-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, U095z6v+V5Iew3YsqgF529ErBOEZwo0o5eATfvjrfERXGz4i5hGMtC07SEepUWi3 lErn3EmWwNwrQcwOLSYe8Q== 0000950168-97-001376.txt : 19970522 0000950168-97-001376.hdr.sgml : 19970522 ACCESSION NUMBER: 0000950168-97-001376 CONFORMED SUBMISSION TYPE: S-3 PUBLIC DOCUMENT COUNT: 12 FILED AS OF DATE: 19970521 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: PUBLIC SERVICE ELECTRIC & GAS CO CENTRAL INDEX KEY: 0000081033 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC & OTHER SERVICES COMBINED [4931] IRS NUMBER: 221212800 STATE OF INCORPORATION: NJ FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3 SEC ACT: 1933 Act SEC FILE NUMBER: 333-27547 FILM NUMBER: 97612519 BUSINESS ADDRESS: STREET 1: 80 PARK PLZ STREET 2: PO BOX 570 CITY: NEWARK STATE: NJ ZIP: 07101 BUSINESS PHONE: 2014307000 S-3 1 PSE&G FORM S-3 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 21, 1997 REGISTRATION NO. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 --------------- FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 --------------- PUBLIC SERVICE ELECTRIC AND GAS COMPANY (Exact name of registrant as specified in its charter) NEW JERSEY 22-1212800 (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification No.)
80 PARK PLAZA, T4B, P.O. BOX 570, NEWARK, NEW JERSEY 07101-0570 (201) 430-7000 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) JAMES T. FORAN, ESQ. ROBERT C. MURRAY GENERAL CORPORATE COUNSEL SENIOR VICE PRESIDENT AND 80 PARK PLAZA, T5B, P.O. BOX 570 CHIEF FINANCIAL OFFICER NEWARK, NEW JERSEY 07101 80 PARK PLAZA, T4B, P.O. BOX 570 (201) 430-6131 NEWARK, NEW JERSEY 07101 (201) 430-5630
(Name, address, including zip code, and telephone number, including area code, of agents for service) --------------- PLEASE SEND COPIES OF ALL COMMUNICATIONS TO: HOWARD G. GODWIN, JR., ESQ. BROWN & WOOD LLP ONE WORLD TRADE CENTER NEW YORK, NEW YORK 10048 --------------- APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: At such time after the effective date of this Registration Statement as may be warranted by market conditions and other factors. --------------- If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. [ ] If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, please check the following box. [X] If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. [ ] --------------- CALCULATION OF REGISTRATION FEE
PROPOSED PROPOSED AMOUNT MAXIMUM MAXIMUM AMOUNT OF TITLE OF EACH CLASS OF SECURITIES TO BE OFFERING PRICE AGGREGATE REGISTRATION TO BE REGISTERED REGISTERED PER UNIT OFFERING PRICE FEE First and Refunding Mortgage Bonds $150,000,000 100%* $150,000,000* $45,455
* Estimated solely for the purpose of calculating the registration fee. --------------- THE PROSPECTUS INCLUDED AS A PART OF THIS REGISTRATION STATEMENT CONTAINS THE INFORMATION REQUIRED BY RULE 429 OF THE COMMISSION UNDER THE SECURITIES ACT OF 1933 WITH RESPECT TO FIRST AND REFUNDING MORTGAGE BONDS OF THE COMPANY COVERED BY REGISTRATION NO. 33-52435. THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE. PRELIMINARY PROSPECTUS, SUBJECT TO COMPLETION, DATED MAY 21, 1997 PROSPECTUS PUBLIC SERVICE ELECTRIC AND GAS COMPANY FIRST AND REFUNDING MORTGAGE BONDS ------------------------ This Prospectus is to be used by Public Service Electric and Gas Company (the "Company") in connection with its sale from time to time in one or more series of not more than $250,000,000 principal amount of its First and Refunding Mortgage Bonds. Such First and Refunding Mortgage Bonds will be offered for sale pursuant to the competitive bidding procedures set forth in the Company's Statement of Terms and Conditions Relating to Bids for such First and Refunding Mortgage Bonds, copies of which are available from the Company. The principal amount of such First and Refunding Mortgage Bonds to be issued after a bidding therefor is referred to herein as the "New Bonds". Pursuant to said Terms and Conditions, at least twenty-four hours prior to the time designated for the opening of bids for each series of New Bonds by the Company, the Company will notify prospective bidders or, in the case of a group of bidders, the representative of the group, in writing of (1) the date and time for the receipt of bids, (2) whether bids will be received in writing, by telephone confirmed in writing, or either in writing or by telephone confirmed in writing, (3) the principal amount of such New Bonds, (4) the series designation of such New Bonds, (5) the minimum and maximum percentages of principal amount which may be specified in the bid as the purchase price for the New Bonds, (6) the term of such New Bonds, which shall not be less than one year nor more than 40 years, (7) the terms and conditions upon which such New Bonds may be redeemed, either at the option of the Company, pursuant to any sinking or improvement fund for the New Bonds, or otherwise, and (8) such other provisions as may be necessary or desirable to establish the terms and conditions of such New Bonds and the terms of bidding therefor. Thereafter, the Company may also notify such bidders or representative, orally, confirmed in writing, not less than 30 minutes prior to the time designated for receiving bids, of any reduced principal amount of New Bonds for which the Company may elect to receive bids. The specific designation, aggregate principal amount, purchase price, maturity date, times of payment of interest, and redemption or other particular terms of each series of New Bonds will be set forth in an accompanying Prospectus Supplement. ------------------------ THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. ------------------------ THE DATE OF THIS PROSPECTUS IS , 1997. AVAILABLE INFORMATION Public Service Electric and Gas Company (the "Company") is subject to the informational requirements of the Securities Exchange Act of 1934 (the "1934 Act") and in accordance therewith files reports and other information with the Securities and Exchange Commission (the "Commission"). Such reports and other information can be inspected and copied at the public reference facilities maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C. and at its regional offices at 500 West Madison Street, Chicago, Illinois and Seven World Trade Center, New York, New York. Copies of such material can also be obtained from the Public Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549-1004 at prescribed rates. Such information may also be accessed electronically by means of the Commission's home page on the Internet (http://www.sec.gov). Such material can also be inspected at the New York Stock Exchange, Inc. where certain of the Company's securities are listed. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The following documents heretofore filed by the Company with the Commission are incorporated herein by reference: 1. The Company's Annual Report on Form 10-K for the year ended December 31, 1996, filed pursuant to the 1934 Act. 2. The Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1997, filed pursuant to the 1934 Act. 3. The Company's Current Reports on Form 8-K dated January 24, 1997 and January 29, 1997, filed pursuant to the 1934 Act. All documents subsequently filed by the Company pursuant to Sections 13(a), 13(c), 14 or 15(d) of the 1934 Act prior to the termination of the offering of the New Bonds shall be deemed to be incorporated by reference in this Prospectus and to be a part hereof from the date of filing of such documents. Any statements contained in a document incorporated or deemed to be incorporated by reference herein shall be modified or superseded for the purposes of this Prospectus to the extent that a statement contained herein or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein or in the accompanying Prospectus Supplement modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Prospectus. The Company hereby undertakes to provide without charge to each person, including any beneficial owner, to whom a copy of this Prospectus is delivered, upon written or oral request of such person, a copy of any or all of the documents referred to above which have been or may be incorporated by reference in this Prospectus, other than exhibits to such documents not specifically incorporated by reference herein. Requests for such copies should be directed to the Director -- Investor Relations, Public Service Electric and Gas Company, 80 Park Plaza, T6B, P. O. Box 570, Newark, New Jersey 07101, telephone (201) 430-6503. 2 THE COMPANY The Company is an operating public utility company, providing electric and gas service in areas of New Jersey in which about 70% of its population resides. The Company is the principal subsidiary of Public Service Enterprise Group Incorporated ("Enterprise"), which owns all of the Company's common stock. The Company's service area is a corridor of approximately 2,600 square miles running diagonally across the State of New Jersey from Bergen County in the northeast to an area below the City of Camden in the southwest. The territory is heavily populated and includes New Jersey's six largest cities and many residential communities as well as commercial and industrial areas. The Company's executive offices are located at 80 Park Plaza, P. O. Box 570, Newark, New Jersey 07101-0570, telephone (201) 430-7000. USE OF PROCEEDS The net proceeds from the sale of the New Bonds will be added to the general funds of the Company and will be used for general corporate purposes, including the refunding and redemption of certain of its higher cost and maturing debt obligations, the reimbursement of its treasury for funds expended therefor and/or the payment of its short-term obligations incurred for such purposes. COVERAGE RATIOS The Company's Ratio of Earnings to Fixed Charges for each of the periods indicated is as follows: 12 MONTHS ENDED YEARS ENDED DECEMBER 31, MARCH 31, - ---------------------------------------- --------- 1992 1993 1994 1995 1996 1997 - ---- ---- ---- ---- ---- --------- 2.70 3.30 3.35 3.25 2.83 2.76 The Ratio of Earnings to Fixed Charges represents, on a pre-tax basis, the number of times earnings cover fixed charges. Earnings consist of net income, to which have been added fixed charges and taxes based on income of the Company and its subsidiaries. Fixed charges consist of interest charges and an interest factor in rentals. DESCRIPTION OF THE NEW BONDS The New Bonds are to be issued under and secured by the indenture (the "First and Refunding Mortgage") dated August 1, 1924, between the Company and First Union National Bank (formerly Fidelity Union Trust Company), as Trustee (the "Trustee"), as amended and supplemented by the ninety-six supplemental indentures now in effect and by the proposed supplemental indentures to be dated the first day of the month in which each series of the New Bonds are issued (the "New Supplements") providing for the New Bonds, which indenture and supplemental indentures are hereinafter collectively called the "Mortgage" and are filed as Exhibits 4a(1) through 4a(98) to the Registration Statement. The following statement includes brief summaries of certain provisions of the Mortgage. For a complete statement of such provisions reference is made to the above-mentioned Exhibits, and to the particular Articles and Sections of the First and Refunding Mortgage and of certain supplements. Bonds issued or issuable under the Mortgage are hereinafter sometimes called "Bonds". A copy of the Mortgage including a proposed New Supplement may be inspected at the office of the Trustee at 765 Broad Street, Newark, 3 New Jersey or at the office of the Securities and Exchange Commission, 450 Fifth Street, N.W., Washington, D.C. The New Bonds will be issuable only in fully registered form in denominations of $1,000 and any multiple thereof. The New Bonds will be transferable, and the several denominations thereof will be exchangeable for New Bonds of other authorized denominations, upon compliance with the applicable provisions of the Mortgage. No service charge will be made for any such transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto. The Mortgage does not contain any covenant or other provision that specifically is intended to afford holders of the New Bonds special protection in the event of a highly leveraged transaction. INTEREST, MATURITY AND PAYMENT See the accompanying Prospectus Supplement. REDEMPTION See the accompanying Prospectus Supplement. LIEN AND SECURITY The New Bonds will be secured by the lien of the Mortgage equally and proportionately with all other Bonds. The Mortgage is a first lien on all the property and franchises of the Company now owned or hereafter acquired (except cash, accounts and bills receivable, merchandise bought, sold or manufactured for sale in the ordinary course of business, stocks, bonds or other corporate obligations or securities, other than those now or hereafter specifically pledged thereunder, not acquired with the proceeds of Bonds) (the effectiveness of the after-acquired property clause being subject to certain possible exceptions under New Jersey law which are not regarded by the Company as of practical importance), subject only (i) to liens for taxes, assessments and governmental charges and other liens, encumbrances, and rights, none of which liens, encumbrances or rights, in the opinion of the Company, materially affects the use of the mortgaged property or the value thereof as security for the Bonds, (ii) to the lien of the Trustee for compensation, expenses and indemnity to which it may be entitled under the Mortgage, and (iii) as to after-acquired property, to encumbrances, if any, existing thereon at the time of acquisition. Under New Jersey law, the State of New Jersey owns in fee simple for the benefit of the public schools all lands now or formerly flowed by the tide up to the mean high-water line, unless it has made a valid conveyance of its interest in such property. In 1981, because of uncertainties raised as to possible claims of State ownership, the New Jersey Constitution was amended to provide that lands formerly tidal-flowed, but which were not then tidal-flowed at any time for a period of forty years, were not subject to State claims unless the State specifically defined and asserted a claim within the one year period ending November 2, 1982. As a result, the State published maps of the eastern (Atlantic) coast of New Jersey depicting claims to portions of many properties, including certain properties owned by the Company. The Company believes it has good title to such properties and will vigorously defend its title, or will obtain such grants from the State as may ultimately be required. The cost to acquire any such grants may be covered by title insurance policies. Assuming that all of such State claims were determined adversely to the Company, they would relate to land, which, together with the improvements thereon, would amount to less than 1% of net utility plant. No maps depicting State claims to property owned by the 4 Company on the western (Delaware River) side of New Jersey were published within the one year period mandated by the Constitutional Amendment. Nevertheless, the Company believes it has obtained all necessary grants from the State for its improved properties along the Delaware River. The after-acquired property clause may not be effective as to property acquired subsequent to the filing of a petition with respect to the Company under the Federal Bankruptcy Code. The property of the Company subject to the lien of the Mortgage consists principally of its electric generating facilities, transmission lines, distribution lines, switching stations and substations, and its gas production plants and gas distribution facilities, and includes the Company's undivided interests as a tenant in common without right of partition in jointly-owned electric generating and gas production facilities and electric transmission lines. ISSUANCE OF ADDITIONAL BONDS Additional Bonds may be authenticated and delivered in a principal amount not exceeding 60% of the cost or fair value to the Company (whichever is less) of additions or permanent improvements to the mortgaged property within 250 miles of Newark, New Jersey, after deducting the cost of property permanently abandoned and the difference between the cost and the net amount realized on the sale of property sold at a price to net less than half of its cost; but only if the net earnings of the Company (before income taxes, amortization of debt discount and expense, and fixed charges), for twelve consecutive months within the fifteen months preceding the application for the authentication of such additional Bonds, shall have been at least twice the fixed charges of the Company, including interest on the Bonds applied for. As of July 1, 1996 additions or improvements against which Bonds may be authenticated amounted to $5.078 billion. No additional Bonds may be authenticated and delivered on the basis of the Company's 22.84% undivided interest in the Keystone Generating Station and 22.5% undivided interest in the Conemaugh Generating Station (both in western Pennsylvania) because such stations are not within 250 miles of Newark, New Jersey. The principal amount of additional Bonds which may be issued on account of the acquisition of property subject to prior liens is that amount which might be issued if there were no such liens, less the principal amount of obligations secured by such liens and not then deposited with the Trustee. Additional Bonds may also be authenticated and delivered under the Mortgage from time to time, in a principal amount equal to the principal amount of Bonds (excluding Bonds retired through a sinking fund or by the application of the proceeds of released property) or certain prior debt bonds purchased, paid, refunded, or retired by the Company and deposited with the Trustee, upon such deposit. Additional Bonds may also be issued (a) in a principal amount not exceeding the amount of cash deposited by the Company with the Trustee, to be subsequently withdrawn on account of additions or improvements or as otherwise permitted by the Mortgage, upon compliance with the conditions which, at the time of withdrawal, would authorize the authentication of Bonds in an amount equal to the cash withdrawn, or (b) in a principal amount not exceeding the principal amount of matured or maturing Bonds or prior debt bonds, to provide for the payment or purchase thereof, within 12 months before maturity (including a maturity resulting from a call for redemption) or at or after maturity, provided that cash equal to the principal amount of the Bonds so issued is simultaneously deposited with the Trustee in exchange therefor. The New Bonds will be issued under the above provisions. 5 MAINTENANCE AND DEPRECIATION PROVISIONS The Company must maintain the useful physical property subject to the Mortgage in good and businesslike working order and condition and make all needful and proper repairs, replacements, and improvements thereto. It must also maintain a reserve for renewals and replacements, reasonable according to the current standard practice of gas and electric utility companies or as approved or fixed by the Board of Public Utilities of the State of New Jersey. The New Supplements will contain no maintenance provisions with respect to the New Bonds. DIVIDEND RESTRICTIONS So long as there remain outstanding any of the New Bonds or any of the Bonds of any series now outstanding (other than the Bonds of the 5% Series due 2037 and the 8% Series due 2037), the Company may not pay any dividend on its common stock other than dividends payable in such stock, or make any other distribution thereon or purchase or otherwise acquire for value any such stock if such action would reduce its earned surplus below $10,000,000 less all amounts on the books of the Company on December 31, 1948, which shall have been thereafter required to be removed therefrom by charges to earned surplus pursuant to any order or rule of any regulatory body thereafter entered. AMENDMENT OF MORTGAGE The Mortgage may be modified by the Company and the Trustee with the consent of the holders of 85% in principal amount of the Bonds then outstanding (as defined in the Mortgage for such purposes), including, if the modification affects less than all series of Bonds outstanding, the holders of 85% in principal amount of the outstanding Bonds of each series affected. No such change, however, may alter the interest rate, redemption price or date, maturity date, or amount payable at maturity of any outstanding Bond or conflict with the Trust Indenture Act of 1939 as then in effect. RELEASE AND SUBSTITUTION OF PROPERTY Cash proceeds of released property held by the Trustee (i) may be paid to the Company to reimburse it for the full cost or fair value, whichever be less, of additions or improvements permitted under the Mortgage to be used as the basis for the issuance of additional Bonds, without any net earnings requirement; (ii) may be paid to the Company in an amount equal to the principal amount of Bonds or certain prior debt bonds purchased, paid, refunded, or retired by the Company and deposited with the Trustee; (iii) may be invested in obligations of the United States; or (iv) may be utilized by the Trustee for the purchase or redemption of Bonds at the lowest prices obtainable. The Trustee must release pledged prior debt bonds of any issue if all prior debt bonds of such issue have been pledged and there is no lien on any of the mortgaged property senior to the lien of the Mortgage but junior to the lien of the prior debt bonds to be released. The Trustee must release franchises surrendered and structures removed or abandoned by the Company pursuant to a legal requirement or an agreement with a state or political subdivision thereof. Certain additional provisions as to the release of property are referred to above under Issuance of Additional Bonds and Maintenance and Depreciation Provisions. DEFAULTS The following constitute events of default under the Mortgage: (i) default in the payment of the principal of any Bonds or prior debt bonds; (ii) default, continued for three months, in the payment of interest on any Bonds 6 or in the payment of any installment of any sinking fund provided for any series of Bonds; (iii) default, continued for three months after written notice to the Company from the Trustee or the holders of 5% in principal amount of the outstanding Bonds, in the observance or performance of any other covenant or condition in the Mortgage; and (iv) the adjudication of the Company as a bankrupt, the appointment of a receiver for the Company or its property or the approval of a petition for the reorganization of the Company under the Federal Bankruptcy Code, if no appeal from such action is taken within 30 days, or on the same becoming final. The Mortgage does not require the Company to furnish to the Trustee any periodic evidence as to the absence of default or as to compliance with the terms of the Mortgage. The holders of 25% in principal amount of the Bonds then outstanding (or a majority in principal amount of the Bonds of any series in default, if default occurs in payments due with respect to Bonds of less than all series) may require the Trustee to take all steps needful for the protection and enforcement of the rights of the Trustee and of the holders of Bonds. The holders of 76% in principal amount of the Bonds then outstanding have the right to direct and control the action of the Trustee in any judicial or other proceedings to enforce the Mortgage. If a default in the payment of principal interest or sinking fund installment affects exclusively the Bonds of one or more series, the holders of a majority of the outstanding Bonds of the series so affected may require the Trustee to accelerate the maturity of such Bonds and also may require the Trustee to take other action for the protection of such bondholders. CERTIFICATE OF COMPLIANCE Pursuant to the provisions of the Trust Indenture Act of 1939, as amended, the Company is required to certify to the Trustee, not less than annually, the Company's compliance with all conditions and covenants under the Mortgage. CONCERNING THE TRUSTEE First Union National Bank, Trustee, is a paying agent under the Mortgage. The Company also maintains other normal banking relationships with First Union National Bank. PLAN OF DISTRIBUTION The Company will sell each series of the New Bonds through the competitive bidding procedures set forth in the Company's Terms and Conditions Relating to Bids for the New Bonds (the "Terms and Conditions") filed as Exhibit 1a to the Registration Statement. Notice of the bidding for the New Bonds will be provided, in accordance with the Terms and Conditions, to prospective bidders or, in the case of a group of bidders, to the representative of the group, who have notified the Company that they intend to submit a bid and wish to be provided notice of the time and date of bidding. Upon the acceptance of a bid for each series of the New Bonds, a Purchase Agreement, substantially in the form of Exhibit 1b to the Registration Statement, will become effective providing for the issuance and sale of such New Bonds pursuant to a firm commitment underwriting on the terms set forth therein. The purchase price of each series of the New Bonds and the proceeds to the Company from such sale and the terms of any re-offering of such New Bonds, including the name or names of any underwriters, any underwriting discounts and other terms constituting underwriters' compensation, any initial public offering price and any discounts or concessions allowed or reallowed or paid to dealers will be set forth in an accompanying Prospectus Supplement. Any initial public offering price and any discounts or concessions allowed or reallowed or paid to dealers may be changed from time to time. 7 The form of Purchase Agreement provides that the consummation of the purchase of each series of the New Bonds will be subject to certain conditions precedent and that the Company will indemnify each underwriter or purchaser for certain civil liabilities, including liabilities under the Securities Act of 1933 (the "1933 Act"). LEGAL OPINIONS The legality of the New Bonds will be passed on for the Company by James T. Foran, Esq., General Corporate Counsel, or R. Edwin Selover, Esq., Senior Vice President and General Counsel, of the Company, who may rely on the opinion of Ballard Spahr Andrews & Ingersoll, of Philadelphia, Pennsylvania, as to matters of Pennsylvania law. Brown & Wood LLP, of New York, New York, will pass on the legality of the New Bonds for the Underwriters and may rely on the opinion of Counsel of the Company as to matters of New Jersey law and on the opinion of Ballard Spahr Andrews & Ingersoll as to matters of Pennsylvania law. EXPERTS Mr. Foran has reviewed the statements in this Prospectus as to the lien of the Mortgage securing the New Bonds under Description of the New Bonds -- Lien and Security (except insofar as they relate to the lien of the Mortgage on property of the Company located in Pennsylvania). Such statements insofar as they relate to the lien of the Mortgage on property of the Company located in Pennsylvania have been reviewed by Ballard Spahr Andrews & Ingersoll of Philadelphia, Pennsylvania. The statements as to liens and encumbrances on the property of the Company are based in part on title insurance policies and reports and searches obtained from companies engaged in the business of insuring title to real estate in New Jersey and from a company engaged in the business of insuring title to real estate in Pennsylvania, and on certificates or opinions of local counsel in Pennsylvania deemed by Ballard Spahr Andrews & Ingersoll to be reliable and competent. All the statements made or referred to in this paragraph, as to matters of law and legal conclusions, are made in reliance on the authority of Mr. Foran and of Ballard Spahr Andrews & Ingersoll, respectively, as experts. The consolidated financial statements and the consolidated financial statement schedule incorporated in this Prospectus by reference from the Company's Annual Report on Form 10-K have been audited by Deloitte & Touche LLP, independent auditors, as stated in their report, which is incorporated herein by reference, and have been so incorporated in reliance on the report of Deloitte & Touche LLP, independent auditors, given upon the authority of that firm as experts in accounting and auditing. 8 PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION. Securities and Exchange Commission filing fee........................................... $ 45,455 * Printing, engraving and mailing......................................................... 60,000 Fees and expenses of Trustee............................................................ 20,000 * Accountants' fee........................................................................ 20,000 * Counsel fees............................................................................ 20,000 * Miscellaneous expenses.................................................................. 9,545 -------- Total.............................................................................. $175,000 -------- --------
- --------------- * Estimated ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS. Under Section 14A:3-5 of the New Jersey Business Corporation Act, the Company (1) has power to indemnify each director and officer of the Company (as well as its employees and agents) against expenses and liabilities in connection with any proceeding involving him by reason of his being or having been such director or officer, other than a proceeding by or in the right of the Company, if (a) such director or officer acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interest of the Company, and (b) with respect to any criminal proceeding, such director or officer had no reasonable cause to believe his conduct was unlawful; (2) has power to indemnify each director and officer of the Company against expenses in connection with any proceeding by or in the right of the Company to procure a judgment in its favor which involves such director or officer by reason of his being or having been such director or officer, if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interest of the Company; however, in such proceeding no indemnification may be provided in respect to any claim, issue or matter as to which such director or officer shall have been adjudged to be liable to the Company, unless and only to the extent that the court determines that the director or officer is fairly and reasonably entitled to indemnity for such expenses as the court shall deem proper; (3) must indemnify each director and officer against expenses to the extent that he has been successful on the merits or otherwise in any proceeding referred to in (1) and (2) above or in defense of any claim, issue or matter therein; and (4) has power to purchase and maintain insurance on behalf of a director or officer against any expenses incurred in any proceeding and any liabilities asserted against him by reason of his being or having been a director or officer, whether or not the Company would have the power to indemnify him against such expenses and liabilities under the statute. As used in the statute, "expenses" means reasonable costs, disbursements and counsel fees, "liabilities" means amounts paid or incurred in satisfaction of settlements, judgments, fines and penalties, and "proceedings" means any pending, threatened or completed civil, criminal, administrative or arbitrative action, suit or proceeding, and any appeal therein and any inquiry or investigation which could lead to such action, suit or proceeding. Indemnification may be awarded by a court under (1) or (2) as well as under (3) above, notwithstanding a prior determination by the Company that the director or officer has not meet the applicable standard of conduct. Indemnification under the statute does not include any other rights to which a director or officer may be entitled under a certificate of incorporation, by-law, or otherwise. II-1 Subdivision 1 of Article VI of the Company's Restated Certificate of Incorporation, as amended, provides as follows: 1. Indemnification of Directors, Officers and Employees: The corporation shall indemnify to the full extent from time to time permitted by law any person made, or threatened to be made, a party to 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) by reason of the fact that he is or was a director, officer or employee of the corporation or serves or served any other enterprise as a director, officer or employee at the request of the corporation. Such right of indemnification shall inure to the benefit of the legal representative of any such person. Subdivision 5 of Article VI of the Company's Restated Certificate of Incorporation, as amended, provides as follows: 5. Limitation of Liability: To the full extent from time to time permitted by law, directors and officers of the corporation shall not be personally liable to the corporation or its shareholders for damages for breach of any duty owed to the corporation or its shareholders. No amendment or repeal of this provision shall adversely affect any right or protection of a director or officer of the corporation existing at the time of such amendment or repeal. The form of Purchase Agreement between the Company and the Underwriters of the New Bonds contains a provision under which each Underwriter agrees to indemnify the directors of the Company and each of its officers who signed the registration statement against certain liabilities which might arise under the 1933 Act from information furnished to the Company in writing by or on behalf of such Underwriter. The directors and officers of the Company are insured under policies of insurance, within the limits and subject to the limitations of the policies, against claims made against them for acts in the discharge of their duties, and the Company is insured to the extent that it is required or permitted by law to indemnify the directors and officers for such loss. The premiums for such insurance are paid by the Company. ITEM 16. EXHIBITS. An Exhibit Index, containing a list of all exhibits filed with this registration statement commences on page II-5. ITEM 17. UNDERTAKINGS. (1) The undersigned Company hereby undertakes that, for purposes of determining any liability under the 1933 Act, each filing of the registrant's annual report pursuant to section 13(a) or section 15(d) of the 1934 Act (and, where applicable, each filing of an employee benefit plan's annual report pursuant to section 15(d) of the 1934 Act) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (2) Insofar as indemnification for liabilities arising under the 1933 Act may be permitted to directors, officers and controlling persons of the Company pursuant to the provisions set forth in Item 15 (other than the policies of insurance), or otherwise, the Company has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the 1933 Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Company of expenses incurred or paid by a director, officer, or controlling person of the Company in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Company will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such II-2 indemnification by it is against public policy as expressed in the 1933 Act and will be governed by the final adjudication of such issue. (3) The undersigned Company hereby undertakes: (a) to file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: (i) to include any prospectus required by section 10(a)(3) of the 1933 act; (ii) to reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement; (iii) to include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; provided, however, that paragraphs 3(a)(i) and 3(a)(ii) shall not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed by the registrant pursuant to section 13 or section 15(d) of the 1934 Act that are incorporated by reference in the registration statement; (b) that, for the purpose of determining any liability under the 1933 Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered herein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof; and (c) to remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. II-3 SIGNATURES PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL OF THE REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF NEWARK, STATE OF NEW JERSEY, ON THIS 21ST DAY OF MAY, 1997. PUBLIC SERVICE ELECTRIC AND GAS COMPANY By: /s/ E. JAMES FERLAND ------------------------------ E. JAMES FERLAND CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED.
