any other corporation or (y) sell, lease or otherwise dispose of all
or any substantial part (as defined in paragraph (ii) of this Section 5.1) of
the assets of the Company, provided, however, that the Company may consolidate
or merge with any other corporation if (a) the Company shall be the surviving o
continuing corporation or (b) the Company is not the surviving or continuing
corporation and the surviving or continuing corporation (i) is incorporated in
the United States or one of the states thereof with substantially all of its
assets located within the United States, (ii) expressly assumes all obligations
of the Company under this Indenture, and (iii) immediately after such
consolidation or merger and after giving effect thereto no Default or Event of
Default shall have occurred or be continuing;
(ii) As used in this Section 5.1, a sale, lease,
transfer or other disposition of assets shall be deemed to be a "substantial
part" of the assets of the Company if the book value of such assets, when added
to the book value of all other assets sold, leased or otherwise disposed of by
the Company (other than the sale or other disposition of assets normally made in
the ordinary course of business) during the then current fiscal year, exceeds
10% of the Consolidated Net Tangible Assets of the Company, determined as of the
end of the immediately preceding fiscal year. Sales of assets shall not be
included in any computations under this paragraph (ii) to the extent that the
net proceeds of such sale are applied within one year of such sale to the
purchase of other Property useful and to be used in the regular business of the
Company, and pending such application, are held by the Company in cash or in
investments of the types described in "Investments" as defined herein.
(iii) The Company shall deliver to the Trustee
prior to a proposed transaction described in this Section 5.1 an Officers'
Certificate, an Opinion of Counsel and an Accountants' Letter each stating that
the proposed transaction and such assumption of such obligations hereunder
comply with this Indenture.
Section 5.2. Successor Corporation Substituted.
Upon any consolidation or merger, or any transfer of all or
any substantial part of the assets, of the Company in accordance with Section
5.1, the successor corporation formed by such consolidation or into which the
Company is merged or to which such transfer is made shall succeed to, and be
substituted for, and may exercise every right and power and will assume all
obligations and covenants of, the Company under this Indenture with the same
effect as if such successor corporation had been named as the Company herein and
thereafter the Company (which term shall for the purpose mean the person named
as the ``Company'' in the first paragraph of this Indenture or any successor
corporation which previously shall have become liable in the manner prescribed
in this Article 5) shall be relieved of all obligations and covenants and shall
no longer exercise any rights or powers under this Indenture and the Securities.
ARTICLE 6
Defaults and Remedies
Section 6.1. Events of Default.
An "Event of Default" occurs if:
(i) the Company defaults in the payment of
interest on any Security when the same becomes due and the default
continues for a period of 10 days;
(ii) the Company defaults in the payment of the
principal of (or premium, if any, on) any Security when the same
becomes due and payable at maturity, upon acceleration, redemption
or otherwise; provided, however, that in the event the Company and
Trustee shall have taken all action required to be taken so that
each such payment of principal (or premium, if any) by means of
wire transfer could reasonably be expected to be effective on the
due date thereof, but nevertheless, any such transfer shall not
have been credited to the account of a Person to whom such payment
is required to be made effective as of the due date, the Company
shall not be deemed to have defaulted upon the obligation to make
such payment until the expiration of five days following said due
date;
(iii) the Company fails to comply with any of its
other agreements or covenants in, or provisions of, the Securities
or this Indenture, and the Default continues for the period and
after the notice specified below;
(iv) except to the extent permitted in Section
4.7, default shall be made in the payment when due and payable
(whether by lapse of time, by declaration, by call for redemption
or otherwise) of the principal of or interest on any Funded Debt
(other than the Securities) or Current Debt aggregating $1,000,000
or more of the Company and such default shall continue beyond the
period of grace, if any, allowed with respect thereto;
(v) Default or the happening of any event shall
occur under any indenture, agreement (other than the Note Purchase
Agreement, as defined below) or other instrument under which any
Funded Debt or Current Debt aggregating $1,000,000 or more of the
Company is then outstanding and such default or event shall
continue for a period of time sufficient to permit the
acceleration of the maturity of such Funded Debt or Current Debt
of the Company outstanding thereunder;
(vi) any representation or warranty made by the
Company in connection with any agreement in respect of the
original issuance of the Securities (the "Note Purchase
Agreement") or in any statement or certificate furnished by the
Company or in connection with the consummation of the issuance and
delivery of the Securities, or furnished by the Company pursuant
hereto is untrue in any material respect as of the date of the
furnishing or making thereof provided, however, that no Event of
Default under this subsection (vi) may be asserted nor need be
reported by the Company for purposes of this Indenture after the
expiration of two years from the
date of the furnishing of such statement or certificate or the
making of such representation or warranty therein;
(vii) a final judgment or final judgments for the
payment of money are entered by a court or courts of competent
jurisdiction against the Company which remains undischarged and
unbonded for a period (during which execution shall not be
effectively stayed) of 30 days, provided that the aggregate of all
such judgments (to the extent not paid or covered by insurance)
exceeds $1,000,000;
(viii) the Company, pursuant to or within the
meaning of any Bankruptcy Law:
(A) commences a voluntary case or
proceeding,
(B) consents to the entry of an order
for relief against it in an involuntary case or proceeding,
(C) consents to the appointment of a
Custodian of it or for all or substantially all of its property,
(D) makes a general assignment for the
benefit of its creditors, or
(E) generally is not paying its debts
as the same become due unless such debts are the subject of a bona
fide dispute; or
(ix) a court of competent jurisdiction enters an
order or decree under any Bankruptcy Law that:
(A) is for relief against the Company
or any Subsidiary or Subsidiaries in an involuntary case or
proceeding,
(B) appoints a Custodian of the Company
or any Subsidiary or Subsidiaries or for all or substantially all
of its property; or
(C) orders the liquidation of the
Company;
and in each case the order or decree remains unstayed and in effect for 60 days.
The term "Bankruptcy Law" means Title 11, U.S. Code or any
similar Federal or state law for the relief of debtors. The term "Custodian"
means any receiver, trustee, assignee, liquidator, sequestrator or similar
official under any Bankruptcy Law.
A Default under clause (iii) of this Section 6.1 is not an
Event of Default until the Trustee notifies the Company in writing, or the
Holders of at least 35% in principal amount of the Securities then outstanding
notify the Company and the Trustee in writing, of the Default, and the Company
does not cure the Default within 30 days after receipt of the notice. The
notice must specify the Default, demand that it be remedied and state that the
notice is a "Notice of Default." Such notice shall be given by the Trustee only
if so requested in writing by the Holders of at least 35% in principal amount of
the Securities then outstanding or if the Trustee has actual knowledge of such
Default. Any notice required to be delivered by the Trustee to the Company
hereunder shall be given promptly after the Trustee obtains actual
knowledge of such Default or is requested by the Holders to deliver such notice.
Section 6.2. Acceleration.
If an Event of Default specified in clauses (i) through (vii)
of Section 6.1 occurs and is continuing, the Trustee or the Holders of at least
35% of the principal amount of the Securities then outstanding, by written
notice to the Company (and to the Trustee if such notice is given by the
Holders) may, and the Trustee at the written request of such Holders shall,
declare all unpaid principal of, premium, if any, and accrued interest on all
the Securities to be due and payable as specified below. When any Event of
Default described in clauses (viii) or (ix) of Section 6.1 has occurred, then
all outstanding Securities shall immediately become due and payable without
presentment, demand or notice of any kind.
Section 6.3. Other Remedies.
If an Event of Default occurs and is continuing, the Trustee
may pursue any available remedy by proceeding at law or in equity to collect the
payment of principal of, premium, if any, or interest on the Securities or to
enforce the performance of any provision of the Securities or this Indenture.
The Trustee may maintain a proceeding even if it does not
possess any of the Securities or does not produce any of them in the proceeding.
A delay or omission by the Trustee or any Securityholder in exercising any right
or remedy accruing upon an Event of Default shall not impair the right or remedy
or constitute a waiver of or acquiescence in the Event of Default. No remedy is
exclusive of any other remedy. All remedies are cumulative to the extent
permitted by law.
Section 6.4. Waiver of Past Defaults.
Subject to Sections 6.7 and 9.2, the provisions of Section 6.2
are subject to the condition that if the principal of, premium, if any, and
accrued interest on all or any outstanding Securities have been declared
immediately due and payable by reason of the occurrence of any Event of Default
described in clauses (i) through (vii), inclusive, of Section 6.1, the holders
of 66-2/3% in aggregate principal amount of the Securities then outstanding may,
by written instrument filed with the Trustee, rescind and annul such declaration
and the consequences thereof, provided that at the time such declaration is
annulled and rescinded:
(i) No judgment or decree has been entered for
the payment of any monies due pursuant to the Securities or the Note Purchase
Agreement;
(ii) all arrears of interest upon all the
Securities and all other sums payable under the Securities (except any principal
or interest on the Securities which has become due and payable solely by reason
of such declaration under Section 6.2) shall have been duly paid; and
(iii) each and every other Default and Event of
Default shall have been made good, cured or waived pursuant to this Section 6.4.
Upon any such waiver, such Default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured for every purpose
of this Indenture; but no such waiver shall extend to any subsequent or other
Default or impair any right consequent thereon.
Section 6.5. Control by Holders.
The Holders of at least 66-2/3% in principal amount of the
Securities then outstanding may direct the time, method and place of conducting
any proceeding for any remedy available to the Trustee or exercising any trust
or power conferred on it. However, the Trustee may refuse to follow any
direction that conflicts with law or this Indenture or that may involve the
Trustee in personal liability.
Section 6.6. Limitation on Suits.
A Securityholder may not pursue a remedy with respect to this
Indenture or the Securities unless:
(i) the Holder gives to the Trustee written
notice of a continuing Event of Default;
(ii) the Holders of at least 66-2/3% in principal
amount of the Securities then outstanding make a written request
to the Trustee to pursue the remedy;
(iii) such Holder or Holders offer to the Trustee
indemnity satisfactory to the Trustee against any loss, liability,
cost or expense;
(iv) the Trustee does not comply with the request
within 60 days after receipt of the request and the offer of
indemnity; and
(v) during such 60-day period the Holders of
more than 33-1/3% in principal amount of the Securities then
outstanding do not give the Trustee a direction inconsistent with
the request.
A Securityholder may not use this Indenture to prejudice the
rights of another Securityholder or to obtain a preference or priority over
another Securityholder.
Section 6.7. Rights of Holders to Receive Payment.
Notwithstanding any other provision of this Indenture, the
right of any Holder of a Security to receive payment of principal of, premium,
if any, or interest on the Security on or after the respective due dates
expressed in the Security, or to bring suit for the enforcement of any such
payment on or after such respective dates, shall not be impaired or affected
without the consent of the Holder.
Section 6.8. Collection Suit by Trustee.
If an Event of Default specified in Section 6.1(i) or (ii)
occurs and is continuing, the Trustee may recover judgment in its own name and
as trustee of an express trust against the Company or any other obligor on the
Securities for the whole amount of principal, premium, if any, and accrued
interest remaining unpaid on the Securities, together with interest on overdue
principal and, to the extent that payment of such interest is lawful, interest
on overdue installments of interest, in each case at the rate then borne by the
Securities, and such further amount as shall be sufficient to cover the costs
and expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel.
Section 6.9. Trustee May File Proofs of Claim.
The Trustee may file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Securityholders allowed in any judicial proceedings relative to the Company (or
any other obligor upon the Securities), its creditors or its property and shall
be entitled and empowered to collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute the same, and any
custodian in any such judicial proceeding is hereby authorized by each
Securityholder to make such payments to the Trustee and, in the event that the
Trustee shall consent to the making of such payments directly to the
Securityholders, to pay to the Trustee any amount due to it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, and any other amounts due the Trustee under Section 7.7. Nothing
herein contained shall be deemed to authorize the Trustee to authorize or
consent to or accept or adopt on behalf of any Securityholder any plan of
reorganization, arrangement, adjustment or composition affecting the Securities
or the rights of any Holder thereof, or to authorize the Trustee to vote in
respect of the claim of any Securityholder in any such proceeding.
Section 6.10. Priorities.
If the Trustee collects any money pursuant to this Article 6,
it shall pay out the money in the following order:
First: to the Trustee for amounts due under Section
7.7;
Second: to Securityholders for amounts due and
unpaid on the Securities for principal,
premium, if any, and interest ratably
without preference or priority of any kind,
according to the amounts due and payable on
the Securities for principal and interest,
respectively; and
Third: to the Company or any other obligors on the
Securities, as their interests may appear,
or as a court of competent jurisdiction may
direct.
The Trustee, upon prior written notice to the Company, may fix
a record date and payment date for any payment to Securityholders pursuant to
this Section 6.10 which record date shall not be more than fifteen (15) days
before the payment date so specified.
Section 6.11. Undertaking for Costs.
In any suit for the enforcement of any right or remedy under
this Indenture or in any suit against the Trustee for any action taken or
omitted by it as a Trustee, a court in its discretion may require the filing by
any party litigant in the suit of an undertaking to pay the costs of the suit,
and the court in its discretion may assess reasonable costs, including
reasonable attorneys' fees, against any party litigant in the suit, having due
regard to the merits and good faith of the claims or defenses made by the party
litigant. This Section 6.11 does not apply to a suit by the Trustee, a suit by
a Holder pursuant to Section 6.7, or a suit by Holders of more than 10% in
principal amount of the Securities then outstanding.
ARTICLE 7
Trustee
Section 7.1. Duties of Trustee.
(i) If an Event of Default has occurred and is
continuing, the Trustee shall exercise such of the rights and powers vested in
it by this Indenture, and use the same degree of care and skill in their
exercise, as a prudent man would exercise or use under the circumstances in the
conduct of his own affairs.
(ii) Except during the continuance of an Event of
Default:
(A) The Trustee need perform only those
duties that are specifically set forth in this Indenture or by law
and no others, and no implied covenants or obligations shall be
read into this Indenture against the Trustee.
(B) In the absence of bad faith on its
part, the Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein,
upon certificates or opinion delivered to the Trustee by the
Company or any other Person pursuant to this Indenture and
conforming to the requirements of this Indenture. However, the
Trustee shall examine the certificates and opinions to determine
whether or not they conform to the requirements of this Indenture
but need not confirm the accuracy of mathematical computations.
(iii) Notwithstanding anything to the contrary
herein contained, the Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(A) This paragraph does not limit the
effect of paragraph (ii) of this Section 7.1.
(B) The Trustee shall not be liable for
any error of judgment made in good faith by a Trust Officer,
unless it is proved that the Trustee was negligent in ascertaining
the pertinent facts.
(C) The Trustee shall not be liable
with respect to any action it takes or omits to take in good faith
in accordance with a direction received by it pursuant to Section
6.5.
(iv) Whether or not therein expressly so
provided, every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (i), (ii), (iii) and (v) of this Section 7.1.
(v) No provision of this Indenture shall require
the Trustee to expend or risk its own funds or incur any liability. The Trustee
may refuse to perform any duty or exercise any right or power unless it receives
indemnity satisfactory to it against any loss, liability, cost or expense.
(vi) The Trustee shall not be obligated to pay
interest on any money received by it unless otherwise agreed in writing with the
Company. Money held in trust by the Trustee need not be segregated from other
funds except to the extent required by law.
Section 7.2. Rights of Trustee.
(i) The Trustee may rely on any document
believed by it to be genuine and to have been signed or presented by the proper
Person. The Trustee need not investigate any fact or matter stated in the
document.
(ii) Before the Trustee acts or refrains from
acting, it may require an Officers' Certificate or an Opinion of Counsel or
both. The Trustee shall not be liable for any action it takes or omits to take
in good faith and without negligence in reliance on the Officers' Certificate or
Opinion of Counsel.
(iii) The Trustee may act through agents and shall
not be responsible for the misconduct or negligence of any agent appointed and
retained with due care.
(iv) The Trustee shall not be liable for any
action it takes or omits to take in good faith and without negligence which it
reasonably believes to be authorized or within the rights or powers conferred
upon it by this Indenture.
(v) The Trustee may consult with counsel and the
written advice of such counsel or any Opinion of Counsel as to matters of law
shall be full and complete authorization and protection in respect of any action
taken, omitted or suffered by it hereunder in good faith and in accordance with
the advice or opinion of such counsel.
(vi) Unless otherwise specifically provided in
this Indenture, any demand, request, direction or notice from the Company shall
be sufficient if signed by an Officer of the Company.
Section 7.3. Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become
the owner or pledgee of Securities and may otherwise deal with the Company or an
Affiliate with the same rights it would have if it were not Trustee. Any Agent
may do the same with like rights. However, the Trustee is subject to Sections
7.10 and 7.11.
Section 7.4. Trustee's Disclaimer.
The Trustee makes no representation as to the validity or
adequacy of this Indenture or the Securities; it shall not be accountable for
the Company's use of the proceeds from the Securities; it shall not be
accountable for any money paid to the Company, or upon the Company's direction,
if made under and in accordance with any provision of this Indenture; it shall
not be responsible for the use or application of any money received by any
Paying Agent other than the Trustee; and it shall not be responsible for any
statement of the Company in the Note Purchase Agreement, this Indenture or any
statement in the Securities other than the Trustee's certificate of
authentication.
Section 7.5. Notice of Defaults.
If a Default or Event of Default occurs and is continuing and
the Trustee has actual knowledge of such Default or Event of Default, the
Trustee shall mail to Securityholders a notice of the Default or Event of
Default within 90 days after the occurrence thereof. Except in the case of a
Default or Event of Default in payment of any Security, the Trustee may withhold
the notice if and so long as the board of directors, executive committee or a
trust committee of directors and/or responsible officers of the Trustee in good
faith determines that withholding the notice is in the interests of
Securityholders.
Section 7.6. Reports by Trustee to Holders.
Within 60 days after receipt by the Trustee of the reports
specified in Sections 4.5(i) and 4.5(ii), the Trustee shall mail to
Securityholders a copy of such reports.
Section 7.7. Compensation and Indemnity.
The Company shall pay to the Trustee from time to time
reasonable compensation for its services. The Trustee's compensation shall not
be limited by any law on compensation of a trustee of an express trust. The
Company shall reimburse the Trustee upon request for all reasonable
disbursements, advances and expenses incurred by it in connection with the
performance of its duties under this Indenture including reasonable
compensation, disbursements and expenses of the Trustee's agents and counsel.
The Company shall indemnify the Trustee against any loss,
liability, cost or expense incurred by it arising out of or in connection with
the performance of its duties under this Indenture, except as set forth in the
next paragraph. The Trustee shall notify the Company promptly of any claim for
which it may seek indemnity. The Company shall defend such claim and the Trustee
shall cooperate in such defense. The Trustee may have separate counsel and the
Company shall pay the reasonable fees and expenses of such counsel. This
indemnification provision shall survive the satisfaction and discharge of this
Indenture.
The Company need not reimburse any expense or indemnify
against any loss or liability incurred by the Trustee through negligence,
willful misconduct or bad faith. The Company need not pay for any settlement
made by the Trustee without the Company's consent. The Company will only
withhold consent where in good faith the Company believes there are reasonable
grounds for withholding consent.
The obligation of the Company under this Section 7.7 to
compensate the Trustee and to pay and reimburse the Trustee for such expenses,
disbursements and advances shall constitute additional Indebtedness.
To secure the Company's payment obligations in this Section,
the Trustee shall have a Lien prior to the Securities on all money or property
held or collected by the Trustee, except that held in trust to pay the principal
of, premium, if any, and interest on particular Securities. Such obligations
shall survive the satisfaction and discharge of the Indenture.
When the Trustee incurs expenses or renders services after an
Event of Default specified in clause (viii) and (ix) of Section 6.1 occurs, the
expenses and the compensation for the services are intended to constitute
expenses of administration under any Bankruptcy Law.
Section 7.8. Replacement of Trustee.
A resignation or removal of the Trustee and appointment of a
successor Trustee shall become effective only upon the successor Trustee's
acceptance of appointment as provided in this Section.
The Trustee may resign and be discharged from the trust hereby
created by so notifying the Company in writing, such resignation and discharge
to become effective as provided in the last paragraph of this Section. The
Holders of a majority in principal amount of the then outstanding Securities may
remove the Trustee by so notifying the Trustee and the Company. The Company may
remove the Trustee if:
(i) the Trustee fails to comply with Section
7.10;
(ii) the Trustee is adjudged a bankrupt or an
insolvent or an order for relief is entered with respect to the
Trustee under any Bankruptcy Law;
(iii) a Custodian or public officer takes charge
of the Trustee or its property; or
(iv) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in
the office of Trustee for any reason, the Company shall promptly appoint a
successor Trustee. The Trustee shall be entitled to payment of its fees and
reimbursement of its expenses while acting as Trustee.
If a successor Trustee does not take office within 60 days
after the retiring Trustee resigns or is removed, the retiring Trustee, the
Company or the Holders of at least 10% in principal amount of the then
outstanding Securities may petition any court of competent jurisdiction for the
appointment of a successor Trustee.
If the Trustee, after written request by any Securityholder
who has been a Securityholder for at least 6 months, fails to comply with
Section 7.10, any Securityholder may petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a successor
Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Securityholders. The retiring Trustee shall promptly transfer all
property held by it as Trustee to the successor Trustee, subject to the Lien
provided for in Section 7.7. Notwithstanding replacement of the Trustee
pursuant to this Section 7.8, the Company's obligations under Section 7.7 shall
continue for the benefit of the retiring Trustee.
Section 7.9. Successor Trustee or Agent by Merger, etc.
If the Trustee or any Agent consolidates, merges or converts
into, or transfers all or substantially all of its corporate trust business to,
another corporation, the successor corporation without any further act shall be
the successor Trustee or any Agent.
Section 7.10. Eligibility; Disqualification.
There shall at all times be a Trustee hereunder which shall be
a corporation organized and doing business under the laws of the United States
of America or of any state thereof authorized under such laws to exercise
corporate trust powers, shall be subject to supervision or examination by
Federal or State authority and shall have a combined capital and surplus of at
least [$100,000,000] as set forth in its most recent published annual report of
condition.
Section 7.11. Preferential Collection of Claims Against the Company.
Notwithstanding the fact that the TIA may or may not apply to
this Indenture, the Trustee shall be subject to, and the Trustee shall at all
times comply with, TIA 311(a), excluding any creditor relationship listed in
TIA 311(b). A Trustee who has resigned or been removed shall be subject to
TIA 311(a) to the extent indicated therein.
ARTICLE 8
Discharge of Indenture
Section 8.1. Termination of Company's Obligations.
This Indenture shall cease to be of further effect (except
that the Company's obligations under Section 7.7 and the Trustee's and Paying
Agent's obligations under Section 8.3 shall survive) when all outstanding
Securities theretofore authenticated and issued have been delivered (other than
destroyed, lost or stolen Securities which have not been replaced or paid) to
the Trustee for cancellation and the Company has paid all sums payable
hereunder. In addition, the Company may terminate all of its obligations under
this Indenture, other than its obligations under those Sections specifically
noted below, at any time within one year of the stated maturity of the
Securities if:
(i) the Company irrevocably deposits in trust
with the Trustee money or U.S. Government Obligations sufficient
(in an opinion set forth in an Accountant's Letter delivered by
the Company to the Trustee) to pay, or which at maturity will be
sufficient to pay, principal, premium, if any, and interest on the
Securities to and at maturity or redemption, as the case may be,
and to pay all other sums payable by it hereunder, provided that
the Trustee shall have been irrevocably instructed to apply such
money or the proceeds of such U.S. Government Obligations to the
payment of said principal, premium, if any, and interest with
respect to the Securities;
(ii) the Company delivers to the Trustee an
Officers' Certificate stating that all of the provisions of this
Section 8.1 have been complied with, and an Opinion of Counsel,
reasonably satisfactory to the Trustee, to the same effect; and
(iii) no Event of Default or Default (including
such deposit) with respect to the Securities shall have occurred
and be continuing on the date of such deposit.
Then, in such event, the obligations of the Company under this Indenture shall
cease to be of further effect (except as provided in this paragraph) and the
Trustee, on demand of the Company, shall execute proper instruments
acknowledging confirmation of and discharge under this Indenture. However, the
Company's obligations in Sections 2.3, 2.4, 2.5, 2.6, 2.7, 2.13, 4.1, 4.2, 4.8,
7.7, 7.8, 8.1, 8.2, and 8.4 and the Trustee's and Paying Agent's obligations
hereunder, including under Section 8.3, shall survive until the Securities are
no longer outstanding. Thereafter, only the Company's and the Trustee's
obligations in Section 7.7 and the Trustee's and Paying Agent's obligations in
Section 8.3 shall survive. After such irrevocable deposit made pursuant to this
Section 8.1 and satisfaction of the other conditions set forth in this Section
8.1, the Trustee upon the written request signed by two Officers of the Company
shall acknowledge in writing the discharge of the Company's obligations under
this Indenture except for those surviving obligations specified above.
"U.S. Government Obligations" means direct or indirect
obligations of the United States of America or an agency of the United States of
America for the payment of which the full faith and credit of the United States
of America is pledged.
In order to have money available on a payment date to pay
principal or interest on the Securities, the U.S. Government Obligations shall
be payable as to principal or interest on or before such payment date in such
amounts as will provide the necessary money. U.S. Government Obligations shall
not be payable at the issuer's option.
Section 8.2. Application of Trust Money.
The Trustee shall hold in trust money or U.S. Government
Obligations deposited with it pursuant to Section 8.1. It shall apply the
deposited money and the money from U.S. Government Obligations through the
Paying Agent and in accordance with this Indenture to the payment of principal,
premium, if any, and interest on the Securities.
Section 8.3. Repayment to Company.
The Trustee and the Paying Agent shall promptly pay to the
Company upon written request any excess money or Securities held by them at any
time.
The Trustee and the Paying Agent shall pay to the Company upon
written request any money held by them for the payment of principal, premium, if
any, or interest that remains unclaimed for two years after the date upon which
such payment shall have become due; provided that the Company shall have first
caused notice of such payment to be mailed to each Securityholder entitled
thereto no less than 30 days prior to such repayment. After payment to the
Company, Securityholders entitled to the money must look to the Company for
payment as general creditors unless an applicable abandoned property law
designates another Person, and all liability of the Trustee and such Paying
Agent with respect to such money shall cease.
Section 8.4. Reinstatement.
If the Trustee or Paying Agent is unable to apply any money in
accordance with Section 8.2 by reason of any legal proceeding or by reason of
any order of judgment of any court or governmental authority enjoining,
restraining or otherwise prohibiting such application, the Company's obligations
under this Indenture and the Securities shall be revived and reinstated as
though no deposit had occurred pursuant to Section 8.2 until such time as the
Trustee or Paying Agent is permitted to apply all such money in accordance with
Section 8.2; provided that, if the Company has made any payment of principal of,
premium, if any, or interest on any Securities because of the reinstatement of
its obligations, the Company shall be subrogated to the rights of the Holders of
such Securities to receive such payment from the money held by the Trustee or
Paying Agent.
ARTICLE 9
Amendments
Section 9.1. Without Consent of Holders.
The Company and the Trustee may amend this Indenture or the
Securities without the consent of any Securityholder:
(i) to cure any ambiguity, defect or
inconsistency;
(ii) to comply with Section 5.1;
(iii) to provide for uncertificated Securities in
addition to or in place of certificated Securities; or
(iv) to make any change that does not adversely
affect the rights hereunder of any Securityholder.
After an amendment or waiver under this Section 9.1 becomes effective, the
Company shall mail to Securityholders a notice briefly describing the amendment
or waiver.
Section 9.2. With Consent of Holders.
The Company and the Trustee may amend this Indenture or the
Securities with the written consent of the Holders of at least 66-2/3% in
principal amount of the then outstanding Securities. Upon the written request
of the Company signed by two Officers, accompanied by a resolution of the Board
of Directors of the Company authorizing the execution of any such supplemental
indenture, and upon the filing with the Trustee of evidence of the consent of
the Securityholders as aforesaid, the Trustee, subject to Section 9.5, shall
join with the Company in the execution of such supplemental indenture.
It shall not be necessary for the consent of the Holders under
this Section to approve the particular form of any proposed amendment or waiver,
but it shall be sufficient if such consent approves the substance thereof.
After an amendment or waiver under this Section 9.2 becomes
effective, the Company shall mail to the Holder of each Security affected
thereby a notice briefly describing the amendment or waiver. Any failure of the
Company to mail such notice, or any defect therein, shall not, however, in any
way impair or affect the validity of any such supplemental indenture. The
Holders of at least 66-2/3% in principal amount of the Securities then
outstanding may waive compliance in a particular instance by the Company with
any provision of this Indenture or the Securities. However, without the consent
of each Securityholder affected, an amendment under this Section may not:
(i) reduce the amount of Securities whose
Holders must consent to an amendment or waiver;
(ii) reduce the rate of or change the time for
payment of interest, including default interest, on any Security;
(iii) reduce the principal of or change the fixed
maturity of any Security or alter the redemption provisions with
respect thereto;
(iv) make any Security payable in money other
than that stated in the Security;
(v) make any change in Section 6.4, 6.7 or this
fourth sentence of the third paragraph of Section 9.2;
(vi) waive a Default in the payment of principal
of or interest on, or redemption payment with respect to, any
Security.
Section 9.3. Revocation and Effect of Consents.
(a) Until an amendment or waiver becomes effective, a
consent to it by a Holder of a Security is a continuing consent by the Holder
and every subsequent Holder of a Security or portion of a Security that
evidences the same debt as the consenting Holder's Security, even if notation of
the consent is not made on any Security. However, any such Holder or subsequent
Holder may revoke the consent as to his Security or portion of a Security if the
Trustee receives written notice of revocation before the date on which the
Trustee receives an Officers' Certificate certifying that the Holders of the
requisite principal amount of Securities have consented to such amendment or
waiver. An amendment or waiver becomes effective upon receipt by the Trustee of
such Officers' Certificate and the written consents from the Holders of the
requisite percentage in principal amount of Securities.