SIGNATURE TITLE DATE - ------------------------------------------------------ ------------------------------------- ------------- /s/E. JAMES FERLAND Chairman of the Board and May 21, 1997 ------------------- Chief Executive Officer E. JAMES FERLAND and Director (Principal Executive Officer) /s/ROBERT C. MURRAY Senior Vice President May 21, 1997 ------------------- and Chief Financial Officer ROBERT C. MURRAY (Principal Financial Officer) /s/PATRICIA A. RADO Vice President and Controller May 21, 1997 ------------------- (Principal Accounting Officer) PATRICIA A. RADO
THIS REGISTRATION STATEMENT HAS ALSO BEEN SIGNED BY ROBERT C. MURRAY, ATTORNEY-IN-FACT, ON BEHALF OF THE FOLLOWING DIRECTORS ON MAY 21, 1997. LAWRENCE R. CODEY ----------------- LAWRENCE R. CODEY RAYMOND V. GILMARTIN By: /s/ROBERT C. MURRAY -------------------- ------------------- RAYMOND V. GILMARTIN ROBERT C. MURRAY ATTORNEY-IN-FACT IRWIN LERNER ------------ IRWIN LERNER FORREST J. REMICK ----------------- FORREST J. REMICK CONRAD K. HARPER ---------------- CONRAD K. HARPER
II-4 EXHIBIT INDEX Certain Exhibits previously filed with the Commission are incorporated herein by reference, and are indicated as follows: (a) Filed by the Company with Form 8-A under the Securities Exchange Act of 1934, on the respective dates indicated, File No. 1-973. (b) Filed with registration statement of the Company under the Securities Exchange Act of 1934, File No. 1-973, effective July 1, 1935, relating to the registration of various issue of securities. (c) Filed with registration statement of the Company under the Securities Act of 1933, No. 2-4995, effective May 20, 1942, relating to the issuance of $15,000,000 First and Refunding Mortgage Bonds, 3% Series due 1972. (d) Filed with registration statement of the Company under the Securities Act of 1933, No. 2-8381, effective April 18, 1950, relating to the issuance of $26,000,000 First and Refunding Mortgage Bonds, 2 3/4% Series due 1980. (e) Filed with registration statement of the Company under the Securities Act of 1933, No. 2-12906, effective December 4, 1956, relating to the issuance of 1,000,000 shares of Common Stock. (f) Filed with registration statement of the Company under the Securities Act of 1933, No. 2-59675, effective September 1, 1977, relating to the issuance of $60,000,000 First and Refunding Mortgage Bonds, 8 1/8% Series I due 2007. (g) Filed with registration statement of the Company under the Securities Act of 1933, No. 2-60925, effective March 30, 1978, relating to the issuance of 750,000 shares of Common Stock through an Employee Stock Purchase Plan. (h) Filed with registration statement of the Company under the Securities Act of 1933, No. 2-65521, effective October 10, 1979, relating to the issuance of 3,000,000 shares of Common Stock. (i) Filed by the Company with Form 8-K under the Securities Exchange Act of 1934, on the respective dates indicated, File No. I-973. (j) Filed by the Company with Form 10-Q under the Securities Exchange Act of 1934, on the respective dates indicated, File No. I-973. (k) Filed by the Company with Form 10-K under the Securities Exchange Act of 1934, on the respective dates indicated, File No. I-973. (l) Filed with registration statement of the Company under the Securities Act of 1933, No. 33-13209 filed April 9, 1987, relating to the registration of $575,000,000 First and Refunding Mortgage Bonds pursuant to Rule 415. (m) Filed with registration statement of the Company under the Securities Act of 1933, No. 33-50197 filed September 9, 1993, relating to the registration of $400,000,000 First and Refunding Mortgage Bonds pursuant to Rule 415. II-5
EXHIBIT NUMBER - ------------------------------ THIS FILING PREVIOUS FILING - ----------- --------------- 1a Terms and Conditions Relating to Bids 1b Bid with Form of Purchase Agreement attached 2 Inapplicable 4a(1) (b) B-1 Indenture between the Company and Fidelity Union Trust Company, (now First Union National Bank), as Trustee, dated August 1, 1924, securing First and Refunding Mortgage Bonds. Supplemental Indentures between the Company and First Union National Bank, as Trustee, supplemental to Exhibit 4a(1), dated as follows: 4a(2) (d) 7(1a) April 1, 1927 4a(3) (f) 2b(3) June 1, 1937 4a(4) (f) 2b(4) July 1, 1937 4a(5) (f) 2b(5) December 19, 1939 4a(6) (c) B-10 March 1, 1942 4a(7) (f) 2b(7) June 1, 1949 4a(8) (f) 2b(8) May 1, 1950 4a(9) (f) 2b(9) October 1, 1953 4a(10) (f) 2b(10) May 1, 1954 4a(11) (e) 4b(16) November 1, 1956 4a(12) (f) 2b(12) September 1, 1957 4a(13) (f) 2b(13) August 1, 1958 4a(14) (f) 2b(14) June 1, 1959 4a(15) (f) 2b(15) September 1, 1960 4a(16) (f) 2b(16) August 1, 1962 4a(17) (f) 2b(17) June 1, 1963 4a(18) (f) 2b(18) September 1, 1964 4a(19) (f) 2b(19) September 1, 1965 4a(20) (f) 2b(20) June 1, 1967 4a(21) (f) 2b(21) June 1, 1968 4a(22) (f) 2b(22) April 1, 1969 4a(23) (f) 2b(23) March 1, 1970 4a(24) (f) 2b(24) May 15, 1971 4a(25) (f) 2b(25) November 15, 1971 4a(26) (f) 2b(26) April 1, 1972 4a(27) (a) 2 March 1, 1974 3/29/74 4a(28) (a) 2 October 1, 1974 10/11/74 4a(29) (a) 2 April 1, 1976 4/6/76 4a(30) (a) 2 September 1, 1976 9/16/76 4a(31) (f) 2b(31) October 1, 1976 4a(32) (a) 2 June 1, 1977 6/29/77 4a(33) (g) 2b(33) September 1, 1977 4a(34) (a) 2 November 1, 1978 11/21/78 4a(35) (a) 2 July 1, 1979 7/25/79 4a(36) (h) 2d(36) September 1, 1979 (No. 1) 4a(37) (h) 2d(37) September 1, 1979 (No. 2)
II-6
EXHIBIT NUMBER - ------------------------------ THIS FILING PREVIOUS FILING - ----------- --------------- 4a(38) (a) 2 November 1, 1979 12/3/79 4a(39) (a) 2 June 1, 1980 6/10/80 4a(40) (a) 2 August 1, 1981 8/19/81 4a(41) (i) 4e April 1, 1982 4/29/82 4a(42) (a) 2 September 1, 1982 9/17/82 4a(43) (a) 2 December 1, 1982 12/21/82 4a(44) (j) 4(ii) June 1, 1983 7/26/83 4a(45) (a) 4 August 1, 1983 8/19/83 4a(46) (j) 4(ii) July 1, 1984 8/14/84 4a(47) (j) 4(ii) September 1, 1984 11/2/84 4a(48) (i) 4(ii) November 1, 1984 (No. 1) 1/4/85 4a(49) (i) 4(ii) November 1, 1984 (No. 2) 1/4/85 4a(50) (a) 2 July 1, 1985 8/2/85 4a(51) (k) 4a(51) January 1, 1986 2/11/86 4a(52) (a) 2 March 1, 1986 3/28/86 4a(53) (a) 2(a) April 1, 1986 (No. 1) 5/1/86 4a(54) (a) 2(b) April 1, 1986 (No. 2) 5/1/86 4a(55) (l) 4a(55) March 1, 1987 4/9/87 4a(56) (a) 4 July 1, 1987 (No. 1) 8/17/87 4a(57) (j) 4 July 1, 1987 (No. 2) 11/13/87 4a(58) (a) 4 May 1, 1988 5/17/88 4a(59) (a) 4 September 1, 1988 9/27/88 4a(60) (a) 4 July 1, 1989 7/25/89 4a(61) (a) 4 July 1, 1990 (No. 1) 7/25/90 4a(62) (a) 4 July 1, 1990 (No. 2) 7/25/90 4a(63) (a) 4 June 1, 1991 (No. 1) 7/1/91 4a(64) (a) 4 June 1, 1991 (No. 2) 7/1/91
II-7
EXHIBIT NUMBER - ------------------------------ THIS FILING PREVIOUS FILING - ----------- --------------- 4a(65) (a) 4 November 1, 1991 (No. 1) 12/2/91 4a(66) (a) 4 November 1, 1991 (No. 2) 12/2/91 4a(67) (a) 4 November 1, 1991 (No. 3) 12/2/91 4a(68) (a) 4 February 1, 1992 (No. 1) 2/27/92 4a(69) (a) 4 February 1, 1992 (No. 2) 2/27/92 4a(70) (a) 4 June 1, 1992 (No. 1) 6/17/92 4a(71) (a) 4 June 1, 1992 (No. 2) 6/17/92 4a(72) (a) 4 June 1, 1992 (No. 3) 6/17/92 4a(73) (a) 4 January 1, 1993 (No. 1) 2/2/93 4a(74) (a) 4 January 1, 1993 (No. 2) 2/2/93 4a(75) (a) 4 March 1, 1993 3/17/93 4a(76) (a) 4 May 1, 1993 3/17/93 4a(77) (a) 4 May 1, 1993 (No. 2) 5/25/93 4a(78) (a) 4 May 1, 1993 (No. 3) 5/25/93 4a(79) (m) July 1, 1993 4a(80) (a) 4 August 1, 1993 8/3/93 4a(81) (i) 4 September 1, 1993 12/1/93 4a(82) (i) 4 September 1, 1993 (No. 2) 12/1/93 4a(83) (i) 4 November 1, 1993 12/1/93 4a(84) (i) 4 February 1, 1994 2/3/94 4a(85) (a) 4 March 1, 1994 (No. 1) 3/15/94 4a(86) (a) 4 March 1, 1994 (No. 2) 3/15/94 4a(87) (j) 4 May 1, 1994 11/8/94 4a(88) (j) 4 June 1, 1994 11/8/94 4a(89) (j) 4 August 1, 1994 11/8/94 4a(90) (j) 4 October 1, 1994 (No. 1) 11/8/94 4a(91) (j) 4 October 1, 1994 (No. 2) 11/8/94
II-8
EXHIBIT NUMBER - ------------------------------ THIS FILING PREVIOUS FILING - ----------- --------------- 4a(92) October 1, 1995 (No. 1) 4a(93) October 1, 1995 (No. 2) 4a(94) (a) 4 January 1, 1996 (No. 1) 1/26/96 4a(95) (a) 4 January 1, 1996 (No. 2) 1/26/96 4a(96) (k) 4 December 1, 1996 2/26/97 4a(97) April 1, 1997 4a(98) Form of Supplemental Indenture between the Company and First Union National Bank, as Trustee, providing for $150,000,000 of New Bonds, supplemental to Exhibit 4a(1) 4b (i) 4 Indenture of Trust between the Company and The Chase Manhattan Bank (National 12/1/93 Association), as Trustee, providing for Secured Medium-Term Notes dated July 1, 1993 5 Opinion of James T. Foran, Esq., as to the legality of the New Bonds to be registered hereby 8 Inapplicable 12 (j)12(a)) Ratio of Earnings to Fixed Charges 5/15/97 15 Inapplicable 23a Independent Auditors' Consent 23b Consent of Ballard Spahr Andrews & Ingersoll 23c Consent of James T. Foran, Esq. (included in Exhibit 5 above) 24 Power of Attorney 25 Statement of Eligibility of First Union National Bank, as Trustee under the Indenture referred to in Exhibit 4a(1) and Supplemental Indentures referred to in 4a(2) -- 4a(98) (Form T-1) 26 Inapplicable 27 Inapplicable 28 Inapplicable 99 Inapplicable
II-9 EX-1 2 EXHIBIT 1A EXHIBIT 1A PUBLIC SERVICE ELECTRIC AND GAS COMPANY FIRST AND REFUNDING MORTGAGE BONDS ------------------------ TERMS AND CONDITIONS RELATING TO BIDS BID WITH FORM OF PURCHASE AGREEMENT ATTACHED PUBLIC SERVICE ELECTRIC AND GAS COMPANY TERMS AND CONDITIONS RELATING TO BIDS FOR THE PURCHASE OF FIRST AND REFUNDING MORTGAGE BONDS Public Service Electric and Gas Company ("the Company") expects to issue from time to time in several series not more than $250,000,000 principal amount of its First and Refunding Mortgage Bonds. The Company will invite competitive bids, in accordance with the notice provisions and the other terms and conditions hereof, for the purchase of all or a portion of such First and Refunding Mortgage Bonds. The principal amount of such First and Refunding Mortgage Bonds to be issued after a bidding therefor is referred to herein as the "Bonds". Proposals for the purchase of the Bonds may be transmitted to the Company only in accordance with the terms and conditions hereof. Any communication received by the Company relating to the purchase of the Bonds other than as contemplated herein shall be treated as market information and not as a proposal. 1. INFORMATION CONCERNING THE COMPANY AND THE BONDS. Prospective bidders may examine at the office of the Company, 80 Park Plaza, Newark, N.J., at any time during business hours, copies of the following: (a) the First and Refunding Mortgage of the Company, dated August 1, 1924, and such of the indentures supplemental thereto as have not heretofore been cancelled, and the form of the Supplemental Indenture thereto to be dated the first day of the month in which the Bonds are issued (all hereinafter collectively referred to as the "Mortgage") to First Union National Bank (successor Trustee to Fidelity Union Trust Company) as Trustee, under which the Bonds are to be issued; (b) the Registration Statement (including exhibits, the Prospectus and the documents incorporated therein by reference), and any further amendments thereto relating to the Bonds, filed with the Securities and Exchange Commission under the Securities Act of 1933; (c) the Petitions, and any amendments or supplements thereto (including exhibits), of the Company relating to the issuance and sale of the Bonds, as filed with the Board of Public Utilities of the State of New Jersey, and the Order or Orders of such Board authorizing the sale of the Bonds through competitive bidding; (d) the Form of Bid to be used by bidders in offering to purchase the Bonds, which includes the form of Purchase Agreement for the purchase of the Bonds (the "Purchase Agreement"); (e) (1) a survey by Brown & Wood LLP, which is the firm referred to in Section 8 hereof, with respect to the legality of the Bonds as investments for savings banks, life and certain other insurance companies and fiduciaries in certain states and (2) a preliminary survey by that firm with respect to the qualification of the Bonds for sale under the securities laws of various states; and (f) a statement, when available, with respect to the bidding for the Bonds and the terms of the Bonds, which statement shall specify (1) the date and time for the receipt of bids for the Bonds, (2) whether bids will be received (i) in writing, (ii) by telephone confirmed in writing or (iii) either in writing or by telephone confirmed in writing, (3) the principal amount of the Bonds, (4) the series designation of the Bonds, (5) the minimum and maximum percentages of principal amount which may be specified in the Bid as the purchase price for the Bonds, (6) the term of the Bonds, which shall not be less than one year nor more than 40 years, (7) the terms and conditions upon which the Bonds may be redeemed, either at the option of the Company, pursuant to any sinking or improvement fund for the Bonds, or otherwise, and (8) such other provisions as may be necessary or desirable to establish the terms and conditions of the Bonds and the terms of bidding therefor. Copies of items (d) and (e), copies of the First and Refunding Mortgage (in composite form as amended by the supplemental indenture thereto dated March 1, 1942), of all uncanceled subsequent supplemental indentures and of the form of the Supplemental Indenture to be dated the first day of the month in which the Bonds are issued, and copies of the Prospectus relating to the Bonds, will be supplied in reasonable quantities to prospective bidders on request. The Company will make copies of item (f) above available to prospective bidders as soon as practicable, but in no event later than 24 hours prior to the time for the opening of bids. The Company reserves the right to amend the Registration Statement and Prospectus and the aforesaid Petition, and to make changes in the form of the Supplemental Indenture to be dated the first day of the month in which the Bonds are issued, including the form of Bond and the redemption provisions therein set forth, and in the form of any other documents relating to the issuance and sale of the Bonds, at any time and from time to time with the approval of Brown & Wood LLP prior to the time the Purchase Agreement becomes effective, or as may be provided in such agreement after it has become effective. The Company will give telephonic notice confirmed in writing of the date and time for the receipt of bids and of any such amendments and changes, which in its opinion are material, made prior to the opening of bids, to any person who intends to submit a bid and who notifies the Company at its office, 80 Park Plaza, T6B, P.O. Box 570, Newark, N.J. 07101, attention Mr. F. J. Riepl, Vice President and Treasurer, that it desires such notice and furnishes the name, address and telephone number of the person to whom such notice shall be given. The notice of any such amendment or change need not include the text thereof, but the text thereof may be examined at said office. The Bonds will be issuable only in fully registered form. 2. FORM AND CONTENT OF BIDS. Each bid must be for the purchase of the entire principal amount of Bonds for which bids are being received, and shall specify (i) the interest rate (which shall be stated in the manner specified in the statement referred to in Section 1(f) hereof) on the Bonds and (ii) the price to be paid to the Company for the Bonds, which price shall be stated as a percent of the principal amount of the Bonds and shall be not less than nor more than the minimum and maximum percentages of the principal amount thereof specified in the statement referred to in Section 1(f) hereof, plus accrued interest from the first day of the month in which the Bonds are issued, to the date of delivery of and payment for the Bonds. Bids may be made by a single bidder or by a group of bidders. No bidder who bids singly may participate in a group bid, and no bidder who participates in one group bid may participate in another group bid. In the case of a bid by a group of bidders, the several members of the group shall act through a duly authorized representative or representatives (herein referred to as the "Representative"), who shall be named as Representative in the bid by the group for the purchase of the Bonds and who may be included in the group. If a bid of a group of bidders is accepted, the obligations of the members of the group shall be several and not joint, including the obligation to purchase the principal amounts of Bonds set forth opposite the respective names of such members in Schedule A to the bid. If a bid is submitted by a Representative on behalf of a group of bidders, and the principal amount of Bonds to be purchased by any member of the group is incorrectly stated in Schedule A to such bid, the Representative may correct any such error or errors forthwith upon discovery thereof. If no such correction is made, or if after all such corrections are made, the total of the amounts set forth in said Schedule A is more or less than the principal amount of Bonds for which bids are being received, then the amount of Bonds offered to be purchased by the Representative shall be deemed to be increased or decreased, as the case may be, to the extent of the discrepancy. All bids must be signed by a single bidder, or in the case of a bid by a group of bidders, by their Representative on behalf of the group, and should be submitted in duplicate. 3. CERTAIN REPRESENTATIONS BY THE BIDDERS TO BE FURNISHED TO THE COMPANY. By submitting a bid for the Bonds, each bidder shall be deemed to represent to the Company, as of the date of the bidding for the Bonds, that, except as stated to the Company in writing prior to the time for receipt of bids for the Bonds: (a) neither such bidder nor any of its directors, officers or partners have a material relationship with the Company or its parent Public Service Enterprise Group Incorporated ("Enterprise"); 2 (b) such bidder and its directors and officers or partners, as a group, do not own beneficially 10% or more of any class of capital stock of the Company or Enterprise; (c) such bidder is not a "holding company", a "subsidiary" of a "holding company", or an "affiliate" of a "holding company" or of a "public utility company", each as defined in the Public Utility Holding Company Act of 1935; (d) such bidder has not prepared any report or memorandum for external use in connection with the proposed offering; (e) such bidder's commitment to purchase the Bonds will not result in a violation of the financial responsibility requirements of Rule 15c3-1 under the Securities Exchange Act of 1934, and is not prohibited or restricted by any action of the Securities and Exchange Commission or of any national securities exchange applicable to such bidder; and (f) such bidder has not assumed or guaranteed any securities of others and has no securities outstanding other than those issued in its present name. 4. SUBMISSION OF BIDS. As set forth below and in the statement to be furnished to prospective bidders pursuant to Section 1(f) hereof, the Company will receive bids in writing and/or by telephone confirmed in writing. (a) WRITTEN BIDS. Each bid in writing must be delivered to the Company on the Form of Bid with Schedule A completed, at the Blake Room, Fourth Floor, 80 Park Plaza, Newark, N.J. 07101, on the date and at the time specified by the Company pursuant to Section 1 hereof, enclosed and sealed in an envelope addressed as follows: "Public Service Electric and Gas Company, 80 Park Plaza, Newark, N.J. 07101 -- Private and Confidential -- Not to be opened except in accordance with the Terms and Conditions Relating to Bids, dated , 1997 for the purchase of Bonds." Each such envelope, when delivered, must indicate the name and address of the bidder or, in the case of a group of bidders, of the Representative, and shall bear no indication of the amount of the bid or any inscription other than herein permitted. (b) TELEPHONIC BIDS CONFIRMED IN WRITING. Each telephonic bid confirmed in writing for the Bonds must be received by the Company on the date and no later than the time designated by the Company in the statement furnished to bidders pursuant to Section 1(f) hereof. Such telephonic bids must be directed to the person and telephone number specified by the Company to each prospective bidder and must provide the Company with (i) the name of any single bidder, the name(s) of the Representative(s) and the names of all members of a group of bidders, (ii) a telephone number at which such bid may be immediately confirmed and the name of the individual who will provide confirmation, (iii) the interest rate to be borne by the Bonds and (iv) the price to be paid to the Company for the Bonds. Such telephonic bids must be confirmed in writing by means of a duly executed bid in writing on the Form of Bid (with Schedule A thereto completed) or by other similar written instrument acceptable to the Company and providing the information required in this paragraph to be set forth, which must either be delivered to the offices of Brown & Wood LLP, One World Trade Center, New York, N.Y., or to the Company, 80 Park Plaza, Newark, New Jersey, to the attention of the persons designated in the statement furnished to bidders pursuant to Section 1(f) hereof or telecopied to the offices of the Company at the telephone number specified by the Company in the statement furnished to bidders pursuant to Section 1(f) hereof, as soon as possible, but in no event more than one hour after the time specified as the deadline for receipt of bids. Except as set forth in the fourth paragraph of Section 2 hereof, any failure by a bidder to confirm a telephonic bid in a timely manner by a duly executed bid in writing on the Form of Bid or other similar written instrument acceptable to the Company, with all information properly specified therein, may result in such telephonic bid being rejected as not in the proper form as specified by the Company. (c) The Company reserves the right, in its discretion from time to time, to postpone the time or date for delivery and opening of bids, and will give telephonic notice confirmed in writing of any such postponement to any prospective bidder who shall have furnished its name to the Company for such purpose pursuant to Section 1 hereof. 3 (d) The Company reserves the right to designate, not less than 30 minutes prior to the time, or postponed time, specified for delivery and opening of bids, a principal amount less than the principal amount originally specified for the Bonds as the principal amount of the Bonds, in which event the principal amount so designated shall be deemed to be the principal amount of the Bonds. 5. ACCEPTANCE OR REJECTION OF BIDS. Subject to the reservations set forth below, all bids will be announced or opened by the Company at its office, 80 Park Plaza, Newark, N.J., on the date and at the time designated for receipt of bids specified by the Company in the statement furnished to bidders pursuant to Section 1(f) hereof, or at such later time or date as may be fixed by the Company as provided in Section 4(c) hereof. Within three hours of the receipt of bids, the Company will (subject to the provisions and reservations stated below) accept the bid which will provide the Company with the lowest "annual cost of money". Said "annual cost of money" in respect of each bid shall be determined by the Company in accordance with the method specified in the statement referred to in Section 1(f) hereof. The decision of the Company with respect to the lowest "annual cost of money" shall in all cases be final. Each bid will be accepted or rejected in its entirety. All bids shall be irrevocable until three hours after the receipt of bids, unless sooner returned unopened or rejected. In case two or more such bids provide an identical lowest "annual cost of money" to the Company, the Company (unless it shall reject all bids) shall by oral announcement give the makers of such identical bids the opportunity (the duration of which shall be in the Company's discretion, but shall not extend beyond three hours after the opening of bids) to improve their bids. The Company will accept, subject to the reservations stated below, the improved bid which will provide the lowest "annual cost of money" to the Company. If no improved bid is so made, or if on rebidding two or more bids providing an identical lowest "annual cost of money" to the Company are again received, the Company may, in its sole discretion and without liability to the maker of any other bid, accept any one of the identical bids providing the lowest "annual cost of money" to the Company. Notwithstanding the foregoing provisions hereof, the Company reserves the right (a) to return all bids unopened either at or prior to the time specified for the opening thereof, (b) to reject all bids (at or after the opening thereof irrespective of the terms named therein), and (c) to reject the bid of any bidder or of any group of bidders (i) if such bidder or any member of such group of bidders is in such relationship with any of the trustees under the Company's indentures as would disqualify any of said trustees from acting as such trustee, if the bid of such bidder or group of bidders shall be accepted, (ii) if the Company, in the opinion of its counsel, may not lawfully sell the Bonds to such bidder or to any member of such group of bidders, and, in either such event, in the case of a group of bidders, if within one hour after the opening of bids, the member or members of such group causing such disqualification or illegality have not withdrawn from the group and the remaining members, including substituted members, if any are permitted by the Company, have not agreed to purchase the Bonds which such withdrawing member or members have offered to purchase, (iii) if the Company is not reasonably satisfied with the financial responsibility of such bidder or any member of any such group of bidders, or (iv) if the acceptance of such bid might, in the judgment of the Company, bring about the risk of a delay in the sale of the Bonds. 6. DETERMINATION OF REDEMPTION PRICES OF THE BONDS. As soon as practicable after the acceptance of a bid, any applicable redemption prices of the Bonds will be determined by the Company in accordance with the statement referred to in Section 1(f) hereof. Such determination by the Company shall be final. 7. PURCHASE AGREEMENT. Upon the acceptance of a bid for the Bonds, the Company will forthwith signify such acceptance by signing a duplicate, reproduction or facsimile copy of the bid of the successful bidder, or, in the case of a bid by a group 4 of bidders, of the Representative on behalf of such group. Upon such acceptance of a bid, the Purchase Agreement shall become effective without any separate execution thereof, and thereafter all rights of the Company and of the successful bidder, or group of bidders, shall be determined solely in accordance with the terms of the bid and such Purchase Agreement. Forthwith upon such acceptance of any bid, the successful bidder or, in the case of a bid by a group of bidders, the Representative on behalf of such group, shall furnish to the Company in writing an appropriate consent to the filing of any required Post-Effective Amendment to the Registration Statement and the information which is (i) required to amend the Registration Statement and/or to supplement the Prospectus and for the filing thereof, and (ii) required to be filed by the Company with the Board of Public Utilities of the State of New Jersey. 8. OPINION OF COUNSEL FOR THE PURCHASERS. Brown & Wood LLP, One World Trade Center, New York, N.Y. 10048 has been selected by the Company as counsel to give to the successful bidder or bidders an opinion with respect to the legal matters specified in Section 5(e) of the Purchase Agreement. Such firm has participated from the standpoint of possible purchasers of the Bonds in the preparation of the competitive bidding papers and the documents under which the Bonds are to be issued and has reviewed or will review the corporate proceedings and the registration procedure with respect to the authorization and issuance of the Bonds. It has also prepared the surveys referred to in Section 1(e) hereof. Prospective bidders may confer with Brown & Wood LLP with respect to any of the foregoing matters. The compensation and disbursements of such firm are to be paid by the successful bidder or bidders, except as otherwise provided in the Purchase Agreement, and any prospective bidder and any Representative of a group of prospective bidders may obtain from such firm, upon request, a statement of the amount of such compensation and an estimate of the amount of such disbursements. 9. MISCELLANEOUS. The Company reserves the right to waive any irregularity, which it deems to be immaterial, in complying with any of the foregoing terms and conditions. The validity, construction and interpretation of the Terms and Conditions and any bid submitted pursuant hereto shall be governed by the laws of the State of New Jersey. PUBLIC SERVICE ELECTRIC AND GAS COMPANY E. JAMES FERLAND By ................................... Chairman of the Board and Chief Executive Officer , 1997 5 EX-1 3 EXHIBIT 1-B EXHIBIT 1B BID FOR THE PURCHASE OF $ * PRINCIPAL AMOUNT OF PUBLIC SERVICE ELECTRIC AND GAS COMPANY FIRST AND REFUNDING MORTGAGE BONDS,* SERIES * DUE * ------------------------------------ INTEREST RATE:** PRICE:** % OF PRINCIPAL AMOUNT , 19 Public Service Electric and Gas Company 80 Park Plaza Newark, N.J. 07101 Dear Sirs: Referring to the Statement of Terms and Conditions Relating to Bids dated , 1997 for the purchase in one or more series of not more than $250,000,000 principal amount of First and Refunding Mortgage Bonds of Public Service Electric and Gas Company (the "Company"), the persons, firms and corporations named in Schedule A attached hereto (the "Bidders") submit herewith the following Bid for the above series of First and Refunding Mortgage Bonds of the Company (the "Bonds"): 1. Each of the Bidders, severally and not jointly, hereby offers to purchase from the Company, at the price (expressed as a percentage of the principal amount of the Bonds) specified in the space provided therefor above, plus accrued interest from the first day of the month in which the Bonds are issued to the date of delivery of and payment for the Bonds, and upon the terms and conditions set forth in the Company's Statement of Terms and Conditions Relating to Bids for the Bonds dated , 1997, including the statement relating to the Bonds furnished to bidders by the Company pursuant to Section 1(f) thereof (the "Terms and Conditions") and in the form of Purchase Agreement attached hereto, the principal amount of Bonds set forth opposite the name of such Bidder in said Schedule A (unless corrected or deemed to have been corrected as provided in Section 2 of the Terms and Conditions, in which case said principal amount shall be as so corrected or deemed to have been corrected). The interest rate for the Bonds shall be that specified in the space provided therefor above. 2. If this Bid shall be accepted by the Company, the Purchase Agreement with the Company in the form attached hereto as Schedule B shall thereupon become effective as of the date of the acceptance of this Bid without any separate execution thereof, with the blanks therein deemed to be appropriately filled in, in accordance with the terms of this Bid and with such modifications therein as may be necessary and as are contemplated by the Terms and Conditions. 3. This Bid is independent of all other bids which may be presented to the Company pursuant to the Terms and Conditions. - --------------- * Insert the principal amount, the series designation and the year of maturity of the Bonds designated by the Company pursuant to Section 1 of the Terms and Conditions. ** Insert the interest rate and price determined in accordance with the statement furnished to bidders by the Company pursuant to Section 1(f) of the Terms and Conditions. 