(b) The Company may, but shall not be obligated to, fix a
record date for the purpose of determining the Holders entitled to consent to
any amendment or waiver. If a record date is fixed, then notwithstanding the
second and third sentence of paragraph (a) of this Section 9.3, those persons
who were Holders at such record date (or their duly designated proxies), and
only those persons, shall be entitled to consent to such amendment or waiver or
to revoke any consent previously given, whether or not such persons continue to
be Holders after such record date. No such consent shall be valid or effective
for more than 120 days after such record date.
(c) After an amendment or waiver becomes effective, it
shall bind every Securityholder.
Section 9.4. Notation on or Exchange of Securities.
Upon the Company's written request, the Trustee shall place an
appropriate notation provided by the Company about an amendment or waiver on any
Security thereafter authenticated. The Company in exchange for all Securities
may issue, and the Trustee shall authenticate, new Securities that reflect the
amendment or waiver.
Section 9.5. Trustee to Sign Amendments, etc.
The Trustee shall sign any amendment or supplemental indenture
authorized pursuant to this Article 9 if the amendment does not adversely affect
the rights, duties, liabilities or immunities of the Trustee. If it does, the
Trustee may, but need not, sign it. In signing or refusing to sign such
amendment or supplemental indenture, the Trustee shall be entitled to receive
and shall be fully protected in relying upon, an Officers' Certificate and an
Opinion of Counsel as conclusive evidence that such amendment or supplemental
indenture is authorized or permitted by this Indenture, that it is not
inconsistent herewith, and that it will be valid and binding upon the Company in
accordance with its terms. The Company may not sign an amendment or
supplemental indenture until the Board of Directors approves it.
ARTICLE 10
Miscellaneous
Section 10.1. Notices.
Any notice or communication to the Company or the Trustee is
duly given if in writing and delivered in person or transmitted by first-class
mail (registered or certified, return receipt requested) or by telecopier
(confirmed by first-class mail) or overnight air courier guaranteeing next day
delivery to the address set forth below:
If to the Company:
South Jersey Gas Company
Number One South Jersey Plaza
Route 54
Folsom, New Jersey 08037
Attention: R.B. Tonielli, Senior Vice President,
Finance
Telecopy No.: (609) 561-8225
If to the Trustee:
New Jersey National Bank
370 Scotch Road
West Trenton, New Jersey 08628
Attention: Corporate Trust Administration
Telecopy No.: (609) 771-5819
The Company or the Trustee by notice to the other may designate additional or
different addresses for subsequent notices or communications.
Any notice or communication to a Securityholder shall be
mailed by first-class mail to his address shown on the register kept by the
Registrar. Failure to mail a notice or communication to a Securityholder or any
defect in such notice or communication shall not affect its sufficiency with
respect to other Securityholders.
If a notice or communication is mailed or sent in the manner
provided above within the time prescribed, it is duly given, whether or not the
addressee receives it, except that notice to the Trustee or the Company shall
only be effective upon receipt thereof by the Trustee or the Company.
If the Company mails a notice or communication to
Securityholders, it shall mail a copy to the Trustee and each Agent at the same
time.
Section 10.2. Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company to the Trustee
to take any action under this Indenture, the Company shall deliver to the
Trustee:
(i) an Officer's Certificate (which shall
include the statements set forth in Section 10.3) stating that, in
the opinion of the signers, all conditions precedent and
covenants, compliance with which constitutes a condition
precedent, if any, provided for in this Indenture relating to the
proposed action or inaction have been complied with; and
(ii) an Opinion of Counsel reasonably
satisfactory to the Trustee (which shall include the statements
set forth in Section 10.3) stating that, in the opinion of such
counsel, all such conditions precedent and covenants, compliance
with which constitutes a condition precedent, if any, provided for
in this Indenture relating to the proposed action or inaction have
been complied with.
Section 10.3. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(i) a statement that the Person making such
certificate or opinion has read such covenant or condition;
(ii) a brief statement as to the nature and scope
of the examination or investigation upon which the statements or
opinions contained in such certificate or opinion are based;
(iii) a statement that, in the opinion of such
Person, he has made such examination or investigation as is
necessary to enable him to express an informed opinion as to
whether or not such covenant or condition has been complied with;
and
(iv) a statement as to whether or not, in the
opinion of such Person, such condition or covenant has been
complied with.
Section 10.4. Rules by Trustee and Agents.
The Trustee may make reasonable rules for action by or a
meeting of Securityholders. The Registrar or Paying Agent may make reasonable
rules and set reasonable requirements for its functions.
Section 10.5. Legal Holidays.
A "Legal Holiday" is a Saturday, a Sunday or a day on which
banking institutions in the State of New Jersey, the State of New York or the
Commonwealth of Pennsylvania are authorized or obligated by law, regulation or
executive order to remain closed. If a payment date is a Legal Holiday at a
place of payment, payment may be made at that place on the next succeeding day
that is not a Legal Holiday, and no interest shall accrue for the intervening
period.
Section 10.6. Duplicate Originals.
The parties may sign any number of copies of this Indenture.
One signed copy is enough to prove this Indenture.
Section 10.7. Governing Law.
This Indenture and the Securities shall be governed by the
laws of the State of New Jersey applicable to contracts to be performed wholly
in the State of New Jersey, without giving effect to the conflicts of laws rules
thereof.
Section 10.8. No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another indenture,
loan or debt agreement of the Company. Any such indenture, loan or debt
agreement may not be used to interpret this Indenture.
Section 10.9. Successors.
All agreements of the Company in this Indenture and the
Securities shall bind its successor. All agreements of the Trustee in this
Indenture shall bind its successor.
Section 10.10. Severability.
In case any provision in this Indenture or in the Securities
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
Section 10.11. No Recourse Against Others.
No director, officer, employee, stockholder, Subsidiary or
Affiliate, as such, of the Company shall have any liability for any obligations
of the Company under the Securities or this Indenture or for any claim based on,
in respect of or by reason of such obligations or their creation. Each
Securityholder by accepting a Security waives and releases all such liability.
The waiver and release are part of the consideration for the issue of the
Securities.
Section 10.12. Table of Contents, Headings, etc.
The Table of Contents and Headings of the Articles and
Sections of this Indenture have been inserted for convenience of reference only,
are not to be considered a part hereof and shall in no way modify or restrict
any of the terms or provisions hereof.
Section 10.13. Counterpart Originals.
This Indenture may be signed in two or more counterparts.
Each signed copy shall be an original, but all of them together represent the
same agreement.
SIGNATURES
Dated: January 31, 1995 SOUTH JERSEY GAS COMPANY
Attest: By:___________________________
Richard B. Tonielli
Senior Vice President,
Finance
____________________________(SEAL)
George L. Baulig
Secretary
Dated: January 31, 1995 NEW JERSEY NATIONAL BANK
Attest: By:___________________________
____________________________(SEAL)
Authorized Officer
EXHIBIT A
[Face of Security]
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"). BY ITS ACCEPTANCE OF THIS NOTE, THE HOLDER OF THIS NOTE
REPRESENTS THAT (1) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" OR A
"QUALIFIED INSTITUTIONAL BUYER" AS SUCH TERMS ARE DEFINED UNDER RULE 501(a) AND
RULE 144A UNDER THE SECURITIES ACT, RESPECTIVELY, AND (2) THIS NOTE IS BEING
ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO DISTRIBUTION OR RESALE, EXCEPT IN
THE CASE OF RESALES PURSUANT TO RULE 144A OF THE SECURITIES ACT. PRIOR TO THE
DATE WHICH IS THREE YEARS AFTER THE ORIGINAL ISSUE DATE OF THIS NOTE ("THIRD
ANNIVERSARY OF ISSUANCE"), NEITHER THIS NOTE NOR ANY INTEREST HEREIN MAY BE
SOLD, OFFERED FOR SALE OR OTHERWISE TRANSFERRED WITHOUT REGISTRATION UNDER THE
SECURITIES ACT EXCEPT (A) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS
SUCH A "QUALIFIED INSTITUTIONAL BUYER" IN A TRANSACTION COMPLYING WITH THE
REQUIREMENTS OF RULE 144A, OR (B) PURSUANT TO ANOTHER APPLICABLE EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT, AND IN THE CASE OF EITHER (A) OR (B)
ABOVE, UNDER CIRCUMSTANCES WHICH WOULD NOT RESULT IN A VIOLATION OF THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. PROSPECTIVE PURCHASERS ARE
HEREBY NOTIFIED THAT THE SELLER OF THIS NOTE MAY BE RELYING ON THE EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF SECTION 5 OF THE SECURITIES ACT PROVIDED
BY RULE 144A. THE ISSUER OF THIS NOTE HAS AGREED THAT UNTIL THE THIRD
ANNIVERSARY OF ISSUANCE IT WILL FURNISH THE HOLDER OF THIS NOTE AND PROSPECTIVE
PURCHASERS DESIGNATED BY THE HOLDER WITH THE INFORMATION ABOUT THE ISSUER
REQUIRED BY RULE 144A(d)(4).
No. $
SOUTH JERSEY GAS COMPANY
8.60% DEBENTURE NOTE
DUE FEBRUARY 1, 2010
SOUTH JERSEY GAS COMPANY, a corporation organized and existing under the
laws of the State of New Jersey, promises to pay to
____________________________________________________________
or registered assigns, the principal sum of ______________________ Dollars on
February 1, 2010.
Interest Payment Dates: February 1 and August 1
Record Dates: January 1 and July 1
SOUTH JERSEY GAS COMPANY
Dated: By:___________________________________
Richard B. Tonielli
Senior Vice President, Finance
By:________________________________(SEAL)
George L. Baulig
Secretary
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Securities described in the within-mentioned Indenture.
NEW JERSEY NATIONAL
BANK, as Trustee
Dated:
By:__________________________
Authorized Signature
[Back of Security]
SOUTH JERSEY GAS COMPANY
8.60% Debenture Note due February 1, 2010
1. Interest. SOUTH JERSEY GAS COMPANY, a New Jersey
corporation (the "Company"), promises to pay interest on the principal amount of
this Security at the interest rate per annum shown above. The Company shall pay
interest semiannually on February 1 and August 1 of each year (each an
"Interest Payment Date"), commencing August 1, 1995. Interest on the Securities
shall accrue from the most recent date to which interest has been paid or, if no
interest has been paid, from the date of original issuance of Securities. The
Company shall pay interest on overdue principal and premium, if any, at the rate
then borne by the Securities plus 1% per annum; it shall pay interest to the
extent permitted by law (including post-petition interest in any proceeding
under any Bankruptcy Law), on overdue installments of interest at the rate then
borne by the Securities. Interest shall be computed on the basis of a 360-day
year of twelve 30-day months.
2. Method of Payment. The Company shall pay interest on
this Security (except defaulted interest) to the person who is the registered
holder of this Security at the close of business on the Record Date next
preceding the Interest Payment Date. The holder must surrender this Security to
a Paying Agent to collect payments of principal and premium. Payments of
interest may be mailed to the holder's registered address. The Company shall
pay principal, premium, if any, and interest in money of the United States that
at the time of payment is legal tender for payment of public and private debts.
The Company, however, may pay principal, premium, if any, and interest by its
check payable in such money. If a payment date is a Legal Holiday at a place of
payment, payment may be made at that place on the next succeeding day that is
not a Legal Holiday, and no interest on the amount payable on such payment date
shall accrue for the intervening period.
3. Paying Agent and Registrar. Initially, the Trustee shall
act as Paying Agent and Registrar. The Company may change any Paying Agent,
Registrar or co-registrar without notice to any Securityholder. The Company or
any of its Subsidiaries or Affiliates may act in any such capacity.
4. Indenture. This Security is one of the Securities issued
by the Company under an Indenture dated as of January 31, 1995 (the
"Indenture") between the Company and New Jersey National Bank (the "Trustee").
The terms of the Securities include those stated in the Indenture and those made
part of the Indenture by reference to the Trust Indenture Act of 1939 (the
"TIA") as in effect on the date of the Indenture, notwithstanding the fact that
the TIA may or may not apply to the Indenture or the Securities. The Securities
are subject to all such terms, and Securityholders are referred to the Indenture
and the TIA for a statement of such terms. The Securities are general unsecured
obligations of the Company and limited to $30,000,000 in aggregate principal
amount. Capitalized terms used in this Security and not defined in this
Security shall have the meanings set forth in the Indenture.
5. Redemption. (a) On February 1 in each year commencing
February 1, 2001 and ending February 1, 2009, both inclusive (herein called
"Fixed Payment Dates"), the Company will prepay and apply and there shall become
due and payable on the principal indebtedness evidenced by this Security an
amount equal to the lesser of (i) the product obtained by multiplying $3,000,000
by a fraction, the numerator of which is the original principal amount of this
Security and the denominator of which is $30,000,000 and (ii) the principal
amount of this Security then outstanding. (b) In addition to the mandatory
prepayments required by paragraph 5(a) above, on any Fixed Payment Date, the
Company may, at its option, prepay and apply to the principal indebtedness
evidenced by this Security up to an amount equal to the product obtained by
multiplying $3,000,000 by a fraction, the numerator of which is the original
principal amount of this Security and the denominator of which is $30,000,000
(such payments being herein referred to as "Supplemental Optional Redemption"),
provided, however, that the amount of such Supplemental Optional Redemptions of
all Securities issued under the Indenture shall not exceed $7,500,000 in the
aggregate. The right to make Supplemental Optional Redemptions pursuant to this
paragraph 5(b) shall be non-cumulative and shall lapse if, and to the extent,
not exercised on any date when such Supplemental Optional Redemption may be
made. (c) The Company may redeem, at its option, the Securities in whole or in
part at any time or from time to time on or after February 1, 2005 at the
redemption prices (expressed in percentages of principal amount) set forth below
plus accrued interest, if any, to the Redemption Date, if redeemed during the
12-month period beginning February 1 of the years indicated below.
Year Percentage
2005. . . . . . . . . . . . . . . . . . . . 102.46%
2006. . . . . . . . . . . . . . . . . . . . 101.84%
2007. . . . . . . . . . . . . . . . . . . . 101.23%
2008. . . . . . . . . . . . . . . . . . . . 100.61%
2009. . . . . . . . . . . . . . . . . . . . 100.00%
If any Redemption Date is subsequent to a Record Date with respect to any
Interest Payment Date and on or prior to such Interest Payment Date, then such
accrued interest, if any, shall be paid to the person who surrenders the
Security for redemption (and not the Holder as of the Record Date with respect
to such Interest Payment Date), and no other interest shall be payable thereon.
6. Notice of Redemption. Notice of any redemption shall be
mailed at least 30 days but not more than 60 days before the Redemption Date to
each holder of Securities to be redeemed at his registered address. Securities
in denominations larger than $1,000 may be redeemed in part but only in whole
multiples of $1,000. On and after the Redemption Date interest ceases to accrue
on Securities or portions of them called for redemption.
7. Denominations, Transfer, Exchange. The Securities are in
registered form without coupons and only in denominations of $1,000 and integral
multiples of $1,000. The transfer of Securities may be registered and
Securities may be exchanged as provided in the Indenture. The Registrar may
require a holder, among other things, to furnish appropriate endorsements and
transfer documents and to pay any taxes and fees required by law or permitted by
the Indenture. The Company shall not be required to, and without the prior
written consent of the Company, the Registrar shall not be required to register
the transfer or exchange of (i) any Security selected for redemption in whole or
in part, except the unredeemed portion of any Security being redeemed in part or
(ii) any Security for a period of 15 days before a selection of Securities to be
redeemed.
8. Persons Deemed Owners. The registered holder of a
Security may be treated as its owner for all purposes.
9. Unclaimed Money. If money for the payment of principal
or interest remains unclaimed for two years, the Trustee and the Paying Agent
shall pay the money back to the Company at its request. After that,
Securityholders entitled to the money must look to the Company for payment
unless an abandoned property law designates another person and all liability of
the Trustee and such Paying Agent with respect to such money shall cease.
10. Discharge Prior to Redemption or Maturity. If within one
year of the stated maturity of the Securities the Company deposits with the
Trustee money or U.S. Government Obligations sufficient (in an opinion set forth
in an Accountant's Letter delivered by the Company to the Trustee) to pay
principal of, premium, if any, and accrued interest on the Securities to
redemption or maturity, and any other amounts payable under the Indenture, the
Company shall be discharged from the Indenture and the Securities, except for
certain sections thereof.
11. Amendments and Waivers. Subject to certain exceptions,
the Indenture or the Securities may be amended with the consent of the holders
of at least 66-2/3% in principal amount of the then outstanding Securities, and
any existing default may be waived with the consent of the holders of at least
66-2/3% in principal amount of the then outstanding Securities. Without the
consent of any Securityholder, the Indenture or the Securities may be amended to
cure any ambiguity, defect or inconsistency, to provide for the assumption of
the obligations of the Company under the Indenture by a successor corporation,
to provide for uncertificated Securities in addition to certificated Securities
or to make any change that does not adversely affect the rights of any
Securityholder.
12. Defaults and Remedies. An Event of Default is: default
for 10 days in payment of interest on the Securities; default in payment of
principal or premium, if any, on the Securities at maturity, upon acceleration,
redemption or otherwise; failure by the Company for the period specified in the
Indenture after notice to it to perform certain covenants and to comply with any
of its other agreements in the Indenture or the Securities; certain final
judgments which remain undischarged; certain events of bankruptcy or insolvency;
and certain other events. If an Event of Default due to events other than of
certain events of bankruptcy or insolvency as described in the Indenture occurs
and is continuing, the Trustee or the holders of at least 35% in principal
amount of the then outstanding Securities may declare all the Securities to be
due and payable immediately. If an event of default due to certain events of
bankruptcy or insolvency as described in the Indenture occurs and is continuing,
then all outstanding Securities shall immediately become due and payable without
presentment, demand or notice of any kind. Securityholders may not enforce the
Indenture or the Securities except as provided in the Indenture. The Trustee
may require indemnity satisfactory to it before it enforces the Indenture or
the Securities. Subject to certain limitations, holders of 66-2/3% in principal
amount of the then outstanding Securities may direct the Trustee in its exercise
of any trust or power. The Trustee may withhold from Securityholders notice of
any continuing default (except a default in payment of principal or interest) if
it determines that withholding notice is in their interests. The Company must
furnish an annual compliance certificate to the Trustee.
13. Trustee Dealings with Company. The Trustee, in its
individual or any other capacity, may become the owner or pledgee of Securities
and may otherwise deal with the Company, its Subsidiaries or its Affiliates, as
if it were not Trustee.
14. No Recourse Against Others. A director, officer,
employee or shareholder, as such, of the Company shall not have any liability
for any obligations of the Company under the Securities or the Indenture or for
any claim based on, in respect of or by reason of such obligations or their
creation. Each Securityholder by accepting a Security waives and releases all
such liability. The waiver and release are part of the consideration for the
issue of the Securities.
15. Authentication. This Security shall not be valid until
authenticated by the manual signature of the Trustee or an authenticating agent.
16. Abbreviation. Customary abbreviations may be used in the
name of a Securityholder or an assignee, such as:
TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN
(= joint tenants with right of survivorship and not as tenants in common), CUST
(= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).
17. CUSIP Numbers. Pursuant to a recommendation promulgated
by the Committee on Uniform Security Identification Procedures, the Company has
caused CUSIP Private Placement numbers to be printed on the Securities as a
convenience to the holders of such Securities. No representation is made as to
the accuracy of such numbers as printed on the Securities, and reliance may be
placed only on the other identification numbers printed thereon.
CERTIFICATE OF TRANSFER
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s)
unto
Insert Taxpayer Identification No.
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP OF
TRANSFEREE)
the within Note (the "Note") of SOUTH JERSEY GAS COMPANY (the "Company") and
does hereby irrevocably constitute and appoint attorney to transfer the
Note on the books of the Company, with full power of substitution in the
premises.
In connection with any transfer of the Note occurring prior to the date which is
three years after the original issue date of the Note, the undersigned confirms
that without utilizing any general solicitation or general advertising: [Check
one]
1(a) The Note is being transferred by the undersigned to a
"Qualified Institutional Buyer" (as defined in Rule 144A
under the Securities Act of 1933, as amended (the
"Securities Act"), pursuant to the exemption from
registration under the Securities Act provided by Rule
144A.
1(b) The Note is being transferred by the undersigned to an
institutional investor which is an "Accredited Investor"
(as defined in Rule 501(a) under the Securities Act) and
the undersigned has been advised by the purchaser that it
intends to hold the Note for investment and not for
distribution or resale.
If neither Box 1(a) nor Box 1(b) is checked, the Registrar shall not be
obligated to
register any transfer of the Note.
Dated:
NOTICE: The signature
to this assignment must
correspond with the
name as written upon
the face of the Note in
every particular,
without alteration or
enlargement or any
change whatever.
Signature guaranteed:
(Bank, Trust Company or Firm)
By
(Authorized Officer)
TO BE COMPLETED BY PURCHASER IF
BOX 1(a) ABOVE IS CHECKED:
The undersigned represents and warrants that it is a "Qualified
Institutional Buyer" as defined in Rule 144A under the Securities Act and
acknowledges that it has received such information regarding the Company as the
undersigned has requested pursuant to Rule 144A or has determined not to request
such information, and that it is aware that the registered owner is relying upon
the undersigned's foregoing representations in order to claim the exemption from
registration provided by Rule 144A.
Dated: ______________________________
NOTICE: To be executed by an
executive officer.
TO BE COMPLETED BY PURCHASER IF
BOX 1(b) ABOVE IS CHECKED:
The undersigned represents and warrants that it is an institutional
investor and an "Accredited Investor" (as defined in Rule 501(a) under the
Securities Act). The undersigned undertakes to hold the Note for investment and
not for distribution or resale.
Dated: ______________________________
NOTICE: To be executed by an
executive officer.
EX-10.KR
4
EXHIBIT (10)(K)(R)
RATE SCHEDULE NS
NEGOTIATED SALES SERVICE AGREEMENT
THIS AGREEMENT is entered into as of the 1 day of December, 1994,
between TRANSCO GAS MARKETING COMPANY, Agent for TRANSCONTINENTAL
GAS PIPE LINE CORPORATION ("TGPL"), a Delaware corporation ("Seller") and
SOUTH JERSEY GAS COMPANY ("Buyer").
Recitals
Seller agrees to supply, on a firm basis, such quantities of natural gas as
requested under the terms and conditions set forth;
Buyer agrees to purchase the quantities of gas requested by Buyer and made
available by Seller at the Points of Delivery;
Accordingly, Seller and Buyer agree as follows:
ARTICLE I
GENERAL TERMS
1. Definitions
Except as otherwise specified, the following terms will be construed to have
the following scope and meaning under this Agreement:
1. "Business Day" - A Day, exclusive of a Saturday, Sunday or a holiday
observed by Transporter under this Agreement. When one full Business Day's
notice is required, notice given at a given time on a Business Day shall be
adequate to provide one full Business Day's notice as of the same time on the
next Business Day.
2. "Daily Contract Quantity" (DCQ) - The daily quantity of Gas that Seller
shall make available each Day on a firm basis as specified on Exhibit "A", and
that Buyer may purchase and receive when tendered by Seller during the term of
this Agreement.
3. "Daily Nominated Quantity" - The estimated volumes Buyer anticipates in
good faith to purchase each Day.
4. "Day" - The twenty-four (24) period commencing at 7:00 a.m. Central
Standard or Daylight Time, when applicable, on any calendar day and ending at
7:00 a.m. on the following calendar day.
5. "Delivery Point(s)" - Any Point(s) of Delivery identified in Exhibit "A",
at which point(s) ownership and control of such Gas shall pass from Seller to
Buyer.
6. "FERC" - The Federal Energy Regulatory Commission or any successor
thereto.
7. "Gas" - Natural gas produced from gas wells and gas produced in
association with oil (casinghead gas) and/or the residue gas resulting from
processing either casinghead gas or gas well gas.
8. "Imbalance" - The difference between allocated receipt Gas quantities and
allocated delivery Gas quantities.
9. "Interest Rate" - The lesser of the annual prime interest rate of
Citibank, N.A., or its successor, as in effect from time to time or the maximum
non-usurious interest rate under applicable law.
10. "Maximum Daily Quantity ("MDQ) - The maximum contract quantity that
Seller shall make available each Day at the Delivery Point(s) and that Buyer may
purchase and receive when tendered by Seller.
11. "Mcf" - One thousand (1,000) cubic feet of Gas.
12. "Month" - The period beginning on the first (1 st) Day of a calendar
month and ending on the first (lst) Day of the next succeeding calendar month.
13. "Party(ies)" - Buyer and/or Seller and their assigns.
14. "Redelivery Point(s)". - Any Point(s) of Redelivery on Buyer's FT
Transportation Agreement with Transporter.
15. "Scheduling or Schedule" - If by Seller, to make Gas available or cause
Gas to be made available at the Delivery Point(s) for delivery to or for the
account of Buyer. If by Buyer, to cause Buyer's Transporter to make available
at the Delivery Point(s) transportation capacity sufficient to permit Buyer's
Transporter to receive on a firm basis the quantities Seller tenders at such
Delivery Point(s) including making all necessary and timely pipeline
nominations.
16. "Transporter" - If Buyer's Transporter, any pipeline receiving Gas at a
Delivery Point for the account of Buyer, If Seller's Transporter, any pipeline
delivering Gas for the account of Seller or Seller's supplier at a Delivery
Point.
ARTICLE 11
Quantity Obligations
1. Seller's Sales Obligation. Seller shall make available to Buyer at the
Delivery Point(s), on a firm basis, a DCQ which does not exceed 30,000 Mcf plus
the applicable fuel as retained by Transporter from the Delivery Point(s) to the
Redelivery Point(s).
2. Buyer's Purchase Obligation. Subject only to the terms and conditions of
this Agreement, Buyer shall Schedule or cause to be Scheduled at the Delivery
Point(s) each Day during the term of this Agreement a quantity of Gas up to the
MDQ for delivery at the Delivery Point(s). Buyer's purchase obligation is
further subject to the following:
(a) No later than two (2) Days prior to Transporter's nomination
deadline for the first Day of Gas flow each Month, Buyer shall
inform Seller in writing of the Daily Nominated Quantity. The
Daily Nominated Quantity submitted each Month shall be the MDQ
for that Month. Seller will rely on such notice to Schedule
deliveries for the following Month.
(b) If Buyer purchases on any Month less than the product of fifty
five percent (55%) of the Daily Nominated Quantity and the number
of Days in that Month (Minimum Monthly Quantity), Buyer shall
forfeit nine cents ($0.09) for each Mcf below the Minimum Monthly
Quantity.
(c) If Buyer elects on any Day to purchase volumes in excess of
81,869 Mcf/Day under the FS Agreement dated August 1, 1991
between the Parties, Buyer shall forfeit under this Agreement the
product of nine cents ($0.09) and the positive difference between
Buyer's purchased volumes under the FS Agreement and 81,869 Mcf
times the number of Days in that Month.
(d) In no event shall Buyer be entitled to purchase in the aggregate
more than 111,869 Mcf/Day under this Agreement and the FS
Agreement.
ARTICLE III
Price
1. Buyer shall pay Seller each Month the product of the Commodity Charge
which shall be negotiated each Month at least two (2) Business Days prior to
Transporter's nomination deadline and the Gas volumes purchased at the Delivery
Point(s). If the Parties are unable to reach agreement, the applicable Default
Price shall be the Natural Gas Week Grand Average price as defined in Section
2(d) of Exhibit "A" of the Form of Service Agreement in Transcontinental Gas
Pipe Line Corporation's ("TGPL") Tariff plus TGPL's perfectly telescoped FT
Commodity charges, plus all applicable surcharges and fuel charges.
2. Seller shall credit Buyer each Month the product of nine cents per Mcf
($0.09/Mcf) and the MDQ. Buyer's monthly credit shall be calculated as follows:
$0.09 x 30,000 Mcf/Day x Number of Days in each Month
3. In the event that Natural Gas Week or its successor ceases publication or
the referenced price posting becomes unavailable, the Parties shall use their
Best Efforts to agree upon a substitute mechanism for determining an alternate
Default Price. If the Parties cannot agree on a substitute methodology and/or
publication by the end of the first Month for which the Default Price could not
be determined, then Seller and Buyer shall each prepare a list of three
alternative published reference postings of spot prices for Gas delivered in the
same geographic area. Each list shall set forth the highest priority index
first. Each Party shall submit its list to the other within ten (10) days after
the end of the first Month for which the price could not be determined. The
first index appearing in Seller's list that also appears in Buyer's list shall
constitute the new Default Price.
ARTICLE IV
Term of Agreement
This Agreement is effective as of December 1, 1994 through March 31, 1996.
ARTICLE V
Transportation and Balancing
Buyer hereby appoints Seller as its agent under Buyer's FT and IT Agreements
for the purpose of transporting Gas hereunder from the Delivery Point(s) to the
Redelivery Point(s) as listed on Exhibit "A". Seller is responsible for all
Imbalance charges in connection with volumes purchased under this Agreement.
ARTICLE VI
Gas Quality, Temperature, and Pressure
All Gas to be delivered hereunder shall meet or exceed the requirements of
Buyer's Transporter, including, but not limited to, the quality, temperature and
pressure.
ARTICLE VII
Warranties
Seller warrants title to all Gas to be delivered by Seller to Buyer, the
right to sell the same, and that at the Delivery Point such Gas is free from all
liens, encumbrances, and adverse claims at the Point of Delivery. Seller shall
indemnify Buyer against all suits, actions, debts, accounts, damages, costs,
losses, and expenses (including attorneys' fees) arising from or out of any
adverse legal claim of any and all persons to or against the Gas prior to its
delivery at the Delivery Point.
ARTICLE VIII
Reservations of Seller
Seller and/or its assigns, expressly reserves to itself the right to
separate and extract liquid and liquefiable hydrocarbons, other than methane,
from the Gas at a point(s) downstream of the Delivery Point(s), together with
such methane as cannot be separate from the ethane and heavier hydrocarbons
separated or extracted from the Gas, and to process such Gas, provided that
Seller, and/or its assigns, by such separation, extraction and processing shall
not reduce the total heating value per cubic foot below a level acceptable to
Buyer's Transporter and provided that by such separation, extraction and
processing the Gas will not be rendered incapable of meeting Transporter's
quality specifications. All liquids and liquefiable hydrocarbons so recovered
shall belong to Seller.
ARTICLE IX
Title Transfer and Indemnity
As between the Parties, Seller shall be deemed to be in exclusive control
and possession of the Gas deliverable hereunder and responsible for any damage
or injury caused prior to the time the same shall have been delivered to Buyer.
At and after delivery of Gas to Buyer at the Delivery Point, Buyer shall be
deemed to be in exclusive control and possession thereof and responsible for any
injury or damage caused thereby. Title to the Gas delivered hereunder shall
pass from Seller to Buyer at the applicable Delivery Point.
Seller and Buyer each assumes full responsibility and liability for and shall
indemnify and hold harmless the other Party from all liability and expense on
account of any and all damages, claims or actions, including injury to and death
of persons, arising from any act or incident occurring when title to the Gas is
vested in the indemnifying Party.
ARTICLE X
Taxes
Seller shall pay or cause to be paid, the taxes lawfully levied on Seller or
otherwise applicable to the Gas delivered hereunder prior to delivery of such
Gas at the Delivery Point(s). Any tax that Seller may be required to pay as a
result of the sales transaction contemplated herein (including, but not limited
to, any sales, use or gross receipts tax, or any tax of a similar nature) shall
be reimbursed to Seller by Buyer. Buyer shall pay all taxes lawfully levied
upon the sale of the Gas at the Delivery Point(s), or lawfully levied on such
Gas after delivery at the Delivery Point(s). Buyer shall furnish to Seller
properly executed resale, exemption or such other certificates which would
eliminate the necessity of collecting or withholding any such taxes. Any such
certificate shall be deemed and is hereby made a part of this Agreement.
ARTICLE XI
Billing and Payment
1. Invoice Date and Charges. On or before the tenth (10th) of each calendar
Month, Seller shall provide Buyer with a written statement setting forth the
quantities of Gas delivered by Seller during the preceding Month and the
associated Commodity Charges with respect to service during the preceding Month,
and any credits due Buyer.
2. Payment Date. Buyer shall remit the Commodity charges on the later of
the 1Oth Day after the statement was received or the 20th Day of the calendar
Month in which the statement was received, or if such Day is not a Business Day,
the next Business Day. Payment of all funds shall be made by wire transfer, in
U.S. funds on a same day basis to the account designed on the billing statement.
3. Late Payment. If Buyer fails to remit any amounts in full when due, or
if any adjustments are made under this Agreement, including but not limited to
adjustments as a result of the resolution of a billing dispute, interest on the
unpaid portion shall accrue at a rate equal to the Interest Rate.
4. Seller's Suspension of Performance. If Buyer fails to make timely
payment under Section 2 and such failure is not remedied within five Business
Days after Seller gives Buyer written notice of such failure, Seller, in
addition to any other remedy it may have, may suspend further sale and delivery
of Gas until such amount, including interest at the Interest Rate, is paid;
provided, if Buyer, in good faith, disputes the amount of any such billing or
part thereof and pays to Seller the undisputed amounts, Seller shall continue to
sell and deliver Gas as provided hereunder. In the event Buyer disputes any
billing statement, Buyer must provide Seller within three Business Days of the
notice of the disputed amounts, ("Due Date") a statement with the particulars of
the dispute including the calculations with respect to any errors or
inaccuracies claimed. Should Buyer fail to timely provide evidence of the
billing errors claimed, the disputed amounts shall be owed with interest at the
Interest Rate from the Due Date. Should Buyer provide the required information,
upon the ultimate determination of the disputed portion of the statement, which
determination shall be made no later than sixty (60) days from the date of
notice of dispute, if Buyer has underpaid the amount actually due, Buyer shall
remit any amount due plus interest at the Interest Rate within 30 Days after
Buyer's receipt of an adjusted billing statement from Seller. If Buyer has
overpaid amounts actually due, Seller shall remit to Buyer any necessary refund
within 30 Days after determination of such overpayment. Interest on the refund
shall accrue at the Interest Rate from the determination date until paid.
5. Unresolved Disputes. Any dispute not resolved pursuant to the terms of
this Article XII shall be without recourse, unless litigation has been commenced
within 24 Months after the event causing the dispute is discovered or reasonably
should have been discovered.
ARTICLE XII
Notices
Any notice, request, demand, statement or bill provided for in this
Agreement, or any notice which a Party may desire to give to the other, shall be
in writing and directed to the Parties as follows:
a) If to Seller for payment:
Address Specified on Invoice
If to Seller for all other purposes:
TRANSCO GAS MARKETING COMPANY
AS AGENT FOR
TRANSCONTINENTAL GAS PIPE LINE CORPORATION
9821 Katy Freeway
P. 0. Box 1047
Houston, Texas 77251-1047
Attention: Phillip E. Fuller
Director, Natural Gas Marketing
Telephone: (713) 932-4960
Telecopy: (713) 932-4980
If to Buyer for billing:
General Manager, Gas Supply
South Jersey Gas Company
Number One South Jersey Plaza/Route 54
Folsom, New Jersey 08037
Telephone: (609) 561-9000
Telecopy: (609) 561-8225
If to Buyer for all other purposes:
Vice President, Gas Supply
South Jersey Gas Company
Number One South Jersey Plaza/Route 54
Folsom, New Jersey 08037
Telephone: (609) 561-9000
Telecopy: (609) 561-8225
All written notices shall be mailed, delivered personally or sent by fax,
telex or telecopier. All notices given by mail or personal delivery shall be
effective on the date of actual receipt at the appropriate address. Notice by
fax, telex or telecopier shall be effective upon actual receipt if received
during recipient's normal business hours before 4:30 p.m. Central Time or at the
beginning of the next Business Day after receipt if received after 4:30 p.m.
Central Time on such Day.
ARTICLE XIII
Force Majeure
The term "Force Majeure" shall mean acts of God, strikes, lockouts,
industrial disturbances or other labor difficulties, epidemics, landslides,
lightning, earthquakes, fires, storms, floods, washouts, arrests and restraints
of rulers and people, arrests and restraints of Government, either Federal or
State, civil disturbances, explosions, sabotage, breakage or accident to
machinery or lines of pipe, freezing of wells or lines of pipe, and any other
causes of the kind enumerated, which were not anticipated at the time of the
Agreement, which are not within the control of the Party claiming suspension and
which by the exercise of due diligence such Party is unable to overcome.
Except for payments due hereunder, neither Party shall be responsible or
liable for, or deemed in breach hereof because of any failure or delay in
performance of its respective obligations hereunder to the extent such
performance is prevented by circumstances beyond the reasonable control of the
Party experiencing such failure or delay, provided that:
1. The non-performing Party gives the other Party:
a. written notice of the occurrence of a Force Majeure event at soon as
reasonably possible, but in no event later than forty-eight (48)
hours after such occurrence; and
b. written notice describing the particulars of such occurrence within
five (5) Business Days of the occurrence.
2. The suspension of performance is of no greater scope and of no longer
duration than is required by Force Majeure;
3. The non-performing Party uses its best efforts to remedy its inability to
perform, provided, however, that this Section shall not require the
settlement of any strike, walkout, lockout or other labor dispute on
terms which, in the sole judgment of the Party involved in the dispute,
are contrary to its interest. It is understood and agreed that the
settlement of strikes, walkouts, lockouts, or other labor disputes
shall be entirely within the discretion of the Party having difficulty;
4. When the non-performing Party is able to resume performance of its
obligations under this Agreement, that Party shall give the other Party
prompt written notice to that effect; and
5. A. The Force Majeure was not proximately caused by:
a) Any gross negligence or intentional acts or omissions by the non-
performing Party; or
b) Any breach or default of this Agreement by the Party seeking
Force Majeure relief.
B. Force Majeure does not include:
1. The inability of Seller to obtain Gas;
2. Failure of Buyer's markets or changes in market conditions that
affect the availability, rates or demand for Buyer's products; or
3. Failure of pipelines to provide transportation, including
curtailment or interruption by a third party pipeline of either
firm or interruptible transportation service unless such
curtailment or interruption was the result of an event of Force
Majeure as described in this Section.
ARTICLE XIV
Regulatory Bodies
This Agreement shall be subject to all valid applicable state, federal and
local laws, rules and regulations; provided that either Party shall be entitled
to regard all laws, rules and regulations issued by any federal or state
regulatory body as valid and may act in accordance therewith until such time as
the same may be held invalid by final judgment in a court of competent
jurisdiction. Nothing shall preclude Buyer or Seller or both from contesting
the validity of any such law(s), rule(s) or regulations).
In the event that the FERC, the Railroad Commission of Texas ("TRC"), or any
other regulatory or governmental body asserting jurisdiction (i) imposes price
controls on natural gas; (ii) prohibits or prevents any transaction described in
this Agreement, (iii) otherwise conditions such transactions in a manner which
materially and adversely affects the rights or obligations of either Party
hereunder; or (iv) adopts any action, rule or order which directly or
indirectly, materially and adversely affects the rights or obligations of either
Party hereunder (collectively "Adverse Governmental Action"), then the Party
affected by such Adverse Governmental Action may terminate this Agreement,
except as to all accrued rights, liabilities and obligations of the Parties by
giving thirty (30) days' prior written notice to the other and each Party shall
be held harmless as a result of such termination.
ARTICLE XV
Successors and Assigns
Any company which shall succeed by purchase, merger or consolidation to the
properties, substantially as an entirety, of Seller or Buyer, shall be entitled
to the rights and shall be subject to the obligations of its predecessor in
title under this Agreement. No other assignment of this Agreement or any of the
rights or obligations thereunder, except to an Affiliate of either Party, shall
be made unless written consent of the non-assigning Party is first obtained.
Seller or Buyer may pledge or assign its respective right, title and interest
under this Agreement to a trustee(s), individual or corporate, as security for
bonds or other obligations or securities. The Trustee(s) shall not be obligated
to perform the obligations of the assignor under this Agreement and, if the
trustee is a corporation, it shall not be required to qualify to do business in
any State in which performance of this Agreement may occur.
ARTICLE XVI
Miscellaneous
1. Headings and Exhibits - The subject headings of the Articles of this
Agreement are inserted for the purpose of convenient reference and are not
intended to be part of this Agreement nor to be considered in any interpretation
of the same. The Exhibits referenced in this Agreement are hereby incorporated
for all purposes.
2. Entire Agreement - This Agreement and the Exhibits referenced in this
Agreement contain the entire understanding and agreement between the Parties
with respect to its subject matter and supersedes all previous communications,
negotiations and agreements, whether oral or written, between the Parties with
respect to this subject matter.
3. Waiver - No waiver by either Party express or implied of any one or more
defaults by the other in the performance of any provisions of this Agreement
shall operate or be construed as a waiver of any future default or defaults,
whether of a like or a different character. Failure by a Party to enforce any
of the terms, covenants, conditions or other provisions of this Agreement at any
time shall not in any way affect, limit, modify or waive that Party's right
thereafter to enforce strict compliance with every term, covenant, condition,
notwithstanding any course of dealing or custom of the trade.
4. Preparation - The Parties and their legal counsel have cooperated in the
drafting of this Agreement, and it shall therefore be deemed their joint work
product and not be construed against either Party by reason of its preparation.
5. Exclusion of Third Party Rights - The provisions of this Agreement shall
not impart rights enforceable by any person or organization not a Party or bound
as a Party unless a permitted successor assignee of a Party bound by this
Agreement.
6. Severability - Any provision, article or section declared or rendered
unlawful by a court of law or regulatory agency with jurisdiction over the
Parties or deemed unlawful because of a statutory change will not otherwise
affect the lawful obligations that arise under this Agreement.
7. Confidentiality - The terms of this Agreement, including but not limited
to, the price paid for Gas, the quantities of Gas purchased or sold and all
other material terms of this Agreement shall be kept confidential by the
Parties, except as required by any applicable laws, rules or regulations.
8. APPLICABLE LAW - THIS AGREEMENT AND THE RIGHTS AND DUTIES OF THE PARTIES
SHALL BE INTERPRETED, PERFORMED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF DELAWARE WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
The Parties have executed this Agreement effective as of the date first
written above.
TRANSCO GAS MARKETING COMPANY
As Agent for
TRANSCONTINENTAL GAS PIPE LINE
CORPORATION
By:_____________________________________
Name: H. Dean Jones II
Title: Senior Vice President
SOUTH JERSEY GAS COMPANY
By: _________________________________
Name: William C. Bingham, Jr.
Title: Senior Vice President, Gas Supply
"Exhibit A"
Maximum
Delivery Redelivery Daily Quantity
Pipeline Point(s) Point(s) (Mcf)
-------- -------- ---------- --------------
TGPL Any receipt point(s) Any delivery point(s) 30,000 plus
on Buyer's FT on Buyer's FT applicable fuel
Agreement with TGPL Agreement with TGPL
Transco
Gas Marketing Company
A Transco Energy Company
9821 Katy Freeway December 19, 1994
P 0. box 1047
Houston, Texas 77261-1047
713-932-4900
Fax: 713-432-4980
South Jersey Gas Company
One South Jersey Plaza
Route 54
Folsom, NJ 08037
Attention. William C. Bingham, Jr,
Senior Vice President, Gas Supply
Re: Appointment of Transco Gas Marketing Company, as Agent for
Transcontinental Gas Pipe Line Corporation - - TGPL Firm Transportation
(FI) Agreement No(s). 3902 and TGPL Interruptible Transportation (IT)
Agreement No(s). 1387.
Gentlemen:
By this letter, South Jersey Gas Company (Buyer), designates Transco Gas
Marketing Company, as Agent for Transcontinental Gas Pipe Line Corporation
(TGPL-Merchant Services), effective beginning January 1, 1995, and until notice
of revocation is given by Buyer to TGPL-Merchant Services, or to Buyer by TGPL
Merchant Services, in writing, as Buyer's agent for the purposes of making
nominations to Transcontinental Gas Pipe Line Corporation (TGPL) for service
under the referenced FT Agreement and IT Agreement between Buyer and TGPL,
receiving TGPL's commodity bills for such transportation service, receiving
adjustments to such commodity bills and making payment to TGPL of commodity
charges for such transportation service in accordance with the transportation
agreement. TGPL-Merchant Services' agency authority under this agreement
extends to volumes of gas sold to Buyer from time to time by TGPL-Merchant
Services pursuant to the Rate Schedule NS Gas Purchase Agreement effective
December 1, 1994. TGPL-Merchant Services, by its execution hereof, acknowledges
and accepts such designation and agrees to act as Buyer's agent to the extent
set forth herein.
In the event allocation of Buyer's entitlement on TGPL under the referenced FT
transportation agreement is necessary at various points on TGPL's system due to
capacity constraints or other circumstances, and TGPL-Merchant Services is not
nominating 100 % of such entitlement, such allocation is to be made ratably
based on all nominations made under the referenced FT transportation agreement.
Buyer agrees to defend, indemnify, and hold TGPL-Merchant Services harmless from
and to reimburse TGPL-Merchant Services for all transportation charges and any
other fees paid by TGPL-Merchant Services pursuant to this agreement. Initial
reimbursement will be based on amounts billed by TGPL. Additional reimbursement
or adjustment will be made as necessary, including reimbursement for any
retroactively effective charges or surcharges related to transportation pursuant
to these agreements which may be charged by TGPL. TGPL-Merchant
South Jersey Gas Company
December 19, 1994
Page 2
Services will remit to Buyer any refunds received from TGPL for charges which
have been previously reimbursed to TGPL-Merchant Services by Buyer, unless such
refunds would result in an offsetting adjustment to Price due TGPL-Merchant
Services for gas purchased by Buyer under the terms of a gas purchase agreement
between Buyer and TGPL-Merchant Services. TGPL-Merchant Services will undertake
the obligation to determine that Proper Payment Of transportation commodity
charges is made by TGPL-Merchant Services to TGPL In accordance
with the transportation agreement.
This agreement shall not be construed to modify in any way the Gas Sales
Agreement(s) between TGPL-Merchant Services and Buyer.
Please acknowledge your agreement hereto by executing both copies of this letter
in the space provided, and returning one (1) copy to TGPL-Merchant Services.
Very truly yours,
TRANSCO GAS MARKETING COMPANY
As Agent for
TRANSCONTINENTAL GAS PIPE LINE
CORPORATION
Phillip E. Fuller
Director, Natural Gas Marketing
ACCEPTED and AGREED TO
this 22 day of December, 1994
SOUTH JERSEY GAS COMPANY
By: __________________
William C. Bingham, Jr.
Title: Senior Vice President, Gas Supply
Transco
Gas Marketing Company
A Transco Energy Company
9821 Katy Freeway
P 0. box 1047
Houston, Texas 77261-1047
713-932-4900
Fax: 713-432-4980
December 1, 1994
Mr. William C. Bingham, Jr.
South Jersey Gas Company
One South Jersey Plaza
Route 54
Folsom, New Jersey 08037
Dear Bill:
The following represents our understanding of the negotiated settlement between
South Jersey Gas Company (SJGC) and Transco Gas Marketing Company (TGMC) as
agent for Transcontinental Gas Pipe Line Corporation.
The rate paid under the existing FS sales contract (i.e., 11 1,869 Mcf/d) will
be $0.166 Mcf for the sum of the FS Service Fee and the Non-Gas Demand Charge.
This rate will become effective April 1, 1995, and will remain in effect as per
the contract. In addition, TGMC will enter into an NS sales agreement with SJGC
for 30,000 Mcf/d at a negative Demand Charge of $0.09 per Mcf. The 30,000 Mcf/d
of NS service would be limited to "set-up swing" only. Prior to the nomination
deadline for the first of the month, SJGC must inform TGPL of the estimated
volume (up to 30,000 Mcf/d) it intends to purchase under the NS service (Daily
Nominated Quantity). SJGC must for the month take a minimum 55 % of the Daily
Nominated Quantity times the number of days in the month. In addition, if SJGC
takes on any day volumes in excess of 81,869 Mcf/d under its FS contract (FS
Base Volumes), for each Mcf taken in excess of the FS Base Volumes, SJGC will
forfeit the corresponding $0.09 per Mcf NS Demand credit for the entire month.
The commodity pricing will be negotiated each month during Bid Week at either a
fixed rate, an agreed upon index rate, or will default to Natural Gas Week Grand
Weighted Average. The term of this NS Agreement will be for sixteen (16) months
beginning December 1, 1994.
Mr. William C. Bingham, Jr.
December 1, 1994
Page Two
Please indicate your agreement with this conceptual settlement and we will begin
drafting the detailed NS Agreement.
Sincerely,
H. Dean Jones II
Agreed and Accepted:
William C. Bingham, Jr.
Senior Vice President, Gas Supply
South Jersey Gas Company
16 December 1994
Date
EX-10.L
5
EXHIBIT (10)(L)
October 21, 1994
AMENDED AND RESTATED
DEFERRED PAYMENT PLAN
FOR THE BOARDS OF DIRECTORS OF
SOUTH JERSEY INDUSTRIES, INC.,
SOUTH JERSEY GAS COMPANY AND
ENERGY & MINERALS, INC.
R & T GROUP, INC.
SOUTH JERSEY ENERGY COMPANY
1. South Jersey Industries, Inc. (Industries), South Jersey Gas
Company (Gas Company), Energy & Minerals, Inc. (EMI),
R & T Group, Inc. (RTG) and South Jersey Energy Company
(Energy Company) (collectively the Companies) hereby establish a
Deferred Payment Plan (the Plan) for the benefit of members of
the Boards of Directors of the Companies. A Director of one or
more of the Companies may elect to defer receipt of all or a
part of fees payable to the Director by the Companies for
services rendered as a member of one or more of the Boards of
the Companies and Committees thereof, as set forth in paragraph
3. For purposes of the Plan, "Directors Fees" shall mean any
compensation payable to a Director for services rendered to all
of the Companies for which he or she serves in that capacity,
including fees payable for services as a member of any Committee
of any of the Boards of Directors.
2. Industries shall establish and maintain on its books a deferred
payment account (Deferred Payment Account) which shall be
administered by the Treasurer of Industries in the name of each
Director who elects to participate in the Plan. After the
effectiveness of a Director's election, pursuant to the election
provisions of the Plan, to defer receipt of all or a portion of
his or her Director's Fees, Industries shall credit to, and Gas
Company, EMI, RTG and Energy Company shall pay into, the
Deferred Payment Account as of the last day of each calendar
quarter the designated amount of his or her Fees payable by each
of such Companies. Interest at the rate quoted from time to
time by First Jersey National Bank/South, on Individual
Retirement Accounts or Keough Plan Accounts, or such other rate
as the Board of Directors of Industries may from time to time
determine, shall accrue on all amounts held in the Deferred
Payment Account, and shall be credited and compounded quarterly.
All right and title in and to all amounts credited to the
Deferred Payment Account shall at all times be the sole and
absolute property of Industries and be part of its general
funds, and shall in no event be deemed to constitute a fund or
collateral security for the payments provided under the
applicable Plan provisions. To the extent that any Director or
his or her designee acquires a right to receive payments under
the Plan, such right shall be no greater than the right of any
unsecured general creditor of Industries. Neither the Director
nor his or her designee shall have any interest in any amounts
credited to the Deferred Payment Account, or any right to
commute, encumber, pledge, sell, assign, or transfer any right
to receive payments under the Plan, except by will or the laws
of descent and distribution. All payments and rights thereto
are expressly declared to be nonassignable.
3. An election to defer receipt of all or a part of Directors' Fees
shall be made in writing on a form provided for that purpose and
shall be filed with the Secretary of Industries. An election
shall become effective for Directors' Fees payable for services
rendered during the month beginning after the date such election
is filed with the Secretary of Industries, and shall remain in
effect unless the Director revokes his election by a notice in
writing filed with the Secretary of Industries. Any such
revocation shall be applicable only prospectively for Directors'
Fees payable for services rendered beginning the month after the
date such revocation is filed with the Secretary of Industries,
and shall not affect amounts previously credited to the Deferred
Payment Account.
4. All amounts standing to the credit of a Director in the Deferred
Payment Account shall be paid to such Director, if living, at
the time and in the manner specified in his or her initial
election filed with the Secretary of Industries. The Director
may elect to receive all such amounts in a single lump-sum
payment or in a number (specified by him or her) of annual
installment payments (the amounts of each of which shall equal a
fraction of the balance credited to him or her in the Deferred
Payment Account at the time of the first such payment, the
numerator of such fraction being one (1) and the denominator of
such fraction being the total number of annual installments).
Each annual installment payment shall be accompanied by the
payment of interest accrued and credited for the benefit of such
Director in the Deferred Payment Account to the end of the last
calendar quarter preceding the date of payment. The date on
which the single lump-sum payment or the initial installment
payment shall be made shall be specified in the election filed
with the Secretary of Industries and shall be determined by
reference to a Director's age or the date on which he or she is
no longer a Director of any of the Companies. A Director may
amend the method or time of payment to him or her of amounts
held in the Deferred Payment Account at any time on or before
the last day of the calendar year immediately preceding the
calendar year in which the single lump-sum payment or the
initial installment payment would otherwise be paid pursuant to
the immediately preceding sentence. On or after the first day
of the calendar year in which the single lump-sum payment or
initial installment payment is to be made, a Director may not
amend the time or method of payment to him or her of amounts
held in the Deferred Payment Account without the consent of the
Board of Directors of the Company that will make payment of such
amounts, but such Board of Directors may, in its sole discretion
and without any obligation to do so, consent to an amendment
requested by a Director in such time or method of payment,
provided that a decision to consent to such a request is made by
majority vote of the members of that Board of Directors and that
the Director making the request does not participate in the
decision.
5. In the event that a Director shall die before all amounts
credited to his or her benefit in the Deferred Payment Account
shall have been paid to him, Industries shall make payments of
the balance of such amounts in one lump-sum amount to such
person or persons as the Director shall designate by notice in
writing filed with the Secretary of Industries or, in the
absence of such designation, to the Director's estate. The
Director may, from time to time, by notice filed with the
Secretary of Industries, substitute another or further
beneficiary or beneficiaries to receive all or a portion of such
lump-sum amount payable subsequent to his or her death.
6. The Plan may be amended or terminated at the discretion of the
Boards of Directors. However, any such amendment or termination
will not affect any amount already credited to the Deferred
Payment Account.
Dated: October 21, 1994
EX-10.LD
6
EXHIBIT 10(L)(D)
SOUTH JERSEY GAS COMPANY
Officer Employment Agreement
THIS AGREEMENT made as of the first day of August, 1994, by
and between South Jersey Gas Company, a New Jersey corporation,
having its principal offices at Number One South Jersey Plaza,
Route 54, Folsom, New Jersey (the "Company"), and (the "Officer").
W I T N E S S E T H :
WHEREAS, the Company, a subsidiary of South Jersey
Industries, Inc. ("SJI"), desires to assure itself of the
continued employment of the Officer by the Company or one or more
of its affiliates and to encourage his or her continued attention
and dedication to the Company in the best interests of the Company
and its shareholders; and
WHEREAS, the Officer is presently employed by the Company and
its affiliates as follows:
South Jersey Gas Company -
WHEREAS, the Officer desires to remain and continue in the
employ of the Company or one or more of its affiliates on the
terms hereinafter provided;
NOW, THEREFORE, in consideration of the premises and the
mutual covenants contained herein, the parties hereto agree as
follows:
Section 1. Employment.
The Company hereby agrees to continue to employ the Officer
in the positions in which he or she presently serves, and the
Officer hereby agrees to continue to serve in those positions, on
the terms and conditions set forth herein.
Section 2. Term.
The term of this Agreement shall be for a period of three (3)
years beginning August 1, 1994, and ending on July 31, 1997.
Section 3. Duties and Responsibilities.
The Officer shall serve in the positions in which he or she
presently serves and shall report only to the Chief Executive
Officer of the Company and his duly authorized officers. The
Officer shall perform such duties and services as are customarily
performed by him or her and as are assigned to him or her by the
Chief Executive Officer of the Company and his duly authorized
officers.
Section 4. Outside Services.
The Officer agrees to devote substantially all of his or her
working time and efforts to the business and affairs of the
Company and shall not, directly or indirectly, without the written
consent of the Chief Executive Officer of the Company, render any
services to any other person, firm or entity, or own, manage,
operate, control or participate in the management of any other
person, firm or entity during the term of this Agreement. However,
the Officer is not prohibited or prevented from acquiring or
holding investments and securities listed on a national or
regional securities exchange or sold in an over-the-counter public
market, provided that the Officer is not part of any control group
of such corporation or entity. So long as it does not interfere
with his or her duties under this Agreement, the Officer shall
have the right to serve as a director of any other corporation
upon the approval of the Chief Executive Officer of the Company.
Section 5. Place of Performance.
The Officer's services during the term of this Agreement
shall be performed primarily in the corporate headquarters
building of the Company at Number One South Jersey Plaza, Route
54, Folsom, New Jersey. Without his or her prior consent, the
Officer shall not be required to move his or her place of
permanent employment from this corporate headquarters building,
although the Officer may be required to undertake reasonable
domestic and international travel from time to time consistent
with his or her business travel obligations.
Section 6. Compensation and Expenses.
6.1 Base Salary.
During the period of the Officer's employment under this
Agreement, the Company shall pay to the Officer a Base Salary of
not less than $_______ per annum in twenty-four (24) equal
installments as nearly as practicable on the fifteenth (15th) and
last days of each month, in arrears. The amount of this Base
Salary shall be reviewed annually in accordance with the normal
business practices of the Company.
6.2 Additional Benefits.
In addition to the Base Salary, the Company shall pay for and
the Officer shall be entitled without limitation to participate in
any employee or executive benefit plan presently in effect or
hereafter adopted by the Company which is applicable to employees
or executive employees generally. Those additional benefits
presently in force are listed on Exhibit A, which is attached
hereto and made a part hereof. If employer contributions to any
such plan (other than a defined benefit plan) for the benefit of
the Officer or his or her dependents or beneficiaries are reduced
in amount by any statute or regulation from the payments that
would otherwise be so made but for such statute or regulation, the
amount that is prohibited from being paid to such plan because of
such statute or regulation, increased if necessary as provided in
the next sentence, shall be paid, at the time it would have been
paid to such plan except for such prohibition, by the Company to
an Employee Stock Purchase Plan account for the Officer. Such
amount shall be increased if necessary so that, after federal and
state income taxes on the amount as so increased are taken into
account, the net amount after such taxes that is to be paid to an
Employee Stock Purchase Plan account for the Officer shall be the
amount that was prohibited from being paid to such plan because of
such statute or regulation.
6.3 Expenses.
In addition to the Base Salary and Additional Benefits, the
Company shall pay for and the Officer shall be entitled to receive
prompt reimbursement for all reasonable expenses incurred by the
Officer in performing services under this Agreement, including all
expenses of travel and living expenses while away from home on
business or at the request of and in the service of the Company,
provided that such expenses are incurred and accounted for in
accordance with the policies and procedures presently or hereafter
established by the Company.
6.4 Services Furnished.
The Company shall furnish the Officer with office space,
stenographic assistance and such other facilities and services as
shall be suitable to the Officer's position and adequate for the
performance of his or her duties.
Section 7. Reasons for Termination.
7.1 Death.
This Agreement shall terminate upon the Officer's death, and
he or she shall be entitled to such death benefits to which he or
she is otherwise entitled presently or which may be hereafter
established by the Company.
7.2 Disability.
If the Officer shall be determined to be disabled in
accordance with the disability policy or plan of the Company, the
Officer may be removed from positions within the Company in which
he or she then may be serving. However, the Officer shall not be
terminated as an employee of the Company. The Officer shall be
retained in such positions and given such duties and
responsibilities as are commensurate with his or her abilities at
the time. The Officer shall be entitled to such disability
benefits, including short term and long term, to which he or she
is otherwise entitled presently or which may be hereafter
established by the Company. Until the Officer becomes entitled to
such disability benefits, he or she shall continue to be paid his
or her Base Salary in accordance with this Agreement. The
determination of the disability of the Officer shall be made by
the Chief Executive Officer of the Company in the exercise of his
discretion in accordance with procedures set forth in the
disability policies or plan.