4. Each of the Bidders acknowledges receipt of a copy of the Terms and Conditions and the Prospectus relating to the Bonds. 5. By making this Bid each of the Bidders confirms its representations to the Company as set forth in Section 3 of the Terms and Conditions. The Representative represents and warrants that it has all necessary power and authority to bid for each of the Bidders in respect of the matters referred to in this Bid and to act on behalf of each of the Bidders in any purchase of the Bonds if this Bid is accepted as contemplated by the Terms and Conditions. Yours very truly, ...................................... Representative(s) By ................................... Acting on behalf of the several bidders named in Schedule A annexed hereto, including itself; or single bidder. Accepted , 19 Public Service Electric and Gas Company By ................................... Vice President SCHEDULE A PRINCIPAL NAME OF BIDDER AMOUNT - --------------- ------------ ------------ Total................................................ $ ------------ ------------ SCHEDULE B PUBLIC SERVICE ELECTRIC AND GAS COMPANY FIRST AND REFUNDING MORTGAGE BONDS PURCHASE AGREEMENT AGREEMENT made as of the date of acceptance of the bid (which includes Schedule A thereto) and to which this Agreement is attached as Schedule B (the "Bid"), between Public Service Electric and Gas Company, a New Jersey corporation (the "Company"), and the several Underwriters (hereinafter defined) of the Company's First and Refunding Mortgage Bonds, of the designated series, in the principal amount and with the interest rate and maturity specified in the Bid (the "Bonds"). SECTION 1. REGISTRATION AND ISSUE OF BONDS. (a) The Company proposes to issue the Bonds under its First and Refunding Mortgage, dated August 1, 1924, between the Company and Fidelity Union Trust Company (now known as First Union National Bank), as Trustee (the "Trustee"), as supplemented and amended, and as to be further supplemented by a supplemental indenture between the Company and the Trustee, to be dated the first day of the month in which the Bonds are issued (said First and Refunding Mortgage, as so supplemented and amended and to be supplemented, being hereinafter referred to as the "Mortgage" and such supplemental indenture, as executed and delivered, being hereinafter referred to as the "Supplemental Indenture"), which Bonds and Mortgage are more fully described in the Prospectus hereinafter referred to. (b) The Company represents and warrants that it has duly filed with the Securities and Exchange Commission (the "Commission") a registration statement on Form S-3 (No. 33-52435) and another registration statement on Form S-3 (No. 333- ), such registration statements together relating to $250,000,000 principal amount of the Company's First and Refunding Mortgage Bonds and the offering thereof from time-to-time in accordance with Rule 415 under the Securities Act of 1933, as amended (the "Securities Act"), and has filed such amendments thereto, if any, and such amended preliminary prospectuses as may have been required to the date hereof. Such registration statements as so amended have been declared effective by the Commission. Copies of such registration statements have been delivered to the Representative hereinafter referred to, and copies of a post-effective amendment or a prospectus supplement or prospectus filed pursuant to Rule 424(b) under the Securities Act satisfactory to Counsel for the Purchasers reflecting the terms of the Bonds will be similarly delivered. The Company will not file any other amendment to said registration statements, any prospectus supplement or any documents with the Commission pursuant to Sections 13, 14, or 15 of the Securities Exchange Act of 1934, as amended (the "1934 Act"), which modify said registration statements, unless such amendment, supplement or modification is satisfactory to Counsel for the Underwriters. Such registration statements as so amended at the date of this Agreement, and the prospectus constituting a part thereof, as amended or supplemented to reflect the terms of the offering of the Bonds pursuant to a post-effective amendment or a prospectus supplement or prospectus filed by the Company pursuant to Rule 424(b) under the Securities Act (including, in each case, all documents incorporated by reference therein pursuant to Item 12 of Form S-3 under the Securities Act), are hereinafter called the "Registration Statement" and the "Prospectus", respectively, except that if the Company files any documents pursuant to Sections 13, 14 or 15 of the 1934 Act after the date of this Agreement and prior to the termination of the offering of the Bonds by the Underwriters, which documents are deemed to be incorporated by reference in the Prospectus, the term "Prospectus" shall refer to the Prospectus as supplemented by the documents so filed from and after the date said documents are mailed or otherwise delivered for filing to the Commission. The Company will advise Brown & Wood LLP, who are acting as Counsel for the Underwriters, of the filing of any amendment to the Registration Statement or any amendment or supplement to the Prospectus (including any documents incorporated by reference), prior to any such filing and will not file any such amendment or supplement to which Counsel for the Underwriters shall reasonably object in writing. SECTION 2. PURCHASE AND SALE. Subject to the terms and conditions herein set forth, the Company agrees to sell to the several persons, firms or corporations named in the Bid (herein referred to as "Underwriters" or singly as "Underwriter" and the Underwriter or Underwriters named as Representative(s) in the Bid being herein referred to as "Representative"), severally and not jointly, and each of the Underwriters, upon the basis of the representations and warranties herein set forth, agrees to purchase from the Company, severally and not jointly, the principal amount of Bonds set forth opposite its name in the Bid at the price specified in the Bid plus accrued interest thereon from the first day of the month in which the Bonds are issued to the date of delivery of any payment for the Bonds. SECTION 3. PUBLIC OFFERING. The Company is advised by the Representative that the Underwriters propose to make a bona fide public offering of the Bonds as soon as practicable. The Representative is contemporaneously advising the Company of such details of the offering, including the initial price to the public and the concessions and discounts, if any, to dealers, brokers and others, as are needed to complete the filing of any amendment to the Registration Statement or any supplement to the Prospectus. The Representative will promptly deliver to the Company its written consent on behalf of all the Underwriters to the filing of any post-effective amendment filed after the acceptance of the Bid, and the Representative and the Underwriters will cooperate fully with the Company towards making such post-effective amendment effective at the earliest practicable time. SECTION 4. DELIVERY OF AND PAYMENT FOR THE BONDS. (a) Payment of the purchase price for the Bonds, including accrued interest at the rate specified in the Bid from the first day of the month in which the Bonds are issued to the date of delivery of and payment for the Bonds, shall be made by or on behalf of the several Underwriters by wire transfer of immediately available funds to the order of the Company, at the office of the Company, 80 Park Plaza, Newark, N.J. (or such other place or places of payment as may be agreed upon between the Company and the Representative), at 10 A.M., New York Time, on the date which is three business days after the date on which the Bid is accepted by the Company, or at such later time as shall be agreed upon by the Company and the Representative, upon delivery of the Bonds to the Representative at the office of First Union National Bank, 765 Broad Street, Newark, N.J. (or such other place or places of delivery as shall be agreed upon between the Company and the Representative) for the account of the several Underwriters. The time and date of such payment and delivery, which may be postponed as provided in paragraph (c) below, is herein referred to as the "Closing Date". (b) The Bonds will be delivered to the Representative for the respective accounts of the Underwriters in fully registered form in the dominations of $1,000 and any multiple of $1,000 and registered in such names as the Representative may reasonably request in writing not later than 10 a.m., New York Time, on the Closing Date, or to the extent not so requested, registered in the names of the respective Underwriters in such denominations as the Company may determine. For the purpose of examining the Bonds, the Company agrees to make such Bonds available to the Representative not later than 12 Noon, New York Time, on the business day next preceding the Closing Date at the above-mentioned office of First Union National Bank (or such other place or places as shall be agreed upon between the Company and the Representative). (c) If any one or more of the Underwriters shall fail or refuse to purchase and pay for the principal amount of Bonds set forth opposite its or their names in the Bid in accordance with the terms hereof (the "Defaulted Bonds"), the Company shall immediately notify the Representative orally, and the Representative shall have the right, within 24 hours thereafter, to make arrangements for one or more of the non-defaulting Underwriters, or any other underwriters, to purchase all, but not less than all, of the Defaulted Bonds in such amounts as may be agreed upon and upon the terms herein set forth. If, however, during such 24 hours the Representative shall not have completed such arrangements for the purchase of all of the Defaulted Bonds, then the Company shall have the right within a further period of 24 hours: (i) to require each non-defaulting Underwriter to purchase the Defaulted Bonds of the defaulting Underwriter up to a principal amount thereof equal to 10% of the principal amount of Bonds which such non-defaulting Underwriting has otherwise agreed to purchase hereunder, and (ii) to procure one or more others, members of the National Association of Securities Dealers, Inc., satisfactory to the Representative, to purchase, upon the terms herein set forth, the principal amount of Defaulted Bonds which the non-defaulting Underwriters shall not be obligated to purchase pursuant to the foregoing clause (i). In the event of a default by any Underwriter or Underwriters as set forth in this Section, either the Representative or the Company shall have the right to postpone the Closing Date for a period of not exceeding seven days in order that any required changes in the Registration Statement or Prospectus or in any other documents or arrangements may be effected. 2 SECTION 5. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The obligations of the several Underwriters to purchase and pay for the Bonds are subject to the following conditions: (a) Any post-effective amendment filed after the acceptance of the Bid to reflect the terms thereof shall have become effective no later than 6:30 P.M., New York Time, on the day next succeeding the effective date hereof, or at such later time as shall be agreed upon by the Company and the Representative. (b) At the Closing Date there shall be in full force and effect an order or orders of the Board of Public Utilities of the State of New Jersey permitting the execution and delivery of the Supplemental Indenture and the issuance and sale of the Bonds substantially in accordance with the terms and conditions herein set forth and containing no provision unacceptable to the Representative (it being understood that any such order in effect as of the date of this Agreement does not contain any such unacceptable provision and that no subsequent order shall be deemed to contain any such unacceptable provision, unless the Representative within 24 hours after receiving a copy thereof from the Company shall have given notice to the Company to the effect that such order contains an unacceptable provision or unacceptable provisions). (c) At the Closing Date (i) no stop order suspending the effectiveness of the Registration Statement shall be in effect, and no proceedings for that purpose shall be pending before, or to the knowledge of the Company threatened by, the Commission; (ii) since the respective most recent dates as of which information is given in the Registration Statement and Prospectus and up to the Closing Date, there shall have been no material adverse change in the business, properties or financial condition of the Company, except as reflected in or contemplated by the Registration Statement and the Prospectus, and since such dates and up to the Closing Date there shall have been no material transaction entered into by the Company other than transactions disclosed in or contemplated by the Registration Statement and the Prospectus and transactions in the ordinary course of business; (iii) the Company shall have performed all agreements contained herein to be performed by it at or prior to such date; and (iv) the representations and warranties of the Company herein contained shall be true and correct; and the Representative shall have received, prior to payment for the Bonds, a certificate, dated the day of the Closing Date and signed by the Chairman of the Board, the President or any Vice President of the Company, to such effect. (d) At the Closing Date the Representative shall be furnished with an opinion of counsel of the Company, which may be given by R. Edwin Selover, Esq., Senior Vice President and General Counsel, or by James T. Foran, Esq., General Corporate Counsel, of the Company, dated the day of the Closing Date and with copies thereof for each of the other Underwriters, to the effect that: (i) the Company has been duly incorporated and is validly existing under the laws of the State of New Jersey and has due corporate authority to carry on its business as described in the Prospectus, to own and operate the properties used and useful in said business and to issue the Bonds and secure the same by the Mortgage; (ii) the Company is a subsidiary of Public Service Enterprise Group Incorporated, which is a public utility holding company exempt from the provisions of the Public Utility Holding Company Act of 1935 (except Section 9(a)(2) thereof); (iii) the Mortgage has been duly authorized, executed and delivered by the Company and is a valid instrument legally binding upon the Company (except as limited by principles of equity and by bankruptcy, insolvency or other laws affecting creditors' rights); (iv) when the Bonds have been duly executed by the Company, authenticated by the Trustee and delivered by the Company, and payment therefor has been received by the Company pursuant to this Agreement, they will be valid and binding obligations of the Company in accordance with their terms and entitled to the lien of and the benefits provided by the Mortgage, subject to the limitation set forth in item (iii); 3 (v) the Bonds conform as to legal matters to the statements concerning them in the Prospectus and the summary of certain provisions of the Mortgage contained in the Prospectus constitutes a correct summary thereof for use in the Prospectus; (vi) the franchises of the Company are sufficient authority for it to carry on its business as described in the Prospectus; (vii) all approvals, consents, and orders of the Board of Public Utilities of the State of New Jersey legally required for the execution and delivery of the Supplemental Indenture and the issuance and sale of the Bonds have been obtained, and no approval, consent or order of any other commission or other governmental authority is legally required for such execution, delivery, issuance and sale (except that the sale of the Bonds in certain states may be subject to the provisions of the securities laws of such states) and the execution and delivery of the Supplemental Indenture and the issuance and sale of the Bonds are in accordance with the approvals, consents or orders obtained; (viii) the Mortgage has been duly recorded, or lodged for record, as a mortgage upon the property covered thereby in such manner as is necessary to maintain the lien thereof; (ix) the Mortgage constitutes as security for the Bonds a valid lien on all the property and franchises owned by the Company (except cash, accounts and bills receivable and all merchandise bought, sold or manufactured for sale in the ordinary course of the Company's business, stocks, bonds, or other corporate obligations or securities, other than those now or hereafter specifically pledged thereunder, not acquired with the proceeds of bonds secured by the Mortgage) as described or referred to in the Prospectus under the heading "Description of the New Bonds" subheading "Lien and Security", subject to no prior liens or encumbrances other than those specified or referred to or as otherwise set forth under said subheading; (x) this Agreement has been duly authorized, executed and delivered by the Company; (xi) the statements in the Registration Statement made upon the authority of counsel of the Company are in his opinion correct; (xii) at the time the Registration Statement became effective, the Registration Statement and, as of the date hereof, the Registration Statement and Prospectus (except the financial statements and other financial information included therein or omitted therefrom, as to which counsel need express no opinion) complied as to form in all material respects with the requirements of the Securities Act and the Trust Indenture Act of 1939, as amended, and the rules and regulations of the Commission regarding registration statements on Form S-3 and related prospectuses; (xiii) the Mortgage has been duly qualified under the Trust Indenture Act of 1939, as amended; (xiv) with respect to matters required to be included in the Registration Statement, the statements made in the Registration Statement under the heading "Description of the New Bonds" fairly present the information called for insofar as such statements constitute summaries of certain documents referred to therein; (xv) the statements made in the Company's most recent Annual Report on Form 10-K under "Rate Matters" and "Environmental Controls" in Item 1. Business and under Item 3. Legal Proceedings, as such statements may be modified by the Prospectus, fairly present in all material respects the matters therein described; and (xvi) on the basis of a general review and discussion with certain officers and employees of the Company, but without independent check or verification except as indicated, nothing has come to the attention of such counsel that would lead him to believe that the Registration Statement, at the time it became effective or, if an amendment to the Registration Statement or an Annual Report on Form 10-K has been filed by the Company with the Commission subsequent to the effectiveness of the Registration Statement, then at the time of the most recent such filing, contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading, or that the Prospectus at the time it was filed with the Commission or at the Closing Date included or includes an untrue statement of a material fact or omitted or omits to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. 4 In giving such opinion, counsel of the Company may rely as to all matters of Pennsylvania law and legal conclusions based thereon upon the opinion of Ballard Spahr Andrews & Ingersoll, of Philadelphia, Pennsylvania. As to matters set forth in subparagraphs (viii) and (ix) above, the opinion of counsel of the Company may be based in part on title insurance policies and reports and searches obtained from companies engaged in the business of insuring title to real estate in New Jersey, and the opinion of Ballard Spahr Andrews & Ingersoll may be based in part on title insurance policies and reports and searches obtained from a company engaged in the business of insuring title to real estate in Pennsylvania, and on certificates or opinions of local counsel deemed by them to be reliable and competent. (e) At the Closing Date the Representative shall be furnished with an opinion, dated the day of the Closing Date, and with copies thereof for each of the other Underwriters, of Brown & Wood LLP (herein sometimes referred to as "Counsel for the Underwriters"), stating in substance the matters set forth in subparagraphs (iii), (iv), (v) (except as to statements under the subheading "Lien and Security"), (vii), (x), (xii), (xiii), (xiv), and (xvi) of paragraph (d) of this Section 5; and stating that the opinion given pursuant to paragraph (d) of this Section 5 is satisfactory to them. In giving such opinion, Counsel for the Underwriters may rely as to all matters of New Jersey law and legal conclusions based thereon upon the opinion of counsel of the Company called for by paragraph (d) of this Section 5 and as to all matters of Pennsylvania law and legal conclusions based thereon upon the opinion of Ballard Spahr Andrews & Ingersoll. (f) At the time of acceptance of the Bid and on the Closing Date, the Representative shall be furnished with a letter from Deloitte & Touche LLP dated such respective dates and addressed to the Board of Directors of the Company and the Representative with copies thereof for each of the Underwriters, to the effect that: (i) they are independent public accountants with respect to the Company and its subsidiaries within the meaning of the Securities Act and the applicable published rules and regulations thereunder (the "Securities Act Regulations"); (ii) in their opinion, the audited consolidated financial statements and financial statement schedule(s) incorporated by reference in the Registration Statement and the Prospectus and included in the Company's most recent Annual Report on Form 10-K filed with the Commission under Section 13 of the 1934 Act (the "Form 10-K") comply as to form in all material respects with the applicable accounting requirements of the Securities Act, the Securities Act Regulations, the 1934 Act and the applicable published rules and regulations thereunder (the "1934 Act Regulations"); (iii) on the basis of (1) a reading of the unaudited balance sheets and related unaudited statements of income, retained earnings and cash flows of the Company incorporated by reference in the Registration Statement and the Prospectus and included in the Company's Form 10-Q Quarterly Reports filed with the Commission under Section 13 of the 1934 Act (the "Form 10-Q's") subsequent to the most recent Form 10-K, (2) a reading of the latest available unaudited financial statements of the Company, (3) a reading of the latest Consent of the Sole Shareholder in Lieu of Annual Meeting, the minutes of Meetings of the Board of Directors of the Company as set forth in the minute books for the current year and certain draft resolutions for subsequent meeting, and (4) inquiries of the officers of the Company who have responsibility for financial and accounting matters (it being understood that the foregoing procedures do not constitute an audit made in accordance with generally accepted auditing standards and would not necessarily reveal matters of significance with respect to the comments made in such letter, and accordingly that Deloitte & Touche LLP makes no representation as to the sufficiency of such procedures for the purposes of the Underwriters), nothing has come to their attention which caused them to believe that (A) any material modifications should be made to the unaudited financial statements included in the Form 10-Q's for them to be in conformity with generally accepted accounting principles; (B) the unaudited financial statements included in the Form 10-Q's do not comply as to form in all material respects with the applicable accounting requirements of the 1934 Act and the 1934 Act Regulations or (C) at the date of the latest available financial statements and at a specified date not more than five days prior to the date of such letter, there was any change in the common stock or preferred stock or increase in long-term debt (except for such stock and long-term debt acquired for sinking fund purposes or redeemed pursuant to optional redemption or sinking fund provisions, or changes in capital lease obligations incurred in the ordinary course of the Company's business) of the Company or any decrease in the consolidated net assets of the Company (except as occasioned by the declaration of dividends), in each case as compared with the amounts shown on the most recent consolidated balance sheet of the Company incorporated by reference in the Registration Statement and the Prospectus or, during the period from the date of such balance sheet to a specified date not more than five days prior to the date 5 of such letter, there were any decreases, as compared with the corresponding period in the preceding year, in consolidated revenues or net income of the Company, except in each such case as set forth in or contemplated by the Registration Statement and the Prospectus or except for such exceptions enumerated in such letter as shall have been agreed to by the Underwriters and the Company; (iv) in addition to the audit referred to in their report included or incorporated by reference in the Registration Statement and the Prospectus, and the limited procedures referred to in clause (iii) above, they have carried out certain other specified procedures, not constituting an audit, with respect to certain amounts, percentages and financial information which are included or incorporated by reference in the Registration Statement and the Prospectus and which are specified by the Underwriters, and have found such amounts, percentages and financial information to be in agreement with the relevant accounting, financial and other records of the Company and its subsidiaries identified in such letter, provided, that said letter may vary from requirements specified above in such manner as the Representative may deem not to be material or as may be acceptable to the Representative with the consent of Underwriters who, together with the Representative, have agreed to purchase in the aggregate 50% or more of the Bonds. SECTION 6. CONDITIONS OF COMPANY'S OBLIGATIONS. The obligations of the Company to issue and sell the Bonds are subject to the following conditions: (a) Any post-effective amendment filed after the acceptance of the Bid to reflect the terms thereof shall have become effective not later than the time specified in or agreed to under paragraph (a) of Section 5 hereof. (b) At the Closing Date no stop order suspending the effectiveness of the Registration Statement shall be in effect and no proceedings for that purpose shall be pending before, or to the knowledge of the Company threatened by, the Commission. (c) At the Closing Date there shall be in full force and effect an order or orders of the Board of Public Utilities of the State of New Jersey permitting the execution and delivery of the Supplemental Indenture and the issuance and sale of the Bonds and the transactions relating thereto substantially in accordance with the terms and conditions herein set forth and containing no provision unacceptable to the Company (it being understood that any such order in effect as of the date of this Agreement does not contain any such unacceptable provision and that no subsequent order shall be deemed to contain any such unacceptable provision, unless the Company, within 24 hours after receiving a copy thereof, shall be given notice by the Representative to the effect that such order contains an unacceptable provision or unacceptable provisions). (d) At the Closing Date the Company shall concurrently sell and receive payment for all of the Bonds. SECTION 7. COVENANTS OF THE COMPANY. In further consideration of the agreements of the Underwriters herein contained, the Company agrees as follows: (a) The Company will file with the Commission a post-effective amendment, or a prospectus or prospectus supplement pursuant to Rule 424, with such changes therein as may be approved by Counsel for the Underwriters, as soon as practicable after the acceptance of the Bid. (b) As soon as the Company is advised thereof, it will notify the Representative orally (i) when any post-effective amendment filed after the acceptance of the Bid has become effective, (ii) when any other amendment to the Registration Statement has become effective or any supplement thereto has been filed, and (iii) when any stop order has been issued under the Securities Act with respect to the Registration Statement or any proceedings therefor have been instituted or to the knowledge of the Company are threatened; and it will use its best efforts to prevent the issuance of any such stop order and secure the prompt removal thereof, if issued. The Company will not, after the acceptance of the Bid, file any further amendment of or any supplement to the Registration Statement or the Prospectus unless such amendment or supplement is satisfactory to Counsel for the Underwriters. (c) The Company will, at or prior to the Closing Date, deliver to the Representative and also, on request, to Counsel for the Underwriters: (i) one certified copy of the Registration Statement as originally filed electronically and of all amendments or supplements thereto, heretofore or hereafter made, including any post-effective amendments (in each case including all documents incorporated by reference therein and all exhibits filed therewith, except 6 exhibits incorporated by reference unless specifically requested), including a certified copy of each consent and certificate included therein or filed as an exhibit thereto. (ii) such other documents (including copies of the Registration Statement of any amendments thereto, in each case including documents incorporated therein by reference but excluding exhibits), appropriately certified if so requested, relating to the issuance and validity of the Bonds as the Representative or Counsel for the Underwriters may reasonably request. (d) Promptly after the effective date of any post-effective amendment filed after acceptance of the Bid, or after the date of any prospectus supplement or prospectus filed with the Commission to reflect the terms of the Bid, the Company will furnish to the Underwriters, in accordance with the Representative's instructions, without charge, as many copies of the Prospectus (without the documents incorporated therein by reference) as the Representative may reasonably request for the purposes contemplated by the Securities Act, and will deliver to the Representative as soon as practicable after the effective date of the Registration Statement sufficient conformed copies of the Registration Statement and of all amendments thereto (in each case including documents incorporated therein by reference but excluding exhibits) for distribution of one to each Underwriter. If any event relating to or affecting the Company, or of which the Company shall be advised by the Representative, shall occur, which in the opinion of the Company or of Counsel for the Underwriters should be set forth in a supplement to or an amendment of the Prospectus in order to make the Prospectus not misleading in the light of the circumstances when it is delivered to the Underwriters, the Company will, upon the occurrence of each such event, forthwith at its expense, (i) prepare and furnish to the Representative a reasonable number of copies of a supplement or amendment to the Prospectus, satisfactory to Counsel for the Underwriters, or (ii) file with the Commission documents to be incorporated by reference in the Prospectus, satisfactory to Counsel for the Underwriters, in either case so that statements in the Prospectus as so supplemented, amended or modified will not include as of the date of such supplement, amendment or modification, any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances when the Prospectus is delivered, not misleading. (e) After the acceptance of the Bid, and prior to the termination of the offering of the Bonds, the Company will file promptly all documents required to be filed with the Commission pursuant to Sections 13(a), 13(c), 14 or 15(d) of the 1934 Act, which documents shall be satisfactory to Counsel for the Underwriters. (f) The Company will make generally available to its security holders, as soon as practicable, but no later than 60 days after the close of the period covered thereby, an earnings statement (in form complying with the provisions of Rule 158 under the Securities Act) covering the 12-month period beginning not later than the first day of the Company's fiscal quarter next following the "effective date" (as defined in such Rule 158) of the Registration Statement. (g) The Company will use its best efforts to comply with the conditions precedent to the obligations of the Underwriters, specified in Section 5 hereof, or to cause such conditions to be complied with. (h) The Company will pay all expenses in connection with the preparation and filing of the Registration Statement and Prospectus, the preparation of the Supplemental Indenture, the issuance and delivery of the Bonds, and the printing and delivery of copies of the Registration Statement, the Prospectus, the Terms and Conditions and the various documents therein referred to; and will pay all taxes, if any, on the issuance of the Bonds, but will not pay any transfer taxes. The Company will not, however, be required to pay any amount for any expenses of the Representative or of any of the Underwriters or compensation and disbursements of their counsel, except as provided in Section 10(c) hereof, and except as provided in said Section 10(c), the Underwriters agree to pay such expenses, compensation, and disbursements. (i) The Company will use its best efforts to qualify at its expense the Bonds for offer and sale, and the Company where necessary as a dealer in securities, under the securities laws in such states as the Representative may designate, and will pay all fees and expenses including fees and disbursements of counsel not to exceed $7,000 incurred in connection with the preparation of surveys relating thereto and to legality for investment provided that the Company shall not be required to qualify as a foreign corporation or to file a general consent to service of process in any state. 