7.3 Retirement.
If the Officer shall retire, he or she shall be entitled to
such pension and other benefits applicable to executive employees
generally and him or her specifically including, without
limitation, those presently existing or hereafter established by
the Company.
7.4 For Cause by the Company.
The Company may terminate the Officer's employment for Cause.
For purposes of this Agreement, the Company shall have "Cause" to
terminate the Officer's employment hereunder only for the
following reasons: (1) the willful and continued failure by the
Officer to substantially perform his or her duties hereunder other
than any such failure resulting from the Officer's incapacity due
to physical or mental illness or injury; (2) the conviction of the
Officer of a crime under state or federal law and the Company's
Board of Directors or one of its committees is unable to conclude
in good faith (and in its sole discretion) that the Officer had no
reasonable cause to believe that the activities of which he or she
was convicted were unlawful and that such conviction will not
materially impair his or her ability to discharge his or her
duties; (3) the willful engaging by the Officer in misconduct
which is materially injurious to the Company, monetarily or
otherwise; or (4) the continued inability of the Officer to
perform his or her duties by reason of alcoholism or drug abuse
even after appropriate rehabilitation services have been made
available to him or her.
7.5 For Good Reason by the Officer.
The Officer may terminate the Officer's employment for Good
Reason following a Change of Control of the Company at any time
during the term of this Agreement. For purposes of this
Agreement, "Good Reason" shall mean any of the following: (1) the
assignment to the Officer by the Company, without the Officer's
express written approval, of duties inconsistent with the
Officer's position, duties, responsibilities, titles, offices or
status with the Company immediately prior to a Change of Control
of the Company, or any removal of the Officer from or any failure
to re-elect the Officer to any of such positions; (2) a reduction
by the Company not consistent with the Company's general salary
practice for Officers, in the Officer's Base Salary as in effect
on the date hereof or as the same is increased from time to time
during the term of this Agreement; (3) the Company's failure to
review and increase in accordance with the Company's general
salary practice for Officers the Officer's Base Salary within
twelve (12) months after the Officer's last increase in Base
Salary; (4) the Company's failure to continue in effect any
benefit plan or arrangement in which the Officer is participating
except for Company-wide modifications or modifications which apply
to all officers generally (provided that the Officer shall enjoy
at least the same benefits available to all employees generally),
or the taking of any action by the Company which would adversely
affect the Officer's participation in and/or materially reduce the
Officer's benefits under any such benefit plan or arrangement or
which would deprive the Officer of any material fringe benefit
enjoyed by the Officer, except for Company-wide modifications or
modifications which apply to all officers generally (provided that
the Officer shall enjoy at least the same benefits available to
all employees generally); (5) a relocation of the Company's
corporate headquarters to a location outside of Folsom, New
Jersey, or the Officer's relocation to any place other than the
location at which the Officer performed the Officer's duties
except for required travel by the Officer on the Company's
business to an extent substantially consistent with the Officer's
business travel obligations; (6) any purported termination of the
Officer's employment which is not effected pursuant to a Notice of
Termination. For purposes of this Agreement a "Change of Control"
of the Company shall mean any of the following: (1) approval by
the shareholders of SJI without the recommendation and approval of
the Board of Directors of SJI of any plan or proposal for the
consolidation, merger, liquidation, dissolution or acquisition of
SJI or all or substantially all of its assets; (2) election to the
Board of Directors of SJI of a new majority different from the
individuals who at the beginning of the term of this Agreement
constituted the entire Board of Directors of SJI, unless the
election or nomination for election by SJI's shareholders of each
such new director was approved by the Chief Executive Officer of
SJI; or (3) the acquisition by any person of 20% or more of the
stock of SJI having general voting rights in the election of
directors (for purposes of this clause (3), the term "person"
shall include two or more persons acting as a group for the
purpose of acquiring, holding or disposing of stock of SJI).
Section 8. Benefits upon Termination.
8.1 Termination by the Company for Cause.
If the Officer's employment by the Company shall be
terminated for Cause (as defined in Section 7.4), the Company
shall pay the Officer his or her Base Salary through the Date of
Termination at the rate in effect at the time Notice of
Termination is given and the Company shall have no further salary
obligations to the Officer under this Agreement. The Officer
shall be entitled to such retirement benefits as he or she may
otherwise be entitled to on the Date of Termination. Effective as
of the Date of Termination, the Officer shall no longer be an
employee of the Company and shall no longer be entitled to the
privileges and benefits thereof.
8.2 Termination by the Officer for Good Reason.
If the Officer's employment shall be terminated by the
Officer for Good Reason following a Change of Control (as defined
in Section 7.5), the Company shall pay the Officer as severance
pay an amount equal to 300% of a base amount determined to be the
average of the aggregate annual compensation paid to the Officer
during the five (5) calendar years preceding the Date of
Termination and subject to federal income taxes; provided that, if
any lump-sum severance payment, either alone or together with any
other payment which the Officer has the right to receive from the
Company, would constitute a "parachute payment" as defined in
Section 280G of the Internal Revenue Code of 1986, as amended,
such lump-sum severance payment shall be reduced to the largest
amount as will result in no portion of the lump-sum payment being
subject to the excise tax imposed by Section 4999 of the Internal
Revenue Code of 1986, as amended. The Company shall pay this
lump-sum severance payment, in cash, on the Date of Termination.
The payments under this section should be in lieu of any payment
to which the Officer might otherwise be entitled to receive under
the Company's Severance Policy.
8.3 Termination by the Company for Other than Cause.
If the Company terminates the Officer's employment for other
than Cause following a Change of Control, the Officer shall be
entitled to those benefits set forth in paragraph 8.2 above. If
the Company terminates the Officer's employment for other than
Cause without a Change of Control (as defined in Section 7.5), the
Officer shall be only entitled to those benefits of the Severance
Plan presently in effect or hereafter adopted by the Company.
In addition, the Officer shall be entitled to such retirement
benefits as he may otherwise be entitled to on the Date of
Termination, and such retirement shall be deemed to occur when the
Company's salary obligations to the Officer under this Agreement
shall terminate. The continuation of such payments and benefits
shall be the Officer's sole and exclusive remedy and the Company
shall have no further obligations or liability to the Officer or
his survivors (except as otherwise provided by this section) under
this Agreement.
Section 9. Procedure for Termination.
9.1 Notice of Termination.
For the purposes of this Agreement, a "Notice of Termination"
shall mean a notice which shall indicate the specific termination
provision in this Agreement relied upon and shall set forth in
reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Officer's employment.
9.2 Date of Termination.
For the purposes of this Agreement, the "Date of Termination"
shall mean the date of the Officer's death; or thirty (30) days
after Notice of Termination is given; provided that if within ten
(10) days after any Notice of Termination is given the party
receiving such Notice of Termination notifies the other party that
a dispute exists concerning the termination, the date of
termination shall be extended for an additional period not to
exceed ten (10) days. During the period between Notice of
Termination and the Date of Termination the Officer may request
and shall be granted a hearing before the Board of Directors of
the Company, at which time the Board of Directors shall decide
whether in its reasonable good faith opinion the Officer was
either disabled or discharged for Cause and specifying the
particulars thereof in detail.
Section 10. No Obligation to Mitigate Damages; No Effect on
Other Contractual Rights.
10.1 The Officer shall not be required to mitigate damages
or the amount of any payment provided for under this Agreement by
seeking other employment or otherwise.
10.2 The amount of any payment provided to the Officer under
this Agreement shall not be reduced by any compensation earned by
the Officer as the result of employment by another employer after
the Date of Termination.
10.3 The provisions of this Agreement, and any payment
provided for hereunder, shall not reduce any amounts otherwise
payable, or in any way diminish the Officer's existing rights, or
rights which would accrue solely as a result of the passage of
time under any plan of benefits provided to officers and managers
of the Company.
Section 11. Confidential Information.
The Officer will not, during or after the term of this
Agreement, use for himself or herself or others, or disclose to
others, any formulae, trade secrets, customer lists, know-how or
other confidential information of or about the Company or any of
its affiliates unless authorized in writing to do so by the
Company. The Officer understands that this undertaking applies to
information of a technical or commercial or other nature and that
any information not made available to the general public is to be
considered confidential.
Section 12. Papers.
All correspondence, memoranda, notes, records, reports, plans
and other papers and items received or made by the Officer in
connection with his or her duties hereunder shall be the property
of the Company, and the Officer shall not have any property rights
to such items when he or she is no longer an employee of the
Company.
Section 13. Noncompetition.
Unless the Officer requests in writing and is thereafter
authorized in writing to do so by the Company, the Officer will
not, during the term of this Agreement, or for a period of one (1)
year thereafter, regardless whether the termination was for Cause,
for Good Reason, or for other than Cause, directly or indirectly
own, manage, operate, join, control or participate in the
ownership, management, operation or control of, or be employed or
otherwise connected in any manner with, any business which at any
time during said period competes with the Company or which uses
any name similar to the Company's name.
Section 14. Renewal and Extension of Agreement.
The term of this Agreement shall be automatically renewed and
extended for a period of three (3) years from the date of any
Change of Control in order that the Officer obtains the full
benefit of all severance benefits in the event of termination of
employment after any Change of Control.
This Agreement, either under its normal three (3) year term
or under the term resulting from a Change of Control, shall be
considered for renewal and extension by the Board of Directors of
the Company or such committee thereof as it may designate at least
six (6) months prior to the end of its term. Action by the Board
of Directors shall be required to renew and extend this Agreement.
Section 15. Enforcement.
The Officer acknowledges that in the event of his or her
breach or threat of breach of Sections 11, 12 or 13 of this
Agreement, the Company's remedies at law will be inadequate and,
in such event, the Company will be entitled to appropriate
injunctive and other equitable relief in addition to its legal
remedies.
Section 16. Notices.
All notices and other communications provided for herein that
one party intends to give to the other party shall be in writing
and shall be considered given when mailed by certified mail,
return receipt requested, or personally delivered, either to the
party or at the address set forth below (or to such other address
as a party shall designate by notice hereunder):
South Jersey Gas Company
Attn: Chief Executive Officer
Number One South Jersey Plaza
Route 54
Folsom, New Jersey 08037
Section 17. Amendments.
This Agreement may be amended, modified, superseded,
canceled, renewed or extended only by a written instrument
executed by both parties hereto.
Section 18. Binding Effect and Non-Assignability.
This Agreement shall inure to the benefit of the Officer's
heirs and personal representatives and shall be binding upon the
successor of the Company, including any entity with which the
Company may be merged or consolidated or which may acquire all or
substantially all of the assets of the Company. This Agreement
shall not be assignable, in whole or in part, by either party,
without the written consent of the other party.
Section 19. Legal Expenses.
In the event of a dispute in connection with this Agreement,
the parties shall each pay their own costs, except that in the
event of such a dispute after a Change of Control involving
termination of employment, or involving entitlement to
compensation or benefits in the event of termination of
employment, the Company shall pay the legal expenses of the
Officer.
Section 20. Arbitration.
Any controversy or claim arising out of or relating to this
Agreement or the breach thereof shall be settled by arbitration in
the County of Atlantic, State of New Jersey, in accordance with
the rules then in effect of the American Arbitration Association,
and judgment upon the award rendered may be entered in any court
having jurisdiction thereof.
Section 21. Governing Law.
This Agreement shall be governed by the laws of the State of
New Jersey.
Section 22. Entire Agreement.
This Agreement contains the entire agreement between the
parties relative to its subject matter, superseding all prior
agreements or understandings of the parties relating thereto.
Section 23. Waiver.
Any term or provision of this Agreement may be waived in
writing at any time by the party entitled to the benefit thereof.
The failure of either party at any time to require performance of
any provision of this Agreement which has not been waived in
writing shall not affect such party's rights at a later time to
enforce such provision. No consent or waiver by either party to
any default or to any breach of a condition or term of this
Agreement shall be deemed or construed to be a consent or waiver
to any other breach or default.
Section 24. Invalidity of Portion of Agreement.
If any provision of this Agreement or the application thereof
to either party shall be invalid or unenforceable to any extent,
the remainder of this Agreement shall not be affected thereby and
shall be enforceable to the fullest extent of the law.
IN WITNESS WHEREOF, the parties hereto have duly executed
this Agreement effective as of the date first above written.
SOUTH JERSEY GAS COMPANY
By_________________________________
William F. Ryan,
Chief Executive Officer
___________________________________
EXHIBIT A
LIST OF OFFICERS' BENEFITS
1. Group Hospital, Surgical and Medical Insurance Plan
2. Major Medical Plan
3. Group Dental Plan
4. Group Prescription Drug Plan
5. Temporary Disability Plan
6. Long Term Disability Plan
7. Group Life Insurance Plan
8. 24-Hour Accident Protection Coverage
9. Supplementary Survivor's Benefit
10. Thrift Plan
11. Employees Stock Ownership Plan
12. Retirement Plan for Employees
13. Supplemental Executive Retirement Plan
14. Deferred Compensation Contract
15. Officers' Liability Insurance
16. Company Automobile
17. Tuition Refund Plan
18. Vacation
19. Holiday Schedule
20. Time Off w/Pay for Jury Duty, Death in Family or Marriage
21. Annual Physical Examination
22. Health Club Membership
23. Country Club House Membership
24. Severance Pay Plan
EXHIBIT A
SCHEDULE 1
DISABILITY AND DEATH BENEFITS
1. Temporary Disability (Sick Pay): - Officers
Commences on 8th consecutive day of absence. Paid @ 100% of
base salary and extends at full pay based on years of service as
follows:
Service: Maximum Benefit
Under 5 Years 120 Days
5 Years or more 365 Days
2. Long-Term Disability: - Officers
Eligibility Begins: After 1 year of service
Benefit Can Begin: Upon Expiration of Temporary Disability Benefits
Benefit: 50% of Salary, reduced by other disability income(ie.Soc Sec).
1. Benefit continues until status is changed by virtue of
rehabilitation, retirement, death, etc.
2. Medical certification for first two years of disability
against "own position". Thereafter, certification against
"any position". However, replacement may be required after one year.
3. Group Life Insurance: - Officers
Two times annual salary rounded to next higher $5,000
4. 24 Hour Accident Protection Insurance: - Officers
$250,000 Death Benefit
5. Company Paid Death Benefit (Uninsured) & Suppl. Survivor's Benefit
Benefit
Lump Sum $1,000
Service:
10-15 Years 6 Months Salary
15-25 Years 9 Months Salary
25 or More 12 Months Salary
Payment of uninsured amount is offset by pension proceeds in year of death
6. Retirement Plan Death Benefit: (Pre-retirement)
Service:
5 Years or More 50% of Accrued Benefit payable to
spouse only.
EXHIBIT A
SCHEDULE 2
South Jersey Industries, Inc.
Officer Severance Program Summary
1. Officer Participation - All officers of South Jersey Industries,
Inc. are immediately covered by this program upon being elected
officers and satisfying the age and service requirements of the
specific plans. The cost of the program will be paid entirely by
the employer unless otherwise noted.
2. Officer Severance Plan
- Participation - immediate
- Basic benefit - weekly salary times years of service.
Minimum of 12 weeks; accrual of two weeks times years of
service to a maximum of 40 weeks, except that any officer
who is or may become a party to an "Employment Agreement"
shall receive one year's salary as a basic benefit without
consideration of a service period.
- Outplacement counselling services - up to 20% of pay to a
maximum of $15,000, at the discretion of the chief Executive
Officer for all other officers and at the discretion of the
compensation Committee of the Board of Directors of the
company in the case of the Chief Executive Officer.
- Death benefits - at officer's expense, benefits may
continue.
- Disability benefits - terminate upon severance.
- Health benefits - at officer's expense, benefits may
continue.
- Company car - given title at severance, at the discretion of
the chief Executive Officer for all other officers and at
the discretion of the Compensation Committee of the Board of
Directors of the Company in the case of the Chief Executive
Officer.
EX-10.LE
7
EXHIBIT (10)(L)(E)
Schedule of Officer Agreements
Pursuant to Rule 12b-31, the following sets forth the material details
which differ in the Executive Employment Agreements, the form of which is
filed herewith as Exhibit (10) (1) (d).
Date of Minimum
Name Capacities in Which Served Agreement Base Salary
George L. Baulig Secretary & Assistant 8/1/94 $100,000
Treasurer, South Jersey
Industries, Inc., South
Jersey Gas Company, Energy
& Minerals, Inc. and
Secretary, R & T Group, Inc.
Charles Biscieglia Executive Vice President, 8/1/94 147,000
Chief Operating Officer
South Jersey Gas Company
Gerald S. Levitt Vice President, Chief 8/1/94 162,000
Financial Officer, South
Jersey Industries, Inc.,
Executive Vice President,
Chief Staff Officer, South
Jersey Gas Company
Albert V. Ruggiero Vice President, Human 8/1/94 107,500
Resources, South Jersey
Gas Company
William J. Smethurst, Jr. Assistant Secretary & 8/1/94 96,000
Assistant Treasurer, South
Jersey Industries, Inc.,
Energy & Minerals, Inc., Vice
President, Treasurer &
Assistant Secretary, South
Jersey Gas Company, Treasurer
& Assistant Secretary,
South Jersey Energy Company
Edward J. Tonielli Vice President, Distribution 8/1/94 107,500
Operations, South Jersey
Gas Company
Richard B. Tonielli Treasurer, South Jersey 8/1/94 122,500
Industries, Inc., R & T Group,
Inc., Senior Vice President,
Finance, South Jersey Gas
Company, Vice President &
Treasurer, Energy & Minerals,
Inc.
EX-10.Q
8
EXHIBIT (10)(Q)
Employment Agreement
between
William F. Ryan
and
South Jersey Industries, Inc.
as of June 17, 1994
Letter of Intent
dated as of June 17, 1994
Execution Copy
TABLE OF CONTENTS
Section 1. Employment. . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 2. Term. . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 3. Duties and Responsibilities . . . . . . . . . . . . . . . . 2
3.1 Initial Period . . . . . . . . . . . . . . . . . . . . . . . 2
3.2 Subsequent Period. . . . . . . . . . . . . . . . . . . . . . 2
3.3 Negotiation of Post-Employment Status. . . . . . . . . . . . 3
Section 4. Outside Services. . . . . . . . . . . . . . . . . . . . . . 3
Section 5. Place of Performance. . . . . . . . . . . . . . . . . . . . 3
Section 6. Compensation and Expenses . . . . . . . . . . . . . . . . . 4
6.1 Base Salary. . . . . . . . . . . . . . . . . . . . . . . . . 4
6.2 Additional Benefits. . . . . . . . . . . . . . . . . . . . . 4
6.3 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 4
6.4 Services Furnished . . . . . . . . . . . . . . . . . . . . . 5
Section 7. Reasons for Termination . . . . . . . . . . . . . . . . . . 5
7.1 Death. . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
7.2 Disability . . . . . . . . . . . . . . . . . . . . . . . . . 5
7.3 Retirement . . . . . . . . . . . . . . . . . . . . . . . . . 6
7.4 Termination For Cause by the Company . . . . . . . . . . . . 6
7.5 Termination For Good Reason by the Executive . . . . . . . . 6
Section 8. Benefits upon Termination . . . . . . . . . . . . . . . . . 7
8.1 Termination by the Company for Cause . . . . . . . . . . . . 7
8.2 Termination by the Executive for Good Reason without a Change in
Control. . . . . . . . . . . . . . . . . . . . . . . . . . . 8
8.3 Termination by the Executive for Good Reason in connection with
a Change of Control. . . . . . . . . . . . . . . . . . . . . 8
8.4 Termination by the Company for Other Than Cause. . . . . . . 9
Section 9. Procedure for Termination . . . . . . . . . . . . . . . . . 9
9.1 Notice of Termination. . . . . . . . . . . . . . . . . . . . 9
9.2 Date of Termination. . . . . . . . . . . . . . . . . . . . . 9
Section 10. No Obligation to Mitigate Damages; No Effect on Other
Contractual Rights. . . . . . . . . . . . . . . 10
Section 11. Confidential Information . . . . . . . . . . . . . . . . . 10
Section 12. Papers . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 13. Noncompetition . . . . . . . . . . . . . . . . . . . . . . 11
Section 14. Enforcement. . . . . . . . . . . . . . . . . . . . . . . . 11
Section 15. Survival . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 16. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 17.Amendments . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 18. Binding Effect and Non-Assignability . . . . . . . . . . . 12
Section 19. Legal Expenses . . . . . . . . . . . . . . . . . . . . . . 12
Section 20. Arbitration. . . . . . . . . . . . . . . . . . . . . . . . 12
Section 21. Governing Law. . . . . . . . . . . . . . . . . . . . . . . 12
Section 22. Entire Agreement . . . . . . . . . . . . . . . . . . . . . 12
Section 23. Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 24. Invalidity of Portion of Agreement . . . . . . . . . . . . 13
SOUTH JERSEY INDUSTRIES, INC.
Executive Employment Agreement
THIS AGREEMENT made as of the 17th day of June 1994, by and between
South Jersey Industries, Inc., a New Jersey corporation, having its
principal offices at Number One South Jersey Plaza, Route 54, Folsom, New
Jersey (the "Company"), and William F. Ryan (the "Executive").
W I T N E S S E T H
WHEREAS, the Company recognizes that the Executive's contribution to
the growth and success of the Company during the years has been substantial
and the Company desires to assure itself of the continued employment of the
Executive with the Company and to encourage his continued attention and
dedication to it in the best interests of the Company and its shareholders;
and
WHEREAS, the Company wishes to encourage the development of an
orderly succession as the Executive approaches retirement as an employee;
and
WHEREAS, the Executive is presently employed by the Company and its
subsidiaries as follows:
South Jersey Industries, Inc. - President and Chief Executive Officer;
South Jersey Gas Company - Chairman, President and Chief Executive Officer;
Energy & Minerals, Inc. - Chairman and Chief Executive Officer;
The Morie Company, Inc. - Chairman;
R&T Group, Inc. - Chairman and Chief Executive Officer; and
WHEREAS, the Executive presently serves on the following Boards of
Directors:
South Jersey Industries, Inc.;
South Jersey Gas Company;
Energy & Minerals, Inc. and its subsidiaries;
R&T Group, Inc. and its subsidiaries;
South Jersey Energy Company; and
WHEREAS, the Executive desires to remain and continue in the employ
of the Company on the terms hereinafter provided;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein, the parties hereto agree as follows:
Section 1. Employment.
The Company hereby agrees to continue to employ the Executive, and
the Executive hereby agrees to continue to serve as an employee of the
Company, on the terms and conditions set forth herein.
Section 2. Term.
The term of this Agreement shall be for a period of five (5) years
beginning August 1, 1994, and ending on July 31, 1999.
Section 3. Duties and Responsibilities.
3.1 Initial Period.
Through July 31, 1997, (the "Initial Period"), the Executive
shall serve in the positions in which he presently serves and shall report
only to the Boards of Directors of the above-mentioned companies and their
duly authorized committees. During the Initial Period: (i) the Executive
shall perform such duties and services as are customarily performed by a
Chief Executive Officer and, by a Chairman of the Board where applicable
to a particular Company, and as are assigned to him by such Boards of
Directors and their duly authorized committees; (ii) the Executive shall
continue to serve on the Boards of Directors on which he is presently
serving, if elected, and the Company shall use its best efforts to cause
him to be so elected; and (iii) the provisions of this paragraph do not
preclude changes in the described positions, duties and services by mutual
agreement between the Company and the Executive. Except as provided in
Section 7.2, any such change without the Executive's express written
approval may constitute Good Reason for termination pursuant to Section
7.5.
3.2 Subsequent Period.
From August 1, 1997, through July 31, 1999, (the "Subsequent
Period"), the Executive shall serve as Chairman of the Board and Chief
Executive Officer of the Company and as Chairman of the Board of South
Jersey Gas Company, Energy and Minerals, Inc. and R&T Group, Inc. and shall
report only to the Boards of Directors of such companies and their duly
authorized committees. During the Subsequent Period (i) the Executive
shall perform such duties and services as are customarily performed by
a Chairman of the Board of the Company and its subsidiaries and Chief
Executive Officer of the Company and as are assigned to him by the Boards
of Directors of the companies and, when authorized by the Boards of
Directors, their committees and (ii) the Executive shall continue to serve
on the Boards of Directors of the companies if elected, and the Company
shall use its best efforts to cause him to be so elected.
3.3 Negotiation of Post-Employment Status.
Not later than the earlier of (i) August 1, 1997, (ii) the date
on which a search, duly authorized by the Company's Board of Directors,
commences for the Executive's successor outside of the Company's then-
existing employees, or (iii) the date on which negotiations, duly
authorized by the Company's Board of Directors, commences with a view to a
change in control (or a merger which would result in a change of control),
the Company through its Board of Directors or a committee of the board will
enter into negotiations with the Executive concerning his post-employment
status and benefits (other than those set forth in this Agreement). The
Company and the Executive recognize that an orderly transition will be
assisted if negotiations begin before August 1, 1997 and in any event are
concluded no later than August 1, 1998.
Section 4. Outside Services.
The Executive agrees to devote substantially all of his working time
and efforts to the business and affairs of the Company and shall not,
directly or indirectly, without the written consent of its Board of
Directors, render any service to any other person, firm or entity, or own,
manage, operate, control or participate in the management of any other
person, firm or entity during the term of this Agreement. However, the
Executive is not prohibited or prevented from acquiring or holding
investments and securities listed on a national or regional securities
exchange or sold in an over-the-counter public market, provided that the
Executive is not part of any control group of such corporation or entity.
The term "control group" shall include any combination of two or more
individuals or entities acting in concert for the purpose of controlling or
influencing, whether directly or indirectly, the management of such
corporation or entity. So long as it does not interfere with his duties
under this Agreement, the Executive shall have the right to serve as a
director of any other corporation or to acquire or hold investments or
securities in a corporation or entity in which the Executive is a part of a
control group upon the approval of the Board of Directors of the Company,
which approval shall not be unreasonably withheld.
Section 5. Place of Performance.
The Executive's services during the term of this Agreement shall be
performed primarily in the corporate headquarters building of the Company
at Number One South Jersey Plaza, Route 54, Folsom, New Jersey. Without
his prior consent, the Executive shall not be required to move his place of
permanent employment from this corporate headquarters building although the
Executive may be required to undertake reasonable domestic and
international travel from time to time consistent with his business travel
obligations.
Section 6. Compensation and Expenses.
6.1 Base Salary.
The Company shall pay to the Executive a Base Salary of not less
than $375,000.00 per annum as of October 1, 1993 in twenty-four (24) equal
installments as nearly as practicable on the fifteenth (15th) and last days
of each month, in arrears. The amount of this Base Salary shall be
reviewed annually in accordance with the normal business practices of the
Company.
6.2 Additional Benefits.
In addition to the Base Salary, the Company shall pay for
and the Executive shall be entitled without limitation to participate in
the benefit plan or plans generally available to executive employees,
including the Chief Executive Officer. Those additional benefits (the
"Additional Benefits") presently in force are listed on Exhibit A, which is
attached hereto and made a part hereof. If employer contributions to any
such plan (other than a defined benefit plan) for the benefit of the
Executive or his dependents or beneficiaries are reduced in amount by any
statute or regulation from the payments that would otherwise be so made but
for such statute or regulation, the amount that is prohibited from being
paid to such plan because of such statute or regulation, increased
if necessary as provided in the next sentence, shall be paid, at the time
it would have been paid except for such prohibition, by the Company to or
as directed by the Executive. Such amount shall be increased if necessary
so that, after federal and state income taxes on the amount as so increased
are taken into account, the net amount after such taxes that is to be paid
to or as directed by the Executive shall be the amount that was prohibited
from being paid because of such statute or regulation. The Company will
continue to provide the Executive and his spouse, free of charge, the same
or substantially similar medical, hospitalization, prescription and major
medical coverages as are provided to the Chief Executive Officer of the
Company. Such medical benefits will continue to be provided to the
Executive for the remainder of his life and shall continue to be provided
to his spouse, if she survives him, for the remainder of her life.
6.3 Expenses.
In addition to the Base Salary and Additional Benefits, the
Company shall pay for and the Executive shall be entitled to receive prompt
reimbursement for all reasonable expenses incurred by the Executive in
performing services under this Agreement, including all expenses of travel
and living expenses while away from home on business or at the request of
and in the service of the Company, provided that such expenses are incurred
and accounted for in accordance with the policies and procedures presently
or hereafter established by the Company.
6.4 Services Furnished.
The Company shall furnish the Executive with office space,
stenographic assistance and such other facilities and services as shall be
suitable to the Executive's position and adequate for the performance of
his duties.
Section 7. Reasons for Termination.
7.1 Death.
In the event of the Executive's death during the term of this
Agreement, he shall be entitled to such death benefits to which he is
otherwise entitled presently or which may be hereafter established by the
Company. In addition, in the event of the Executive's death during the
term of this Agreement, his Base Salary shall continue to be
paid to such beneficiary or beneficiaries as he may from time to time
designate in writing, or to his estate if he has made no such designation,
until the second anniversary of the date of his death. Payment shall not
be offset by group life insurance, but shall be offset by the Company's
voluntary death benefit. If the Executive's spouse survives him, the
Company will make available to his spouse after his death the same
assistance of a financial planner or other similar expert to assist the
surviving spouse as the Company customarily provides to its executive
officers from time to time. The provisions of this Section 7.1 shall
survive the termination of this Agreement.
7.2 Disability.
If the Executive shall be determined to be disabled in
accordance with the disability policy or plan of the Company, the Executive
may be removed from positions within the Company in which he then may be
serving. However, the Executive shall not be terminated as an employee of
the Company. The Executive shall be retained in such positions and given
such duties and responsibilities as are commensurate with his abilities at
the time. Any such reduction in the Executive's duties and
responsibilities by the Company based upon a reasonable determination of
his disability by the Board of Directors shall not constitute Good Reason
for termination pursuant to Section 7.5. The Executive shall be entitled
to such disability benefits, including short term and long term, to which
he is otherwise entitled presently or which may be hereafter established by
the Company. Until the Executive becomes entitled to such disability
benefits, he shall continue to be paid his Base Salary in accordance with
this Agreement. If the Executive becomes able to return to his full duties
and responsibilities during the term of this Agreement, the refusal or
failure of the Company to do so shall constitute Good Reason for
termination pursuant to Section 7.5. The determination of the disability
of the Executive shall be made by the Board of Directors in the exercise of
its reasonable discretion in accordance with procedures set forth in the
disability policies or plan.