7 SECTION 8. REPRESENTATIONS AND WARRANTIES OF THE COMPANY; INDEMNIFICATION. (a) The Company represents and warrants to each Underwriter that (i) when any post-effective amendment reflecting the acceptance of the Bid shall become effective, or when any prospectus or prospectus supplement reflecting the acceptance of the Bid is filed with the Commission, the Registration Statement and Prospectus will comply in all material respects with the provisions of the Securities Act, and the Trust Indenture Act of 1939, as amended, and the rules and regulations of the Commission thereunder, and will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading, except that this representation and warranty shall not apply to statements in or omissions from the Registration Statement and Prospectus made in reliance upon and in conformity with information furnished herein or in writing to the Company by any Underwriter or by the Representative on behalf of any Underwriter expressly for use in the Registration Statement or Prospectus, or to any statements in or omissions from the Statement of Eligibility of the Trustee under the Mortgage, but nothing contained herein is intended as a waiver of compliance with the Securities Act or any rule or regulation of the Commission thereunder. (ii) the documents incorporated by reference in the Prospectus pursuant to Item 12 of Form S-3 under the Securities Act, at the time they were filed with the Commission, complied in all material respects with the requirements of the 1934 Act and the 1934 Act Regulations and, when read together with the other information in the Prospectus, at the time any post-effective amendment reflecting the acceptance of the Bid becomes effective, or when any prospectus or prospectus supplement reflecting the acceptance of the Bid is filed with the Commission, and at the Closing Date, will not include any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they are made, not misleading, and any documents deemed to be incorporated by reference in the Prospectus will, when they are filed with the Commission, comply in all material respects with the requirements of the 1934 Act and the 1934 Act Regulations, and will not include any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they are made, not misleading; (iii) Deloitte & Touche LLP are independent public accountants with respect to the Company as required by the Securities Act and the rules and regulations of the Commission thereunder; (iv) the performance by the Company of the terms of this Agreement will not result in a breach by the Company of any terms of, or constitute a default under, any other agreement or undertaking of the Company; and (v) except as reflected in, or contemplated by, the Registration Statement and Prospectus, since the respective most recent dates as of which information is given in the Registration Statement and Prospectus, there has not been any material adverse change in the business, properties or financial condition of the Company, and since such dates there has not been any material transaction entered into by the Company other than transactions disclosed in or contemplated by the Registration Statement and Prospectus and transactions in the ordinary course of business, and the Company has no material contingent obligation which is not disclosed in the Registration Statement and Prospectus. (b) The Company agrees to indemnify and hold harmless each Underwriter and each person, if any, who controls any Underwriter within the meaning of Section 15 of the Securities Act, as follows: (i) against any and all loss, liability, claim, damage and expense whatsoever arising out of any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement (or any amendment thereto), or the omission or alleged omission therefrom of a material fact required to be stated therein or necessary to make the statements therein not misleading or arising out of any untrue statement or alleged untrue statement of a material fact contained in any preliminary prospectus or the Prospectus (or any amendment or supplement thereto) or the omission or alleged omission therefrom of a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, unless such untrue statement or omission or such alleged untrue statement or omission was 8 made in reliance upon and in conformity with written information furnished to the Company by any Underwriter or by the Representative on behalf of any Underwriter expressly for use in the Registration Statement (or any amendment thereto) or such preliminary prospectus or the Prospectus (or any amendment or supplement thereto), except for such loss, liability, claim, damage and expense arising out of any untrue statements or alleged untrue statements in or omissions or alleged omissions from the Statement of Eligibility of the Trustee under the Mortgage; (ii) against any and all loss, liability, claim, damage and expense whatsoever to the extent of the aggregate amount paid in settlement of any litigation, commenced or threatened, or of any claim whatsoever based upon any such untrue statement or omission or any alleged untrue statement or omission, if such settlement is effected with the written consent of the Company; and (iii) against any and all expense whatsoever reasonably incurred in investigating, preparing or defending against any litigation, commenced or threatened, or any claim whatsoever based upon any such untrue statement or omission, or any such alleged untrue statement or omission, to the extent that any such expense is not paid under (i) or (ii) above. This indemnity agreement is subject to the condition that insofar as it relates to any untrue statement or omission, or any alleged untrue statement or omission, made in the Prospectus but eliminated or remedied in a supplement or amendment thereto, such indemnity agreement shall not inure to the benefit of any Underwriter from and after the time such supplement or amendment shall have been furnished unless the Prospectus is used as so supplemented or amended, provided that such use shall not require delivery of documents incorporated by reference. In no case shall the Company be liable under this indemnity agreement with respect to any claim made against any Underwriter or any such controlling person unless the Company shall be notified in writing of the nature of the claim promptly after the assertion thereof, but failure so to notify the Company shall not relieve it from any liability which it may have otherwise than on account of this indemnity agreement. The Company shall be entitled to participate at its own expense in the defense, or, if it so elects, within a reasonable time after receipt of such notice, to assume the defense of any suit brought to enforce any such claim, but if it so elects to assume the defense, such defense shall be conducted by counsel chosen by it and approved by the Underwriter or Underwriters or controlling person or persons, defendant or defendants in any suit so brought, which approval shall not be unreasonably withheld. In the event that the Company elects to assume the defense of any such suit and retains such counsel, the Underwriter or Underwriters or controlling person or persons, defendant or defendants in the suit, shall bear the fees and expenses of any additional counsel thereafter retained by them. In the event that the parties to any such action (including impleaded parties) include both the Company and one or more Underwriters and any such Underwriter shall have been advised by counsel chosen by it and satisfactory to the Company that there may be one or more legal defenses available to it which are different from or additional to those available to the Company, the Company shall not have the right to assume the defense of such action on behalf of such Underwriter and will reimburse such Underwriter and any person controlling such Underwriter as aforesaid for the reasonable fees and expenses of any counsel retained by them, it being understood that the Company shall not, in connection with any one action or separate but similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances, be liable for the reasonable fees and expenses of more than one separate firm of attorneys for all such Underwriters and controlling persons, which firm shall be designated in writing by the Representative. The Company agrees to notify the Representative promptly after the assertion of any claim against it, any of its directors, any of its officers who signed the Registration Statement, or any person who controls the Company within the meaning of Section 15 of the Securities Act, in connection with the sale of the Bonds. (c) Each Underwriter severally agrees that it will indemnify and hold harmless the Company, its directors, and each of its officers who signed the Registration Statement and each person, if any, who controls the Company within the meaning of Section 15 of the Securities Act to the same extent as the indemnity contained in subsection (b) of this Section, but only with respect to statements or omissions made in the Registration Statement (or any amendment thereto) or any preliminary prospectus or the Prospectus (or any amendment or supplement thereto) in reliance upon and in conformity with written information furnished to the Company by such Underwriter or by the Representative on behalf of such Underwriter expressly for use in the Registration Statement (or 9 any amendment thereto) or such preliminary prospectus or the Prospectus (or any amendment or supplement thereto). In case any action shall be brought against the Company or any person so indemnified based on the Registration Statement (or any amendment thereto) or such preliminary prospectus or the Prospectus (or any amendment or supplement thereto) and in respect of which indemnity may be sought against any Underwriter, such Underwriter shall have the rights and duties given to the Company, and the Company and each person so indemnified shall have the rights and duties given to the Underwriters by the provisions of subsection (b) of this Section. (d) The indemnity agreements contained in this Section 8 shall remain operative and in full force and effect, regardless of any investigation made by or on behalf of the Company, or any Underwriter or any controlling person, and shall survive the delivery of the Bonds to the Underwriters. SECTION 9. CONTRIBUTION. In order to provide for just and equitable contribution in circumstances in which the indemnity agreement provided for in Section 8 is for any reason held to be unenforceable by the indemnified parties although applicable in accordance with its terms, the Company and the Underwriters shall contribute to the aggregate losses, liabilities, claims, damages and expenses of the nature contemplated by said indemnity agreement incurred by the Company and one or more of the Underwriters, in such proportions that the Underwriters are responsible for that portion represented by the percentage that the underwriting discount appearing on the cover page of the prospectus supplement bears to the initial public offering price appearing thereon and the Company is responsible for the balance; provided, however, that no person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. For purposes of this Section, each person, if any, who controls an Underwriter within the meaning of Section 15 of the Securities Act shall have the same rights to contribution as such Underwriter, and each director of the Company, each officer of the Company who signed the Registration Statement, and each person, if any, who controls the Company within the meaning of Section 15 of the Securities Act shall have the same rights to contribution as the Company. SECTION 10. TERMINATION AND SURVIVAL. (a) This Agreement may be terminated by notice to the Company by the Representative with the consent of Underwriters who have agreed to purchase in the aggregate 50% or more of the aggregate principal amount of the Bonds (i) at any time prior to the expiration of 24 hours after acceptance of the Bid (but not after the initial public offering of the Bonds) if the market value of securities in general or political, financial or economic conditions shall have so materially changed after the time fixed for the delivery and opening of bids for the Bonds and within the time set forth above as, in the reasonable judgment of the Representative, to render it inadvisable to proceed with the public offering of the Bonds, and (ii) at any time prior to the Closing Date if, subsequent to the time fixed for the delivery and opening of bids, (1) a general banking moratorium shall have been declared by Federal or New York State authorities which in the reasonable judgment of the Representative would materially restrict a free market for the Bonds, (2) there shall have occurred any new outbreak or unforeseen escalation of hostilities or other national or international calamity or crisis the effect of which on the financial markets of the United States shall be such as, in the reasonable judgment of the Representative, to make it impracticable for the Underwriters to enforce contracts for the sale of the Bonds, (3) the Company shall have sustained a loss by fire, flood, accident or other calamity which is substantial with respect to the property of the Company and constitutes a material adverse change in the business, properties or financial condition of the Company or (4) a stop order suspending the effectiveness of the Registration Statement shall have been issued by the Commission. The time of the initial public offering for the purposes of this Section 10 shall mean the time of the release by the Representative for publication of the first newspaper advertisement, if any, which is subsequently published by or on behalf of the Underwriters or any of them offering the Bonds for sale or the time at which the Bonds are first generally offered by the Representative on behalf of the Underwriters to dealers by letter or telegram, whichever shall first occur. 10 (b) This Agreement shall terminate: (i) if, under the conditions, within the time and otherwise as provided in Section 4(c) hereof, neither the Representative nor the Company shall procure another party or parties to purchase the Bonds which any one or more of the Underwriters shall fail or refuse to purchase and pay for, (ii) if any of the conditions specified in Section 5 hereof shall not have been fulfilled and the Representative shall give notice to the Company that this Agreement is terminated by reason thereof, or (iii) if any of the conditions specified in Section 6 hereof shall not have been fulfilled and the Company shall give notice to the Representative that this Agreement is terminated by reason thereof. (c) Subject to the provisions of paragraph (d) next below, in the event that this Agreement shall terminate as provided in paragraph (a) or (b) next above, no Underwriter (other than an Underwriter who shall have failed or refused to purchase the Bonds which it has agreed to purchase hereunder without some reason sufficient to justify its termination of its obligations hereunder) shall be under any liability to the Company, and the Company shall not be under any liability to any Underwriter, except (i) that the Company shall, unless such termination shall be under the provisions of paragraph (a) or (b) (i) next above, pay the Representative, for the account of the Underwriters severally, the amount of their out-of-pocket expenses (but not exceeding $5,000 in the aggregate in addition to the fee and disbursements of Counsel for the Underwriters, a statement of the amount of such fee and estimate of such disbursements having been furnished to the Company) reasonably incurred by the Underwriters hereunder, except for those Underwriters who have failed or refused (without some reason sufficient to justify the termination of their obligations hereunder) to purchase and pay for the Bonds which such Underwriters have agreed to purchase hereunder. The Company will not in any event be liable to any of the several Underwriters for damages on account of loss of anticipated profits. (d) The agreements and representations and warranties set forth in Sections 1, 7, 8 and 9 hereof shall remain operative and in full force and effect, regardless of any investigation made by or on behalf of any Underwriter or controlling person or by or on behalf of the Company, and regardless of acceptance of any payment for the Bonds hereunder, and the agreements and representations and warranties set forth in Sections 1, 7(h), 8 and 9 hereof shall remain operative and in full force and effect, regardless of termination hereof as above provided or otherwise. SECTION 11. NOTICES. All notices and other communications hereunder shall be in writing or by telegram (or where oral notice is specified, shall be promptly confirmed in writing or by telegram) and if to the Company, shall be mailed or delivered to it at 80 Park Plaza, T6B, P.O. Box 570, Newark, N.J. 07101, attention of Mr. F. J. Riepl, Vice President and Treasurer, or if to the Representative or Underwriter shall be mailed or delivered to such person at the address set forth for the Representative or Underwriter in the Bid. SECTION 12. VALIDITY AND INTERPRETATION. The validity, construction and interpretation of this Agreement shall be governed by the laws of the State of New Jersey applicable to agreements made and to be performed in such State. In the event that the Bid was made by a single person, firm or corporation, as used herein the term "Underwriter" shall mean such single person, firm or corporation, the term "Representative" shall mean such Underwriter, the term "Underwriters" shall be read in the singular to mean such Underwriter, and the provisions of this Agreement shall be deemed appropriately modified to reflect that it is an Agreement between the Company and a single Underwriter. SECTION 13. SUCCESSION. This Agreement shall inure to the benefit of the Company, of the several Underwriters and, with respect to paragraphs (b), (c) and (d) of Section 8 and Section 9 hereof, of each controlling person, officer and director referred to therein, and their respective successors, assigns, executors and administrators. Nothing in this Agreement is intended or shall be construed to give any other person, firm or corporation any legal or equitable right, remedy or claim under or in respect to this Agreement or any provision herein contained. The terms "successors" and "assigns" as used in this Agreement shall not include any purchaser, as such purchaser, of any of the Bonds from any of the several Underwriters. 11 EX-4.A(92) 4 SUPPLEMENTAL MORTGAGE SUPPLEMENTAL MORTGAGE ================================================================================ SUPPLEMENTAL INDENTURE Dated October 1, 1995 (No.1) ---------- SUPPLEMENTAL TO FIRST AND REFUNDING MORTGAGE DATED AUGUST 1, 1924 ---------- PUBLIC SERVICE ELECTRIC AND GAS COMPANY To FIRST FIDELITY BANK, NATIONAL ASSOCIATION, Trustee 765 Broad Street Newark, New Jersey 07101 ---------- Providing for the issue of First and Refunding Mortgage Bonds, Pollution Control Series U ================================================================================ RECORD IN MORTGAGE BOOK AND RETURN TO: JAMES T. FORAN, ESQ. 80 PARK PLAZA, T5B P.O. BOX 570 NEWARK, NJ. 07101 This instrument prepared by /s/ Donald S. Leibowitz, Esq.. (DONALD S. LEIBOWITZ, ESQ.) TABLE OF CONTENTS ---------- Page ---- RECITALS .................................................................. 1 FORM OF BOND .............................................................. 4 FORM OF CERTIFICATE OF AUTHENTICATION ..................................... 9 GRANTING CLAUSES .......................................................... 9 ARTICLE I. BONDS OF THE POLLUTION CONTROL SERIES U. DESCRIPTION OF POLLUTION CONTROL SERIES U ................................. 11 ARTICLE II. REDEMPTION OF BONDS-POLLUTION CONTROL SERIES U. SECTION 2.01. Redemption-Redemption Prices ............................... 12 SECTION 2.02. Notice of Redemption ....................................... 15 SECTION 2.03. Interest on Called Bonds to Cease .......................... 17 SECTION 2.04. Bonds Called in Part ....................................... 17 SECTION 2.05. Provisions of Indenture not Applicable ..................... 17 ARTICLE III. CREDITS WITH RESPECT TO THE BONDS OF THE POLLUTION CONTROL SERIES U. SECTION 3.01. Credits .................................................... 18 SECTION 3.02. Certificate of the Company ................................. 19 ARTICLE IV. MISCELLANEOUS. SECTION 4.01. Authentication of Bonds of Pollution Control Series U ................................................. 19 SECTION 4.02. Additional Restrictions on Authentication of Additional Bonds Under Indenture .................................... 19 SECTION 4.03. Restriction on Dividends ................................... 20 SECTION 4.04. Use of Facsimile Seal and Signatures ....................... 21 SECTION 4.05. Effective Period of Supplemental Indenture ................. 21 SECTION 4.06. Time for Making of Payment ................................. 21 SECTION 4.07. Effect of Approval of Board of Public Utilities of the State of New Jersey ............................... 21 SECTION 4.08. Execution in Counterparts .................................. 21 Acknowledgments ........................................................... 22 Certificate of Residence .................................................. 24 SUPPLEMENTAL INDENTURE, dated the 1st day of October, 1995, for convenience of reference and effective from the time of execution and delivery hereof, between PUBLIC SERVICE ELECTRIC AND GAS COMPANY, a corporation organized under the laws of the State of New Jersey, hereinafter called the "Company", party of the first part, and FIRST FIDELITY BANK, NATIONAL ASSOCIATION, a national banking association organized under the laws of the United States of America, as Trustee under the indenture dated August 1, 1924, below mentioned, hereinafter called the "Trustee", party of the second part. WHEREAS, on July 25, 1924, the Company executed and delivered to Fidelity Union Trust Company (now known as First Fidelity Bank, National Association), a certain indenture dated August 1, 1924 (hereinafter called the "Indenture"), to secure and to provide for the issue of First and Refunding Mortgage Gold Bonds of the Company; and WHEREAS, the Indenture has been recorded in the following counties of the State of New Jersey, in the offices, and therein in the books and at the pages, as follows: Page County Office Book Number Number - ------ ------ ----------- ------ Atlantic Clerk's 1955 of Mortgages 160 Bergen Clerk's 94 of Chattel Mortgages 123 etc. 693 of Mortgages 88 etc. Burlington Clerk's 52 of Chattel Mortgages Folio 8 etc. 177 of Mortgages Folio 354 etc. Camden Register's 45 of Chattel Mortgages 184 etc. 239 of Mortgages 1 etc. Cumberland Clerk's 786 of Mortgages 638 & c. Essex Register's 437 of Chattel Mortgages 1-48 T-51 of Mortgages 341-392 Gloucester Clerk's 34 of Chattel Mortgages 123 etc. 142 of Mortgages 7 etc. Hudson Register's 453 of Chattel Mortgages 9 etc. 1245 of Mortgages 484 etc. Hunterdon Clerk's 151 of Mortgages 344 Mercer Clerk's 67 of Chattel Mortgages 1 etc. 384 of Mortgages 1 etc. Middlesex Clerk's 113 of Chattel Mortgages 3 etc. 437 of Mortgages 294 etc. Monmouth Clerk's 951 of Mortgages 291 & c. Morris Clerk's N-3 of Chattel Mortgages 446 etc. F-10 of Mortgages 269 etc. Ocean Clerk's 1809 of Mortgages 40 Passaic Register's M-6 of Chattel Mortgages 178 etc. R-13 of Mortgages 268 etc. Salem Clerk's 267 of Mortgages 249 & c. 2 Page County Office Book Number Number - ------ ------ ----------- ------ Somerset Clerk's 46 of Chattel Mortgages 207 etc. N-10 of Mortgages 1 etc. Sussex Clerk's 123 of Mortgages 10 & c. Union Register's 128 of Chattel Mortgages 28 & c. 664 of Mortgages 259 etc. Warren Clerk's 124 of Mortgages 141 etc. and WHEREAS, the Indenture has also been recorded in the following counties of the Commonwealth of Pennsylvania, in the offices, and therein in the books and at the pages, as follows: Page County Office Book Number Number - ------ ------ ----------- ------ Adams Recorder's 22 of Mortgages 105 Armstrong Recorder's 208 of Mortgages 381 Bedford Recorder's 90 of Mortgages 917 Blair Recorder's 671 of Mortgages 430 Cambria Recorder's 407 of Mortgages 352 Cumberland Recorder's 500 of Mortgages 136 Franklin Recorder's 285 of Mortgages 373 Huntingdon Recorder's 128 of Mortgages 47 Indiana Recorder's 197 of Mortgages 281 Lancaster Recorder's 984 of Mortgages 1 Montgomery Recorder's 5053 of Mortgages 1221 Westmoreland Recorder's 1281 of Mortgages 198 York Recorder's 31-V of Mortgages 446 and WHEREAS, the Indenture granted, bargained, sold, aliened, remised, released, conveyed, confirmed, assigned, transferred and set over unto the Trustee certain property of the Company, more fully set forth and described in the Indenture, then owned or which might thereafter be acquired by the Company; and WHEREAS, the Company, by various supplemental indentures, supplemental to the Indenture, the last of which was dated October 1, 1994 (No.2), has granted, bargained, sold, aliened, remised, released, conveyed, confirmed, assigned, transferred and set over unto the Trustee certain property of the Company acquired by it after the execution and delivery of the Indenture; and WHEREAS, since the execution and delivery of said supplemental indenture dated October 1, 1994 (No. 2), the Company has acquired property 3 which, in accordance with the provisions of the Indenture, is subject to the lien thereof and the Company desires to confirm such lien; and WHEREAS, the Indenture has been amended or supplemented from time to time; and WHEREAS, it is provided in the Indenture that no bonds other than those of the 5 1/2% Series due 1959 therein authorized may be issued thereunder unless a supplemental indenture providing for the issue of such additional bonds shall have been executed and delivered by the Company to the Trustee; and WHEREAS, the New Jersey Economic Development Authority (the "Authority") has previously issued and sold its Pollution Control Revenue Bonds, 1979 Series A (Public Service Electric and Gas Company Project) (the "1979 Authority Bonds") to finance the acquisition and construction of certain pollution control facilities at the Company's Bergen Generating Station, Burlington Generating Station, Hudson Generating Station, Kearny Generating Station, Linden Generating Station, Mercer Generating Station, Sewaren Generating Station, Central Gas Plant, Harrison Gas Plant and West End Gas Plant, all of which are located within the State of New Jersey (such generating stations and gas plants being referred to individually as a "Plant" and collectively as "Plants" and the pollution control facilities being sometimes referred to herein seperately as a "Project" and collectively as "Projects"); and WHEREAS, the Authority is making provision for the issuance and sale of its Pollution Control Revenue Refunding Bonds, 1995 Series A (Public Service Electric and Gas Company Project) (the "1995 Authority Bonds") to provide funds for making a loan to the Company to provide for refinancing of a portion of the costs of the Projects, including the refunding and redemption of the 1979 Authority Bonds; and WHEREAS, the 1995 Authority Bonds are to be issued under a Trust Indenture dated as of September 1, 1995, (the "Authority Indenture"), between the Authority and First Fidelity Bank, National Association, as trustee (the "Authority Trustee"); and 4 WHEREAS, the Company has entered into a Pollution Control Facilities Loan Agreement dated as of September 1, 1995, (the "Agreement"), with the Authority providing, among other things, for the loan by the Authority to the Company of funds to finance a portion of the costs of the Projects, including the refunding and redemption of the 1979 Authority Bonds, and for the issuance by the Company to the Authority Trustee, as assignee of the Authority, of First and Refunding Mortgage Bonds of the Company to evidence the Company's obligation to repay said loan, and for such purposes the Company desires to provide for the issue of $42,620,000 aggregate principal amount of bonds secured by the Indenture of a series to be designated as "First and Refunding Mortgage Bonds, Pollution Control Series U" (hereinafter sometimes called "Pollution Control Series U"); and WHEREAS, the text of the bonds of the Pollution Control Series U and of the certificate of authentication to be borne by the bonds of the Pollution Control Series U shall be substantially of the following tenor: [FORM OF BOND] This Bond is not transferable except as provided in the Trust Indenture dated as of September 1, 1995 between the New Jersey Economic Development Authority and First Fidelity Bank, National Association, as Trustee (the "Authority Indenture"). Capitalized terms used herein, not otherwise expressly defined herein, shall have the meanings ascribed to them in the Authority Indenture. 5 Registered Registered Number Amount R- $42,620,000 PUBLIC SERVICE ELECTRIC AND GAS COMPANY FIRST AND REFUNDING MORTGAGE BOND, POLLUTION CONTROL SERIES U Public Service Electric and Gas Company (hereinafter called the "Company"), a corporation of the State of New Jersey, for value received, hereby promises to pay to First Fidelity Bank, National Association, as trustee under the Authority Indenture, or registered assigns, the principal sum of Forty-Two Million Six Hundred Twenty Thousand Dollars, on September 1, 2012, and to pay interest thereon from the date hereof, at the rate of 15.0% per annum, and until payment of said principal sum, provided, however, that the Company shall receive certain credits against such obligations to the extent that interest payable by the Authority from time to time for bonds issued pursuant to the Authority Indenture (the "1995 Authority Bonds") is less than interest calculated pursuant to the foregoing rate. Such interest to be payable at such times and in such manner as interest is payable on the 1995 Authority Bonds. Both the principal hereof and interest hereon shall be paid at the principal office of First Fidelity Bank, National Association, in the City of Newark, State of New Jersey, or at the corporate trust office of any paying agent appointed by the Company, in such coin or currency of the United States of America as at the time of payment shall constitute legal tender for the payment of public and private debts. This Bond is one of the First and Refunding Mortgage Bonds of the Company issued and to be issued under and pursuant to, and all equally secured by, an indenture of mortgage or deed of trust dated August 1, 1924, between the Company and First Fidelity Bank, National Association (formerly known as Fidelity Union Trust Company), a national banking association of the United States of America, as Trustee, as supplemented and amended by the supplemental indentures thereto, including the supplemental indenture dated October 1, 1995 (No. 1). This Bond is one of the Bonds of the Pollution Control Series U, which series is limited to the aggregate principal amount of $42,620,000 and is issued pursuant to said supplemental indenture 6 dated October 1, 1995 (No.1). Reference is hereby made to said indenture and all supplements thereto for a specification of the principal amount of Bonds from time to time issuable thereunder, and for a description of the properties mortgaged and conveyed or assigned to said Trustee or its successors, the nature and extent of the security, and the rights of the holders of said Bonds and any coupons appurtenant thereto, and of the Trustee in respect of such security. In and by said indenture, as amended and supplemented, it is provided that with the written approval of the Company and the Trustee, any of the provisions of said indenture may from time to time be eliminated or modified and other provisions may be added thereto provided the change does not alter the annual interest rate, redemption price or date, date of maturity or amount payable on maturity of any then outstanding Bond or conflict with the Trust Indenture Act of 1939 as then in effect, and provided the holders of 85% in principal amount of the Bonds secured by said indenture and then outstanding (including, if such change affect the Bonds of one or more series but less than all series then outstanding, a like percentage of the then outstanding Bonds of each series affected by such change, and excluding Bonds owned or controlled by the Company or by the parties owning at least 10% of the outstanding voting stock of the Company, as more fully specified in said indenture) consent in writing thereto, all as more fully set forth in said indenture, as amended and supplemented. First and Refunding Mortgage Bonds issuable under said indenture are issuable in series, and the Bonds of any series may be for varying principal amounts and in the form of coupon Bonds and of registered Bonds without coupons, and the Bonds of any one series may differ from the Bonds of any other series as to date, maturity, interest rate and otherwise, all as in said indenture provided and set forth. The Bonds of the Pollution Control Series U, in which this Bond is included, are designated "First and Refunding Mortgage Bonds, Pollution Control Series U". In case of the happening of an event of default as specified in said indenture and in the supplemental indenture dated March 1, 1942 supplemental thereto, the principal sum of the Bonds of this issue may be declared or may become due and payable forthwith, in the manner and with the effect in said indenture provided. 7 The Bonds of this series are subject to redemption as provided in said supplemental indenture dated October 1, 1995 (No. 1). This Bond is transferable, but only as provided in the Authority Indenture upon surrender hereof, by the registered owner in person or by attorney duly authorized in writing, at the principal office of the Trustee; upon any such transfer a new Bond similar hereto will be issued to the transferee. No service charge shall be made for any such transfer, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto. The Company and the Trustee and any paying agent may deem and treat the person in whose name this Bond is registered as the absolute owner hereof for the purpose of receiving payment of or on account of the principal hereof and the interest hereon and for all other purposes; and neither the Company nor the Trustee nor any paying agent shall be affected by any notice to the contrary. The Bonds of this series are issuable only in fully registered form, in any denomination authorized by the Company. No recourse under or upon any obligation, covenant or agreement contained in said indenture or in any indenture supplemental thereto, or in any Bond or coupon issued thereunder, or because of any indebtedness arising thereunder, shall be had against any incorporator, or against any past, present or future stockholder, officer or director, as such, of the Company or of any successor corporation, either directly or through the Company or any successor corporation, under any rule of law, statute or constitutional provision or by the enforcement of any assessment or by any legal or equitable proceeding or otherwise; it being expressly agreed and understood that said indenture, any indenture supplemental thereto and the obligations issued thereunder, are solely corporate obligations, and that no personal liability whatever shall attach to, or be incurred by, such incorporators, stockholders, officers or directors, as such, of the Company, or of any successor corporation, or any of them, because of the incurring of the indebtedness thereby authorized, or under or by reason of any of the obligations, covenants or agreements contained in the indenture or in any indenture supplemental thereto or in any of the Bonds or coupons issued thereunder, or implied therefrom. This Bond shall not be entitled to any security or benefit under said indenture, as amended and supplemented, and shall not become valid or 8 obligatory for any purpose, until the certificate of authentication, hereon endorsed, shall have been signed by First Fidelity Bank, National Association, as Trustee, or by its successor in trust under said indenture. IN WITNESS WHEREOF, the Company has caused this Bond to be duly executed by its proper officers under its corporate seal. Dated PUBLIC SERVICE ELECTRIC AND GAS COMPANY, By (Vice) President (Seal) Attest: (Assistant) Secretary 9 [FORM OF CERTIFICATE OF AUTHENTICATION] CERTIFICATE OF AUTHENTICATION This Bond is one of the Bonds of the series designated therein which are described in the within-mentioned indenture and supplemental indenture dated October 1, 1995 (No.1), as secured thereby. FIRST FIDELITY BANK, NATIONAL ASSOCIATION, TRUSTEE, BY Authorized Signatory ---------- WHEREAS, the execution and delivery of this supplemental indenture have been duly authorized by the Board of Directors of the Company; and WHEREAS, the Company represents that all things necessary to make the bonds of the Pollution Control Series U hereinafter described, when duly authenticated by the Trustee and issued by the Company, valid, binding and legal obligations of the Company, and to make this supplemental indenture a valid and binding agreement supplemental to the Indenture, have been done and performed: NOW, THEREFORE, THIS SUPPLEMENTAL INDENTURE WITNESSETH that the Company, in consideration of the premises and the execution and delivery by the Trustee of this supplemental indenture, and in pursuance of the covenants and agreements contained in the Indenture and for other good and valuable consideration, the receipt of which is hereby acknowledged, has granted, bargained, sold, aliened, remised, released, conveyed, confirmed, assigned, transferred and set over, and by these presents does grant, bargain, sell, alien, remise, release, convey, confirm, assign, transfer and set over unto the Trustee, its successors and assigns, forever, all the right, title and interest of the Company in and to all property of every kind and description (except cash, accounts and bills receivable and all merchandise bought, sold or manufactured for sale in the ordinary course of the Company's business, 10 stocks, bonds or other corporate obligations or securities, other than such as are described in Part V of the Granting Clauses of the Indenture, not acquired with the proceeds of bonds secured by the Indenture, and except as in the Indenture and herein otherwise expressly excluded) acquired by the Company since the execution and delivery of the supplemental indenture dated October 1, 1994 (No. 2), supplemental to the Indenture (except any such property duly released from, or disposed of free from, the lien of the Indenture, in accordance with the provisions thereof) and all such property which at any time hereafter may be acquired by the Company; All of which property it is intended shall be included in and granted by this supplemental indenture and covered by the lien of the Indenture as heretofore and hereby amended and supplemented; UNDER AND SUBJECT to any encumbrances or mortgages existing on property acquired by the Company at the time of such acquisition and not heretofore discharged of record; and SUBJECT, also, to the exceptions, reservations and provisions in the Indenture and in this supplemental indenture recited, and to the liens, reservations, exceptions, limitations, conditions and restrictions imposed by or contained in the several deeds, grants, franchises and contracts or other instruments through which the Company acquired or claims title to the aforesaid property; and SUBJECT, also, to existing leases, to liens on easements or rights of way, to liens for taxes, assessments and governmental charges not in default or the payment of which is deferred, pending appeal or other contest by legal proceedings, pursuant to Section 4 of Article Five of the Indenture, or the payment of which is deferred pending billing, transfer of title or final determination of amount, to easements for alleys, streets, highways, rights of way and railroads that may run across or encroach upon the said property, to joint pole and similar agreements, to undetermined liens and charges, if any, incidental to construction, and other encumbrances permitted by the Indenture as heretofore and hereby amended and supplemented; TO HAVE AND TO HOLD the property hereby conveyed or assigned, or intended to be conveyed or assigned, unto the Trustee, its successor or successors and assigns, forever; 11 In Trust, Nevertheless, upon the terms, conditions and trusts set forth in the Indenture as heretofore and hereby amended and supplemented, to the end that the said property shall be subject to the lien of the Indenture as heretofore and hereby amended and supplemented, with the same force and effect as though said property had been included in the Granting Clauses of the Indenture at the time of the execution and delivery thereof; And This Supplemental Indenture Further Witnesseth that for the considerations aforesaid, it is hereby covenanted between the Company and the Trustee as follows: ARTICLE I. Bonds of the Pollution Control Series U. The series of bonds authorized by this supplemental indenture to be issued under and secured by the Indenture shall be designated "First and Refunding Mortgage Bonds, Pollution Control Series U"; shall be limited to the aggregate principal amount of $42,620,000; shall be issued initially to the Authority Trustee, as assignee of the Authority, to evidence the Company's obligation to repay the loan to finance a portion of the costs of the Projects made pursuant to the Agreement; and shall mature and bear interest as set forth in the form of bond hereinbefore described; provided, however, that the Company shall receive certain credits against principal and interest obligations as set forth in Section 3.01 hereof. The date of each bond of the Pollution Control Series U shall be the interest payment date next preceding the date of authentication, unless such date of authentication be an interest payment date, in which case the date shall be the date of authentication, or unless such date of authentication be prior to the first interest payment date, in which case the date shall be October 1, 1995. Bonds of the Pollution Control Series U shall be issued as fully registered bonds in any denomination authorized by the Company. Interest on bonds of the Pollution Control Series U shall be payable at such time and in such manner as interest is payable on the 1995 Authority Bonds, subject to certain credits against principal and interest as set forth in Section 3.01 hereof and shall be payable as to both principal and interest in such coin or currency of 12 the United States of America as at the time of payment shall constitute legal tender for the payment of public and private debts, at the principal office of the Trustee, or at the corporate trust office of any paying agent appointed by the Company. Bonds of the Pollution Control Series U shall be transferable (but only as provided in the Authority Indenture) upon surrender thereof for cancellation by the registered owner in person or by attorney duly authorized in writing at said office of the Trustee. The Company hereby waives any right to make a charge for any transfer of bonds of the Pollution Control Series U, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto. ARTICLE II. REDEMPTION OF BONDS--POLLUTION CONTROL SERIES U. SECTION 2.01. Redemption--Redemption Prices. Bonds of the Pollution Control Series U shall be subject to redemption prior to maturity, under the conditions and upon the payment of the amounts specified in the following subsections, together in each case with interest accrued to the redemption date: (a) at the option of the Company (i) whenever the Interest Rate Mode for the 1995 Authority Bonds is the Daily Rate or the Weekly Rate, in whole or in part, at a redemption price of 100% of the principal amount thereof on any Interest Payment Date; (ii) whenever the Interest Rate Mode for the 1995 Authority Bonds is the Commercial Paper Rate, in whole or in part, at a redemption price of 100% of the principal amount thereof on the Interest Payment Date for each Commercial Paper Rate Period for 13 an Authority Bond or Bonds, such redemption to be in the same principal amount of such Authority Bond or Bonds; (iii) whenever the Interest Rate Mode for the 1995 Authority Bonds is the Auction Rate, in whole or in part, at a redemption price of 100% of the principal amount thereof on the final Interest Payment Date for each Auction Period; (iv) whenever the Interest Rate Mode for the 1995 Authority Bonds is the Term Rate, in whole or in part, on the final Interest Payment Date for the then current Term Rate Period and, prior to the end of the then current Term Rate Period, at any time during the redemption periods and at the redemption prices set forth below, plus interest accrued, if any, to the redemption date: Original Length of Current Commencement of Redemption Price as Term Rate Period (Years) Redemption Period Percentage of Principal - -------------------------- ----------------- ----------------------- More than 15 years Tenth anniversary of 102% declining by 1% on commencement of Term each succeeding anniversary Rate Period of the first day of the redemption period until reaching 100% and thereafter 100% More than 10 but not Seventh anniversary of 102% declining by 1% on more than 15 years commencement of Term each succeeding anniversary Rate Period of the first day of the redemption period until reaching 100% and thereafter 100% More than 5 but not Fifth anniversary of 101% declining by 1% on more than 10 years commencement of Term each succeeding anniversary Rate Period of the first day of the redemption period until reaching 100% and thereafter 100% More than 2 but not Second anniversary of 100% on and after such more than 5 years commencement of Term second anniversary of the first Rate Period day of the redemption period 2 years or less Non-callable Non-callable If, at the time of the Company's notice of a change in the Term Rate Period pursuant to Section 2.02(d) of the Authority Indenture, or its notice of Conversion of the Interest Rate Mode for the 1995 14 Authority Bonds to the Term Rate pursuant to Section 2.02(e) of the Authority Indenture, or, when the Interest Rate Mode for the 1995 Authority Bonds is the Term Rate, at least 35 days prior to the Purchase Date for the 1995 Authority Bonds pursuant to Section 3.01(b)(i) of the Authority Indenture, the Company provides a certification of the Remarketing Agent to the Authority Trustee and the Authority that the foregoing schedule is not consistent with prevailing market conditions and an opinion of nationally recognized bond counsel that a change in the redemption provisions of the 1995 Authority Bonds will not adversely affect the exclusion from gross income of interest on the 1995 Authority Bonds for Federal income tax purposes, the foregoing redemption periods and redemption prices may be revised effective as of the date of such change in the Term Rate Period, the Conversion Date, or that Purchase Date, as determined by the Remarketing Agent in its judgment, taking into account the then Prevailing Market Conditions, as stipulated in such certification, which shall be appended by the Trustee to its counterpart of this supplemental indenture. Any such revision of redemption periods or redemption prices shall not be considered an amendment of or supplement to this supplemental indenture and shall not require the consent of any other person or entity. (b) in whole or in part (if, in the opinion of nationally recognized bond counsel, such partial redemption will preserve the exclusion from gross income for Federal income tax purposes of interest on the remaining 1995 Authority Bonds) at any time at 100% of the principal amount thereof to be redeemed, within 180 days after a "final determination" (i.e., the issuance of a published or private ruling or technical advice) of the Internal Revenue Service or a judicial decision in a proceeding by any court of competent jurisdiction in the United States (from which ruling, advice or decision no further right of appeal exists), in all cases in which the Company has participated or been a party or has been given an opportunity to participate and has failed to do so (no such decree or judgment by any court or action by the Internal Revenue Service to be considered final unless the owner of the 1995 Authority Bonds involved in such proceeding or action has given the Company and the Authority Trustee prompt written notice of the commencement thereof and offered 15 the Company, at the Company's expense, the opportunity to control the defense thereof) that, as a result of a failure by the Company to observe any covenant, agreement, representation or warranty in the Agreement, the interest payable on the 1995 Authority Bonds is includable in the gross income for Federal income tax purposes of the holder thereof, other than a "substantial user" of the Project or a "related person" as provided in Section 147(a) of the Internal Revenue Code of 1986, as amended, and the applicable regulations thereunder. (c) in whole at 100% of the principal amount thereof whenever the Company receives from the Authority Trustee a copy of a written demand sent to the Trustee stating that the principal of all outstanding 1995 Authority Bonds has been declared to be immediately due and payable because of an Event of Default under the Authority Indenture. In such case, redemption of the Bonds of the Pollution Control Series U shall be any date selected by the Company, not more than 180 days after receipt by the Company of such written demand for redemption. (d) to the extent that any of the 1995 Authority Bonds shall have become Provider Bonds, (i) on the Provider Bond Redemption Date in an amount equal to the aggregate principal amount of Provider Bonds outstanding at the expiration of the Liquidity Facility at 100% of the principal amount thereof and (ii) on each of the first four anniversaries of the expiration of the Liquidity Facility at the rate of 20% per year of the aggregate principal amount of Provider Bonds outstanding at the expiration of the Liquidity Facility at 100% of the principal amount thereof. SECTION 2.02. Notice of Redemption. (a) The election of the Company under subsection (a) of Section 2.01 hereof to redeem any of the bonds of the Pollution Control Series U shall be evidenced by a resolution of the Board of Directors of the Company calling for redemption on a stated date of all or a stated principal amount thereof. To exercise its option to redeem the bonds of the Pollution Control Series U under subsection (a) of Section 2.01 hereof, the Company shall deliver to the Trustee, the Authority and the Authority Trustee a certified copy of said resolution calling all or a stated principal amount of the bonds of the Pollution Control Series U for redemption on a date not less than 20 days (35 days if the Interest Rate Mode is the Term 16 Rate) nor more than 65 days from the date said resolution is delivered. The delivery to the Authority Trustee of a certified copy of such resolution shall constitute notice to the Authority Trustee of the redemption referred to therein, on the terms specified therein. The Company shall on or before such redemption date deposit with the Trustee, as paying agent hereunder, the total applicable redemption price of all the bonds so called, with interest accrued thereon to the redemption date, less any credits to which the Company may be entitled pursuant to Section 3.01 hereof, and the Trustee, as such paying agent, shall apply such funds on the redemption date to the redemption of the bonds so called. (b) The Company shall, within 10 days after the occurrence of a "final determination" under subsection (b) of Section 2.01 hereof, deliver to the Trustee written notice of such "final determination". The Company shall, by resolution of its Board of Directors, fix a redemption date for such redemption and shall deliver to the Trustee, the Authority and the Authority Trustee a certified copy of said resolution at least 40 days prior to the date so selected for redemption. Such redemption date may be any day not more than 180 days after the occurrence of such "final determination". If the Trustee does not receive written notice of such selection by the Company within 140 days after the date of the occurrence of such "final determination", then the redemption date shall be the 180th day after the occurrence of such "final determination". On or before such redemption date, the Company shall deposit with the Trustee, as paying agent hereunder, the total redemption price of the bonds so called, with interest accrued thereon to the redemption date, less any credits to which the Company may be entitled pursuant to Section 3.01 hereof, and the Trustee, as such paying agent, shall apply such funds, on the redemption date, to the redemption of the bonds so called. The delivery to the Authority Trustee of a certified copy of such resolution shall constitute notice to the Authority Trustee of the redemption referred to therein on the terms specified therein. (c) The Company shall, within 10 days after the receipt of a written demand under subsection (c) of Section 2.01 hereof, by resolution of its Board of Directors, fix a redemption date for such redemption and shall deliver to the Trustee, the Authority and the Authority Trustee a certified copy of said resolution at least 40 days prior to the date so selected for redemption. Such 17 redemption date may be any day not more than 180 days after the receipt of such written demand. If the Trustee does not receive written notice of such selection by the Company within 140 days after the date of the receipt of such written demand, then the redemption date shall be the 180th day after the receipt of such written demand. On or before such redemption date, the Company shall deposit with the Trustee, as paying agent hereunder, the total redemption price of the bonds so called, with interest accrued thereon to the redemption date, less any credits to which the Company may be entitled pursuant to Section 3.01 hereof, and the Trustee, as such paying agent, shall apply such funds, on the redemption date, to the redemption of the bonds so called. SECTION 2.03. Interest on Called Bonds to Cease. Each bond or portion thereof of the Pollution Control Series U called for redemption under Section 2.02 hereof shall be due and payable at the office of the Trustee, as paying agent hereunder, at the applicable redemption price and on the specified redemption date, anything herein or in such bond to the contrary notwithstanding. From and after the date when each bond or portion thereof of the Pollution Control Series U shall be due and payable as aforesaid (unless upon said date the full amount due thereon shall not be held by or provided to the Trustee, as paying agent hereunder, and be immediately available for payment), all further interest shall cease to accrue on such bond or on such portion thereof, as the case may be. SECTION 2.04. Bonds Called in Part. If only a portion of any bond of the Pollution Control Series U shall be called for redemption pursuant to Section 2.02 hereof, the notice of redemption hereinbefore provided for shall specify the portion of the principal amount thereof to be redeemed. Upon payment of the portion so called for redemption, the Trustee, as paying agent hereunder, shall give prompt written notice thereof to the Company. SECTION 2.05. Provisions of Indenture Not Applicable. The provisions of Article Four of the Indenture, as amended and supplemented, shall not apply to the procedure for the exercise of any right of redemption reserved by the Company, or to any mandatory redemption provided in this Article in respect of the bonds of the Pollution Control Series U. There shall be no sinking fund for the bonds of the Pollution Control Series U. 18 ARTICLE III. CREDITS WITH RESPECT TO THE BONDS OF THE POLLUTION CONTROL SERIES U. SECTION 3.01. Credits. (a) In addition to any other credit, payment or satisfaction to which the Company is entitled with respect to the Bonds of the Pollution Control Series U, the Company shall be entitled credits against amounts otherwise payable in respect of the Bonds of the Pollution Control Series U in an amount corresponding to the amount by which interest due on the Bonds of the Pollution Control Series U exceeds the interest due on the 1995 Authority Bonds. (b) The Company shall be entitled to credits against amounts otherwise payable in respect of the bonds of the Pollution Control Series U in an amount corresponding to (i) the principal amount of any 1995 Authority Bond surrendered to the Authority Trustee by the Company or the Authority, or purchased by the Authority Trustee, for cancellation and (ii) the amount of money held by the Authority Trustee and available and designated for or applied toward the payment of principal or redemption price of and interest on the 1995 Authority Bonds, as the case may be, regardless of the source of payment to the Authority Trustee of such moneys; provided, however, that the Company shall not be entitled to any such credit with respect to amounts paid to the Authority Trustee pursuant to the Bond Insurance Policy. The Trustee, as paying agent hereunder, shall give prompt written notice to the Company of any such credit with respect to the payment of interest. 19 (c) The Trustee, as paying agent hereunder, shall (i) promptly notify the Company of each deposit in the Bond Fund under the Authority Indenture, (ii) provide evidence to the Company that such deposit has been credited to such Fund and (iii) give prompt written notice to the Company of any credits with respect to payment of principal or redemption price of and interest on the bonds of the Pollution Control Series U. SECTION 3.02. Certificate of the Company. A certificate of the Company signed by the President, any Vice President or any Assistant Treasurer, and attested to by the Secretary or any Assistant Secretary, and consented to by the Authority Trustee, stating that the Company is entitled to a credit under Section 3.01 hereof and setting forth the basis therefor in reasonable detail, shall be conclusive evidence of such entitlement, and the Trustee shall accept such certificate as such evidence without further investigation or verification of the matters stated therein. ARTICLE IV. MISCELLANEOUS. SECTION 4.01. Authentication of Bonds of Pollution Control Series U. None of the bonds of the Pollution Control Series U, the issue of which is provided for by this supplemental indenture, shall be authenticated by the Trustee except in accordance with the provisions of the Indenture, as amended and supplemented, and this supplemental indenture, and upon compliance with the conditions in that behalf therein contained. SECTION 4.02. Additional Restrictions on Authentication of Additional Bonds Under Indenture. The Company covenants that from and after the date of execution of this supplemental indenture, no additional bonds (as defined in Section 1 of Article Two of the Indenture) shall be authenticated and delivered by the Trustee under Subdivision A of Section 4 of said Article Two on account of additions or improvements to the mortgaged property (1) unless the net earnings of the Company for the period required by Subdivision C of Section 6 of said Article Two shall have been at least 20 twice the fixed charges (in lieu of 1 3/4 times such fixed charges, as required by said Subdivision C); and for the purpose of this condition (a) such fixed charges shall in each case include interest on the bonds applied for, notwithstanding the parenthetical provision contained in clause (4) of said Subdivision C, and (b) in computing such net earnings there shall be included in expenses of operation (under paragraph(c) of said Subdivision C) all charges against earnings for depreciation, renewals or replacements, and all certificates with respect to net earnings delivered to the Trustee in connection with any authentication of additional bonds under said Article Two shall so state; and (2) except to the extent of 60% (in lieu of 75% as permitted by Subdivision A of Section 7 of said Article Two) of the cost or fair value to the Company of the additions or improvements forming the basis for such authentication of additional bonds. SECTION 4.03. Restriction on Dividends. The Company will not declare or pay any dividend on any shares of its common stock (other than dividends payable in shares of its common stock) or make any other distribution on any such shares, or purchase or otherwise acquire any such shares (except shares acquired without cost to the Company) whenever such action would reduce the earned surplus of the Company to an amount less than $10,000,000 or such lesser amount as may remain after deducting from said $10,000,000 all amounts appearing in the books of account of the Company on December 31, 1948, which shall thereafter, pursuant to any order or rule of any regulatory body entered after said date, be required to be removed, in whole or in part, from the books of account of the Company by charges to earned surplus. 