7.3 Retirement.
If the Executive shall retire, he shall be entitled to such
pension and other benefits applicable to executive employees generally and
him specifically including, without limitation, those presently existing or
hereafter established by the Company; provided that, in determining the
total retirement benefit due from the Company and its pension or other
benefit plans, whenever the Executive's "Average Earnings" or "Final
Average Earnings" or "Final Average Compensation" shall be relevant to the
calculation of the amount of such pension or other benefits, such Average
Earnings or Final Average Earnings or Final Average Compensation shall be
determined for a period of not more than 36 months, and shall be based on
the highest such 36 consecutive months out of the final 60 months of the
Executive's employment, notwithstanding any longer period provided for in
any such pension or other benefit plan. If the Executive has reached age
60 (or such earlier age as shall have been fixed in any arrangement
established with the Executive's consent) at the time he retires, such
pension or other benefits shall not be reduced because of early retirement.
In no event shall payment made to the Executive pursuant to Section 8.3 be
taken into account for purposes of determining Average Earnings, Final
Average Earnings or Final Average Compensation.
7.4 Termination For Cause by the Company.
The Company may terminate the Executive's employment for Cause.
For purposes of this Agreement, the Company shall have "Cause" to terminate
the Executive's employment hereunder only for the following reasons: (1)
the willful and continued failure by the Executive to substantially perform
his duties hereunder other than any such failure resulting from the
Executive's incapacity due to physical or mental illness or injury; (2) the
conviction of the Executive of a crime under state or federal law and the
Company's Board of Directors or one of its committees is unable to conclude
in good faith (and in its sole discretion) that the Executive had no
reasonable cause to believe that the activities of which he was convicted
were unlawful and that such conviction will not materially impair his
ability to discharge his duties; (3) the willful engaging by the Executive
in misconduct which is materially injurious to the Company, monetarily or
otherwise; or (4) the continued inability of the Executive to perform his
duties by reason of alcoholism or drug abuse even after appropriate
rehabilitation services have been made available to him.
7.5 Termination For Good Reason by the Executive.
At any time during the term of this Agreement during which "Good
Reason" exists, the Executive may at his option terminate the Executive's
employment by giving the Notice of Termination specified in Section 9.1
(which will then become effective in accordance with the time period set
out in Section 9.2). For purposes of this Agreement, "Good Reason" shall
exist after any of the following circumstances have occurred, the Executive
has notified the Company that it has occurred, and the circumstance
continues unremedied for 60 days after the Executive has notified the
Company that the circumstance exists. The circumstances are: (1) the
assignment to the Executive by the Company, without the Executive's express
written approval, of duties inconsistent with the Executive's position,
duties, responsibilities, titles, offices or status with the Company or any
removal of the Executive from or any failure to re-elect the Executive to
any of such positions; (2) a reduction by the Company, not consistent with
the Company's general salary practice for Executives, in the Executive's
Base Salary as in effect on the date hereof or as the same is increased
from time to time during the term of this Agreement; (3) the Company's
failure to review in accordance with the Company's general salary
practice for Executives the Executive's Base Salary within twelve (12)
months after the Executive's last increase in Base Salary; (4) the
Company's failure to continue in effect any benefit plan or arrangement in
which the Executive is participating except for Company-wide modifications
or modifications which apply to all executives generally (provided that the
Executive shall enjoy at least the same benefits available to all employees
generally), or the taking of any action by the Company which would
adversely affect the Executive's participation in and/or materially reduce
the Executive's benefits under any such benefit plan or arrangement or
which would deprive the Executive of any material fringe benefit enjoyed by
the Executive, except for Company-wide modifications or modifications which
apply to all executives generally (provided that the Executive shall enjoy
at least the same benefits available to all employees generally); (5) a
relocation of the Company's corporate headquarters to a location outside of
Folsom, New Jersey, or the Executive's relocation to any place other than a
location outside of the location at which the Executive performed the
Executive's duties, except for required travel by the Executive on the
Company's business to an extent substantially consistent with the
Executive's business travel obligations; (6) any purported termination of
the Executive's employment which is not effected pursuant to a Notice of
Termination; or (7) the failure or refusal to reinstate the Executive after
he has recovered from a disability as provided in section 7.2.
Section 8. Benefits upon Termination.
8.1 Termination by the Company for Cause.
If the Executive's employment shall be terminated for Cause:
(a) (i) if the Executive shall have acted in good faith,
and as to any criminal conviction constituting such Cause the Executive had
no reasonable grounds to believe his conduct was unlawful, then the Company
shall pay the Executive his Base Salary for twelve (12) months after the
Date of Termination at the rate in effect at the time Notice of Termination
is given and the Company shall have no further salary obligations
to the Executive or other obligations to the Executive or his survivors
(except as otherwise provided by this Section) under this Agreement; or
(ii) if the Executive shall not have acted in good faith, or as to any
criminal conviction constituting such Cause the Executive had reasonable
ground to believe his conduct was unlawful, then after the Date of
Termination the Company shall have no further salary obligations to the
Executive or other obligations to the Executive or his survivors (except as
otherwise provided by this section) under this Agreement;
(b) the Executive shall be entitled to such retirement
benefits as he may otherwise be entitled to on the Date of Termination, and
such retirement shall be deemed to occur when the Company's salary
obligations to the Executive under this Agreement shall terminate; and
(c) effective as of the Date of Termination, the
Executive shall no longer be an employee of the Company and shall no longer
be entitled to the privileges and benefits thereof.
8.2 Termination by the Executive for Good Reason without a
Change in Control.
If the Executive's employment shall be terminated by the
Executive for Good Reason in accordance with section 7.5, and no Change in
Control has occurred, the Company shall, from the date of Termination,
continue to pay the Executive the Executive's Base Salary for the remainder
of the year in which such terminations occurs and shall pay the Executive
$974,000. In addition, the Executive shall be entitled to such retirement
benefits as he may otherwise be entitled to on the Date of Termination, and
such retirement shall be deemed to occur when the Company's salary
obligations to the Executive under this Agreement shall terminate and the
Company will continue to provide the Executive and his spouse, free of
charge, the same or substantially similar medical, hospitalization,
prescription and major medical coverages as are provided to the Chief
Executive Officer of the Company. Such medical benefits will continue to
be provided to the Executive for the remainder of his life and shall
continue to be provided to his spouse, if she survives him, for the
remainder of her life. Such payments and the provision of such benefits
shall be the Executive's sole and exclusive remedy for breach or for any
other cause of action arising out of his employment and the Company shall
have no further obligations or liability to the Executive or his survivors
(except as otherwise provided by this section) under this Agreement.
8.3 Termination by the Executive for Good Reason in connection
with a Change of Control.
If the Executive terminates this Agreement for Good Reason in
accordance with Section 7.5 following a Change in Control, the Company
shall, in lieu of the payments under Section 8.2, continue to pay the
Executive the Executive's Base Salary from the date of Termination for the
remainder of the then-current Agreement year and the Company shall pay as
severance pay an amount equal to 300% of a base amount determined to be the
average of the aggregate compensation paid to the Executive during the
three (3) calendar years preceding the Date of Termination and subject to
federal income taxes; provided that, if any lump-sum severance payment,
either alone or together with any other payment which the Executive has the
right to receive from the Company, would constitute a "parachute payment"
as defined in Section 280G of the Internal Revenue Code of 1986, as
amended, such lump-sum severance payment shall be reduced to the largest
amount as will result in no portion of the lump-sum payment being subject
to the excise tax imposed by Section 4999 of the Internal Revenue Code
of 1986, as amended. The Company shall pay this lump-sum severance
payment, in cash, on the Date of Termination. The payments under this
section shall be in lieu of any payment to which the Executive might
otherwise be entitled to receive under the Company's Severance Policy.
For purposes of this Agreement a "Change in Control" of the
Company shall mean any of the following: (1) approval by the shareholders
of the Company without the recommendation and approval of the Board of
Directors of the Company of any plan or proposal for the consolidation,
merger, liquidation, dissolution or acquisition of the Company or all or
substantially all of its assets; (2) election to the Board of Directors of
the Company of a new majority different from the individuals who at the
beginning of the term of this Agreement constituted the entire Board of
Directors of the Company, unless the election or nomination for election by
the Company's shareholders of each such new director was recommended by a
majority of the Board of Directors of the Company; or (3) the acquisition
by any person of 20% or more of the stock of the Company having general
voting rights in the election of directors (for purposes of this clause
(3), the term "person" shall include any individual or entity or any
combination of two or more individuals or entities acting as a group for
the purpose of acquiring, holding or disposing of stock of the Company).
In addition, the Executive shall be entitled to such retirement
benefits as he may otherwise be entitled to on the Date of Termination, and
such retirement shall be deemed to occur when the Company's salary
obligations to the Executive under this Agreement shall terminate. The
continuation of such payments and benefits shall be the Executive's sole
and exclusive remedy and the Company shall have no further obligations
or liability to the Executive or his survivors (except as otherwise
provided by this section) under this Agreement.
8.4 Termination by the Company for Other Than Cause.
If the Company terminates the Executive's employment for other
than Cause, the Executive shall be entitled to the payments specified in
Section 8.3, including the reduction in those payments by the application
of the provisions of the Internal Revenue Code referred to in Section 8.3,
even though such provisions are not required to be applied by their terms
because no change in control has occurred. In addition, the Company will
continue to provide the Executive and his spouse, free of charge, the same
or substantially similar medical, hospitalization, prescription and major
medical coverages as are provided to the Chief Executive Officer of the
Company. Such medical benefits will continue to be provided to the
Executive for the remainder of his life and shall continue to be provided
to his spouse, if she survives him, for the remainder of her life.
Section 9. Procedure for Termination.
9.1 Notice of Termination.
For purposes of this Agreement, a "Notice of Termination" shall
mean a notice which shall indicate the specific termination provision in
this Agreement relied upon and shall set forth in reasonable detail the
facts and circumstances claimed to provide a basis for termination of the
Executive's employment.
9.2 Date of Termination.
For the purposes of this Agreement, the "Date of Termination"
shall mean the date of the Executive's death; or thirty (30) days after
Notice of Termination is given; provided that if within ten (10) days after
any Notice of Termination is given the party receiving such Notice of
Termination notifies the other party that a dispute exists concerning the
termination, the date of termination shall be extended for an additional
period not to exceed ten (10) days. During the period between Notice of
Termination and the Date of Termination the Executive may request and shall
be granted a hearing before the Board of Directors, at which time the Board
of Directors shall decide whether in its reasonable good faith opinion the
Executive was either disabled or discharged for Cause and specifying the
particulars thereof in detail.
Section 10. No Obligation to Mitigate Damages; No Effect on Other
Contractual Rights.
10.1 The Executive shall not be required to mitigate damages or
the amount of any payment provided for under this Agreement by seeking
other employment or otherwise.
10.2 The amount of any payment provided to the Executive under
this Agreement shall not be reduced by any compensation earned by the
Executive as the result of employment by another employer after the Date of
Termination.
10.3 The provisions of this Agreement, and any payment provided
for hereunder, shall not reduce any amounts otherwise payable, or in any
way diminish the Executive's existing rights, or rights which would accrue
solely as a result of the passage of time under any plan of benefits
provided to officers and managers of the Company.
Section 11. Confidential Information.
The Executive will not, during or after the term of this Agreement,
use for himself or others, or disclose to others, any formulae, trade
secrets, customer lists, know-how or other confidential information of or
about the Company or any of its affiliates unless authorized in writing to
do so by the Company. The Executive understands that this undertaking
applies to information of a technical or commercial or other nature and
that any information not made available to the general public is to be
considered confidential.
Section 12. Papers.
All correspondence, memoranda, notes, records, reports, plans and
other papers and items received or made by the Executive in connection with
his duties hereunder shall be the property of the Company, and the
Executive shall not have any property rights to such items when he is no
longer an employee of the Company.
Section 13. Noncompetition.
Unless the Executive requests in writing and is thereafter authorized
in writing to do so by the Company, the Executive will not, during the term
of this Agreement, or for one year following the end of the period during
which the Executive serves as a member of the Board of Directors,
regardless of whether the termination was for Cause, for Good Reason, or
for other than Cause, directly or indirectly own, manage, operate, join,
control or participate in the ownership, management, operation or control
of, or be employed or otherwise connected in any manner with, any business
which at any time during said period competes with the Company or which
uses any name similar to the Company's name.
Section 14. Enforcement.
The Executive acknowledges that in the event of his breach or threat
of breach of Sections 11, 12, or 13 of this Agreement, the Company's
remedies at law will be inadequate and, in such event, the Company will be
entitled to appropriate injunctive and other equitable relief in addition
to its legal remedies.
Section 15. Survival.
The provisions of Sections 6.2, 7.1, 8.2, 8.4, 11, 12, 13 and 14 and
this Section 15 shall survive the termination of this Agreement.
Section 16. Notices.
All notices and other communications provided for herein that one
party intends to give to the other party shall be in writing and shall be
considered given when mailed by certified mail, return receipt requested,
or personally delivered, either to the party or at the address set forth
below (or to such other address as a party shall designate by notice
hereunder):
South Jersey Industries, Inc.
Attn: Chairman of the Compensation/Pension Committee
Number One South Jersey Plaza
Route 54
Folsom, New Jersey 08037
with a copy to the Company's Secretary at the same address
William F. Ryan
207 School House Drive
Linwood, New Jersey 08221
Section 17.Amendments.
This Agreement may be amended, modified, superseded, canceled,
renewed or extended only by a written instrument executed by both parties
hereto.
Section 18. Binding Effect and Non-Assignability.
This Agreement shall inure to the benefit of the Executive's heirs
and personal representatives and shall be binding upon the successor of the
Company, including any entity with which the Company may be merged or
consolidated or which may acquire all or substantially all of the assets of
the Company. This Agreement shall not be assignable, in whole or in part,
by either party, without the written consent of the other party.
Section 19. Legal Expenses.
In the event of a dispute in connection with this Agreement, the
parties shall each pay their own costs, except that in the event of such a
dispute involving termination of employment, or involving entitlement to
compensation or benefits in the event of termination of employment, the
Company shall pay the legal expenses of the Executive.
Section 20. Arbitration.
Any controversy or claim arising out of or relating to this Agreement
or the breach thereof shall be settled by arbitration in the County of
Atlantic, State of New Jersey, in accordance with the rules then in effect
of the American Arbitration Association, and judgment upon the award
rendered may be entered in any court having jurisdiction thereof.
Section 21. Governing Law.
This Agreement shall be governed by the laws of the State of New
Jersey.
Section 22. Entire Agreement.
This Agreement contains the entire agreement between the parties
relative to its subject matter, superseding all prior agreements or
understandings of the parties relating thereto.
Section 23. Waiver.
Any term or provision of this Agreement may be waived in writing at
any time by the party entitled to the benefit thereof. The failure of
either party at any time to require performance of any provision of this
Agreement which has not been waived in writing shall not affect such
party's rights at a later time to enforce such provision. No consent or
waiver by either party to any default or to any breach of a condition or
term of this Agreement shall be deemed or construed to be a consent or
waiver to any other breach or default.
Section 24. Invalidity of Portion of Agreement.
If any provision of this Agreement or the application thereof to
either party shall be invalid or unenforceable to any extent, the remainder
of this Agreement shall not be affected thereby and shall be enforceable to
the fullest extent of the law.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement effective as of the date first above written.
SOUTH JERSEY INDUSTRIES, INC.
By /S/ Richard L. Dunham
Richard L. Dunham, Chairman
Compensation/Pension Committee
/S/ William F. Ryan
William F. Ryan
South Jersey Industries, Inc.
Number 1 South Jersey Plaza, Route 54
Folsom, New Jersey 08037
June 17, 1994
William F. Ryan
President and Chief Executive Officer
South Jersey Industries, Inc.
Number 1 South Jersey Plaza
Route 54
Folsom, NJ 08037
Dear Bill,
In the course of our recent discussions concerning your
employment agreement with South Jersey Industries Inc. (the
"Company"), we considered a number of matters you proposed as non-
binding expressions of intention. Rather than include those matters
in the employment contract, we agreed with you in that contract that
the Company would enter into negotiations with you concerning those
matters no later than the earlier of (i) August 1, 1997, (ii) the
date on which a search, duly authorized by the Company's Board of
Directors, commences for the Executive's successor outside of the
Company's then-existing employees, or (iii) the date on which
negotiations, duly authorized by the Company's Board of Directors,
commences with a view to a change in control (or a merger which would
result in a change of control).
This letter is a record of those matters that we agreed to
defer until those negotiations when those matters will be considered
in the light of the then contemporary business environment.
1. You and the Company will seek to reach agreement on a
succession plan to become effective on your retirement. In
that connection the Company will seek your advice and take
into account your recommendations on the appropriate
persons to fill the various officer positions of the
Company and its subsidiaries.
2. It is your and our intent that you and the Company will
enter into a consulting agreement covering the seven year
period after your retirement. Under such an agreement you
will remain available to the Company as an advisor and
consultant, and the agreement will define your
responsibilities and remuneration during that period.
3. The remuneration to be paid to you under that consulting
agreement will be an amount between 10% and 30% of your
salary at retirement.
4. The Company will consider your continuing to serve on its
board of Directors following your retirement in the light
of the succession plan and state of the Company at that
time. The Committee takes note of your experience in
serving on the board and your expertise in the Company's
business and the value that experience and expertise brings
to the deliberations of the Board.
5. The Company will provide, to the extent then practical,
additional assistance beyond that already set forth in your
employment agreement to enable your wife or your designated
beneficiary to exercise any stock options that remain
unexercised on your death.
The matters expressed above are statements of intention
only, and do not and are not intended to confer any legal rights or
create any binding or legally enforceable obligations on you, the
Company or any third party. We and you understand that you are not
relying on the statements in this letter as an inducement to remain
in the Company's employ or to enter into the employment agreement
which is dated the same date as this letter.
If this letter conforms with your understanding, please
sign the additional copy and return it to the Company's secretary for
safe keeping as a record of the matters we will take up with you at
the agreed time.
The Compensation/Pension Committee
of The Board of Directors of
South Jersey Industries, Inc.
By: Richard L. Dunham
Chairman
EXHIBIT A
LIST OF OFFICERS' BENEFITS
1. Group Hospital, Surgical and Medical Insurance Plan
2. Major Medical Plan
3. Group Dental Plan
4. Group Prescription Drug Plan
5. Temporary Disability Plan
6. Long Term Disability Plan
7. Group Life Insurance Plan
8. 24-Hour Accident Protection Coverage
9. Supplementary Survivor's Benefit
10. Thrift Plan
11. Employees Stock Ownership Plan
12. Retirement Plan for Employees
13. Supplemental Executive Retirement Plan
14. Deferred Compensation Contract
15. Officers' Liability Insurance
16. Company Automobile
17. Tuition Refund Plan
18. Vacation
19. Holiday Schedule
20. Time Off w/Pay for Jury Duty, Death in Family or Marriage
21. Annual Physical Examination
22. Health Club Membership
23. Country Club House Membership
24. Severance Pay Plan
EXHIBIT A
SCHEDULE 1
DISABILITY AND DEATH BENEFITS
1. Temporary Disability (Sick Pay): - Officers
Commences on 8th consecutive day of absence. Paid @ 100% of
base salary and extends at full pay based on years of service as
follows:
Service: Maximum Benefit
Under 5 Years 120 Days
5 Years or more 365 Days
2. Long-Term Disability: - Officers
Eligibility Begins: After 1 year of service
Benefit Can Begin: Upon Expiration of Temporary Disability
Benefits Benefit: 50% of Salary, reduced by other disability
income(ie.Soc Sec).
1. Benefit continues until status is changed by virtue of
rehabilitation, retirement, death, etc.
2. Medical certification for first two years of disability
against "own position". Thereafter, certification against
"any position". However, replacement may be required after one
year.
3. Group Life Insurance: - Officers
Two times annual salary rounded to next higher $5,000
4. 24 Hour Accident Protection Insurance: - Officers
$250,000 Death Benefit
5. Company Paid Death Benefit (Uninsured) & Suppl. Survivor's Benefit
Benefit
Lump Sum $1,000
Service:
10-15 Years 6 Months Salary
15-25 Years 9 Months Salary
25 or More 12 Months Salary
Payment of uninsured amount is offset by pension proceeds in year of
death
6. Retirement Plan Death Benefit: (Pre-retirement)
Service:
5 Years or More 50% of Accrued Benefit payable to
spouse only.
EXHIBIT A
SCHEDULE 2
South Jersey Industries, Inc.
Officer Severance Program Summary
1. Officer Participation - All officers of South Jersey Industries,
Inc. are immediately covered by this program upon being
elected officers and satisfying the age and service
requirements of the specific plans. The cost of the program
will be paid entirely by the employer unless otherwise noted.
2. Officer Severance Plan
- Participation - immediate
- Basic benefit - weekly salary times years of service.
Minimum of 12 weeks; accrual of two weeks times years of
service to a maximum of 40 weeks, except that any
officer
who is or may become a party to an "Employment
Agreement" shall receive one year's salary as a basic
benefit without consideration of a service period.
- Outplacement counselling services - up to 20% of pay to a
maximum of $15,000, at the discretion of the chief
Executive Officer for all other officers and at the
discretion of the compensation Committee of the Board of
Directors of the company in the case of the Chief
Executive Officer.
- Death benefits - at officer's expense, benefits may continue.
- Disability benefits - terminate upon severance.
- Health benefits - at officer's expense, benefits may continue.
- Company car - given title at severance, at the discretion of
the chief Executive Officer for all other officers and
at the discretion of the Compensation Committee of the
Board of Directors of the Company in the case of the
Chief Executive Officer.
EX-12
9
Exhibit 12
SOUTH JERSEY INDUSTRIES
Calculation of Ratio of Earnings to
Fixed Charges (Before Federal Income Taxes)
(In Thousands)
Fiscal Year Ended December 31,
1994 1993 1992 1991 1990
Net Income * $ 12,379 $ 14,971 $ 15,127 $ 11,702 $ 11,622
Federal Income Taxes, Net 5,584 7,055 7,092 5,449 5,073
Fixed Charges ** 16,211 15,775 16,043 15,513 15,141
Total Available $ 34,174 $ 37,801 $ 38,262 $ 32,664 $ 31,836
Total Available 2.11x 2.40x 2.38x 2.11x 2.10x
Fixed Charges
* Net Income before Cumulative Effect of a Change in Accounting Principle.
** Includes interest and preferred stock dividend requirements of a subsidiary
EX-13
10
Cover - Outside
Orchestrating Change
South Jersey Industries, Inc.
1994 Annual Report
PHOTO - Orchestrating Change
Description: Violin Workshop
Three inserted circle photos
1: Offshore Drilling
2: Environmental Remediation Personnel
3: Sand Mining Operation
SJI LOGO
Cover - Inside
Table of Contents
1 Financial Highlights
1 Dividend Reinvestment and Stock Purchase Plan
2 Report to Shareholders
4 Financial Review
6 Operating Review
10 Consolidated Financial Statements and Schedule
19 Management's Discussion
22 Quarterly Financial Data
23 Comparative Operating Statistics
24 SJI Directors
24 SJI Officers
Company Profile
South Jersey Industries, Inc. is a diversified holding company whose
subsidiaries are: South Jersey Gas Company; South Jersey Energy Company; Energy
& Minerals, Inc.; and R & T Group, Inc. South Jersey Gas Company is a natural
gas distribution utility which supplies natural gas to residential, commercial
and industrial customers in all or parts of the seven southern counties of New
Jersey. South Jersey Energy Company provides services for the acquisition and
transportation of natural gas for commercial and industrial end users. Energy &
Minerals, Inc. manages the natural resources development operations of The Morie
Company, Inc. which mines and processes sand and gravel. R & T Group, Inc.
manages the interests of five companies involved in utility construction,
general contracting and environmental consulting and remediation.
South Jersey Industries, Inc.
South Jersey Gas Company
South Jersey Energy Company
Energy & Minerals, Inc.
. The Morie Company, Inc.
R & T Group, Inc.
. R and T Castellini Company, Inc.
. Cape Atlantic Crane Company, Inc.
. S. W. Downer, Jr. Company, Inc.
. Onshore Construction Company, Inc.
. R & T Castellini Construction Company, Inc.
1994 HIGHLIGHTS
Five-Year Summary of Selected Financial Data South Jersey Industries, Inc. and Subsidiaries
(In Thousands Where Applicable) Year Ended December 31,
---------------------------------------------------------
1994 1993 1992 1991 1990
--------- --------- --------- --------- ---------
Operating Results:
Operating Revenues $373,959 $333,941 $316,666 $278,921 $260,027
========= ========= ========= ========= =========
Operating Income $ 30,865 $ 30,746 $ 31,170 $ 27,215 $ 26,763
========= ========= ========= ========= =========
Income before Cumulative Effect
of a Change in Accounting Principle (1) $ 12,379 $ 14,971 $ 15,127 $ 11,702 $ 11,622
========= ========= ========= ========= =========
Net Income Applicable to Common Stock (1)(2) $ 12,379 $ 15,353 $ 15,127 $ 11,702 $ 11,622
========= ========= ========= ========= =========
Total Assets $571,095 $531,778 $471,274 $446,424 $421,544
========= ========= ========= ========= =========
Capitalization:
Long-Term Obligations and
Redeemable Preferred Stock $155,580 $146,889 $121,537 $109,429 $114,576
Common Equity 154,972 140,526 132,053 125,006 122,603
--------- --------- --------- --------- ---------
Total Capitalization $310,552 $287,415 $253,590 $234,435 $237,179
========= ========= ========= ========= =========
Ratio of Income from Operations to Fixed
Charges (Before Federal Income Taxes) 2.26 2.40 2.38 2.11 2.10
========= ========= ========= ========= =========
Earnings Applicable to Common Stock
(Based on Average Shares) (1)(3):
Before Cumulative Effect of a Change in Accounting Principle $ 1.21 $ 1.55 $ 1.61 $ 1.28 $ 1.33
Cumulative Effect of a Change in Accounting Principle - 0.04 - - -
--------- --------- --------- --------- ---------
Earnings per Common Share $ 1.21 $ 1.59 $ 1.61 $ 1.28 $ 1.33
========= ========= ========= ========= =========
Return on Average Common Equity 8.38% 11.27% 11.77% 9.45% 9.81%
========= ========= ========= ========= =========
Share Data (3):
Number of Shareholders 14.0 13.1 12.5 11.6 11.7
Average Common Shares 10,258 9,680 9,394 9,159 8,742
Common Shares Outstanding at Year End 10,715 9,805 9,498 9,239 9,029
Dividend Reinvestment and Stock Purchase Plan:
Number of Shareholders 6.6 5.7 5.0 4.0 3.7
Number of Participating Shares 2,941 2,716 2,483 2,190 2,114
Book Value at Year End $ 14.46 $ 14.33 $ 13.90 $ 13.53 $ 13.58
Cash Dividends Declared $ 1.440 $ 1.433 $ 1.412 $ 1.412 $ 1.402
Market Price at Year End 18 1/8 23 3/4 23 19 7/8 18 5/8
Dividend Payout:
Gross 116.7% 89.2% 87.1% 109.9% 103.1%
Net (4) 82.9% 64.6% 63.4% 82.8% 89.8%
Market Price to Book Value 125.3% 165.7% 165.5% 146.9% 137.2%
Price Earnings Ratio 14.98 14.94 14.29 15.53 14.00
Certain reclassifications have been made of previously reported amounts to conform with classifications used in
the current year.
(1) Included in 1994 is the negative impact of a $3.5 million Customer Refund Obligation ordered by
the BPU which reduced 1994 earnings by $2.3 million, or $0.22 per share (See Note 1 to Consolidated
Financial Statements).
(2) Included in 1993 is the Cumulative Effect of a Change in Accounting Principle for Income Taxes.
(3) Per share data has been restated to reflect the 2 percent Stock Dividend declared on January 22, 1993.
(4) Net Dividend Payout Ratio determined using dividends paid less dividends reinvested
through the Company's Dividend Reinvestment and Stock Purchase Plan.
DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN
SJI's Dividend Reinvestment and Stock Purchase Plan provides record shareholders of the Company's
common stock with a way to increase their investment in the Company without payment of any brokerage
commission or service charge.
Shareholders who participate in the Plan may purchase shares of common stock by the automatic reinvestment
of dividends. Optional purchases are permitted each quarter up to a maximum of $100,000 in any calendar year as
prescribed in the Plan. Shares of common stock offered through the Plan are currently purchased in the open market.
The price of shares purchased under the Plan will be determined by dividing the total cost of all shares purchased
during the investment period by the number of shares purchased. The offer and sale of shares under
the Plan will be made only through a Prospectus, which may be obtained by contacting the Shareholder Records
Department, Number One South Jersey Plaza, Route 54, Folsom, NJ 08037-9917, (609) 561-9000.
- 1 -
To Our Shareholders
Over the years, South Jersey Industries, Inc.'s businesses have implemented many
changes to maintain an edge in an increasingly competitive marketplace. We are
committed to continuing on that path into the future. While 1994 earnings were
impacted by warmer weather in the latter part of the year, and a charge reducing
net income by approximately $2.3 million, we persisted in our long-range goal of
steady growth.
South Jersey Gas Company, our natural gas distribution company, anticipates the
$12.1 million rate increase, approved by the New Jersey Board of Public
Utilities in December 1994, will favorably impact annual, after-tax income by an
amount in excess of $5.0 million, assuming normal temperatures. In conjunction
with that case, an issue concerning gas purchasing practices was resolved. While
the company believes that its practices were appropriate, we chose settlement
over litigation to expedite resolution of the rate case in time for winter
operations. Company management, in consultation with its independent auditing
firm, reviewed the accounting for the charge associated with this settlement,
and management decided to implement a reduction in 1994 net income of $2.3
million. With resolution of these regulatory matters, we will be better
positioned to meet the financial obligations required to serve expanding markets
and maintain our dividend to shareholders. We look forward to further regulatory
actions which will allow us to enjoy rewards more consistent with the increased
risks of a deregulated environment. At the same time, we will continue to ensure
the security of our core residential and commercial customers.
During 1994, SJI's nonutility subsidiaries enhanced their competitive positions
in their respective industries. South Jersey Energy Company, our natural gas
acquisition and transportation company, and the R & T Group, Inc., our
construction and environmental services company, pursued diversification of
their services into new geographical areas. The Morie Company, Inc., our sand
mining and processing company, acquired the assets of Cape Concrete Company,
Inc. in New Jersey, extending commercial sand reserves by 15 to 20 years and
adding ready-mix concrete as a small, but profitable new line of business.
Utility stocks have undergone intense pressure as a result of scrutiny by
analysts and shareholders, brought on by greater perceived risks associated with
a deregulated environment and increasing interest rates. During 1994, we began
taking steps to differentiate ourselves from electric utilities and peer group
natural gas utilities to reach a broader group of investors. We will continue in
1995 with a much higher profile financial relations program. It is important to
note, however, that the electric industry has yet to come to grips with
deregulation and competition and, as a result, key analysts are viewing electric
utilities as more risky than natural gas distribution companies.
INSERT: passage on left side of page 2 --
Many changes have taken place over the past 10 years; and we chose, in
virtually every instance, to view those changes as opportunities to
offer new services to existing customers and those beyond our
traditional boundaries.
INSERT: Photograph - Conductors wand
- 2 -
We believe we are well-situated compared with the rest of the industry, because
of our customer growth rate and our relatively strong position in the
deregulated marketplace. From the onset of industry restructuring, we have
offered our large-volume customers flexible options to manage their own gas
supplies and have expanded those options over the years. Our actions were
designed to insulate earnings from competitive forces while benefitting our
customers and our shareholders. As the industry continues to experience greater
deregulation, we intend to pursue further actions from regulators to provide
additional benefits to all constituents, especially our shareholders.
Many changes have taken place over the past 10 years; and we chose, in virtually
every instance, to view those changes as opportunities to offer new services to
existing customers and those beyond our traditional boundaries. Gas Company
implemented aggressive gas supply and acquisition programs, as well as
innovative rate structures. We embarked on a path toward a deregulated natural
gas environment which drastically altered the way natural gas was purchased,
transported and distributed; and we continued on the path of geographical
diversification with our core businesses.
Several other changes occurred on the nonutility side as well. Recognizing a new
opportunity to serve large customers, created by the natural gas industry
restructuring, Energy Company began assisting customers with gas supply contract
negotiation and acquisition. Over the last seven years, without the need for
substantial start-up capital, Energy Company's efforts have resulted in
significant savings to large industrial and smaller commercial customers, while
returning an incremental profit to SJI.
INSERT: Photograph of three men --
Title -- (left to right) William F. Ryan, president and CEO of SJI,
Ronald W. Johnson, newly-elected chairman of Morie and
Robert G. Cook, Morie's newly-elected president.
Morie strengthened its competitive stance in the sand industry by installing
labor-saving equipment and adding to reserves through acquisitions and planned
changes in mining locations. New products in its golf course line launched Morie
further into this profitable market. Additionally, R & T Group was formed to
manage the assets of newly acquired operating companies and soon carved out
another market niche with its environmental services division.
With the continued dedication, loyalty and talent of our employees, we look
forward to continuing on the path of change and remain committed to improving
the value of our shareholders' investment.
William F. Ryan
President
February 15, 1995
- 3 -
Financial Review
South Jersey Industries, Inc.'s consolidated net income amounted to $12.4
million in 1994, compared with $15.4 million last year. Lower earnings, reported
by South Jersey Gas Company, contributed to the lower consolidated results in
1994, although improved results by SJI's nonutility subsidiaries partially
offset the decrease.
Earnings per average share of common stock were $1.21 in 1994, compared with
$1.59 in 1993, based on 10.3 million and 9.7 million average shares outstanding,
respectively. The 600,000 increase in average shares resulted from SJI's
Dividend Reinvestment and Stock Purchase Plan, which our board of directors
amended in April 1994, to allow shareholders to increase their investment in the
company and for the company to secure equity capital. The amount of equity
raised through the plan provided us with sufficient capital to meet expected
requirements through 1995. However, it increased the average shares outstanding
in 1994, by approximately 6 percent. Having reached the desired equity level,
the company modified the plan to an open-market program, effective in January
1995.
Gas Company reported net income for 1994 of $11.0 million, compared with $16.7
million for the same period last year. The 1993 period reflected record net
income by Gas Company, with the adoption of Financial Accounting Standards Board
Statement No. 109, "Accounting for Income Taxes," contributing approximately
$1.2 million to earnings. Several factors contributed to the lower net income in
1994. As we reported in separate communications to our shareholders and the
financial community, Gas Company will reduce revenues by $3.5 million through
its Levelized Gas Adjustment Clause, which will affect customer bills upon
completion of that separately pending proceeding. This charge reduced 1994 net
income, after appropriate tax provisions, by approximately $2.3 million.
INSERT: Bar Chart -
South Jersey Industries, Inc.
Consolidated Net Income Applicable to Common Shareholders ($ Millions)
1990 1991 1992 1993 1994
$11.6 $11.7 $15.1 $15.4 $12.4
Even though Gas Company experienced warmer-than-normal weather in the latter
part of the year, which resulted in lower sales for that period, total firm
sales and revenues increased due to colder weather in the early part of 1994 and
the addition of approximately 6,300 new residential and general service
customers.
The 1993-1994 Temperature Adjustment Clause period, which ended in May 1994, was
- 4 -
INSERT: Photograph between center of Pages 4 and 5 - Contractor installing
natural gas pipe.
Title -- Gas Company (left) continued to expand and improve its
facilities to accommodate the ever growing southern New
Jersey region.
colder than normal and exceeded the upper threshold of the TAC by 298 degree
days. Gas Company's customers will benefit from the colder weather in this
period since revenues deferred in 1994, amounting to approximately $2.3 million,
will be credited to them over the 1994-1995 TAC period. The TAC insulates the
company from the earnings impact of extremely warm weather and insulates
customers from the impact of extremely cold weather.
INSERT: Notation at right side of page -
Title -- In 1994, nonutility results improved over 1993 led by The
Morie Company, Inc.'s strong sales.
Our financial outlook was strengthened when, in December 1994, the New Jersey
Board of Public Utilities approved a $12.1 million rate increase for Gas
Company. Nearly the entire amount of the increase will come from the
residential, commercial and small industrial customer classes, bringing their
rates of return closer to the company's average. We expect the rate increase to
favorably impact annual, after-tax income by more than $5.0 million, assuming
normal temperatures. As part of the rate case, Gas Company modified its tariffs
to provide further options to large industrial and commercial customers in
managing their own gas supplies. As with past flexible rates, our margins are
maintained and these changes will not negatively impact net income.
INSERT: Photograph - Front end loader scooping up gravel at Morie Plant.
Title -- Morie mines and processes sand and gravel in New Jersey,
Georgia, Alabama and Tennessee.
In 1994, nonutility results improved over 1993 led by The Morie Company, Inc.'s
strong sales. Morie achieved a record in net income from operations. South
Jersey Energy Company's record net income in 1994 also resulted from greater
sales volumes. R & T Group, Inc. experienced lower consolidated operating losses
in 1994, reflecting increased business activity and improved margins.
Gas Company completed $60 million in financing during 1994 and in the early part
of 1995 consisting of three parts: a $10 million
INSERT: Photograph - R & T Group, Inc. installation of utility services.
Title -- R & T Group's activities (right) include natural gas,
electric, water and sewer construction.
INSERT: Photograph - portion of violin
- 5 -
contribution in capital made by SJI; an unsecured long-term debt instrument
amounting to $20 million; and the private sale of $30 million of unsecured
debenture notes due February 1, 2010. The $10 million contribution was raised
by SJI through the Dividend Reinvestment and Stock Purchase Plan in 1994. SJI
plans an additional contribution of equity to Gas Company in 1995. Gas Company's
$20 million debt instrument consists of a $15 million term loan maturing in 2001
and a $5 million revolving credit facility with a commercial bank that may be
converted into term notes. The proceeds from this loan are intended to reduce
short-term debt levels from environmental remediation expenditures. The $30
million in unsecured debenture notes, sold in January 1995, have a coupon rate
of 8.6 percent. The notes were sold in a competitive process which awarded the
entire issue to the bidder offering the lowest cost of money to Gas Company. The
proceeds were used to reduce short-term debt attributed to gross receipts and
franchise tax payments, accelerated by state government in 1993 and 1994, and
for general business purposes.
INSERT: Bar Chart
South Jersey Industries, Inc.
Earnings Per Share Applicable to Common Shareholders and Dividends
Declared (Dollars)
1990 1991 1992 1993 1994
. $1.402 $1.412 $1.412 $1.433 $1.440
.. $1.33 $1.28 $1.61 $1.59 $1.21
. Dividends Per Share
.. Earnings Per Share
Operating Review
As the natural gas industry evolves toward an increasingly competitive
marketplace, the substance of Gas Company's business remains the same.
Residential, commercial and small industrial customers continue to represent the
greater part of its profit and growth.
Overall, requests for natural gas service for new housing construction increased
by approximately 3 percent over 1993. Conversions to natural gas represent a
solid 26 percent of new customers. During 1994, Gas Company installed its
250,000th meter and added its 200,000th residential heating customer.
INSERT: Photograph - York Triathlon(tm) gas-fired heating and cooling unit.
Title -- Gas Company became one of the first local distribution
companies in the nation to introduce the state-of-the-art
York Triathlon(tm) gas-fired heating and cooling system.
The expansion of the casino, convention and tourism economy continues to drive
the eastern portion of its service area, while the western side of our service
territory enjoys above-average residential growth, especially in the southern
New Jersey communities in the shadow of metropolitan Philadelphia.
When pipeline capacity under contract is not required to serve customers within
the service area, Gas Company has used its expertise to develop profit centers
beyond its boundaries. Weather conditions, on a daily, monthly or seasonal
basis, may make gas supplies and pipeline capacity available for off-system
sales. Sales in this market complement the success Gas Company has achieved in
serving its core group of customers by enabling it to sell for resale natural
gas to marketers or
- 6 -
INSERT: Extended Photograph at the bottom of pages 6 and 7 - Trumpet
gas distribution companies for delivery essentially anywhere in the United
States. Currently, the Off-System Sales Division sells gas throughout the
eastern United States. Through careful management of pipeline capacity and gas
supplies, Gas Company's Off-System Sales Division sold 16.8 billion cubic feet
of gas during 1994 to 17 customers who, in turn, marketed the gas to their
customers ranging from large industrial businesses to cogenerators and electric
generating facilities. Those sales were delivered to 30 delivery points in 11
states on the systems of our two major pipeline suppliers. This compares with
total Gas Company sendout of 74.0 billion cubic feet of natural gas.
INSERT: Photograph - Office at Morie's Port Elizabeth Plant looking out to
outside sand mining scene.
Title - Morie's Port Elizabeth plant specializes in commercial sand
and recreational products.
All of the off-system sales have been made in competition with gas marketers,
including other local distribution companies. Gas Company's Off-System Sales
Division has been successful in making these sales by using available gas
supplies, as well as pipeline and storage capacities to the benefit of its
customers and shareholders. This division expects to expand its current business
by adding to its customer list and to the areas it serves.
Technological advances are providing increasing opportunities for Gas Company to
attract new customers. Gas Company became one of the first local distribution
companies in the nation to introduce the state-of-the-art York Triathlon(tm)
gas-fired heating and cooling system. The Triathlon(tm), although in limited
production, represents a whole new era in comfort, economy and efficiency for
residential and commercial consumers.
In Gas Company's service area, Triathlon(tm) debuted at historic Wheaton Village
in Millville, with two units now in operation. A third unit was installed in a
model home in Gloucester Township. By the summer of 1995, Gas Company will
install a total of 10 units, and anticipates the installation of another 10 by
local builders. Over the next two years, Gas Company will help introduce nearly
400 of these units and is working with local builders and contractors to promote
this innovative product.
- 7 -
INSERT: Photograph - portion of drum and drum sticks
During 1994, Energy Company continued to expand into new markets. Energy Company
now serves commercial and industrial customers in New Jersey, Pennsylvania, New
York and Delaware. Increased manpower has enabled Energy Company to call on a
wide variety of customers to emphasize its expertise and convey that the
services it provides are secure, dependable and offer significant opportunities
to reduce energy costs. Energy Company plans to expand its market area in the
Middle Atlantic states, as well as strengthen relationships with existing
customers who maintain offices or plants in other states.
Over the last several years, the condition of the national economy had a
significant impact on Morie's operations. During this period, while the market
for Morie's products was depressed, it developed strategic objectives which,
combined with capital investments made in recent years, placed it in a position
to benefit as the economy improved. This year, Morie continued to implement
changes to improve current operations and prepare for the future. In October,
Morie acquired the assets of Cape Concrete Company, Inc., located in Cape May
County, which produces and markets ready-mix concrete, construction sand and
gravel and masonry supplies. By this acquisition, Morie extended its commercial
reserves by 15 to 20 years while also expanding its product lines.
INSERT: Notation at left side of page --
Title - As a natural resources development company, SJI will pursue
growth in the nonutility markets through strategic
acquisitions, expansion into new geographic areas and
development of new products and services.
Morie continued its innovative approach to marketing golf course products
through its well-received golf symposiums in New Jersey. Morie's ability to meet
strict United States Golf Association golf course materials specifications for
traps, greens maintenance and new construction place it above the competition
with golf course management in the Northeast. Based on market studies conducted
in the South, Morie believes its plants in Georgia and Tennessee will be able to
produce similar high quality golf course products at a competitive price.
R & T Group successfully competed along the East Coast and Middle Atlantic
region and, as a result, added new customers outside of New Jersey for utility
construction and environmental consulting. The environmental business saw an
increase in both the number and dollar amount of contract awards. This year, R &
T Group acquired the equipment to perform directional drilling which bores
underground without disturbing the surface. Using this equipment, R & T Group
recently completed several directional drilling jobs, which are increasingly in
demand, for utility customers.
INSERT: Photograph - Construction Worker welding a 20" transmission pipe.
Title - Deregulation in the natural gas industry has provided growth
opportunities for both Energy Company and Gas Company.
- 8 -
INSERT: Photograph - R & T Group performing removal of underground tank.
Title -- R & T Group, Inc. carved out a market niche with its
environmental services division.
SJI and its subsidiaries will continue to implement changes to maintain an edge
in an era of expanding competition. As a natural resources development company,
SJI will pursue growth in the nonutility markets through strategic acquisitions,
expansion into new geographic areas and development of new products and
services. We expect natural gas markets to become more open to competition and
hope that state regulatory bodies will allow utility companies greater freedom
and creativity in the way they run their businesses. This anticipated freedom
will be accompanied by increased risk and responsibility. The reward structure,
reflected in the amount of earnings that companies and their shareholders will
retain, should create improved financial incentives. Customers and shareholders
alike will ultimately benefit from this structure, and we look to the state's
regulatory body for support in implementing such a system.
INSERT: Bar Chart
South Jersey Gas Company
Number of Customers at Year End
1990 1991 1992 1993 1994
217,636 223,388 229,182 235,067 241,406
Companies can fail in a deregulated environment when they shift focus from their
core markets. Gas Company's core group of customers remain the center of its
focus, and it intends to maintain the balance achieved in serving their needs,
as well as those of its large-volume customers. Gas Company's entry into the
off-system market is a natural extension of its traditional markets. The changes
Gas Company has implemented in recent years were designed to increase its
competitive strength, to benefit its core customers and to insulate earnings
from competition.
Gas Company has always faced competition from other fuel suppliers, and it now
anticipates greater competition from independent marketers and other natural gas
utilities. To maintain its edge, Gas Company will concentrate on gas acquisition
and marketing to obtain available supplies and capacity at the best prices, and
to sell gas and capacity in a profitable way.
As we move into the next century, SJI and its subsidiaries will diligently
continue their efforts to enhance the value of shareholders' investment in the
company.
INSERT: Photograph - portion of clarinet
- 9 -
Statements of Consolidated Income South Jersey Industries, Inc. and Subsidiaries
(In Thousands Except for Per Share Data) Year Ended December 31,
---------------------------------
1994 1993 1992
--------- --------- ---------
Operating Revenues:
Utility (Note 1) $297,950 $268,541 $255,041
Nonutility 76,009 65,400 61,625
--------- --------- ---------
Total Operating Revenues 373,959 333,941 316,666
--------- --------- ---------
Operating Expenses:
Gas Purchased for Resale 174,354 145,786 137,492
Operation and Maintenance - Utility 42,832 39,977 35,572
Nonutility 67,616 59,603 55,395
Depreciation and Depletion (Note 1) 16,561 15,379 14,526
Federal Income Taxes (Notes 1 & 4) 6,809 7,055 7,092
Gross Receipts & Franchise Taxes and Other Taxes (Note 1) 34,922 35,395 35,419
--------- --------- ---------
Total Operating Expenses 343,094 303,195 285,496
--------- --------- ---------
Operating Income 30,865 30,746 31,170
--------- --------- ---------
Interest and Other Charges:
Long-Term Debt 12,889 12,400 11,480
Short-Term Debt 2,859 2,603 2,307
Other (Note 3) 463 772 2,256
--------- --------- ---------
Total Interest and Other Charges 16,211 15,775 16,043
--------- --------- ---------
Customer Refund Obligation - Net (Notes 1 & 4) 2,275 - -
--------- --------- ---------
Income Before Cumulative Effect of a Change in Accounting Principle 12,379 14,971 15,127
Cumulative Effect of a Change in Accounting Principle (Note 1) - 382 -
--------- --------- ---------
Net Income Applicable to Common Stock $ 12,379 $ 15,353 $ 15,127
========= ========= =========
Average Shares of Common Stock Outstanding (Note 6) 10,258 9,680 9,394
========= ========= =========
Earnings Per Common Share: (Note 6)
Before Cumulative Effect of a Change in Accounting Principle $ 1.21 $ 1.55 $ 1.61
Cumulative Effect of a Change in Accounting Principle - 0.04 -
--------- --------- ---------
Earnings Per Common Share $ 1.21 $ 1.59 $ 1.61
========= ========= =========
Cash Dividends Declared Per Common Share $ 1.440 $ 1.433 $ 1.412
========= ========= =========
Statements of Consolidated Retained Earnings (In Thousands) Year Ended December 31,
---------------------------------
1994 1993 1992
--------- --------- ---------
Balance at Beginning of Year $ 33,889 $ 32,409 $ 35,306
Net Income Applicable to Common Stock 12,379 15,353 15,127
Cash Dividends Declared - Common Stock (14,771) (13,873) (13,262)
Stock Dividend Declared - Common Stock (Note 6) - - (4,762)
--------- --------- ---------
Balance at End of Year (Note 8) $ 31,497 $ 33,889 $ 32,409
========= ========= =========
The accompanying schedule and footnotes are an integral part of the financial statements.
- 10 -
Statements of Consolidated Cash Flows South Jersey Industries, Inc. and Subsidiaries
(In Thousands) Year Ended December 31,
---------------------------------
1994 1993 1992
--------- --------- ---------
Cash Flows from Operating Activities:
Net Income Applicable to Common Stock $ 12,379 $ 15,353 $ 15,127
Adjustments to Reconcile Net Income to Cash Flows:
Depreciation, Depletion and Amortization 19,142 18,204 17,034
Provision for Losses on Accounts Receivable 1,293 913 1,090
Revenues and Fuel Costs Deferred - Net 18,183 (18,306) (1,564)
Deferred and Non-Current Federal Income Taxes
and Credits - Net (928) 4,665 3,271
Cumulative Effect of a Change in Accounting Principle - (382) -
Environmental Remediation Costs - Net 1,029 990 (1,610)
Changes in:
Accounts Receivable (2,167) (6,615) (811)
Inventories (6,093) (1,439) (688)
Prepayments and Other Current Assets (138) (268) 213
Gross Receipts & Franchise Taxes Accrued (13,276) (15,940) 3,393
Accounts Payable and Other Accrued Liabilities 9,859 (4,246) 5,654
Other - Net (1,846) 1,238 (2,528)
--------- --------- ---------
Net Cash Provided by (Used In) Operating Activities 37,437 (5,833) 38,581
--------- --------- ---------
Cash Flows from Investing Activities:
Proceeds from the Sale of Available-for-Sale Securities 128 - -
Investment in Available-for-Sale Securities - - (147)
Capital Expenditures, Cost of Removal and Salvage (41,412) (36,253) (32,158)
--------- --------- ---------
Net Cash Used in Investing Activities (41,284) (36,253) (32,305)
--------- --------- ---------
Cash Flows from Financing Activities:
Net (Repayments of) Borrowings from Lines of Credit (2,550) 21,650 (9,500)
Principal Repayments of Long-Term Debt (8,307) (9,845) (8,902)
Dividends on Common Stock (14,771) (13,873) (13,262)
Repurchase of Preferred Stock (90) (90) (110)
Proceeds from Sale of Long-Term Debt 17,000 35,000 25,000
Proceeds from Sale of Common Stock 16,838 6,993 5,182
--------- --------- ---------
Net Cash Provided by (Used In) Financing Activities 8,120 39,835 (1,592)
--------- --------- ---------
Net Increase (Decrease) in Cash and Cash Equivalents 4,273 (2,251) 4,684
Cash and Cash Equivalents at Beginning of Year 9,935 12,186 7,502
--------- --------- ---------
Cash and Cash Equivalents at End of Year $ 14,208 $ 9,935 $ 12,186
========= ========= =========
Supplemental Disclosures of Cash Flow Information
Cash paid during the year for:
Interest (Net of Amounts Applicable to LGAC
Overcollections and Amounts Capitalized) $ 16,941 $ 14,086 $ 13,490
Income Taxes (Net of Refunds) $ 4,660 $ 4,728 $ 3,463
Supplemental Disclosures of Noncash Investing and Financing Activities:
During 1994 and 1993, capital lease obligations of $1,313 and $457, respectively, were incurred by
R & T Group, Inc. in connection with its Master Lease Agreement for various items of construction equipment.
The accompanying schedule and footnotes are an integral part of the financial statements.
- 11 -
Consolidated Balance Sheet South Jersey Industries, Inc. and Subsidiaries
(In Thousands) December 31,
-----------------------
Assets 1994 1993
Property, Plant and Equipment: (Note 1)
Utility Plant, at original cost $ 504,259 $ 471,549
Accumulated Depreciation (136,112) (126,722)
Gas Plant Acquisition Adjustment - Net 2,150 2,225
Nonutility Property and Equipment, at cost 63,613 59,106
Accumulated Depreciation and Depletion (31,810) (30,065)
---------- ----------
Property, Plant and Equipment - Net 402,100 376,093
---------- ----------
Available-for-Sale Securities (Note 5) 830 917
---------- ----------
Current Assets:
Cash and Cash Equivalents (Notes 1 & 7) 14,208 9,935
Accounts Receivable 35,213 31,026
Unbilled Revenues (Note 1) 15,154 18,502
Provision for Uncollectibles (991) (1,026)
Natural Gas in Storage, average cost 17,082 11,495
Materials and Supplies, average cost 11,995 11,489
Prepayments and Other 2,909 2,771
---------- ----------
Total Current Assets 95,570 84,192
---------- ----------
Accounts Receivable - Merchandise 2,015 2,221
---------- ----------
Deferred Debits: (Note 1)
Environmental Remediation Costs: (Note 9)
Expended - Net 13,361 14,355
Liability for Future Expenditures 17,026 11,868
Gross Receipts & Franchise Taxes 5,268 5,668
Income Taxes - Flowthrough Depreciation (Notes 1 & 4) 16,933 17,296
Deferred Fuel Costs - Net - 5,345
Deferred Postretirement Benefit Costs (Note 1) 6,567 3,902
Other 11,425 9,921
---------- ----------
Total Deferred Debits 70,580 68,355
---------- ----------
Total Assets $ 571,095 $ 531,778
========== ==========
Capitalization and Liabilities
Capitalization: (see Schedule)
Common Equity (Notes 6 & 8) $ 154,972 $ 140,526
Redeemable Cumulative Preferred Stock (Note 3) 2,494 2,584
Long-Term Debt 153,086 144,305
---------- ----------
Total Capitalization 310,552 287,415
---------- ----------
Current Liabilities:
Notes Payable (Note 7) 80,200 82,750
Current Maturities of Long-Term Debt 9,455 8,230
Accounts Payable 35,237 27,814
Customer Deposits 5,895 5,781
Gross Receipts & Franchise Taxes Accrued (Note 1) 196 13,472
Environmental Remediation Costs (Note 9) 5,175 3,624
Interest Accrued and Other Current Liabilities 12,029 9,707
---------- ----------
Total Current Liabilities 148,187 151,378
---------- ----------
Deferred Credits and Other Non-Current Liabilities: (Note 1)
Accumulated Deferred Income Taxes - Net (Note 4) 63,425 63,648
Investment Tax Credits 6,807 7,428
Deferred Revenues:
Customer Refund Obligation 3,500 -
Other Deferred Revenues 9,338 -
Pension and Other Postretirement Benefits 10,329 6,602
Environmental Remediation Costs (Note 9) 11,902 8,260
Other 7,055 7,047
---------- ----------
Total Deferred Credits and Other Non-Current Liabilities 112,356 92,985
---------- ----------
Commitments and Contingencies (Note 9)
Total Capitalization and Liabilities $ 571,095 $ 531,778
========== ==========
The accompanying schedule and footnotes are an integral part of the financial statements.
Schedule of Consolidated Capitalization South Jersey Industries, Inc.
and Subsidiaries
(In Thousands Except for Share Data) December 31,
---------------------
1994 1993
--------- ---------
Common Equity (Notes 6 & 8)
Common Stock: Par Value $1.25 per share; Authorized 20,000,000 shares;
Outstanding Shares: 10,715,211 (1994) and 9,804,576 (1993)
Balance at Beginning of Year $ 12,256 $ 11,872
Dividend Reinvestment and Stock Purchase Plan & Employee Stock Option Plan 1,138 384
--------- ---------
Balance at End of Year 13,394 12,256
Premium on Common Stock 110,081 94,381
Retained Earnings 31,497 33,889
--------- ---------
Total Common Equity 154,972 140,526
--------- ---------
Redeemable Cumulative Preferred Stock (Note 3)
South Jersey Gas Company, Par Value $100 per share
Authorized Shares: 50,004 (1994) and 50,904 (1993)
Outstanding Shares: Series A, 4.70% - 5,700 (1994) and 6,600 (1993) 570 660
Series B, 8.00% - 19,242 1,924 1,924
--------- ---------
Total Redeemable Cumulative Preferred Stock 2,494 2,584
--------- ---------
Long-Term Debt (A)
South Jersey Gas Company:
First Mortgage Bonds (B):
7 7/8% Series due 1994 - 2,986
8% Series due 1995 71 205
8 1/4% Series due 1996 2,089 2,180
8 1/4% Series due 1998 3,397 3,534
9.2% Series due 1998 4,889 7,111
8.19% Series due 2007 25,000 25,000
10 1/4% Series due 2008 25,000 25,000
9% Series due 2010 35,000 35,000
6.95% Series due 2013 35,000 35,000
Term Note, 8.47% due 2001 (C) 15,000 -
Energy & Minerals, Inc.:
Senior Notes, 9.66% due 2000 (D) 5,250 6,125
Direct Reduction Note, 9.1% due 1994 - 319
Note, 7% due 2001 (E) 2,000 -
R & T Group, Inc.:
Senior Notes, 9.66% due 2000 (D) 8,250 9,625
Master Lease Agreement 1,595 450
--------- ---------
Total Long-Term Debt Outstanding 162,541 152,535
Less Current Maturities 9,455 8,230
--------- ---------
Total Long-Term Debt 153,086 144,305
--------- ---------
Total Capitalization $310,552 $287,415
========= =========
(A) The long-term debt maturities and sinking fund requirements for the succeeding five years are as follows:
1995, $9,455,295; 1996, $11,376,305; 1997, $10,141,520; 1998, $14,844,541; and 1999, $11,885,851.
(B) SJG's First Mortgage dated October 1, 1947, as supplemented, securing the First Mortgage Bonds constitutes
a direct first mortgage lien on substantially all utility plant.
(C) On December 2, 1994, SJG entered into an unsecured Long-Term Debt Agreement consisting of a $15,000,000 term
loan, 8.47% due 2001 and a $5,000,000 revolving credit facility.
(D) These notes are the subject of a support agreement by SJI.
(E) On October 13, 1994, EMI entered into a long-term financing agreement for $2,000,000, 7% due 2001, as
part of an acquisition of sand reserves and various construction equipment.
Notes to Consolidated Financial Statements
1. Summary of Significant Accounting Practices:
Consolidation - The consolidated financial statements include the accounts of
South Jersey Industries, Inc. (the Company) and all of its subsidiaries. Certain
intercompany transactions, amounting to approximately $6.2 million, $6.1 million
and $6.8 million, respectively, in 1994, 1993 and 1992, were not required to be
eliminated. Such amounts were capitalized to utility plant or environmental
remediation costs on the South Jersey Gas Company (SJG) books of account and are
recoverable by SJG through the rate-making process (See Note 9). All other
significant intercompany accounts and transactions have been eliminated. Certain
reclassifications have been made of previously reported amounts to conform with
classifications used in the current year.
Regulation - The Company's principal subsidiary, SJG, is subject to the rules
and regulations of the New Jersey Board of Public Utilities (BPU) and maintains
its accounts in accordance with the prescribed Uniform System of Accounts of
that Board.