21 SECTION 4.04. Use of Facsimile Seal and Signatures. The seal of the Company and any or all signatures of the officers of the Company upon any of the bonds of the Pollution Control Series U may be facsimiles. SECTION 4.05. Effective Period of Supplemental Indenture. The preceding provisions of Articles I, II and III of this supplemental indenture shall remain in effect only so long as any of the bonds of the Pollution Control Series U shall remain outstanding. SECTION 4.06. Time for Making of Payment. All payments of principal or redemption price of and interest on the bonds of the Pollution Control Series U shall be made to the Authority Trustee in such funds as shall constitute immediately available funds when payment is due. In any case where the date of payment of the principal or redemption price of or interest on the bonds of the Pollution Control Series U or the date fixed for redemption of any such bonds shall be in the city of payment a Saturday, Sunday or a legal holiday or a day on which banking institutions are authorized by law to close, then such payment need not be made on such date but may be made on the next succeeding business day with the same force and effect as if made on the date of maturity or the date fixed for redemption, and no interest on such payment shall accrue for the period after such date. SECTION 4.07. Effect of Approval of Board of Public Utilities of the State of New Jersey. The approval of the Board of Public Utilities of the State of New Jersey of the execution and delivery of these presents and of the issue of any bonds of the Pollution Control Series U shall not be construed as approval of said Board of any other act, matter or thing which requires approval of said Board under the laws of the State of New Jersey. SECTION 4.08. Execution in Counterparts. For the purpose of facilitating the recording hereof, this supplemental indenture has been executed in several counterparts, each of which shall be and shall be taken to be an original, and all collectively but one instrument. 22 IN WITNESS WHEREOF, Public Service Electric and Gas Company, party hereto of the first part, after due corporate and other proceedings, has caused this supplemental indenture to be signed and acknowledged or proved by its President or one of its Vice Presidents and its corporate seal hereunto to be affixed and to be attested by the signature of its Secretary or an Assistant Secretary; and First Fidelity Bank, National Association, as Trustee, party hereto of the second part, has caused this supplemental indenture to be signed and acknowledged or proved by its President, one of its Vice Presidents or one of its Assistant Vice Presidents and its corporate seal to be hereunto affixed and to be attested by the signature of one of its Assistant Vice Presidents, its Cashier, one of its Assistant Cashiers, or one of its Corporate Trust Officers. Executed and delivered this 2nd day of October, 1995. PUBLIC SERVICE ELECTRIC AND GAS COMPANY By /s/ F. J. Riepl (F.J. Riepl) Vice President Attest: /s/ E.J. Biggins, Jr. (E.J. Biggins, Jr.) Assistant Secretary FIRST FIDELITY BANK, NATIONAL ASSOCIATION By /s/ F. Gallagher (F. Gallagher) Vice President Attest: /s/ J.J. Waters (J.J. Waters) Assistant Vice President 23 ) STATE OF NEW JERSEY ) ss.: COUNTY OF ESSEX ) BE IT REMEMBERED, that on this 2nd day of October, 1995, before me, the subscriber, a Notary Public of the State of New Jersey, personally appeared F. J. Riepl who, I am satisfied, is a Vice President of PUBLIC SERVICE ELECTRIC AND GAS COMPANY, one of the corporations named in and which executed the foregoing instrument, and is the person who signed the said instrument as such officer for and on behalf of such corporation, and I having first made known to him the contents thereof, he did acknowledge that he signed the said instrument as such officer, that the said instrument was made by such corporation and sealed with its corporate seal, that the said instrument is the voluntary act and deed of such corporation, made by virtue of authority from its Board of Directors, and that said corporation, the mortgagor, has received a true copy of said instrument. /s/ IRENE ROXANNE PRIGNANO IRENE ROXANNE PRIGNANO NOTARY PUBLIC OF NEW JERSEY My Commission Expires Oct. 29, 1998 ) STATE OF NEW JERSEY ) ss.: COUNTY OF ESSEX ) BE IT REMEMBERED, that on this 2nd day of October, 1995, before me, the subscriber, a Notary Public of the State of New Jersey, personally appeared F. Gallagher who, I am satisfied, is a Vice President of FIRST FIDELITY BANK, NATIONAL ASSOCIATION, one of the corporations named in and which executed the foregoing instrument, and is the person who signed the said instrument as such officer, for and on behalf of such corporation, and I having first made known to him the contents thereof, he did acknowledge that he signed the said instrument as such officer, that the said instrument was made by such corporation and sealed with its corporate seal; and that the said instrument is the voluntary act and deed of such corporation, made by virtue of authority from its Board of Directors. /s/ JEAN M. SEIZ JEAN M. SEIZ NOTARY PUBLIC OF NEW JERSEY My Commission Expires Nov. 28, 1995 24 CERTIFICATE OF RESIDENCE First Fidelity Bank, National Association, Mortgagee and Trustee within named, hereby certifies that its precise residence is 765 Broad Street, Newark, New Jersey 07101. FIRST FIDELITY BANK, NATIONAL ASSOCIATION By /s/ F. Gallagher (F. Gallagher) Vice President EX-4.A(93) 5 SUPPLEMENTAL INDENTURE SUPPLEMENTAL MORTGAGE ============================================== SUPPLEMENTAL INDENTURE Dated October 1, 1995 (No. 2) ============= SUPPLEMENTAL TO FIRST AND REFUNDING MORTGAGE DATED AUGUST 1, 1924 ============= PUBLIC SERVICE ELECTRIC AND GAS COMPANY To FIRST FIDELITY BANK, NATIONAL ASSOCIATION, Trustee 765 Broad Street Newark, New Jersey 07101 ============= Providing for the issue of First and Refunding Mortgage Bonds, Pollution Control Series V ============================================== RECORD IN MORTGAGE BOOK AND RETURN TO: JAMES T. FORAN, ESQ. 80 PARK PLAZA, T5B P.O. BOX 570 NEWARK, N.J. 07101 This instrument prepared by /s/ Edward C. Fedak - ----------------------- (EDWARD C. FEDAK, ESQ.) TABLE OF CONTENTS ------------- Page ---- RECITALS .................................................................... 1 FORM OF BOND ................................................................ 4 FORM OF CERTIFICATE OF AUTHENTICATION ....................................... 9 GRANTING CLAUSES ............................................................ 9 ARTICLE I. BONDS OF THE POLLUTION CONTROL SERIES V. DESCRIPTION OF POLLUTION CONTROL SERIES V .................................. 11 ARTICLE II. REDEMPTION OF BONDS-POLLUTION CONTROL SERIES V. SECTION 2.01. Redemption-Redemption Prices ................................. 12 SECTION 2.02. Notice of Redemption ......................................... 15 SECTION 2.03. Interest on Called Bonds to Cease ............................ 17 SECTION 2.04. Bonds Called in Part ......................................... 17 SECTION 2.05. Provisions of Indenture not Applicable ....................... 17 ARTICLE III. CREDITS WITH RESPECT TO THE BONDS OF THE POLLUTION CONTROL SERIES V. SECTION 3.01. Credits ...................................................... 18 SECTION 3.02. Certificate of the Company ................................... 19 ARTICLE IV. MISCELLANEOUS. SECTION 4.01. Authentication of Bonds of Pollution Control Series V ................................................... 19 SECTION 4.02. Additional Restrictions on Authentication of Additional Bonds Under Indenture ........................... 19 SECTION 4.03. Restriction on Dividends ..................................... 20 SECTION 4.04. Use of Facsimile Seal and Signatures ......................... 21 SECTION 4.05. Effective Period of Supplemental Indenture ................... 21 SECTION 4.06. Time for Making of Payment ................................... 21 SECTION 4.07. Effect of Approval of Board of Public Utilities of the State of New Jersey ................................. 21 SECTION 4.08. Execution in Counterparts .................................... 21 Acknowledgments ............................................................ 22 Certificate of Residence ................................................... 24 SUPPLEMENTAL INDENTURE, dated the 1st day of October, 1995, for convenience of reference and effective from the time of execution and delivery hereof, between PUBLIC SERVICE ELECTRIC AND GAS COMPANY, a corporation organized under the laws of the State of New Jersey, hereinafter called the "Company", party of the first part, and FIRST FIDELITY BANK, NATIONAL ASSOCIATION, a national banking association organized under the laws of the United States of America, as Trustee under the indenture dated August 1, 1924, below mentioned, hereinafter called the "Trustee", party of the second part. WHEREAS, on July 25, 1924, the Company executed and delivered to Fidelity Union Trust Company (now known as First Fidelity Bank, National Association), a certain indenture dated August 1, 1924 (hereinafter called the "Indenture"), to secure and to provide for the issue of First and Refunding Mortgage Gold Bonds of the Company; and WHEREAS, the Indenture has been recorded in the following counties of the State of New Jersey, in the offices, and therein in the books and at the pages, as follows: Page County Office Book Number Number - ------ ------ ----------- ------ Atlantic Clerk's 1955 of Mortgages 160 Bergen Clerk's 94 of Chattel Mortgages 123 etc. 693 of Mortgages 88 etc. Burlington Clerk's 52 of Chattel Mortgages Folio 8 etc. 177 of Mortgages Folio 354 etc. Camden Register's 45 of Chattel Mortgages 184 etc. 239 of Mortgages 1 etc. Cumberland Clerk's 786 of Mortgages 638 & c. Essex Register's 437 of Chattel Mortgages 1-48 T-51 of Mortgages 341-392 Gloucester Clerk's 34 of Chattel Mortgages 123 etc. 142 of Mortgages 7 etc. Hudson Register's 453 of Chattel Mortgages 9 etc. 1245 of Mortgages 484 etc. Hunterdon Clerk's 151 of Mortgages 344 Mercer Clerk's 67 of Chattel Mortgages 1 etc. 384 of Mortgages 1 etc. Middlesex Clerk's 113 of Chattel Mortgages 3 etc. 437 of Mortgages 294 etc. Monmouth Clerk's 951 of Mortgages 291 & c. Morris Clerk's N-3 of Chattel Mortgages 446 etc. F-10 of Mortgages 269 etc. Ocean Clerk's 1809 of Mortgages 40 Passaic Register's M-6 of Chattel Mortgages 178 etc. R-13 of Mortgages 268 etc. Salem Clerk's 267 of Mortgages 249 & c. 2 Page County Office Book Number Number - ------ ------ ----------- ------ Somerset Clerk's 46 of Chattel Mortgages 207 etc. N-10 of Mortgages 1 etc. Sussex Clerk's 123 of Mortgages 10 & c. Union Register's 128 of Chattel Mortgages 28 & c. 664 of Mortgages 259 etc. Warren Clerk's 124 of Mortgages 141 etc. and WHEREAS, the Indenture has also been recorded in the following counties of the Commonwealth of Pennsylvania, in the offices, and therein in the books and at the pages, as follows: Page County Office Book Number Number - ------ ------ ----------- ------ Adams Recorder's 22 of Mortgages 105 Armstrong Recorder's 208 of Mortgages 381 Bedford Recorder's 90 of Mortgages 917 Blair Recorder's 671 of Mortgages 430 Cambria Recorder's 407 of Mortgages 352 Cumberland Recorder's 500 of Mortgages 136 Franklin Recorder's 285 of Mortgages 373 Huntingdon Recorder's 128 of Mortgages 47 Indiana Recorder's 197 of Mortgages 281 Lancaster Recorder's 984 of Mortgages 1 Montgomery Recorder's 5053 of Mortgages 1221 Westmoreland Recorder's 1281 of Mortgages 198 York Recorder's 31-V of Mortgages 446 and WHEREAS, the Indenture granted, bargained, sold, aliened, remised, released, conveyed, confirmed, assigned, transferred and set over unto the Trustee certain property of the Company, more fully set forth and described in the Indenture, then owned or which might thereafter be acquired by the Company; and WHEREAS, the Company, by various supplemental indentures, supplemental to the Indenture, the last of which was dated October 1, 1994 (No. 2), has granted, bargained, sold, aliened, remised, released, conveyed, confirmed, assigned, transferred and set over unto the Trustee certain property of the Company acquired by it after the execution and delivery of the Indenture; and WHEREAS, since the execution and delivery of said supplemental indenture dated October 1, 1994 (No. 2), the Company has acquired property 3 which, in accordance with the provisions of the Indenture, is subject to the lien thereof and the Company desires to confirm such lien; and WHEREAS, the Indenture has been amended or supplemented from time to time; and WHEREAS, it is provided in the Indenture that no bonds other than those of the 5 1/2% Series due 1959 therein authorized may be issued thereunder unless a supplemental indenture providing for the issue of such additional bonds shall have been executed and delivered by the Company to the Trustee; and WHEREAS, the York County Industrial Development Authority (the "Authority") has previously issued and sold its Pollution Control Revenue Bonds, 1976 Series A (Public Service Electric and Gas Company Peach Bottom Project) (the "1976 Authority Bonds") to finance the Company's share of the cost of the acquisition and construction of certain pollution control facilities at the Peach Bottom Atomic Power Station Units 1 and 2 located principally in Peach Bottom Township, York County, Pennsylvania (such station being referred to as the "Plant" and the pollution control facilities being referred to herein as the "Project"); and WHEREAS, the Authority is making provision for the issuance and sale of its Pollution Control Revenue Refunding Bonds, 1995 Series A (Public Service Electric and Gas Peach Bottom Company Project) (the "1995 Authority Bonds") to provide funds to pay a portion of the costs of refunding through redemption of the 1976 Authority Bonds; and WHEREAS, the 1995 Authority Bonds are to be issued under a Trust Indenture dated as of September 1, 1995, (the "Authority Indenture"), between the Authority and First Fidelity Bank, National Association, as trustee (the "Authority Trustee"); and WHEREAS, the Company has entered into a Pollution Control Facilities Agreement dated as of October 1, 1976, (the "Agreement"), with the Authority and the other owners of the Plant providing, among other things, for the sale and conveyance by the Authority to the Company of the Project, and for the issuance by the Company to the Authority Trustee, as assignee of the Authority, of First and Refunding Mortgage Bonds of the Company to 4 evidence the Company's obligation to pay the purchase price for the Project, and for such purposes, in connection with the issuance of the 1995 Authority Bonds, the Company desires to provide for the issue of $13,700,000 aggregate principal amount of bonds secured by the Indenture of a series to be designated as "First and Refunding Mortgage Bonds, Pollution Control Series V" (hereinafter sometimes called "Pollution Control Series V"); and WHEREAS, the text of the bonds of the Pollution Control Series V and of the certificate of authentication to be borne by the bonds of the Pollution Control Series V shall be substantially of the following tenor: [FORM OF BOND] This Bond is not transferable except as provided in the Trust Indenture dated as of September 1, 1995 between the York County Industrial Development Authority and First Fidelity Bank, National Association, as Trustee (the "Authority Indenture"). Capitalized terms used herein, not otherwise expressly defined herein, shall have the meanings ascribed to them in the Authority Indenture. 5 Registered Registered Number Amount R- $13,700,000 PUBLIC SERVICE ELECTRIC AND GAS COMPANY FIRST AND REFUNDING MORTGAGE BOND, POLLUTION CONTROL SERIES V Public Service Electric and Gas Company (hereinafter called the "Company"), a corporation of the State of New Jersey, for value received, hereby promises to pay to First Fidelity Bank, National Association, as trustee under the Authority Indenture, or registered assigns, the principal sum of Thirteen Million Seven Hundred Thousand Dollars, on September 1, 2020, and to pay interest thereon from the date hereof, at the rate of 15.0% per annum, and until payment of said principal sum, provided, however, that the Company shall receive certain credits against such obligations to the extent that interest payable by the Authority from time to time for bonds issued pursuant to the Authority Indenture (the "1995 Authority Bonds") is less than interest calculated pursuant to the foregoing rate. Such interest to be payable at such times and in such manner as interest is payable on the 1995 Authority Bonds. Both the principal hereof and interest hereon shall be paid at the principal office of First Fidelity Bank, National Association, in the City of Newark, State of New Jersey, or at the corporate trust office of any paying agent appointed by the Company, in such coin or currency of the United States of America as at the time of payment shall constitute legal tender for the payment of public and private debts. This Bond is one of the First and Refunding Mortgage Bonds of the Company issued and to be issued under and pursuant to, and all equally secured by, an indenture of mortgage or deed of trust dated August 1, 1924, between the Company and First Fidelity Bank, National Association (formerly known as Fidelity Union Trust Company), a national banking association of the United States of America, as Trustee, as supplemented and amended by the supplemental indentures thereto, including the supplemental indenture dated October 1, 1995 (No. 2). This Bond is one of the Bonds of the Pollution Control Series V, which series is limited to the aggregate principal amount of $13,700,000 and is issued pursuant to said supplemental indenture 6 dated October 1, 1995 (No. 2). Reference is hereby made to said indenture and all supplements thereto for a specification of the principal amount of Bonds from time to time issuable thereunder, and for a description of the properties mortgaged and conveyed or assigned to said Trustee or its successors, the nature and extent of the security, and the rights of the holders of said Bonds and any coupons appurtenant thereto, and of the Trustee in respect of such security. In and by said indenture, as amended and supplemented, it is provided that with the written approval of the Company and the Trustee, any of the provisions of said indenture may from time to time be eliminated or modified and other provisions may be added thereto provided the change does not alter the annual interest rate, redemption price or date, date of maturity or amount payable on maturity of any then outstanding Bond or conflict with the Trust Indenture Act of 1939 as then in effect, and provided the holders of 85% in principal amount of the Bonds secured by said indenture and then outstanding (including, if such change affect the Bonds of one or more series but less than all series then outstanding, a like percentage of the then outstanding Bonds of each series affected by such change, and excluding Bonds owned or controlled by the Company or by the parties owning at least 10% of the outstanding voting stock of the Company, as more fully specified in said indenture) consent in writing thereto, all as more fully set forth in said indenture, as amended and supplemented. First and Refunding Mortgage Bonds issuable under said indenture are issuable in series, and the Bonds of any series may be for varying principal amounts and in the form of coupon Bonds and of registered Bonds without coupons, and the Bonds of any one series may differ from the Bonds of any other series as to date, maturity, interest rate and otherwise, all as in said indenture provided and set forth. The Bonds of the Pollution Control Series V, in which this Bond is included, are designated "First and Refunding Mortgage Bonds, Pollution Control Series V". In case of the happening of an event of default as specified in said indenture and in the supplemental indenture dated March 1, 1942 supplemental thereto, the principal sum of the Bonds of this issue may be declared or may become due and payable forthwith, in the manner and with the effect in said indenture provided. 7 The Bonds of this series are subject to redemption as provided in said supplemental indenture dated October 1, 1995 (No. 2). This Bond is transferable, but only as provided in the Authority Indenture upon surrender hereof, by the registered owner in person or by attorney duly authorized in writing, at the principal office of the Trustee; upon any such transfer a new Bond similar hereto will be issued to the transferee. No service charge shall be made for any such transfer, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto. The Company and the Trustee and any paying agent may deem and treat the person in whose name this Bond is registered as the absolute owner hereof for the purpose of receiving payment of or on account of the principal hereof and the interest hereon and for all other purposes; and neither the Company nor the Trustee nor any paying agent shall be affected by any notice to the contrary. The Bonds of this series are issuable only in fully registered form, in any denomination authorized by the Company. No recourse under or upon any obligation, covenant or agreement contained in said indenture or in any indenture supplemental thereto, or in any Bond or coupon issued thereunder, or because of any indebtedness arising thereunder, shall be had against any incorporator, or against any past, present or future stockholder, officer or director, as such, of the Company or of any successor corporation, either directly or through the Company or any successor corporation, under any rule of law, statute or constitutional provision or by the enforcement of any assessment or by any legal or equitable proceeding or otherwise; it being expressly agreed and understood that said indenture, any indenture supplemental thereto and the obligations issued thereunder, are solely corporate obligations, and that no personal liability whatever shall attach to, or be incurred by, such incorporators, stockholders, officers or directors, as such, of the Company, or of any successor corporation, or any of them, because of the incurring of the indebtedness thereby authorized, or under or by reason of any of the obligations, covenants or agreements contained in the indenture or in any indenture supplemental thereto or in any of the Bonds or coupons issued thereunder, or implied therefrom. This Bond shall not be entitled to any security or benefit under said indenture, as amended and supplemented, and shall not become valid or 8 obligatory for any purpose, until the certificate of authentication, hereon endorsed, shall have been signed by First Fidelity Bank, National Association, as Trustee, or by its successor in trust under said indenture. IN WITNESS WHEREOF, the Company has caused this Bond to be duly executed by its proper officers under its corporate seal. Dated PUBLIC SERVICE ELECTRIC AND GAS COMPANY, By --------------------------------- (Vice) President (Seal) Attest: - ---------------------------------------- (Assistant) Secretary 9 [FORM OF CERTIFICATE OF AUTHENTICATION] CERTIFICATE OF AUTHENTICATION This Bond is one of the Bonds of the series designated therein which are described in the within-mentioned indenture and supplemental indenture dated October 1, 1995 (No. 2), as secured thereby. FIRST FIDELITY BANK, NATIONAL ASSOCIATION, TRUSTEE, BY --------------------------- Authorized Signatory ------------------ WHEREAS, the execution and delivery of this supplemental indenture have been duly authorized by the Board of Directors of the Company; and WHEREAS, the Company represents that all things necessary to make the bonds of the Pollution Control Series V hereinafter described, when duly authenticated by the Trustee and issued by the Company, valid, binding and legal obligations of the Company, and to make this supplemental indenture a valid and binding agreement supplemental to the Indenture, have been done and performed: NOW, THEREFORE, THIS SUPPLEMENTAL INDENTURE WITNESSETH that the Company, in consideration of the premises and the execution and delivery by the Trustee of this supplemental indenture, and in pursuance of the covenants and agreements contained in the Indenture and for other good and valuable consideration, the receipt of which is hereby acknowledged, has granted, bargained, sold, aliened, remised, released, conveyed, confirmed, assigned, transferred and set over, and by these presents does grant, bargain, sell, alien, remise, release, convey, confirm, assign, transfer and set over unto the Trustee, its successors and assigns, forever, all the right, title and interest of the Company in and to all property of every kind and description (except cash, accounts and bills receivable and all merchandise bought, sold or manufactured for sale in the ordinary course of the Company's business, 10 stocks, bonds or other corporate obligations or securities, other than such as are described in Part V of the Granting Clauses of the Indenture, not acquired with the proceeds of bonds secured by the Indenture, and except as in the Indenture and herein otherwise expressly excluded) acquired by the Company since the execution and delivery of the supplemental indenture dated October 1, 1994 (No. 2), supplemental to the Indenture (except any such property duly released from, or disposed of free from, the lien of the Indenture, in accordance with the provisions thereof) and all such property which at any time hereafter may be acquired by the Company; All of which property it is intended shall be included in and granted by this supplemental indenture and covered by the lien of the Indenture as heretofore and hereby amended and supplemented; UNDER AND SUBJECT to any encumbrances or mortgages existing on property acquired by the Company at the time of such acquisition and not heretofore discharged of record; and SUBJECT, also, to the exceptions, reservations and provisions in the Indenture and in this supplemental indenture recited, and to the liens, reservations, exceptions, limitations, conditions and restrictions imposed by or contained in the several deeds, grants, franchises and contracts or other instruments through which the Company acquired or claims title to the aforesaid property; and SUBJECT, also, to existing leases, to liens on easements or rights of way, to liens for taxes, assessments and governmental charges not in default or the payment of which is deferred, pending appeal or other contest by legal proceedings, pursuant to Section 4 of Article Five of the Indenture, or the payment of which is deferred pending billing, transfer of title or final determination of amount, to easements for alleys, streets, highways, rights of way and railroads that may run across or encroach upon the said property, to joint pole and similar agreements, to undetermined liens and charges, if any, incidental to construction, and other encumbrances permitted by the Indenture as heretofore and hereby amended and supplemented; TO HAVE AND TO HOLD the property hereby conveyed or assigned, or intended to be conveyed or assigned, unto the Trustee, its successor or successors and assigns, forever; 11 IN TRUST, NEVERTHELESS, upon the terms, conditions and trusts set forth in the Indenture as heretofore and hereby amended and supplemented, to the end that the said property shall be subject to the lien of the Indenture as heretofore and hereby amended and supplemented, with the same force and effect as though said property had been included in the Granting Clauses of the Indenture at the time of the execution and delivery thereof; AND THIS SUPPLEMENTAL INDENTURE FURTHER WITNESSETH that for the considerations aforesaid, it is hereby covenanted between the Company and the Trustee as follows: ARTICLE I. BONDS OF THE POLLUTION CONTROL SERIES V. The series of bonds authorized by this supplemental indenture to be issued under and secured by the Indenture shall be designated "First and Refunding Mortgage Bonds, Pollution Control Series V"; shall be limited to the aggregate principal amount of $13,700,000; shall be issued initially to the Authority Trustee, as assignee of the Authority, to evidence the Company's obligation under the Agreement with respect to the 1995 Authority Bonds; and shall mature and bear interest as set forth in the form of bond hereinbefore described; provided, however, that the Company shall receive certain credits against principal and interest obligations as set forth in Section 3.01 hereof. The date of each bond of the Pollution Control Series V shall be the interest payment date next preceding the date of authentication, unless such date of authentication be an interest payment date, in which case the date shall be the date of authentication, or unless such date of authentication be prior to the first interest payment date, in which case the date shall be October 1, 1995. Bonds of the Pollution Control Series V shall be issued as fully registered bonds in any denomination authorized by the Company. Interest on bonds of the Pollution Control Series V shall be payable at such time and in such manner as interest is payable on the 1995 Authority Bonds, subject to certain credits against principal and interest as set forth in Section 3.01 hereof and shall be payable as to both principal and interest in such coin or currency of 12 the United States of America as at the time of payment shall constitute legal tender for the payment of public and private debts, at the principal office of the Trustee, or at the corporate trust office of any paying agent appointed by the Company. Bonds of the Pollution Control Series V shall be transferable (but only as provided in the Authority Indenture) upon surrender thereof for cancellation by the registered owner in person or by attorney duly authorized in writing at said office of the Trustee. The Company hereby waives any right to make a charge for any transfer of bonds of the Pollution Control Series V, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto. ARTICLE II. REDEMPTION OF BONDS--POLLUTION CONTROL SERIES V. SECTION 2.01. Redemption--Redemption Prices. Bonds of the Pollution Control Series V shall be subject to redemption prior to maturity, under the conditions and upon the payment of the amounts specified in the following subsections, together in each case with interest accrued to the redemption date: (a) at the option of the Company (i) whenever the Interest Rate Mode for the 1995 Authority Bonds is the Daily Rate or the Weekly Rate, in whole or in part, at a redemption price of 100% of the principal amount thereof on any Interest Payment Date; (ii) whenever the Interest Rate Mode for the 1995 Authority Bonds is the Commercial Paper Rate, in whole or in part, at a redemption price of 100% of the principal amount thereof on the Interest