On December 14, 1994, the BPU granted SJG a rate increase of $12.1 million based
on an overall rate of return of 9.51 percent, including an 11.5 percent return
on equity. Nearly the entire amount of the increase will come from the
residential, commercial and small industrial customer classes. In addition, SJG
is allowed to retain the first $4.0 million of pretax interruptible and off-
system margins combined and 20 percent of such margins above that level.
In addition to the rate increase, the BPU approved a change in SJG's Temperature
Adjustment Clause (TAC), a mechanism designed to reduce the impact of extreme
fluctuations in temperature on SJG and its customers, which will require colder
weather before an adjustment is required to customer billings. The BPU order
also provides partial recovery of the costs associated with SJG's adoption of
FASB No. 106 and the continued deferral of all unrecovered costs. The recovery
of these additional costs will be addressed in SJG's next rate petition and it
is expected that recovery will be included in future base rates. In addition,
SJG is recovering from ratepayers the carrying costs associated with the
accelerated gross receipts and franchise tax payment in April 1994, which
resulted from new legislation adopted in 1991. As part of the new tariff changes
approved, SJG also implemented new tariffs which will give large industrial and
commercial customers more opportunities to manage their own gas supplies. As
with past flexible rates, these changes will not have a negative impact on SJG's
net income.
In December 1994, the BPU ordered a $3.5 million customer refund which resulted
in a $2.3 million (net of taxes), or $0.22 per share, unfavorable impact on 1994
consolidated net income. This refund was part of a global settlement which
expedited the resolution of a series of matters pending before the BPU including
the rate case discussed above and SJG's 1993-1994 Levelized Gas Adjustment
Clause (LGAC). Although the BPU's decision had no finding of fault or
imprudency, SJG accepted this settlement to avoid exposure and protracted
litigation cost. Customers will receive the $3.5 million refund through the
1994-1995 LGAC which will be placed in effect upon the completion of that
separately pending proceeding.
Utility Revenues - SJG, in accordance with industry practices, bills most of its
customers on a monthly cycle basis, although certain large industrial customers
are billed at or near the end of each month. An accrual is made to recognize the
unbilled revenues from the date of the last bill to the end of period.
In accordance with a BPU order, SJG is allowed to recover the excess cost of gas
sold over the cost thereof included in the base rates through the LGAC. Such
collection is made on a forecasted basis, after a hearing, upon BPU order.
Under- and over-recoveries of gas costs are deferred and included in the
determination of the following year's LGAC. Interest is paid on overcollected
LGAC balances based on SJG's return on rate base as determined in its base rate
proceedings.
Property, Plant & Equipment - Utility plant is stated at original cost as
defined for regulatory purposes; nonutility plant is stated at cost. The cost of
additions, replacements and renewals of units of property is charged to the
appropriate plant account.
Depreciation and Amortization - Depreciation of gas utility plant is provided on
a straight-line basis over the estimated remaining lives of the various classes
of property. These estimates are periodically reviewed and adjustments are made
as required after approval by the BPU. The composite rate per annum for all
depreciable utility property was approximately 2.8 percent in 1994, 1993 and
1992. Generally, with the exception of extraordinary retirements, accumulated
depreciation is charged with the cost of depreciable utility property retired,
together with removal costs less salvage. The gas plant acquisition adjustment,
in the initial amount of approximately $3.0 million, is being amortized on a
straight-line basis over a 40-year period. The unamortized balance amounting to
$2.2 million at December 31, 1994, is not included in rate base. Depreciation of
nonutility property is computed generally on a straight-line basis over the
estimated useful lives of the property, ranging up to 45 years. Any gain or loss
realized upon the disposition of nonutility property is recognized in
determining net income.
Federal Income and Other Taxes - Deferred Federal Income Taxes are provided for
all significant temporary differences between book and taxable income. In
February 1992, the Financial Accounting Standards Board issued FASB No. 109
entitled "Accounting for Income Taxes". The Company adopted this statement in
1993. Its adoption resulted in the recording on the balance sheet of additional
assets and liabilities, with the difference being credited to earnings as a
cumulative effect of a change in accounting principle (See Note 4). The primary
asset created as a result of adopting FASB No. 109 was income taxes -
flowthrough depreciation in the amount of $17.6 million as of January 1, 1993.
This amount represented the recording of the net tax effect of excess
liberalized depreciation over book depreciation on utility plant because of
temporary differences for which, prior to FASB No. 109, deferred taxes had not
previously been provided. These tax benefits were previously flowed through in
rates and, as a result of positions taken in the 1994 rate case, the
amortization of the asset will be recoverable through rates over an 18-year
period beginning December 1994. The cumulative effect of this change, as of
January 1, 1993, was to increase income by $382,000, or $0.04 per share.
Restatement of years prior to 1993 for the effect of FASB No. 109 would not have
materially changed previously reported earnings.
The Investment Tax Credits (ITC) attributable to SJG were deferred and continue
to be amortized at the annual rate of 3 percent, which approximates the life of
the related assets.
Effective March 1, 1978, SJG began accruing Gross Receipts and Franchise Taxes
(GRAFT) on current revenues, the basis for such taxes through 1991, rather than
on the previous basis of taxes paid. The one-time increase resulting from this
change has been deferred and is being amortized on a straight-line basis to
operations over a 30-year period. In June 1991, new GRAFT legislation was
adopted in New Jersey which accelerated the payments of such taxes to a current
year basis, rather than the previous basis of prior year results, by 1994. The
new legislation also imposes the tax on the basis of the volume of gas sold
beginning in 1992.
Pensions - The Company and its subsidiaries have several defined benefit
retirement plans that provide annuity payments to substantially all full-time
regular employees upon retirement. Approximately 78 percent of the plans' assets
are invested in securities which, under their terms, provide for fixed income
and a return of principal. The remaining assets
- 14 -
Notes to Consolidated Financial Statements, Continued
of the plans are invested in professionally managed common stock portfolios. The
companies pay the entire cost of the plans and the total provisions made for
such plans in 1994, 1993 and 1992 aggregated approximately $2.2 million, $1.8
million and $1.6 million, respectively, including amounts for amortization of
the cost of past service benefits over a period of approximately 30 years. Net
periodic pension cost for 1994, 1993 and 1992 included the following components:
Thousands of Dollars
1994 1993 1992
------ ------ ------
Service cost - benefits earned during the period $1,738 $1,351 $1,189
Interest cost on projected benefit obligation 2,932 2,723 2,552
Actual return on plan assets (1,169) (3,184) (2,444)
Net amortization and deferral (1,292) 903 281
------ ------ ------
Net periodic pension cost $2,209 $1,793 $1,578
Assumptions as of December 31 were:
Discount rate 7.25%-7.50% 7.25% 8.0%-8.5%
Rate of increase in compensation levels 4.6% 4.6% 4.8%
Expected long-term rate of return on assets 8.5% 8.5%-9.5% 8.5%-9.5%
The following table sets forth the plans' funded status at December 31, 1994 and
1993:
Actuarial present value of benefit obligations:
Thousands of Dollars
1994 1993
-------- --------
Vested benefit obligation $(34,018) $(32,337)
-------- --------
Accumulated benefit obligation $(34,167) $(32,550)
-------- --------
Projected benefit obligation $(43,415) $(40,964)
Plan assets at fair value 34,003 32,976
-------- --------
Projected benefit obligation in excess of plan assets (9,412) (7,988)
Unrecognized net loss 3,544 2,871
Prior service cost not yet recognized
in net periodic pension cost 2,725 2,633
Unrecognized net obligation at January 1 1,013 986
-------- --------
Pension liability recognized in
the consolidated balance sheet $ (2,130) $ (1,498)
======== ========
Postretirement Benefits Other Than Pensions - The Company and its subsidiaries
provide postretirement health care and life insurance benefits to substantially
all retired employees. Effective January 1, 1993, the Company adopted FASB No.
106 entitled "Employers' Accounting for Postretirement Benefits Other Than
Pensions". This statement requires the Company to accrue the estimated cost of
retiree benefit payments during the years the employee provides services. The
Company previously expensed the cost of these benefits, which are principally
health care, on a pay-as-you-go basis. The Company has elected to recognize the
unfunded transition obligation over a period of 20 years.
The majority of the Company's costs apply to its utility subsidiary, SJG, which
has previously recovered these costs on a pay-as-you-go basis through its rates.
As part of SJG's 1994 base rate case settlement, SJG was granted full recovery
of the current service cost component of the annual cost in addition to
continued recovery of pay-as-you-go costs. The BPU also approved recovery of
previously deferred 1993 and 1994 service costs totaling $2.0 million over a 5-
year period beginning December 1 994. SJG is also authorized to continue
recording a regulatory asset for the amount by which the cost exceeds the
current level recovered in rates. The recovery of this regulatory asset, which
amounted to approximately $4.6 million at December 31, 1994, will be addressed
in SJG's next base rate case proceeding and it is expected that the recovery
will be included in base rates.
The following table sets forth the life and health care plans' funded status at
December 31, 1994 and 1993. Actuarial present value of accumulated
postretirement benefit obligations:
Thousands of Dollars
1994 1993
-------- --------
Retirees $ (6,364) $ (9,260)
Other active plan participants (16,813) (24,953)
-------- --------
Accumulated postretirement benefit obligation (23,177) (34,213)
Fair value of plan assets - -
-------- --------
Accumulated postretirement benefit
obligation in excess of plan assets (23,177) (34,213)
Unrecognized net (gain) loss (673) 3,745
Unrecognized transition obligation 16,931 26,429
-------- --------
Postretirement benefit liability recognized
in the consolidated balance sheet $ (6,919) $ (4,039)
======== ========
Net postretirement benefit cost for 1994 and 1993 consisted of the following
components:
Thousands of Dollars
1994 1993
-------- --------
Service cost - benefits earned during the period $ 898 $ 1,144
Actual return on plan assets - -
Interest cost on accumulated
postretirement benefit obligation 1,594 2,196
Amortization of transition obligation 941 1,391
Unrecognized net loss 78 -
-------- --------
Net postretirement benefit cost $ 3,511 $ 4,731
======== ========
A majority of the postretirement benefit cost has been capitalized and the
amount of such cost expensed in 1994, 1993 and 1992 is not material.
The decrease in the accumulated postretirement benefit obligation, unrecognized
transition obligation and net postretirement benefit cost for 1994 resulted
primarily from a decrease in the assumed health care cost trend rates and an
increase in the assumed discount rate used in determining the accumulated
postretirement benefit obligation as of December 31, 1994.
The assumed health care cost trend rates used in measuring the accumulated
postretirement benefit obligations as of December 31, 1994 and 1993 are as
follows: Medical and Drug - Ranged from 7.7 percent to 10.95 percent in 1994,
grading to 5.75 percent in 2007; and 11.42 percent in 1993, grading to 6.75
percent in 2007. Dental - 7.97 percent in 1994, grading to 5.75 percent in 2002;
and 8.10 percent in 1993, grading to 6.75 percent in 2002. If the health care
cost trend rate assumptions were increased by 1 percent, the accumulated
postretirement benefit obligation as of December 31, 1994, would be increased by
17.5 percent. The effect of this change on the sum of the service cost and
interest cost would be an increase of 22.3 percent. The assumed discount rates
used in determining the accumulated postretirement benefit obligation as of
December 31, 1994 and 1993, were 7.50 percent and 7.25 percent, respectively.
FASB No. 112, "Employers' Accounting for Postemployment Benefits" became
effective in 1994. This statement requires the Company to accrue the estimated
cost of benefits provided by an employer to former or inactive employees after
employment, but before retirement, during the years the employee provides
services. The adoption of this statement did not have a material effect on the
results of operations or financial position of the Company.
Statements of Cash Flows - For purposes of reporting cash flows, all highly
liquid investments with original maturities of three months or less are
considered cash equivalents.
- 15 -
Notes to Consolidated Financial Statements, Continued
2. Segments of Business:
Information about the Company's operations in different industry segments is
presented below:
Thousands of Dollars
1994 1993 1992
-------- -------- --------
Operating Revenues:
Gas Utility Operations $311,459 $277,581 $255,258
Sand Mining Operations 30,651 28,435 27,149
Other Industries 45,647 37,250 34,860
-------- -------- -------
Total 387,757 343,266 317,267
Intersegment Sales (13,798) (9,325) (601)
-------- -------- --------
Consolidated Operating Revenues $373,959 $333,941 $316,666
======== ======== ========
Operating Income:
Gas Utility Operations $ 5,109 $ 37,388 $ 37,408
Sand Mining Operations 3,844 2,517 2,442
Other Industries 953 204 241
-------- -------- --------
Total 39,906 40,109 40,091
Federal Income Taxes (6,809) (7,055) (7,092)
General Corporate Expense (2,232) (2,308) (1,829)
-------- -------- --------
Total Operating Income $ 30,865 $ 30,746 $ 31,170
======== ======== ========
Depreciation, Depletion and Amortization:
Gas Utility Operations $ 14,741 $ 13,881 $ 12,703
Sand Mining Operations 2,756 2,713 2,622
Other Industries 1,645 1,610 1,709
-------- -------- --------
Total $ 19,142 $ 18,204 $ 17,034
======== ======== ========
Property Additions:
Gas Utility Operations $ 35,633 $ 33,260 $ 29,663
Sand Mining Operations 4,231 1,732 1,315
Other Industries 1,062 671 736
-------- -------- --------
Total $ 40,926 $ 35,663 $ 31,714
======== ======== ========
Identifiable Assets:
Gas Utility Operations $509,828 $479,204 $416,177
Sand Mining Operations 34,049 30,841 30,903
Other Industries 18,299 15,727 12,483
-------- -------- --------
Total 562,176 525,772 459,563
Corporate Assets 19,270 20,495 25,219
Intersegment Assets (10,351) (14,489) (13,508)
-------- -------- --------
Consolidated Identifiable Assets $571,095 $531,778 $471,274
======== ======== ========
Gas utility operations consist primarily of natural gas distribution to
residential, commercial and industrial customers. Sand mining operations consist
primarily of mining and processing sand, gravel and clay. Other industries
include the utility construction, environmental services and general
contracting, and the natural gas acquisition and transportation service company.
Total operating revenues by industry segment include both sales to unaffiliated
customers, as reported in the Company's statements of consolidated income, and
intercompany sales, which are accounted for generally at the fair market value
of the goods or services rendered.
Operating income is total revenues less operating expenses, Federal Income
Taxes, and general corporate expenses, as shown on the statements of
consolidated income.
Identifiable assets are those assets that are used in each segment of the
Company's operations. Corporate assets are principally cash and cash items, and
land, buildings and equipment held for corporate use.
3. Redeemable Cumulative Preferred Stock:
Purchase funds for the Cumulative Preferred Stock, Series A and Series B,
require SJG to offer annually to purchase 900 and 1,500 shares, respectively, at
par value thereof, plus accrued dividends.
The preferred stock dividend requirements of SJG amounting to approximately $0.2
million for the years 1994, 1993 and 1992 have been included in the Company's
statements of consolidated income under the caption "Interest and Other
Charges".
If preferred stock dividends are in arrears, no dividends may be declared or
paid, or other distribution made on the SJG Common Stock; and, if four or more
quarterly dividends are in arrears, the Preferred Shareholders may elect a
majority of the SJG directors.
The Company has 2,500,000 authorized shares of Preference Stock, no par value,
none of which has been issued.
4. Federal Income Taxes:
Income tax expense applicable to operations is lower than the tax that would
have resulted by applying the statutory rate to income from operations before
Federal Income Tax for 1994, 1993 and 1992. The reasons for the differences are
as follows:
Thousands of Dollars
1994 1993 1992
------ ------ ------
Tax at Statutory Rate $7,581 $7,775 $7,622
Increase (Decrease) Resulting from:
Additional Statutory Depletion Allowance (606) (405) (365)
Amortization of ITC (377) (389) (389)
BRC Order - Flow back of Excess
Deferred Taxes (55) (67) (67)
Other - Net 266 141 291
------ ------ ------
Federal Income Taxes as reported
on the Statements of
Consolidated Income 6,809 7,055 7,092
------ ------ ------
Tax on Customer Refund Obligation (1,225) - -
------ ------ ------
Net Federal Income Taxes $5,584 $7,055 $7,092
====== ====== ======
The provision for Federal Income Taxes is composed of the following:
Thousands of Dollars
1994 1993 1992
------ ------ ------
Current $7,737 $2,390 $3,821
------ ------ ------
Deferred:
Repair Allowance Permitted Under the Class
Life Asset Depreciation Range System - 34 (65)
Excess of Tax Depreciation Over
Book Depreciation - Net 3,500 2,870 3,278
Deferred Fuel Costs (5,536) 5,536 -
Environmental Remediation Costs - Net (207) (287) 340
Amortization of Gross Receipts Taxes (136) (136) (136)
Advances for Construction (7) 19 36
BRC Order - Flow Back of Excess
Deferred Taxes (55) (67) (67)
Premium on Bond Redemption (59) (58) (10)
Alternative Minimum Tax 1,525 (2,042) (510)
Other - Net 424 (815) 794
------ ------ ------
Total Deferred (551) 5,054 3,660
------ ------ ------
ITC (377) (389) (389)
------ ------ ------
Federal Income Taxes as reported
on the Statements of
Consolidated Income 6,809 7,055 7,092
------ ------ ------
Tax on Customer Refund Obligation (1,225) - -
------ ------ ------
Net Federal Income Taxes $5,584 $7,055 $7,092
====== ====== ======
- 16 -
Notes to Consolidated Financial Statements, Continued
Deferred income taxes reflect the net tax effect of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components of
the Company's net deferred tax liability at December 31, 1994 and 1993 are as
follows:
Thousands of Dollars
1994 1993
------- -------
Deferred Tax Liabilities:
Tax Depreciation Over Book Depreciation $55,195 $53,069
Difference Between Book and Tax Basis of Property 4,417 3,285
Deferred Fuel Costs - 5,536
Environmental Remediation Costs 4,539 4,773
Excess Protected 3,671 3,726
Gross Receipts Taxes 1,791 1,927
Other 2,407 1,138
------- -------
Total Deferred Tax Liabilities 72,020 73,454
------- -------
Deferred Tax Assets:
Alternative Minimum Tax 5,089 5,980
ITC Basis Gross Up 3,506 3,826
------- -------
Total Deferred Tax Assets 8,595 9,806
------- -------
Net Deferred Tax Liability $63,425 $63,648
======= =======
The IRS completed examinations of the Company's consolidated Federal Income Tax
returns for the years ended 1982 through 1988. In 1994, the Company settled
these open examinations and the adjustments resulting from these audits did not
have a material effect on the Company's financial position.
5. Financial Instruments:
Long-Term Debt - The fair values of the Company's long-term debt, including
current maturities, as of December 31, 1994 and 1993, are estimated to be $160.9
million and $165.7 million, respectively (carrying amounts $162.5 million and
$152.5 million, respectively) and are estimated based on the interest rates
available to the Company at each respective year end for debt with similar terms
and remaining maturities. The Company retires higher cost debt whenever it is
cost effective to do so within the constraints of the respective debt covenants.
Other Financial Instruments - The carrying amounts of the Company's other
financial instruments are a reasonable estimate of their fair values at December
31, 1994 and 1993.
In 1994, the Company also adopted FASB No. 115, "Accounting for Certain
Investments in Debt and Equity Securities", which requires the Company, among
other things, to account for certain of its investments at fair market value.
Adoption of this statement did not have a material effect on the results of
operations or financial position of the Company.
6. Common Stock:
The Company has 20,000,000 shares of Common Stock authorized of which the
following shares were issued and outstanding:
1994 1993 1992
---------- --------- ---------
Beginning of Year 9,804,576 9,497,700 9,238,519
New Issues During Year:
Dividend Reinvestment and
Stock Purchase Plan 899,649 281,295 241,874
Employees' Stock Ownership Plan 7,926 4,941 5,577
Stock Option & Stock Appreciation
Rights Plan 3,060 20,640 11,730
---------- --------- ---------
End of Year 10,715,211 9,804,576 9,497,700
========== ========= =========
The average shares of Common Stock outstanding for 1994, 1993, and 1992 were
10,257,848, 9,680,035 and 9,393,652, respectively.
The par value ($1.25 per share) of the stock issued in 1994, 1993 and 1992 has
been credited to common stock and the net excess over par value of approximately
$15.7 million, $6.6 million and $9.6 million, respectively, has been credited to
Premium on Common Stock.
On January 22, 1993, the Company's Board of Directors declared a 2 percent
common stock dividend, payable on March 31, 1993, to shareholders of record at
the close of business on March 10, 1993. Accordingly, the Company's financial
statements and related per share amounts were restated in 1993.
The Company has a Stock Option and Stock Appreciation Rights Plan under which
not more than 306,000 shares in the aggregate may be issued to officers and
other key employees of the Company and its subsidiaries. No options or stock
appreciation rights may be granted under the Plan after January 23, 1997. At
December 31, 1994 and 1993, the Company had 50,560 and 53,620 options
outstanding, respectively, exercisable at prices from $17.16 to $24.69 per
share. During 1994, 1993 and 1992, 3,060, 20,640 and 11,730 options were
exercised, respectively, at prices ranging from $17.16 to $17.89 per share. On
September 16, 1993, the Company granted options on 10,000 shares exercisable at
$24.69. No options were granted in 1994 or 1992. No stock appreciation rights
have been issued under the plan. The stock options outstanding at December 31,
1994, 1993, and 1992 did not have a material effect on the earnings per share
calculations. The Company also has a Dividend Reinvestment and Stock Purchase
Plan (DRP) and Employees' Stock Ownership Plan (ESOP). As of December 31, 1994,
921,643 and 52,696 shares of authorized but unissued Common Stock were reserved
for future issuance to the DRP and ESOP, respectively.
7. Unused Lines of Credit and Compensating Balances:
Unused lines of credit available at December 31, 1994, were approximately $102.8
million. Borrowings under these lines of credit are at market rates which
approximated 6.0 and 3.5 percent at December 31, 1994 and 1993, respectively.
Demand deposits are maintained with lending banks on an informal basis and do
not constitute compensating balances.
8. Retained Earnings:
There are certain restrictions under various loan agreements as to the amount of
cash dividends or other distributions that may be paid on the Common Stock of
certain subsidiaries. The Company's aggregate equity in its subsidiaries'
retained earnings that are free of these restrictions was approximately $31.5
million at December 31, 1994.
9. Commitments and Contingencies:
The estimated cost of construction and environmental remediation programs of the
Company and its subsidiaries for the year 1995 aggregates $35.7 million and, in
connection therewith, certain commitments have been made.
In May 1990, the BPU approved the stipulation entered into by the parties which
allowed SJG to collect 100 percent of its gas costs which reflect producer-
supplier take-or-pay costs from ratepayers. All costs billed by pipeline
suppliers on a volumetric basis were passed through on a current basis through
July 1993. The majority of the costs billed on a fixed basis have been paid over
a 3-year period, but are being recovered from ratepayers over a 6-year period
without interest. This recovery mechanism started in November 1990. During 1993,
and 1992, the amount of these costs which have been flowed through to SJG, net
of refunds, was approximately $2.1 million and $5.4 million, respectively. SJG
anticipates being billed additional fixed costs of approximately $1.1 million
under this stipulation; however, the order allowing for such cost recovery by
one of SJG's pipelines has been remanded to the Federal Energy Regulatory
Commission (FERC) for further action. The amount
- 17 -
Notes to Consolidated Financial Statements, Continued
of these additional fixed costs which have been flowed through to SJG, net of
refunds, was approximately $0.3 million during 1994.
SJG, in the normal course of conducting business, has entered into long-term
contracts for the supply of natural gas, firm transportation, and long-term firm
gas storage service. The earliest expiration of any of the gas supply contracts
is 1999. All of the transportation and storage service agreements between SJG
and its interstate pipeline suppliers are provided under tariffs on file with,
and approved by, the FERC. SJG's cumulative obligations for demand charges paid
to its suppliers for all of these services is approximately $4.4 million per
month which is recovered on a current basis through the LGAC.
During 1992, the FERC issued a series of orders requiring all interstate
pipelines to restructure their services. Included in these orders is FERC Order
No. 636 which required pipelines to separate their sales and transportation
services and change their rate design. Also, as a result of these orders, SJG is
incurring certain transition costs that are associated with its pipeline
suppliers' unbundling their services. Since not all suppliers have yet
established the basis or the method of billing transition costs, SJG's total
liability cannot be determined. A liability of approximately $0.7 million is
recorded as of December 31, 1994, representing identified transition costs being
billed to SJG by a pipeline over a 2-year period which began in April 1994. SJG
expects to recover such costs resulting from these orders through its LGAC.
SJI and its subsidiaries have responded to requests from the U.S. Environmental
Protection Agency and the New Jersey Department of Environmental Protection for
information regarding several sites at which SJG or predecessor companies
operated gas manufacturing plants or a nonutility subsidiary previously operated
a fuel oil business. Manufactured gas operations were terminated at all SJG
sites more than 30 years ago. The Company is currently engaged in environmental
remediation activities related to some of these sites and, in connection
therewith, certain costs have been incurred and recorded.
Through December 31, 1994, the Company has recorded environmental remediation
costs of $37.2 million, of which $20.1 million has been expended. Management's
estimate of the remaining liability of approximately $17.1 million is reflected
on the consolidated balance sheet under the captions "Current Liabilities" and
"Deferred Credits and Other Non-Current Liabilities". Such amounts have not been
adjusted for future insurance recoveries, which management is pursuing.
Insurance recoveries, amounting to $1.5 million, were received by SJG in July
1994 and an additional $1.5 million was received in January 1995. These proceeds
were first used to offset legal fees incurred in connection with such recoveries
and the excess was used to reduce the balance of deferred environmental
remediation costs. Recorded amounts include estimated costs to be incurred
through 1997 based on projected investigation and remediation work plans using
existing technologies. Estimates beyond this time cannot be made on a reliable
basis due to changing technology, government regulations and site specific
requirements and, therefore, have not been recorded; however, the total costs to
be incurred after 1997 may be substantial. The major portion of such costs
relate to the remediation of former gas manufacturing sites of SJG, which has
recorded and expended amounts of $36.0 million and $19.5 million, respectively,
through December 31, 1994. SJG has established a regulatory asset for these
costs and is recovering its costs as expended over 7-year amortization periods,
as authorized by the BPU. SJG has recovered $4.7 million through rates as of
December 31, 1994. The balance of such costs and payments, amounting to $1.2
million and $0.6 million, respectively, relates to other environmental related
costs including nonutility sites previously used in fuel oil operations. As of
December 31, 1994, the $0.6 million relating to nonutility sites has either been
expensed or capitalized to nonutility property on the books of the applicable
subsidiary.
As part of SJG's rate increase effective December 14, 1994 (See Note 1), a
capital structure test was implemented. The parties stipulated that by February
28, 1995, SJG's common equity balance will increase by $6.0 million as a result
of an equity infusion; and its long-term debt balance will increase by $45.0
million as a result of new debt issues. SJG has already issued the $45.0 million
of long-term debt (See Note 10) and met this portion of the requirement. The
common equity component of this test is still under review. Since the approved
overall rate of return contained in the settlement is based upon these projected
increases in capital levels, a mechanism was included that would result in a
reduction to customers' rates through the immediately following LGAC to the
extent the fundings are not in place. SJG anticipates that these capital levels
will be reached by February 28, 1995; however, not achieving such levels will
not have a material effect on the financial position of the Company.
10: Subsequent Event:
On January 31, 1995, SJG sold privately $30.0 million of Unsecured Debenture
Notes, 8.6% due February 1, 2010.
Management's Responsibilities for Financial Statements
The management of South Jersey Industries, Inc. is responsible for the integrity
and objectivity of the financial statements and related disclosures of the
Company. These statements and disclosures have been prepared using management's
best judgment and are in conformity with generally accepted accounting
principles.
The Board of Directors, acting through its Audit Committee, which is composed of
outside directors, oversees management's responsibilities for accounting,
internal control and financial reporting. The Audit Committee meets periodically
with management and the internal and independent auditors to discuss auditing
and financial matters, and to assure that each is carrying out its
responsibilities. The internal auditors and independent auditors have access to
the members of the Audit Committee at any time.
- 18 -
Independent Auditor's Report
To the Shareholders and
Board of Directors of
South Jersey Industries, Inc.:
We have audited the consolidated balance sheet of South Jersey Industries, Inc.
and subsidiaries as of December 31, 1994 and 1993, and the related statements of
consolidated income, consolidated retained earnings and consolidated cash flows
for each of the three years in the period ended December 31, 1994. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of South Jersey Industries, Inc. and
subsidiaries as of December 31, 1994 and 1993, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1994, in conformity with generally accepted accounting principles.
As discussed in Notes 1 and 4 to the consolidated financial statements, the
Company changed its method of accounting for income taxes effective January 1,
1993, to conform with Statement of Financial Accounting Standards No. 109 and
its method of accounting for postretirement benefits other than pensions
effective January 1, 1993, to conform with Statement of Financial Accounting
Standards No. 106.
Deloitte & Touche, LLP
Philadelphia, Pennsylvania
February 15, 1995
Management's Discussion and Analysis of Results of Operations and Financial
Condition
Results of Operations - 1994 Compared with 1993 - Utility revenues increased in
1994 due to increased volumes of gas sold and transported. In 1994, 74.0 billion
cubic feet (Bcf) of natural gas was sold and transported compared with 59.1 Bcf
in 1993. The major portion of the increase in volumes sold and transported in
1994 was due to wholesale marketing activity (off-system sales). The wholesale
sale of natural gas outside of SJG's traditional service area is now permitted
as a result of federal action. Such sales are made in a highly competitive
market environment and are subject to modest profit margins, thereby impacting
the gross margin on utility sales (Utility Revenues less Gas Purchased for
Resale). Residential and commercial sales also increased; however, such
increases were partially offset by lower firm industrial and cogeneration sales,
and lower interruptible sales. SJG added approximately 6,300 customers in 1994
compared with 5,900 customers in 1993. The increased revenues in 1994 were
partially offset by temperature adjustment clause credits to be passed back to
customers. This clause insulates SJG from the earnings impact of extremely warm
weather and insulates customers from the effects of extremely cold weather. A
4.4 percent increase in utility revenue was approved by the BPU, effective
December 14, 1994. As part of the approved tariff changes, larger industrial and
commercial customers have been given more flexibility to manage their gas
supplies. This is being done through rates for the delivery of gas which will
not negatively impact SJG's net income. Nonutility revenues increased in 1994
due to increases in sales volumes by The Morie Company, Inc. (Morie) and South
Jersey Energy Company (SJE).