Payment Date for each Commercial Paper Rate Period for 13 an Authority Bond or Bonds, such redemption to be in the same principal amount of such Authority Bond or Bonds; (iii) whenever the Interest Rate Mode for the 1995 Authority Bonds is the Auction Rate, in whole or in part, at a redemption price of 100% of the principal amount thereof on the final Interest Payment Date for each Auction Period; (iv) whenever the Interest Rate Mode for the 1995 Authority Bonds is the Term Rate, in whole or in part, on the final Interest Payment Date for the then current Term Rate Period and, prior to the end of the then current Term Rate Period, at any time during the redemption periods and at the redemption prices set forth below, plus interest accrued, if any, to the redemption date: Original Length of Current Commencement of Redemption Price as Term Rate Period (Years) Redemption Period Percentage of Principal ------------------------ ----------------- ----------------------- More than 15 years Tenth anniversary of 102% declining by 1% on commencement of Term each succeeding anniversary Rate Period of the first day of the redemption period until reaching 100% and thereafter 100% More than 10 but not Seventh anniversary of 102% declining by 1% on more than 15 years commencement of Term each succeeding anniversary Rate Period of the first day of the redemption period until reaching 100% and thereafter 100% More than 5 but not Fifth anniversary of 101% declining by 1% on more than 10 years commencement of Term each succeeding anniversary Rate Period of the first day of the redemption period until reaching 100% and thereafter 100% More than 2 but not Second anniversary of 100% on and after such more than 5 years commencement of Term second anniversary of the Rate Period first day of the redemption period 2 years or less Non-callable Non-callable If, at the time of the Company's notice of a change in the Term Rate Period pursuant to Section 2.02(d) of the Authority Indenture, or its notice of Conversion of the Interest Rate Mode for the 1995 14 Authority Bonds to the Term Rate pursuant to Section 2.02(e) of the Authority Indenture, or, when the Interest Rate Mode for the 1995 Authority Bonds is the Term Rate, at least 35 days prior to the Purchase Date for the 1995 Authority Bonds pursuant to Section 3.01(b)(i) of the Authority Indenture, the Company provides a certification of the Remarketing Agent to the Authority Trustee and the Authority that the foregoing schedule is not consistent with prevailing market conditions and an opinion of nationally recognized bond counsel that a change in the redemption provisions of the 1995 Authority Bonds will not adversely affect the exclusion from gross income of interest on the 1995 Authority Bonds for Federal income tax purposes, the foregoing redemption periods and redemption prices may be revised effective as of the date of such change in the Term Rate Period, the Conversion Date, or that Purchase Date, as determined by the Remarketing Agent in its judgment, taking into account the then Prevailing Market Conditions, as stipulated in such certification, which shall be appended by the Trustee to its counterpart of this supplemental indenture. Any such revision of redemption periods or redemption prices shall not be considered an amendment of or supplement to this supplemental indenture and shall not require the consent of any other person or entity. (b) in whole or in part (if, in the opinion of nationally recognized bond counsel, such partial redemption will preserve the exclusion from gross income for Federal income tax purposes of interest on the remaining 1995 Authority Bonds) at any time at 100% of the principal amount thereof to be redeemed, within 180 days after a "final determination" (i.e., the issuance of a published or private ruling or technical advice) of the Internal Revenue Service or a judicial decision in a proceeding by any court of competent jurisdiction in the United States (from which ruling, advice or decision no further right of appeal exists), in all cases in which the Company has participated or been a party or has been given an opportunity to participate and has failed to do so (no such decree or judgment by any court or action by the Internal Revenue Service to be considered final unless the owner of the 1995 Authority Bonds involved in such proceeding or action has given the Company and the Authority Trustee prompt written notice of the commencement thereof and offered 15 the Company, at the Company's expense, the opportunity to control the defense thereof) that, as a result of a failure by the Company to observe any covenant, agreement, representation or warranty in the Agreement, the interest payable on the 1995 Authority Bonds is includable in the gross income for Federal income tax purposes of the holder thereof, other than a "substantial user" of the Project or a "related person" as provided in Section 147(a) of the Internal Revenue Code of 1986, as amended, and the applicable regulations thereunder. (c) in whole at 100% of the principal amount thereof whenever the Company receives from the Authority Trustee a copy of a written demand sent to the Trustee stating that the principal of all outstanding 1995 Authority Bonds has been declared to be immediately due and payable because of an Event of Default under the Authority Indenture. In such case, redemption of the Bonds of the Pollution Control Series V shall be any date selected by the Company, not more than 180 days after receipt by the Company of such written demand for redemption. (d) to the extent that any of the 1995 Authority Bonds shall have become Provider Bonds, (i) on the Provider Bond Redemption Date in an amount equal to the aggregate principal amount of Provider Bonds outstanding at the expiration of the Liquidity Facility at 100% of the principal amount thereof and (ii) on each of the first four anniversaries of the expiration of the Liquidity Facility at the rate of 20% per year of the aggregate principal amount of Provider Bonds outstanding at the expiration of the Liquidity Facility at 100% of the principal amount thereof. SECTION 2.02. Notice of Redemption. (a) The election of the Company under subsection (a) of Section 2.01 hereof to redeem any of the bonds of the Pollution Control Series V shall be evidenced by a resolution of the Board of Directors of the Company calling for redemption on a stated date of all or a stated principal amount thereof. To exercise its option to redeem the bonds of the Pollution Control Series V under subsection (a) of Section 2.01 hereof, the Company shall deliver to the Trustee, the Authority and the Authority Trustee a certified copy of said resolution calling all or a stated principal amount of the bonds of the Pollution Control Series V for redemption on a date not less than 20 days (35 days if the Interest Rate Mode is the Term 16 Rate) nor more than 65 days from the date said resolution is delivered. The delivery to the Authority Trustee of a certified copy of such resolution shall constitute notice to the Authority Trustee of the redemption referred to therein, on the terms specified therein. The Company shall on or before such redemption date deposit with the Trustee, as paying agent hereunder, the total applicable redemption price of all the bonds so called, with interest accrued thereon to the redemption date, less any credits to which the Company may be entitled pursuant to Section 3.01 hereof, and the Trustee, as such paying agent, shall apply such funds on the redemption date to the redemption of the bonds so called. (b) The Company shall, within 10 days after the occurrence of a "final determination" under subsection (b) of Section 2.01 hereof, deliver to the Trustee written notice of such "final determination". The Company shall, by resolution of its Board of Directors, fix a redemption date for such redemption and shall deliver to the Trustee, the Authority and the Authority Trustee a certified copy of said resolution at least 40 days prior to the date so selected for redemption. Such redemption date may be any day not more than 180 days after the occurrence of such "final determination". If the Trustee does not receive written notice of such selection by the Company within 140 days after the date of the occurrence of such "final determination", then the redemption date shall be the 180th day after the occurrence of such "final determination". On or before such redemption date, the Company shall deposit with the Trustee, as paying agent hereunder, the total redemption price of the bonds so called, with interest accrued thereon to the redemption date, less any credits to which the Company may be entitled pursuant to Section 3.01 hereof, and the Trustee, as such paying agent, shall apply such funds, on the redemption date, to the redemption of the bonds so called. The delivery to the Authority Trustee of a certified copy of such resolution shall constitute notice to the Authority Trustee of the redemption referred to therein on the terms specified therein. (c) The Company shall, within 10 days after the receipt of a written demand under subsection (c) of Section 2.01 hereof, by resolution of its Board of Directors, fix a redemption date for such redemption and shall deliver to the Trustee, the Authority and the Authority Trustee a certified copy of said resolution at least 40 days prior to the date so selected for redemption. Such 17 redemption date may be any day not more than 180 days after the receipt of such written demand. If the Trustee does not receive written notice of such selection by the Company within 140 days after the date of the receipt of such written demand, then the redemption date shall be the 180th day after the receipt of such written demand. On or before such redemption date, the Company shall deposit with the Trustee, as paying agent hereunder, the total redemption price of the bonds so called, with interest accrued thereon to the redemption date, less any credits to which the Company may be entitled pursuant to Section 3.01 hereof, and the Trustee, as such paying agent, shall apply such funds, on the redemption date, to the redemption of the bonds so called. SECTION 2.03. Interest on Called Bonds to Cease. Each bond or portion thereof of the Pollution Control Series V called for redemption under Section 2.02 hereof shall be due and payable at the office of the Trustee, as paying agent hereunder, at the applicable redemption price and on the specified redemption date, anything herein or in such bond to the contrary notwithstanding. From and after the date when each bond or portion thereof of the Pollution Control Series V shall be due and payable as aforesaid (unless upon said date the full amount due thereon shall not be held by or provided to the Trustee, as paying agent hereunder, and be immediately available for payment), all further interest shall cease to accrue on such bond or on such portion thereof, as the case may be. SECTION 2.04. Bonds Called in Part. If only a portion of any bond of the Pollution Control Series V shall be called for redemption pursuant to Section 2.02 hereof, the notice of redemption hereinbefore provided for shall specify the portion of the principal amount thereof to be redeemed. Upon payment of the portion so called for redemption, the Trustee, as paying agent hereunder, shall give prompt written notice thereof to the Company. SECTION 2.05. Provisions of Indenture Not Applicable. The provisions of Article Four of the Indenture, as amended and supplemented, shall not apply to the procedure for the exercise of any right of redemption reserved by the Company, or to any mandatory redemption provided in this Article in respect of the bonds of the Pollution Control Series V. There shall be no sinking fund for the bonds of the Pollution Control Series V. 18 ARTICLE III. CREDITS WITH RESPECT TO THE BONDS OF THE POLLUTION CONTROL SERIES V. SECTION 3.01. Credits. (a) In addition to any other credit, payment or satisfaction to which the Company is entitled with respect to the Bonds of the Pollution Control Series V, the Company shall be entitled credits against amounts otherwise payable in respect of the Bonds of the Pollution Control Series V in an amount corresponding to the amount by which interest due on the Bonds of the Pollution Control Series V exceeds the interest due on the 1995 Authority Bonds. (b) The Company shall be entitled to credits against amounts otherwise payable in respect of the bonds of the Pollution Control Series V in an amount corresponding to (i) the principal amount of any 1995 Authority Bond surrendered to the Authority Trustee by the Company or the Authority, or purchased by the Authority Trustee, for cancellation and (ii) the amount of money held by the Authority Trustee and available and designated for or applied toward the payment of principal or redemption price of and interest on the 1995 Authority Bonds, as the case may be, regardless of the source of payment to the Authority Trustee of such moneys; provided, however, that the Company shall not be entitled to any such credit with respect to amounts paid to the Authority Trustee pursuant to the Bond Insurance Policy. The Trustee, as paying agent hereunder, shall give prompt written notice to the Company of any such credit with respect to the payment of interest. 19 (c) The Trustee, as paying agent hereunder, shall (i) promptly notify the Company of each deposit in the Bond Fund under the Authority Indenture, (ii) provide evidence to the Company that such deposit has been credited to such Fund and (iii) give prompt written notice to the Company of any credits with respect to payment of principal or redemption price of and interest on the bonds of the Pollution Control Series V. SECTION 3.02. Certificate of the Company. A certificate of the Company signed by the President, any Vice President or any Assistant Treasurer, and attested to by the Secretary or any Assistant Secretary, and consented to by the Authority Trustee, stating that the Company is entitled to a credit under Section 3.01 hereof and setting forth the basis therefor in reasonable detail, shall be conclusive evidence of such entitlement, and the Trustee shall accept such certificate as such evidence without further investigation or verification of the matters stated therein. ARTICLE IV. MISCELLANEOUS. SECTION 4.01. Authentication of Bonds of Pollution Control Series V. None of the bonds of the Pollution Control Series V, the issue of which is provided for by this supplemental indenture, shall be authenticated by the Trustee except in accordance with the provisions of the Indenture, as amended and supplemented, and this supplemental indenture, and upon compliance with the conditions in that behalf therein contained. SECTION 4.02. Additional Restrictions on Authentication of Additional Bonds Under Indenture. The Company covenants that from and after the date of execution of this supplemental indenture, no additional bonds (as defined in Section 1 of Article Two of the Indenture) shall be authenticated and delivered by the Trustee under Subdivision A of Section 4 of said Article Two on account of additions or improvements to the mortgaged property (1) unless the net earnings of the Company for the period required by Subdivision C of Section 6 of said Article Two shall have been at least 20 twice the fixed charges (in lieu of 1 3/4 times such fixed charges, as required by said Subdivision C); and for the purpose of this condition (a) such fixed charges shall in each case include interest on the bonds applied for, notwithstanding the parenthetical provision contained in clause (4) of said Subdivision C, and (b) in computing such net earnings there shall be included in expenses of operation (under paragraph (c) of said Subdivision C) all charges against earnings for depreciation, renewals or replacements, and all certificates with respect to net earnings delivered to the Trustee in connection with any authentication of additional bonds under said Article Two shall so state; and (2) except to the extent of 60% (in lieu of 75% as permitted by Subdivision A of Section 7 of said Article Two) of the cost or fair value to the Company of the additions or improvements forming the basis for such authentication of additional bonds. SECTION 4.03. Restriction on Dividends. The Company will not declare or pay any dividend on any shares of its common stock (other than dividends payable in shares of its common stock) or make any other distribution on any such shares, or purchase or otherwise acquire any such shares (except shares acquired without cost to the Company) whenever such action would reduce the earned surplus of the Company to an amount less than $10,000,000 or such lesser amount as may remain after deducting from said $10,000,000 all amounts appearing in the books of account of the Company on December 31, 1948, which shall thereafter, pursuant to any order or rule of any regulatory body entered after said date, be required to be removed, in whole or in part, from the books of account of the Company by charges to earned surplus. 21 SECTION 4.04. Use of Facsimile Seal and Signatures. The seal of the Company and any or all signatures of the officers of the Company upon any of the bonds of the Pollution Control Series V may be facsimiles. SECTION 4.05. Effective Period of Supplemental Indenture. The preceding provisions of Articles I, II and III of this supplemental indenture shall remain in effect only so long as any of the bonds of the Pollution Control Series V shall remain outstanding. SECTION 4.06. Time for Making of Payment. All payments of principal or redemption price of and interest on the bonds of the Pollution Control Series V shall be made to the Authority Trustee in such funds as shall constitute immediately available funds when payment is due. In any case where the date of payment of the principal or redemption price of or interest on the bonds of the Pollution Control Series V or the date fixed for redemption of any such bonds shall be in the city of payment a Saturday, Sunday or a legal holiday or a day on which banking institutions are authorized by law to close, then such payment need not be made on such date but may be made on the next succeeding business day with the same force and effect as if made on the date of maturity or the date fixed for redemption, and no interest on such payment shall accrue for the period after such date. SECTION 4.07. Effect of Approval of Board of Public Utilities of the State of New Jersey. The approval of the Board of Public Utilities of the State of New Jersey of the execution and delivery of these presents and of the issue of any bonds of the Pollution Control Series V shall not be construed as approval of said Board of any other act, matter or thing which requires approval of said Board under the laws of the State of New Jersey. SECTION 4.08. Execution in Counterparts. For the purpose of facilitating the recording hereof, this supplemental indenture has been executed in several counterparts, each of which shall be and shall be taken to be an original, and all collectively but one instrument. 22 IN WITNESS WHEREOF, Public Service Electric and Gas Company, party hereto of the first part, after due corporate and other proceedings, has caused this supplemental indenture to be signed and acknowledged or proved by its President or one of its Vice Presidents and its corporate seal hereunto to be affixed and to be attested by the signature of its Secretary or an Assistant Secretary; and First Fidelity Bank, National Association, as Trustee, party hereto of the second part, has caused this supplemental indenture to be signed and acknowledged or proved by its President, one of its Vice Presidents or one of its Assistant Vice Presidents and its corporate seal to be hereunto affixed and to be attested by the signature of one of its Assistant Vice Presidents, its Cashier, one of its Assistant Cashiers, or one of its Corporate Trust Officers. Executed and delivered this 2nd day of October, 1995. PUBLIC SERVICE ELECTRIC AND GAS COMPANY By /s/ F.J. Riepl --------------------------------- (F.J. Riepl) Vice President Attest: /s/ E.J. Biggins, Jr. --------------------------------- (E.J. Biggins, Jr.) Assistant Secretary FIRST FIDELITY BANK, NATIONAL ASSOCIATION By /s/ F. Gallagher --------------------------------- (F. Gallagher) Vice President Attest: /s/ J.J. Waters --------------------------------- (J.J. Waters) Assistant Vice President 23 STATE OF NEW JERSEY ) COUNTY OF ESSEX ) ss.: BE IT REMEMBERED, that on this 2nd day of October, 1995, before me, the subscriber, a Notary Public of the State of New Jersey, personally appeared F. J. Riepl who, I am satisfied, is a Vice President of PUBLIC SERVICE ELECTRIC AND GAS COMPANY, one of the corporations named in and which executed the foregoing instrument, and is the person who signed the said instrument as such officer for and on behalf of such corporation, and I having first made known to him the contents thereof, he did acknowledge that he signed the said instrument as such officer, that the said instrument was made by such corporation and sealed with its corporate seal, that the said instrument is the voluntary act and deed of such corporation, made by virtue of authority from its Board of Directors, and that said corporation, the mortgagor, has received a true copy of said instrument. /s/ Irene Roxanne Prignano --------------------------------- Irene Roxanne Prignano Notary Public of New Jersey My Commission Expires Oct. 29, 1998 STATE OF NEW JERSEY ) COUNTY OF ESSEX ) ss.: BE IT REMEMBERED, that on this 2nd day of October, 1995, before me, the subscriber, a Notary Public of the State of New Jersey, personally appeared F. Gallagher who, I am satisfied, is a Vice President of FIRST FIDELITY BANK, NATIONAL ASSOCIATION, one of the corporations named in and which executed the foregoing instrument, and is the person who signed the said instrument as such officer, for and on behalf of such corporation, and I having first made known to him the contents thereof, he did acknowledge that he signed the said instrument as such officer, that the said instrument was made by such corporation and sealed with its corporate seal; and that the said instrument is the voluntary act and deed of such corporation, made by virtue of authority from its Board of Directors. /s/ Jean M. Seiz --------------------------------------- Jean M. Seiz Notary Public of New Jersey My Commission Expires Nov. 28, 1995 24 CERTIFICATE OF RESIDENCE First Fidelity Bank, National Association, Mortgagee and Trustee within named, hereby certifies that its precise residence is 765 Broad Street, Newark, New Jersey 07101. FIRST FIDELITY BANK, NATIONAL ASSOCIATION By /s/ F. Gallagher --------------------------------- (F. Gallagher) Vice President EX-4.A(97) 6 SUPPLEMENTAL MORTGAGE SUPPLEMENTAL MORTGAGE ============================================================ Supplemental Indenture Dated April 1, 1997 ================ SUPPLEMENTAL TO FIRST AND REFUNDING MORTGAGE DATED AUGUST 1, 1924 ================ PUBLIC SERVICE ELECTRIC AND GAS COMPANY To FIRST UNION NATIONAL BANK Trustee 765 Broad Street Newark, New Jersey 07101 ================ Providing for the issue of First and Refunding Mortgage Bonds, Pollution Control Series X ============================================================ RECORD IN MORTGAGE BOOK AND RETURN TO: JAMES T. FORAN, ESQ. 80 PARK PLAZA, T5B P.O. BOX 570 NEWARK, N.J. 07101 This instrument prepared by /s/ Edward C. Fedak - ----------------------- (EDWARD C. FEDAK, ESQ.) TABLE OF CONTENTS ============= Page ---- RECITALS ............................................................. 1 FORM OF BOND ......................................................... 4 FORM OF CERTIFICATE OF AUTHENTICATION ................................ 9 GRANTING CLAUSES ..................................................... 9 ARTICLE I. BONDS OF POLLUTION CONTROL SERIES X. DESCRIPTION OF POLLUTION CONTROL SERIES X ............................ 11 ARTICLE II. REDEMPTION OF BONDS -- POLLUTION CONTROL SERIES X. SECTION 2.01. Redemption -- Redemption Prices ...................... 12 SECTION 2.02. Notice of Redemption ................................. 15 SECTION 2.03. Interest on Called Bonds to Cease .................... 17 SECTION 2.04. Bonds Called in Part ................................. 17 SECTION 2.05. Provisions of Indenture not Applicable ............... 17 ARTICLE III. CREDITS WITH RESPECT TO THE BONDS OF THE POLLUTION CONTROL SERIES X. SECTION 3.01. Credits .............................................. 18 SECTION 3.02. Certificate of the Company ........................... 18 ARTICLE IV. MISCELLANEOUS. SECTION 4.01. Authentication of Bonds of Pollution Control Series X ........................................ 19 SECTION 4.02. Additional Restrictions on Authentication of Additional Bonds Under Indenture ................ 19 SECTION 4.03. Restriction on Dividends ............................. 20 SECTION 4.04. Use of Facsimile Seal and Signatures ................. 20 SECTION 4.05. Effective Period of Supplemental Indenture ........... 20 SECTION 4.06. Time for Making of Payment ........................... 20 SECTION 4.07. Effect of Approval of Board of Public Utilities of the State of New Jersey ............ 21 SECTION 4.08. Execution in Counterparts ............................ 21 Acknowledgments ...................................................... 22 Certificate of Residence ............................................. 24 SUPPLEMENTAL INDENTURE, dated the 1st day of April, 1997, for convenience of reference and effective from the time of execution and delivery hereof, between PUBLIC SERVICE ELECTRIC AND GAS COMPANY, a corporation organized under the laws of the State of New Jersey, hereinafter called the "Company", party of the first part, and FIRST UNION NATIONAL BANK, a national banking association organized under the laws of the United States of America, as Trustee under the indenture dated August 1, 1924, below mentioned, hereinafter called the "Trustee", party of the second part. WHEREAS, on July 25, 1924, the Company executed and delivered to Fidelity Union Trust Company (now known as First Union National Bank), a certain indenture dated August 1, 1924 (hereinafter called the "Indenture"), to secure and to provide for the issue of First and Refunding Mortgage Gold Bonds of the Company; and WHEREAS, the Indenture has been recorded in the following counties of the State of New Jersey, in the offices, and therein in the books and at the pages, as follows: Page County Office Book Number Number - ------ ------ ----------- ------ Atlantic Clerk's 1955 of Mortgages 160 Bergen Clerk's 94 of Chattel Mortgages 123 etc. 693 of Mortgages 88 etc. Burlington Clerk's 52 of Chattel Mortgages Folio 8 etc. 177 of Mortgages Folio 354 etc. Camden Register's 45 of Chattel Mortgages 184 etc. 239 of Mortgages 1 etc. Cumberland Clerk's 786 of Mortgages 638 & c. Essex Register's 437 of Chattel Mortgages 1-48 T-51 of Mortgages 341-392 Gloucester Clerk's 34 of Chattel Mortgages 123 etc. 142 of Mortgages 7 etc. Hudson Register's 453 of Chattel Mortgages 9 etc. 1245 of Mortgages 484 etc. Hunterdon Clerk's 151 of Mortgages 344 Mercer Clerk's 67 of Chattel Mortgages 1 etc. 384 of Mortgages 1 etc. Middlesex Clerk's 113 of Chattel Mortgages 3 etc. 437 of Mortgages 294 etc. Monmouth Clerk's 951 of Mortgages 291 & c. Morris Clerk's N-3 of Chattel Mortgages 446 etc. F-10 of Mortgages 269 etc. Ocean Clerk's 1809 of Mortgages 40 Passaic Register's M-6 of Chattel Mortgages 178 etc. 2 Page County Office Book Number Number - ------ ------ ----------- ------ R-13 of Mortgages 268 etc. Salem Clerk's 267 of Mortgages 249 & c. Somerset Clerk's 46 of Chattel Mortgages 207 etc. N-10 of Mortgages 1 etc. Sussex Clerk's 123 of Mortgages 10 & c. Union Register's 128 of Chattel Mortgages 28 & c. 664 of Mortgages 259 etc. Warren Clerk's 124 of Mortgages 141 etc. and WHEREAS, the Indenture has also been recorded in the following counties of the Commonwealth of Pennsylvania, in the offices, and therein in the books and at the pages, as follows: Page County Office Book Number Number - ------ ------ ----------- ------ Adams Recorder's 22 of Mortgages 105 Armstrong Recorder's 208 of Mortgages 381 Bedford Recorder's 90 of Mortgages 917 Blair Recorder's 671 of Mortgages 430 Cambria Recorder's 407 of Mortgages 352 Cumberland Recorder's 500 of Mortgages 136 Franklin Recorder's 285 of Mortgages 373 Huntingdon Recorder's 128 of Mortgages 47 Indiana Recorder's 197 of Mortgages 281 Lancaster Recorder's 984 of Mortgages 1 Montgomery Recorder's 5053 of Mortgages 1221 Westmoreland Recorder's 1281 of Mortgages 198 York Recorder's 31-V of Mortgages 446 and WHEREAS, the Indenture granted, bargained, sold, aliened, remised, released, conveyed, confirmed, assigned, transferred and set over unto the Trustee certain property of the Company, more fully set forth and described in the Indenture, then owned or which might thereafter be acquired by the Company; and WHEREAS, the Company, by various supplemental indentures, supplemental to the Indenture, the last of which was dated December 1, 1996, has granted, 3 bargained, sold, aliened, remised, released, conveyed, confirmed, assigned, transferred and set over unto the Trustee certain property of the Company acquired by it after the execution and delivery of the Indenture; and WHEREAS, since the execution and delivery of said supplemental indenture dated December 1, 1996, the Company has acquired property which, in accordance with the provisions of the Indenture, is subject to the lien thereof and the Company desires to confirm such lien; and WHEREAS, the Indenture has been amended or supplemented from time to time; and WHEREAS, it is provided in the Indenture that no bonds other than those of the 5 1/2% Series due 1959 therein authorized may be issued thereunder unless a supplemental indenture providing for the issue of such additional bonds shall have been executed and delivered by the Company to the Trustee; and WHEREAS, the Industrial Pollution Control Financing Authority of Salem County (now known as The Pollution Control Financing Authority of Salem County) (the "Authority") has previously issued and sold its Pollution Control Revenue Bonds, 1987 Series A (Public Service Electric and Gas Company Project) (the "1987 Authority Bonds") to finance the acquisition and construction of certain pollution control facilities at the Company's Hope Creek Generating Station located in Lower Alloways Creek Township, Salem County, New Jersey (such generating station being sometimes referred to herein as the "Plant" and the pollution control facilities being sometimes referred to herein as the "Project"); and WHEREAS, the Authority is making provision for the issuance and sale of its Pollution Control Revenue Refunding Bonds, 1997 Series A (Public Service Electric and Gas Company Project) (the "1997 Authority Bonds") to provide funds for making a loan to the Company to provide for refinancing of a portion of the costs of the Project, including the refunding and redemption of the 1987 Authority Bonds; and WHEREAS, the 1997 Authority Bonds are to be issued under a Trust Indenture dated as of April 1, 1997, (the "Authority Indenture"), between the Authority and First Union National Bank, as trustee (the "Authority Trustee"); and 4 WHEREAS, the Company has entered into a Pollution Control Facilities Loan Agreement dated as of April 1, 1997, (the "Agreement"), with the Authority providing, among other things, for the loan by the Authority to the Company of funds to finance a portion of the costs of the Project, including the refunding and redemption of the 1987 Authority Bonds, and for the issuance by the Company to the Authority Trustee, as assignee of the Authority, of First and Refunding Mortgage Bonds of the Company to evidence the Company's obligation to repay said loan, and for such purposes the Company desires to provide for the issue of $25,000,000 aggregate principal amount of bonds secured by the Indenture of a series to be designated as "First and Refunding Mortgage Bonds, Pollution Control Series X" (hereinafter sometimes called "Pollution Control Series X"); and WHEREAS, the text of the bonds of the Pollution Control Series X and of the certificate of authentication to be borne by the bonds of the Pollution Control Series X shall be substantially of the following tenor: [FORM OF BOND] This Bond is not transferable except as provided in the Trust Indenture dated as of April 1, 1997 between The Pollution Control Financing Authority of Salem County and First Union National Bank, as Trustee (the "Authority Indenture"). Capitalized terms used herein, not otherwise expressly defined herein, shall have the meanings ascribed to them in the Authority Indenture. 