Gas purchased for resale increased in 1994 principally due to higher volume gas
sales, partially offset by the effect of lower unit prices for natural gas.
Utility operating expenses are higher primarily due to higher payroll related
and insurance costs. Nonutility operating expenses are higher due to costs
associated with increased sales. Maintenance expense increased in 1994
principally due to increases in nonutility costs.
Depreciation is higher in 1994 due to increased investment in property, plant
and equipment.
Gross Receipts and Franchise Taxes are lower in 1994 due to an increase in the
transportation of natural gas which is subject to lower unit tax rates.
Customer refund obligation - net reflects a charge related to a global
settlement resolving several issues before the BPU, including the rate case
discussed above and SJG's 1993-1994 Levelized Gas Adjustment Clause (LGAC).
Although the BPU's decision had no finding of fault or imprudency, SJG accepted
this settlement to avoid exposure and protracted litigation cost.
Interest charges increased in 1994 principally due to the effects of: higher
levels of long-term debt outstanding; an increase in the level of short-term
debt outstanding and increases in short-term interest rates; partially offset by
the deferral of carrying costs related to the accelerated payment of gross
receipts and franchise taxes.
Net income applicable to common stock and earnings per share decreased in 1994
principally due to increases in utility operating expenses and interest costs
and the customer refund obligation ($0.22 per share) described above. The
decrease is partially offset by increased revenues and earnings from nonutility
operations. The decrease in earnings per share was also impacted by the effect
of a higher average number of common shares outstanding.
- 19 -
Management's Discussion, Continued
Results of Operations - 1993 Compared with 1992 - Utility revenues increased in
1993 principally due to increased residential sales, recognition of previously
deferred levelized gas adjustment clause overcollections, and higher
interruptible sales. Such increases were partially offset by lower cogeneration
and electric generation firm sales. The increase in residential sales reflects
the impact of 5,500 net customer additions and weather which was slightly colder
in 1993. Net residential customer additions amounted to 5,600 in 1992.
Nonutility revenue increased due to increased sales by Morie and SJE, partially
offset by lower revenues by R&T Group, Inc. Increased sales were partially
offset by increased cost of sales and other operating expenses. Nonutility
operating results include increased operating income by Morie and SJE, partially
offset by an R&T Group operating loss in 1993. R&T Group experienced the impact
of price competition and depressed economic activity in the construction sector.
While R&T Group's construction revenues decreased in 1993, revenues from
environmental remediation activities increased.
Gas purchased for resale increased in 1993 due to increased volumes of gas sold
and higher unit prices. Utility operating expenses are higher primarily due to
increased payroll and employee benefit cost and higher distribution and
regulatory expense. Maintenance cost is higher in 1993 principally due to
increases in gas utility maintenance cost partially offset by lower nonutility
maintenance cost. Utility maintenance cost includes the amortization of deferred
costs related to the remediation of former gas manufacturing sites.
Depreciation is higher in 1993 due to increased investment in property, plant
and equipment.
Interest charges decreased in 1993 due to a decrease in the balance of
overcollections associated with the cost of purchased natural gas and decreased
interest rates. Partially offsetting the decrease in interest expense was higher
long-term interest due to an increase in the level of long-term debt
outstanding.
In 1993, the Company adopted FASB No. 109, "Accounting for Income Taxes", which
resulted in an increase in net income of $382,000 and the creation of a
regulatory asset of approximately $17.6 million (See Notes 1 and 4). Also, in
1993, the Company adopted FASB No. 106, "Employers' Accounting for
Postretirement Benefits Other than Pensions", which resulted in the recording of
a regulatory asset for the level of costs not currently recovered in rates (See
Note 1). As provided by FASB No. 106, the Company has elected to recognize the
unfunded transition obligation of approximately $27.8 million over a period of
20 years.
Net income applicable to common stock increased in 1993 as a result of the
improvement in utility earnings. This included the effect of retaining increased
margins on interruptible sales as a result of the base rate case order which
became effective August 10, 1992. Earnings per share is lower due to the impact
of a higher average number of common shares outstanding in 1993.
Liquidity - Management anticipates that future operations will continue to
generate sufficient cash flows to meet its operating needs, pay dividends, repay
current portions of long-term debt and finance a portion of the Company's
planned capital expenditures. In 1994, cash flow was impacted by the accelerated
gross receipts and franchise tax payment of $12.2 million to the State of New
Jersey. In 1993, cash flow was impacted by an accelerated gross receipts and
franchise tax payment of approximately $15.4 million. SJG recovers the carrying
costs associated with the accelerated payments in rates, as allowed by the BPU
(See Note 1).
Seasonal aspects of the Company's subsidiary operations affect cash flows,
revenues and operating expenses and, generally, the level of current assets and
current liabilities. Utility operations are usually greater during the first and
fourth quarters, reflecting the impact of higher sales resulting from colder
weather. Sand mining and construction operations are usually greater during the
second and third quarters, reflecting higher demand for sand products and
construction services during warmer weather. The increase in cash and cash
equivalents and accounts receivable at December 31, 1994, principally reflects
increased sales from nonutility operations. The increase in natural gas
inventory is principally the result of gas storage and supply arrangements with
customers for off-system sales. The accounts payable increase is related to the
increase in natural gas inventory.
Cash flows from operations are impacted by amounts collected in excess of, or
undercollections from, tariffs established under SJG's LGAC. Overcollections
represent increases in cash flow while undercollections reflect decreases in
cash flow. In 1994, net cash flows increased by $18.2 million, primarily due to
the LGAC. At December 31, 1994, the balance of overcollections of approximately
$9.3 million and the customer refund obligation of $3.5 million will be subject
to recovery by SJG's customers in the 1994-1995 LGAC period. In 1993, cash flow
was reduced by approximately $18.3 million, primarily due to the return to
customers of overcollections in the 1992-1993 LGAC. Overcollections are
reflected in the balance sheet under the caption "Deferred Revenues" and
undercollections are reflected in the balance sheet under the caption "Deferred
Fuel Costs - Net".
Short-term bank lines of credit aggregate $183.0 million of which $102.8 million
was unused at December 31, 1994. The credit lines are uncommitted and unsecured,
with borrowings thereunder being affected for various terms of less than one
year, at interest rates less than the prime rate of interest, in effect at the
time of borrowing.
Cash flow from nonutility operations is generally retained in the nonutility
companies. Amounts in excess of cash requirements, including dividends, are
invested. Such activities are not considered material in relation to the
financial statements taken as a whole.
The adoption of FASB No. 109 in 1993 resulted in the creation of a regulatory
asset and a deferred income tax liability. As the amortization of the asset
occurs ("Income Taxes - Flowthrough Depreciation"), such amortization will be
recoverable through rates over an amortization period of 18 years (See Notes 1
and 4). Also, FASB No. 106 requires an accrual basis of accounting for such
benefits. Its adoption in 1993, as measured in accordance with the statement,
reflected an unfunded transition obligation of $27.8 million which is being
recognized over 20 years. The majority of the postretirement benefit costs apply
to SJG, which, as prescribed by the BPU, has recorded a regulatory asset of
approximately $6.6 million at December 31, 1994 (See Note 1). This amount
represents the excess of the annual cost over the level of costs recovered under
current rates. The BPU order of December 1994 provides for partial recovery of
costs associated with FASB No. 106 and prescribes continued deferral of
unrecovered costs for consideration in SJG's next rate case (See Note 1). To the
extent such costs are recoverable in rates, the BPU order provides for a
separate trust fund for the management of revenues and costs associated with
such postretirement benefits. The adoption of FASB Nos. 109 and 106 has not
adversely impacted liquidity or debt covenants. In addition, the application of
FASB No. 112, "Employers' Accounting for Postemployment Benefits", and FASB No.
115, "Accounting for Certain Investments in Debt and Equity Securities", which
became effective in 1994, did not have a material effect on the Company's
financial statements and cash flows.
During 1992, the FERC issued a series of orders requiring all interstate
pipelines to restructure their services. Included in these orders is FERC Order
No. 636 which required the pipelines to separate sales and transportation
services and to change their rate design. Also, as a result of these orders, SJG
is incurring certain transition costs that are associated with its pipeline
suppliers unbundling their services.
- 20 -
Management's Discussion, Continued
Since not all suppliers have yet established the basis or the method of billing
transition costs, SJG's total liability cannot be determined. A liability of
approximately $0.7 million is recorded as of December 31, 1994, representing
identified transition costs being billed to SJG by a pipeline over a 2-year
period which began in April 1994. SJG expects to recover such costs through its
LGAC (See Note 9).
Under FERC Order No. 636, as amended, SJG is responsible for securing and
maintaining its own gas supplies from producers and other suppliers. SJG has
entered into several contracts which, when combined, replaced 100 percent of
long-term gas supplies previously purchased from interstate pipelines. SJG does
not expect any adverse impact on its operations, cash flows or liquidity from
the implementation of FERC Order No. 636. SJG expects to recover the costs
resulting from these orders through its LGAC.
The FERC's actions unbundling the services of natural gas pipelines under Orders
No. 636 and 547 were designed to increase competition by providing greater
access by buyers and sellers to pipeline systems. As a result, companies such as
SJG and SJE have greater flexibility in marketing gas, transportation and
storage capacity.
SJG, in the normal course of conducting business, has entered into long-term
contracts for the supply of natural gas, firm transportation, and long-term firm
gas storage service. The earliest expiration of any of these gas supply
contracts is 1999. All of the transportation and storage service agreements
between SJG and its interstate pipeline suppliers are provided under tariffs on
file with, and approved by, the FERC. SJG's cumulative obligations for demand
charges paid to its suppliers for all of these services is approximately $4.4
million per month which is recovered on a current basis through its LGAC.
Certain storage and supply agreements are entered into with third parties under
which SJG has no responsibility except to store natural gas and permit
withdrawals by such third parties. A fee is charged for this service by SJG;
however, SJG may, at its option, withdraw such gas for its own use at pre-
defined unit rates. In connection with the global settlement with the BPU, a
focused management audit will be made by the BPU concentrating on SJG's gas
planning and purchasing practices. Management believes that its practices are
appropriate and does not expect that the results of the focused audit will
result in any material changes to its practices.
Through December 31, 1994, the Company has recorded environmental remediation
costs of $37.2 million, of which $20.1 million has been expended. The remaining
liability of approximately $17.1 million is reflected in the balance sheet under
the captions "Current Liabilities" and "Deferred Credits and Other Non-Current
Liabilities". Such amounts have not been adjusted for future insurance
recoveries, which management is pursuing. SJG has realized insurance recoveries
of $3.0 million which are offset against legal costs and deferred remediation
costs as prescribed by the BPU. Recorded amounts include estimated costs to be
incurred through 1997 based on projected investigation and remediation work
plans using existing technologies. Estimates beyond this time cannot be made on
a reliable basis due to changing technology, government regulations and site-
specific requirements and, therefore, have not been recorded; however, the total
costs to be incurred after 1997 could be substantial. The major portion of such
costs relate to the remediation of former gas manufacturing sites of SJG, which
has recorded and expended amounts of $36.0 million and $19.5 million,
respectively, through December 31, 1994. SJG has established a regulatory asset
for these costs and is recovering such costs over 7-year amortization periods,
as authorized by the BPU. SJG has recovered $4.7 million through rates as of
December 31, 1994. The balance of such costs and payments, amounting to $1.2
million and $0.6 million, respectively, relates to other environmental related
costs including nonutility sites previously used in fuel oil operations.
Capital Resources - The Company has a continuing need for cash resources and
capital, primarily to invest in new and replacement equipment and facilities for
its utility subsidiary. Total construction expenditures for utility and
nonutility operations were $41.4 million in 1994. Construction expenditures for
1995 are estimated at approximately $30.5 million and approximately $40.0
million annually in 1996 and 1997, respectively. Such investment is expected to
be funded from several sources, including cash generated by operations,
temporary use of short-term debt, sale of first mortgage bonds, sale of common
stock and capital leases.
The proceeds of the Company's Dividend Reinvestment and Stock Purchase Plan were
used for general corporate purposes. In 1994, SJI issued 910,635 shares of
common stock through its various plans, including a Stock Option and Stock
Appreciation Rights Plan, its Dividend Reinvestment and Stock Purchase Plan and
Employees' Stock Ownership Plan, for approximately $16.8 million. In 1993, SJI
issued 306,876 common shares for approximately $7.0 million under such plans
(shares issued reflect the 2 percent stock dividend declared in the first
quarter of 1993). New common shares were issued for shares purchased through the
various plans in 1993 and the nine months ended September 30, 1994. Beginning
in November 1994, the Company began to purchase common shares in the open market
to satisfy share purchase requirements under its dividend reinvestment and stock
purchase plan. This action reduces the dilutive effect resulting from the
issuance of new common shares.
On June 29, 1993, SJG sold $35.0 million of First Mortgage Bonds, 6.95% Series.
The proceeds of this issue were used to reduce short-term debt incurred in
connection with SJG's construction program. In 1994, SJG entered into a bank
credit facility under which it issued a $15 million unsecured term note and
under which SJG can borrow an additional $5.0 million under a revolving credit
facility. The term note matures December 31, 2001, and is payable in seven
consecutive year-end installments beginning in 1995. In January 1995, SJG also
issued $30.0 million of 8.6% Debenture Notes maturing February 1, 2010.
Inflation - The impact of inflation on nonutility operations tends to follow the
movement of the general price index. The nonutility operations respond to this
by implementing cost control measures and increasing prices in an attempt to
maintain or improve each company's financial results.
As to utility operations, the ratemaking process provides that only the original
cost of utility plant is recoverable in revenues as depreciation. Therefore, the
excess cost of utility plant, stated in terms of current cost over the original
cost of utility plant, is not presently recoverable. While the ratemaking
process gives no recognition to the current cost of replacing utility plant,
based on past practices the Company believes it will be allowed to earn on the
increased cost of its net investment as replacement of facilities actually
occurs.
Summary - The Company is confident it will have sufficient cash flow to meet its
operating, capital and dividend needs and is taking and will take such actions
necessary to employ its resources effectively.
- 21 -
Quarterly Financial Data
The summarized quarterly results of operations of the Company, in thousands except for per share
amounts, for 1994 and 1993 are presented below:
1994 Quarter Ended 1993 Quarter Ended
------------------------------------------ ------------------------------------------
March 31 June 30 Sept. 30 Dec. 31 March 31 June 30 Sept. 30 Dec. 31
--------- --------- --------- --------- --------- --------- --------- ---------
Operating Revenues $138,943 $ 67,345 $ 68,060 $ 99,611 $113,447 $ 65,150 $ 60,529 $ 94,815
--------- --------- --------- --------- --------- --------- --------- ---------
Operating Expenses:
Operation and Maintenance
Including Fixed Charges 107,894 61,051 66,437 82,192 83,171 59,425 57,785 76,139
Federal Income Taxes 5,372 125 (1,067) 2,379 5,168 (115) (788) 2,790
Gross Receipts, Franchise
and Other Taxes 15,914 5,670 4,268 9,070 14,994 5,810 4,322 10,269
Customer Refund Obligation - Net - - - 2,275 - - - -
--------- --------- --------- --------- --------- --------- --------- ---------
Income (Loss) Before Cumulative
Effect of a Change in
Accounting Principle 9,763 499 (1,578) 3,695 10,114 30 (790) 5,617
Cumulative Effect of a Change
in Accounting Principle - - - - 382 - - -
--------- --------- --------- --------- --------- --------- --------- ---------
Net Income (Loss) Applicable
to Common Stock $ 9,763 $ 499 $ (1,578) $ 3,695 $ 10,496 $ 30 $ (790) $ 5,617
========= ========= ========= ========= ========= ========= ========= =========
Earnings (Loss) Per Common
Share (Based on Average
Shares Outstanding)(1):
Before Cumulative Effect of a Change
in Accounting Principle $ 0.99 $ 0.05 $ (0.15) $ 0.34 $ 1.06 $ 0.00 $ (0.08) $ 0.57
Cumulative Effect of a Change
in Accounting Principle 0.00 0.00 0.00 0.00 0.04 0.00 0.00 0.00
--------- --------- --------- --------- --------- --------- --------- ---------
Earnings (Loss) per
Common Share $ 0.99 $ 0.05 $ (0.15) $ 0.34 $ 1.10 $ 0.00 $ (0.08) $ 0.57
========= ========= ========= ========= ========= ========= ========= =========
Average Shares Outstanding 9,887 9,974 10,456 10,715 9,567 9,636 9,713 9,804
(1) The sum of the quarters for 1994 does not equal the total due to the dilution resulting from
the number of shares issued during the year.
NOTE: Because of the seasonal nature of the business, statements for the three-month periods are not
indicative of the results for a full year.
Market Price of Common Stock and Related Information
Market Price Market Price
Quarter Ended Per Share Dividends Quarter Ended Per Share Dividends
------------- ------------------ Declared ------------- ------------------ Declared
1994 High Low Per Share 1993 High Low Per Share
------------- -------- -------- --------- ------------- -------- -------- ---------
March 31 24 21 1/4 $0.360 March 31 26 22 1/4 $0.353
June 30 22 1/8 17 3/4 $0.360 June 30 25 1/2 23 5/8 $0.360
Sept. 30 19 1/4 16 5/8 $0.360 Sept. 30 27 1/2 24 1/8 $0.360
Dec. 31 18 1/8 16 5/8 $0.360 Dec. 31 25 3/4 22 7/8 $0.360
These quotations are based on the list of composite transactions of the New York Stock Exchange. The Company's
stock is traded on the New York and Philadelphia stock exchanges and the ticker symbol is SJI. The Company
has declared and expects to continue to declare regular quarterly cash dividends. As of December 10, 1994,
the latest available date, the stock records indicate that there were approximately 13,955 shareholders.
- 22 -
South Jersey Industries, Inc. and Subsidiaries Comparative Operating Statistics
1994 1993 1992 1991 1990
--------- --------- --------- --------- ---------
South Jersey Gas Company
Operating Revenues (Thousands):
Firm
Residential $151,857 $142,409 $131,749 $117,904 $112,362
Commercial 61,848 57,392 56,774 51,833 51,102
Industrial & Other 9,397 14,725 17,273 12,070 15,871
Cogeneration & Electric Generation 19,301 23,726 24,110 12,899 2,213
Firm Transportation 18,092 13,746 11,120 10,252 8,578
--------- --------- --------- --------- ---------
Total Firm 260,495 251,998 241,026 204,958 190,126
Interruptible 6,610 11,299 8,283 9,425 14,375
Interruptible Transportation 2,985 2,412 2,837 2,891 2,896
Off-System 38,163 8,788 - - -
Other 3,206 3,084 3,112 3,022 3,139
--------- --------- -------- -------- --------
Total Operating Revenues $311,459 $277,581 $255,258 $220,296 $210,536
========= ========= ========= ========= =========
Gas Sales and Transportation Volumes (MMcf):
Firm
Residential 19,543 19,368 18,748 16,442 15,439
Commercial 9,276 9,182 9,686 8,812 8,514
Industrial & Other 1,364 2,599 3,341 2,412 2,911
Cogeneration & Electric Generation 5,384 6,741 8,629 4,593 693
Firm Transportation 14,401 10,194 8,739 6,858 4,965
--------- --------- --------- --------- ---------
Total Firm Sales 49,968 48,084 49,143 39,117 32,522
--------- --------- --------- --------- ---------
Interruptible 1,810 3,105 2,333 2,613 4,158
Interruptible Transportation 5,424 4,328 5,455 5,519 5,429
Off-System 16,840 3,563 - - -
--------- --------- --------- --------- ---------
Total Gas Sales & Transportation 74,042 59,080 56,931 47,249 42,109
========= ========= ========= ========= =========
Number of Customers at Year End:
Residential 224,394 218,484 212,939 207,366 201,962
Commercial 16,615 16,206 15,849 15,629 15,275
Industrial 397 377 394 393 399
--------- --------- --------- --------- ---------
Total Customers 241,406 235,067 229,182 223,388 217,636
========= ========= ========= ========= =========
Maximum Daily Sendout (MMcf) 370 318 290 277 270
========= ========= ========= ========= =========
Annual Degree Days 4,820 4,953 4,916 4,195 3,597
========= ========= ========= ========= =========
Normal Degree Days * 4,453 4,445 4,409 4,557 4,559
========= ========= ========= ========= =========
The Morie Company, Inc.
Operating Revenues (Thousands):
New Jersey $ 17,765 $ 16,175 $ 14,884 $ 16,344 $ 18,136
Other 12,886 12,260 12,265 10,753 10,607
--------- --------- --------- --------- ---------
Total Operating Revenues $ 30,651 $ 28,435 $ 27,149 $ 27,097 $ 28,743
========= ========= ========= ========= =========
Sand & Gravel Sales (Thousands of Tons):
New Jersey 1,847 1,634 1,359 1,749 1,942
Other 1,027 914 969 850 880
--------- --------- --------- --------- ---------
Total Sales 2,874 2,548 2,328 2,599 2,822
========= ========= ========= ========= =========
* Average degree days recorded in SJG service territory during 5-year period ended June 30 of prior year.
- 23 -
South Jersey Industries, Inc.
Board of Directors
Frank L. Bradley, Jr.
Retired; former Chairman of the Board, President and CEO of Stone & Webster
Management Consultants, Inc., New York, N.Y.
Richard L. Dunham
Chairman of Zinder Companies, Inc., an economic and regulatory consulting firm,
Washington, D.C.
W. Cary Edwards
Partner, law firm of Edwards & Caldwell, Fairlawn, N.J.
Thomas L. Glenn, Jr.
Chairman, Glenn Insurance, Inc., Absecon, N.J.
Vincent E. Hoyer
Retired; former President of New Jersey Manufacturers Insurance Company, West
Trenton, N.J.
Herman D. James, Ph.D.
President, Rowan College of New Jersey, Glassboro, N.J.
Marilyn Ware Lewis
Chairman of the Board, American Water Works Company, Inc., Voorhees, N.J.
Clarence D. McCormick
Chairman, President and Director of The Farmers and Merchants National Bank and
Southern Jersey Bancorp of Delaware, Bridgeton, N.J.
Peter M. Mitchell, Ph.D.
President, Massachusetts Maritime Academy, Buzzards Bay, Mass.
Jackson Neall
Retired; former real estate appraiser and registered builder
William F. Ryan
President and Chief Executive Officer of South Jersey Industries, Inc.; Chairman
of the Board, President and Chief Executive Officer of South Jersey Gas Company;
Chairman of the Board and Chief Executive Officer of Energy & Minerals, Inc. and
R & T Group, Inc.
Shirli M. Vioni, Ph.D.
Superintendent, Oberlin, Ohio City Schools, Oberlin, Ohio
South Jersey Industries, Inc.
Committees and Members
Executive Committee
William F. Ryan, Chairman
Frank L. Bradley, Jr.
Richard L. Dunham
Thomas L. Glenn, Jr.
Clarence D. McCormick
Peter M. Mitchell
Compensation/Pension Committee
Richard L. Dunham, Chairman
Frank L. Bradley, Jr.
W. Cary Edwards
Vincent E. Hoyer
Marilyn Ware Lewis
Clarence D. McCormick
Peter M. Mitchell
Audit Committee
Thomas L. Glenn, Jr., Chairman
W. Cary Edwards
Herman D. James
Marilyn Ware Lewis
Jackson Neall
Shirli M. Vioni
Management Development Committee
Shirli M. Vioni, Chairman
Vincent E. Hoyer
Herman D. James
Peter M. Mitchell
Jackson Neall
William F. Ryan, Ex Officio
South Jersey Industries, Inc.
Officers
William F. Ryan
President and Chief Executive Officer
Gerald S. Levitt
Vice President and Chief Financial Officer
George L. Baulig
Secretary and Assistant Treasurer
Richard B. Tonielli
Treasurer
William J. Smethurst, Jr.
Assistant Secretary and Assistant Treasurer
- 24 -
Bank Cover - Inside
Corporate Headquarters
Number One South Jersey Plaza
Route 54
Folsom, NJ 08037-9917
(609) 561-9000
TDD only 1-800-547-9085
Transfer Agent and Registrar
First Fidelity Bank, N.A., New Jersey
Stock Transfer Department
765 Broad Street
Newark, NJ 07101
Dividend, Dividend Reinvestment and Other Shareholder Inquiries
South Jersey Industries, Inc.
Shareholder Records Department
Number One South Jersey Plaza
Route 54
Folsom, NJ 08037-9917
Annual Meeting Information
The Annual Meeting of Shareholders will be held on Thursday, April 20, 1995 at
10:00 a.m. at the company's corporate headquarters.
South Jersey Industries, Inc. stock is traded on the New York and Philadelphia
stock exchanges under the trading symbol, SJI.
The information contained herein is not given in connection with any sale or
offer of, or solicitation of an offer to buy, any securities.
This report is printed on recycled paper
Back Cover - Outside
South Jersey Industries, Inc.
Number One South Jersey Plaza
Route 54
Folsom, New Jersey 08037
SJI LOGO
EX-21
11
EXHIBIT 21
SUBSIDIARIES OF REGISTRANT
AS OF DECEMBER 31, 1994
% of Voting
Securities State of
Owned by Parent Relationship Incorporation
South Jersey Industries, Inc. Registrant Parent New Jersey
South Jersey Gas Company (4) 99.77 (1) New Jersey
Energy & Minerals, Inc. (4) 100 (1) New Jersey
The Morie Company, Inc. (4) 100 (2) New Jersey
South Jersey Fuel, Inc. (4) 100 (2) New Jersey
South Jersey Energy
Company (4) 100 (1) New Jersey
R&T Group, Inc. (4) 100 (1) New Jersey
R and T Castellini
Company, Inc. (4) 100 (3) New Jersey
Cape Atlantic Crane
Company, Inc. (4) 100 (3) New Jersey
S.W. Downer, Jr.
Company, Inc. (4) 100 (3) New Jersey
Onshore Construction
Company, Inc. (4) 100 (3) New Jersey
R & T Castellini
Construction
Company, Inc. (4) 100 (3) Delaware
(1) Subsidiary of South Jersey Industries, Inc.
(2) Subsidiary of Energy & Minerals, Inc.
(3) Subsidiary of R&T Group, Inc.
(4) Subsidiary included in financial statements
EX-23
12
EXHIBIT 23
INDEPENDENT AUDITORS' CONSENT
South Jersey Industries, Inc:
We consent to the incorporation by reference in Registration
Statement Nos. 33-27132, 33-20196 and 33-44278 on Forms S-8
and Registration Statement Nos. 33-53127, 33-24123 and 33-
36581 on Forms S-3 of our reports dated February 15, 1995
appearing in and incorporated by reference in the Annual
Report on Form 10-K of South Jersey Industries, Inc. for the
year ended December 31, 1994.
DELOITTE & TOUCHE LLP
Philadelphia, Pennsylvania
March 27, 1995
EX-24
13
EXHIBIT (24)
Page 1 of 2
SOUTH JERSEY INDUSTRIES, INC.
POWER OF ATTORNEY
Each of the undersigned, in his capacity as an officer or
director, or both, as the case may be, of South Jersey
Industries, Inc., a New Jersey corporation, does hereby
appoint William F. Ryan, Gerald S. Levitt, and G.L. Baulig,
and each of them, severally, as his or her true and lawful
attorneys or attorney to execute in his or her name, place and
stead, in his or her capacity as a director or officer, or
both, as the case may be, of said corporation, its Annual
Report for the fiscal year ended December 31, 1994 on Form
10-K, pursuant to Section 13 of the Securities Exchange Act of
1934, and any and all amendments thereto and instruments
necessary or incidental in connection therewith, and to file
the same with the Securities and Exchange Commission; and does
hereby provide that each of said attorneys shall have power to
act hereunder with or without the other said attorneys, and
shall have full power of substitution and resubstitution and
that each of said attorneys shall have full power and
authority to do and perform in the name and on behalf of the
undersigned in any and all capacities every act whatsoever
required to be done in the premises, as fully and to all
intents and purposes as he or she might or could do in person,
hereby ratifying and approving the acts of said attorneys and
each of them.
IN WITNESS WHEREOF, the undersigned have executed this
instrument, this 27th day of March 1995.
/s/ William F. Ryan
William F. Ryan, President and Director
/s/ Frank L. Bradley, Jr.
Frank L. Bradley, Jr., Director
/s/ Richard L. Dunham
Richard L. Dunham, Director
/s/ W. Cary Edwards
W. Cary Edwards, Director
/s/ Thomas L. Glenn, Jr.
Thomas L. Glenn, Jr., Director
Re: Power of Attorney -- 10-K Page 2 of 2
/s/ Vincent E. Hoyer
Vincent E. Hoyer, Director
/s/ Herman D. James
Herman D. James, Director
/s/ Marilyn Ware Lewis
Marilyn Ware Lewis, Director
/s/ Clarence D. McCormick
Clarence D. McCormick, Director
/s/ Peter M. Mitchell
Peter M. Mitchell, Director
/s/ Jackson Neall
Jackson Neall, Director
/s/ Shirli M. Vioni
Shirli M. Vioni, Director
/s/ Gerald S. Levitt
Gerald S. Levitt, Vice President
/s/ Richard B. Tonielli
Richard B. Tonielli, Treasurer
EX-27
14
EXHIBIT (27) FINANCIAL DATA SCHEDULE
UT
1,000
12-MOS
DEC-31-1994
DEC-31-1994
PER-BOOK
370,297
31,803
95,570
70,580
2,845
571,095
13,394
110,081
31,497
154,972
0
2,494
153,086
80,200
0
0
9,455
0
0
0
170,888
571,095
373,959
5,584
336,285
343,094
30,865
(2,275)
28,590
16,211
12,379
0
12,379
14,771
12,889
37,437
1.21
1.21