5 Registered Registered Number Amount R- $25,000,000 PUBLIC SERVICE ELECTRIC AND GAS COMPANY FIRST AND REFUNDING MORTGAGE BOND, POLLUTION CONTROL SERIES X Public Service Electric and Gas Company (hereinafter called the "Company"), a corporation of the State of New Jersey, for value received, hereby promises to pay to First Union National Bank, as trustee under the Authority Indenture, or registered assigns, the principal sum of Twenty-Five Million Dollars, on April 1, 2031, and to pay interest thereon from the date hereof, at the rate of 15.0% per annum, and until payment of said principal sum, provided, however, that the Company shall receive certain credits against such obligations to the extent that interest payable by the Authority from time to time for bonds issued pursuant to the Authority Indenture (the "1997 Authority Bonds") is less than interest calculated pursuant to the foregoing rate. Such interest to be payable at such times and in such manner as interest is payable on the 1997 Authority Bonds. Both the principal hereof and interest hereon shall be paid at the corporate trust office of First Union National Bank in the City of Newark, State of New Jersey, or at the corporate trust office of any paying agent appointed by the Company, in such coin or currency of the United States of America as at the time of payment shall constitute legal tender for the payment of public and private debts. This Bond is one of the First and Refunding Mortgage Bonds of the Company issued and to be issued under and pursuant to, and all equally secured by, an indenture of mortgage or deed of trust dated August 1, 1924, between the Company and First Union National Bank (formerly known as Fidelity Union Trust Company), a national banking association of the United States of America, as Trustee, as supplemented and amended by the supplemental indentures thereto, including the supplemental indenture dated April 1, 1997. This Bond is one of the Bonds of the Pollution Control Series X, which series is limited to the aggregate principal amount of $25,000,000 and is issued pursuant to said supplemental indenture dated April 1, 1997. Reference is hereby made to said indenture and all 6 supplements thereto for a specification of the principal amount of Bonds from time to time issuable thereunder, and for a description of the properties mortgaged and conveyed or assigned to said Trustee or its successors, the nature and extent of the security, and the rights of the holders of said Bonds and any coupons appurtenant thereto, and of the Trustee in respect of such security. In and by said indenture, as amended and supplemented, it is provided that with the written approval of the Company and the Trustee, any of the provisions of said indenture may from time to time be eliminated or modified and other provisions may be added thereto provided the change does not alter the annual interest rate, redemption price or date, date of maturity or amount payable on maturity of any then outstanding Bond or conflict with the Trust Indenture Act of 1939 as then in effect, and provided the holders of 85% in principal amount of the Bonds secured by said indenture and then outstanding (including, if such change affect the Bonds of one or more series but less than all series then outstanding, a like percentage of the then outstanding Bonds of each series affected by such change, and excluding Bonds owned or controlled by the Company or by the parties owning at least 10% of the outstanding voting stock of the Company, as more fully specified in said indenture) consent in writing thereto, all as more fully set forth in said indenture, as amended and supplemented. First and Refunding Mortgage Bonds issuable under said indenture are issuable in series, and the Bonds of any series may be for varying principal amounts and in the form of coupon Bonds and of registered Bonds without coupons, and the Bonds of any one series may differ from the Bonds of any other series as to date, maturity, interest rate and otherwise, all as in said indenture provided and set forth. The Bonds of the Pollution Control Series X, in which this Bond is included, are designated "First and Refunding Mortgage Bonds, Pollution Control Series X". In case of the happening of an event of default as specified in said indenture and in the supplemental indenture dated March 1, 1942 supplemental thereto, the principal sum of the Bonds of this issue may be declared or may become due and payable forthwith, in the manner and with the effect in said indenture provided. The Bonds of this series are subject to redemption as provided in said supplemental indenture dated April 1, 1997. 7 This Bond is transferable, but only as provided in the Authority Indenture upon surrender hereof, by the registered owner in person or by attorney duly authorized in writing, at the office of the Trustee; upon any such transfer a new Bond similar hereto will be issued to the transferee. No service charge shall be made for any such transfer, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto. The Company and the Trustee and any paying agent may deem and treat the person in whose name this Bond is registered as the absolute owner hereof for the purpose of receiving payment of or on account of the principal hereof and the interest hereon and for all other purposes; and neither the Company nor the Trustee nor any paying agent shall be affected by any notice to the contrary. The Bonds of this series are issuable only in fully registered form, in any denomination authorized by the Company. No recourse under or upon any obligation, covenant or agreement contained in said indenture or in any indenture supplemental thereto, or in any Bond or coupon issued thereunder, or because of any indebtedness arising thereunder, shall be had against any incorporator, or against any past, present or future stockholder, officer or director, as such, of the Company or of any successor corporation, either directly or through the Company or any successor corporation, under any rule of law, statute or constitutional provision or by the enforcement of any assessment or by any legal or equitable proceeding or otherwise; it being expressly agreed and understood that said indenture, any indenture supplemental thereto and the obligations issued thereunder, are solely corporate obligations, and that no personal liability whatever shall attach to, or be incurred by, such incorporators, stockholders, officers or directors, as such, of the Company, or of any successor corporation, or any of them, because of the incurring of the indebtedness thereby authorized, or under or by reason of any of the obligations, covenants or agreements contained in the indenture or in any indenture supplemental thereto or in any of the Bonds or coupons issued thereunder, or implied therefrom. This Bond shall not be entitled to any security or benefit under said indenture, as amended and supplemented, and shall not become valid or obligatory for any purpose, until the certificate of authentication, hereon endorsed, shall have 8 been signed by First Union National Bank, as Trustee, or by its successor in trust under said indenture. IN WITNESS WHEREOF, the Company has caused this Bond to be duly executed by its proper officers under its corporate seal. Dated PUBLIC SERVICE ELECTRIC AND GAS COMPANY, By ------------------------------------ (Vice) President (Seal) Attest: -------------------------- (Assistant) Secretary [FORM OF CERTIFICATE OF AUTHENTICATION] CERTIFICATE OF AUTHENTICATION This Bond is one of the Bonds of the series designated therein which are described in the within-mentioned indenture and supplemental indenture dated April 1, 1997, as secured thereby. FIRST UNION NATIONAL BANK, TRUSTEE, By: ------------------------------------ Authorized Signatory --------------- 9 WHEREAS, the execution and delivery of this supplemental indenture have been duly authorized by the Board of Directors of the Company; and WHEREAS, the Company represents that all things necessary to make the bonds of the Pollution Control Series X hereinafter described, when duly authenticated by the Trustee and issued by the Company, valid, binding and legal obligations of the Company, and to make this supplemental indenture a valid and binding agreement supplemental to the Indenture, have been done and performed: NOW, THEREFORE, THIS SUPPLEMENTAL INDENTURE WITNESSETH that the Company, in consideration of the premises and the execution and delivery by the Trustee of this supplemental indenture, and in pursuance of the covenants and agreements contained in the Indenture and for other good and valuable consideration, the receipt of which is hereby acknowledged, has granted, bargained, sold, aliened, remised, released, conveyed, confirmed, assigned, transferred and set over, and by these presents does grant, bargain, sell, alien, remise, release, convey, confirm, assign, transfer and set over unto the Trustee, its successors and assigns, forever, all the right, title and interest of the Company in and to all property of every kind and description (except cash, accounts and bills receivable and all merchandise bought, sold or manufactured for sale in the ordinary course of the Company's business, stocks, bonds or other corporate obligations or securities, other than such as are described in Part V of the Granting Clauses of the Indenture, not acquired with the proceeds of bonds secured by the Indenture, and except as in the Indenture and herein otherwise expressly excluded) acquired by the Company since the execution and delivery of the supplemental indenture dated December 1, 1996, supplemental to the Indenture (except any such property duly released from, or disposed of free from, the lien of the Indenture, in accordance with the provisions thereof) and all such property which at any time hereafter may be acquired by the Company; All of which property it is intended shall be included in and granted by this supplemental indenture and covered by the lien of the Indenture as heretofore and hereby amended and supplemented; 10 UNDER AND SUBJECT to any encumbrances or mortgages existing on property acquired by the Company at the time of such acquisition and not heretofore discharged of record; and SUBJECT, also, to the exceptions, reservations and provisions in the Indenture and in this supplemental indenture recited, and to the liens, reservations, exceptions, limitations, conditions and restrictions imposed by or contained in the several deeds, grants, franchises and contracts or other instruments through which the Company acquired or claims title to the aforesaid property; and SUBJECT, also, to existing leases, to liens on easements or rights of way, to liens for taxes, assessments and governmental charges not in default or the payment of which is deferred, pending appeal or other contest by legal proceedings, pursuant to Section 4 of Article Five of the Indenture, or the payment of which is deferred pending billing, transfer of title or final determination of amount, to easements for alleys, streets, highways, rights of way and railroads that may run across or encroach upon the said property, to joint pole and similar agreements, to undetermined liens and charges, if any, incidental to construction, and other encumbrances permitted by the Indenture as heretofore and hereby amended and supplemented; TO HAVE AND TO HOLD the property hereby conveyed or assigned, or intended to be conveyed or assigned, unto the Trustee, its successor or successors and assigns, forever; IN TRUST, NEVERTHELESS, upon the terms, conditions and trusts set forth in the Indenture as heretofore and hereby amended and supplemented, to the end that the said property shall be subject to the lien of the Indenture as heretofore and hereby amended and supplemented, with the same force and effect as though said property had been included in the Granting Clauses of the Indenture at the time of the execution and delivery thereof; AND THIS SUPPLEMENTAL INDENTURE FURTHER WITNESSETH that for the considerations aforesaid, it is hereby covenanted between the Company and the Trustee as follows: 11 ARTICLE I. BONDS OF THE POLLUTION CONTROL SERIES X. The series of bonds authorized by this supplemental indenture to be issued under and secured by the Indenture shall be designated "First and Refunding Mortgage Bonds, Pollution Control Series X"; shall be limited to the aggregate principal amount of $25,000,000; shall be issued initially to the Authority Trustee, as assignee of the Authority, to evidence the Company's obligation to repay the loan to finance a portion of the costs of the Project made pursuant to the Agreement; and shall mature and bear interest as set forth in the form of bond hereinbefore described; provided, however, that the Company shall receive certain credits against principal and interest obligations as set forth in Section 3.01 hereof. The date of each bond of the Pollution Control Series X shall be the interest payment date next preceding the date of authentication, unless such date of authentication be an interest payment date, in which case the date shall be the date of authentication, or unless such date of authentication be prior to the first interest payment date, in which case the date shall be April 1, 1997. Bonds of the Pollution Control Series X shall be issued as fully registered bonds in any denomination authorized by the Company. Interest on bonds of the Pollution Control Series X shall be payable at such time and in such manner as interest is payable on the 1997 Authority Bonds, subject to certain credits against principal and interest as set forth in Section 3.01 hereof and shall be payable as to both principal and interest in such coin or currency of the United States of America as at the time of payment shall constitute legal tender for the payment of public and private debts, at the principal office of the Trustee, or at the corporate trust office of any paying agent appointed by the Company. Bonds of the Pollution Control Series X shall be transferable (but only as provided in the Authority Indenture) upon surrender thereof for cancellation by the registered owner in person or by attorney duly authorized in writing at said office of the Trustee. The Company hereby waives any right to make a charge for any transfer of bonds of the Pollution Control Series X, but the Company may require payment 12 of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto. ARTICLE II. REDEMPTION OF BONDS -- POLLUTION CONTROL SERIES X. SECTION 2.01. Redemption -- Redemption Prices. Bonds of the Pollution Control Series X shall be subject to redemption prior to maturity, under the conditions and upon the payment of the amounts specified in the following subsections, together in each case with interest accrued to the redemption date: (a) at the option of the Company (i) whenever the Interest Rate Mode for the 1997 Authority Bonds is the Daily Rate or the Weekly Rate, in whole or in part, at a redemption price of 100% of the principal amount thereof on any Interest Payment Date; (ii) whenever the Interest Rate Mode for the 1997 Authority Bonds is the Commercial Paper Rate, in whole or in part, at a redemption price of 100% of the principal amount thereof on the Interest Payment Date for each Commercial Paper Rate Period for a 1997 Authority Bond or Bonds, such redemption to be in the same principal amount of such 1997 Authority Bond or Bonds; (iii) whenever the Interest Rate Mode for the 1997 Authority Bonds is the Auction Rate, in whole or in part, at a redemption price of 100% of the principal amount thereof on the final Interest Payment Date for each Auction Period; (iv) whenever the Interest Rate Mode for the 1997 Authority Bonds is the Term Rate, in whole or in part, on the final Interest Payment Date for the then current Term Rate Period and, prior to the end of the then current Term Rate Period, at any time during the redemption periods and at the redemption prices set forth below, plus interest accrued, if any, to the redemption date: 13
Original Length of Current Commencement of Redemption Price as Term Rate Period (Years) Redemption Period Percentage of Principal - -------------------------- -------------------------- -------------------------- More than 15 years Tenth anniversary of 102% declining by 1% on commencement of Term each succeeding Rate Period anniversary of the first day of the redemption period until reaching 100% and thereafter 100% More than 10 but not more Seventh anniversary of 102% declining by 1% on than 15 years commencement of Term each succeeding Rate Period anniversary of the first day of the redemption period until reaching 100% and thereafter 100% More than 5 but not more Third anniversary of 101% declining by 1% on than 10 years commencement of Term the next anniversary of the Rate Period first day of the redemption period and thereafter 100% More than 2 but not more Second anniversary of 100% on and after such than 5 years commencement of Term second anniversary of the Rate Period first day of the redemption period 2 years or less Non-callable Non-callable
If, at the time of the Company's notice of a change in the Term Rate Period pursuant to Section 2.02(c) of the Authority Indenture, or its notice of Conversion of the Interest Rate Mode for the 1997 Authority Bonds to the Term Rate pursuant to Section 2.02(d) of the Authority Indenture, or, when the Interest Rate Mode for the 1997 Authority Bonds is the Term Rate, at least 35 days prior to the Purchase Date for the 1997 Authority Bonds pursuant to Section 3.01(b)(i) of the Authority Indenture, the Company provides a certification of the Remarketing Agent to the Authority Trustee and the Authority that the foregoing schedule is not consistent with prevailing market conditions and an opinion of nationally recognized bond counsel that a change in the redemption provisions of the 1997 Authority Bonds will not adversely affect the exclusion from gross income of interest on the 1997 Authority Bonds for Federal income tax purposes, the foregoing redemption periods and redemption prices may be revised effective as of the date of such change in the Term Rate Period, the Conversion Date, or that Purchase Date, as determined by the Remarketing Agent in its judgment, 14 taking into account the then Prevailing Market Conditions, as stipulated in such certification, which shall be appended by the Trustee to its counterpart of this supplemental indenture. Any such revision of redemption periods or redemption prices shall not be considered an amendment of or supplement to this supplemental indenture and shall not require the consent of any other person or entity. (b) in whole (or in part if, in the opinion of nationally recognized bond counsel, such partial redemption will preserve the exclusion from gross income for Federal income tax purposes of interest on the 1997 Authority Bonds remaining outstanding after such redemption) at any time at 100% of the principal amount thereof to be redeemed, plus interest accrued to the redemption date, within 180 days after a "final determination" (i.e., the issuance of a published or private ruling or technical advice) of the Internal Revenue Service or a judicial decision in a proceeding by any court of competent jurisdiction in the United States (from which ruling, advice or decision no further right of appeal exists), in all cases in which the Company has participated or been a party or has been given an opportunity to participate and has failed to do so (no such decree or judgment by any court or action by the Internal Revenue Service to be considered final unless the owner of the 1997 Authority Bonds involved in such proceeding or action has given the Company and the Authority Trustee prompt written notice of the commencement thereof and offered the Company, at the Company's expense, the opportunity to control the defense thereof) that, as a result of a failure by the Company to observe any covenant, agreement, representation or warranty in the Agreement, the interest payable on the 1997 Authority Bonds is includable in the gross income for Federal income tax purposes of the holder thereof, other than a "substantial user" of the Project or a "related person" as provided in Section 147(a) of the Internal Revenue Code of 1986, as amended, and the applicable regulations thereunder. (c) in whole at 100% of the principal amount thereof whenever the Company receives from the Authority Trustee a copy of a written demand sent to the Trustee stating that the principal of all outstanding 1997 Authority Bonds has been declared to be immediately due and payable because of an Event of Default under the Authority Indenture. In such case, redemption of the Bonds of the Pollution Control Series X shall be any date selected by 15 the Company, not more than 180 days after receipt by the Company of such written demand for redemption. (d) to the extent that any of the 1997 Authority Bonds shall have become Provider Bonds, (i) on the Provider Bond Redemption Date in an amount equal to the aggregate principal amount of Provider Bonds outstanding at the expiration of the Liquidity Facility at 100% of the principal amount thereof and (ii) on each of the first four anniversaries of the expiration of the Liquidity Facility at the rate of 20% per year of the aggregate principal amount of Provider Bonds outstanding at the expiration of the Liquidity Facility at 100% of the principal amount thereof. SECTION 2.02. Notice of Redemption. (a) The election of the Company under subsection (a) of Section 2.01 hereof to redeem any of the bonds of the Pollution Control Series X shall be evidenced by a resolution of the Board of Directors of the Company calling for redemption on a stated date of all or a stated principal amount thereof. To exercise its option to redeem the bonds of the Pollution Control Series X under subsection (a) of Section 2.01 hereof, the Company shall deliver to the Trustee, the Authority and the Authority Trustee a certified copy of said resolution calling all or a stated principal amount of the bonds of the Pollution Control Series X for redemption on a date not less than 20 days (35 days if the Interest Rate Mode is the Term Rate) nor more than 65 days from the date said resolution is delivered. The delivery to the Authority Trustee of a certified copy of such resolution shall constitute notice to the Authority Trustee of the redemption referred to therein, on the terms specified therein. The Company shall on or before such redemption date deposit with the Trustee, as paying agent hereunder, the total applicable redemption price of all the bonds so called, with interest accrued thereon to the redemption date, less any credits to which the Company may be entitled pursuant to Section 3.01 hereof, and the Trustee, as such paying agent, shall apply such funds on the redemption date to the redemption of the bonds so called. (b) The Company shall, within 10 days after the occurrence of a "final determination" under subsection (b) of Section 2.01 hereof, deliver to the Trustee written notice of such "final determination". The Company shall, by resolution of its Board of Directors, fix a redemption date for such redemption and shall deliver to the Trustee, the Authority and the Authority Trustee a certified copy of 16 said resolution at least 40 days prior to the date so selected for redemption. Such redemption date may be any day not more than 180 days after the occurrence of such "final determination". If the Trustee does not receive written notice of such selection by the Company within 140 days after the date of the occurrence of such "final determination", then the redemption date shall be the 180th day after the occurrence of such "final determination". On or before such redemption date, the Company shall deposit with the Trustee, as paying agent hereunder, the total redemption price of the bonds so called, with interest accrued thereon to the redemption date, less any credits to which the Company may be entitled pursuant to Section 3.01 hereof, and the Trustee, as such paying agent, shall apply such funds, on the redemption date, to the redemption of the bonds so called. The delivery to the Authority Trustee of a certified copy of such resolution shall constitute notice to the Authority Trustee of the redemption referred to therein on the terms specified therein. (c) The Company shall, within 10 days after the receipt of a written demand under subsection (c) of Section 2.01 hereof, by resolution of its Board of Directors, fix a redemption date for such redemption and shall deliver to the Trustee, the Authority and the Authority Trustee a certified copy of said resolution at least 40 days prior to the date so selected for redemption. Such redemption date may be any day not more than 180 days after the receipt of such written demand. If the Trustee does not receive written notice of such selection by the Company within 140 days after the date of the receipt of such written demand, then the redemption date shall be the 180th day after the receipt of such written demand. On or before such redemption date, the Company shall deposit with the Trustee, as paying agent hereunder, the total redemption price of the bonds so called, with interest accrued thereon to the redemption date, less any credits to which the Company may be entitled pursuant to Section 3.01 hereof, and the Trustee, as such paying agent, shall apply such funds, on the redemption date, to the redemption of the bonds so called. SECTION 2.03. Interest on Called Bonds to Cease. Each bond or portion thereof of the Pollution Control Series X called for redemption under Section 2.02 hereof shall be due and payable at the office of the Trustee, as paying agent hereunder, at the applicable redemption price and on the specified redemption date, anything herein or in such bond to the contrary notwithstanding. From and after the date when each bond or portion thereof of the Pollution Control Series X 17 shall be due and payable as aforesaid (unless upon said date the full amount due thereon shall not be held by or provided to the Trustee, as paying agent hereunder, and be immediately available for payment), all further interest shall cease to accrue on such bond or on such portion thereof, as the case may be. SECTION 2.04. Bonds Called in Part. If only a portion of any bond of the Pollution Control Series X shall be called for redemption pursuant to Section 2.02 hereof, the notice of redemption hereinbefore provided for shall specify the portion of the principal amount thereof to be redeemed. Upon payment of the portion so called for redemption, the Trustee, as paying agent hereunder, shall give prompt written notice thereof to the Company. SECTION 2.05. Provisions of Indenture Not Applicable. The provisions of Article Four of the Indenture, as amended and supplemented, shall not apply to the procedure for the exercise of any right of redemption reserved by the Company, or to any mandatory redemption provided in this Article in respect of the bonds of the Pollution Control Series X. There shall be no sinking fund for the bonds of the Pollution Control Series X. 18 ARTICLE III. CREDITS WITH RESPECT TO THE BONDS OF THE POLLUTION CONTROL SERIES X. SECTION 3.01. Credits. (a) In addition to any other credit, payment or satisfaction to which the Company is entitled with respect to the Bonds of the Pollution Control Series X, the Company shall be entitled credits against amounts otherwise payable in respect of the Bonds of the Pollution Control Series X in an amount corresponding to the amount by which interest due on the Bonds of the Pollution Control Series X exceeds the interest due on the 1997 Authority Bonds. (b) The Company shall be entitled to credits against amounts otherwise payable in respect of the bonds of the Pollution Control Series X in an amount corresponding to (i) the principal amount of any 1997 Authority Bond surrendered to the Authority Trustee by the Company or the Authority, or purchased by the Authority Trustee, for cancellation and (ii) the amount of money held by the Authority Trustee and available and designated for or applied toward the payment of principal or redemption price of and interest on the 1997 Authority Bonds, as the case may be, regardless of the source of payment to the Authority Trustee of such moneys; provided, however, that the Company shall not be entitled to any such credit with respect to amounts paid to the Authority Trustee pursuant to the Bond Insurance Policy. The Trustee, as paying agent hereunder, shall give prompt written notice to the Company of any such credit with respect to the payment of interest. 19 (c) The Trustee, as paying agent hereunder, shall (i) promptly notify the Company of each deposit in the Bond Fund under the Authority Indenture, (ii) provide evidence to the Company that such deposit has been credited to such Fund and (iii) give prompt written notice to the Company of any credits with respect to payment of principal or redemption price of and interest on the bonds of the Pollution Control Series X. SECTION 3.02. Certificate of the Company. A certificate of the Company signed by the President, any Vice President or any Assistant Treasurer, and attested to by the Secretary or any Assistant Secretary, and consented to by the Authority Trustee, stating that the Company is entitled to a credit under Section 3.01 hereof and setting forth the basis therefor in reasonable detail, shall be conclusive evidence of such entitlement, and the Trustee shall accept such certificate as such evidence without further investigation or verification of the matters stated therein. ARTICLE IV. MISCELLANEOUS. SECTION 4.01. Authentication of Bonds of Pollution Control Series X. None of the bonds of the Pollution Control Series X, the issue of which is provided for by this supplemental indenture, shall be authenticated by the Trustee except in accordance with the provisions of the Indenture, as amended and supplemented, and this supplemental indenture, and upon compliance with the conditions in that behalf therein contained. SECTION 4.02. Additional Restrictions on Authentication of Additional Bonds Under Indenture. The Company covenants that from and after the date of execution of this supplemental indenture, no additional bonds (as defined in Section 1 of Article Two of the Indenture) shall be authenticated and delivered by the Trustee under Subdivision A of Section 4 of said Article Two on account of additions or improvements to the mortgaged property (1) unless the net earnings of the Company for the period required by Subdivision C of Section 6 of said Article Two shall have been at least twice 20 the fixed charges (in lieu of l 3/4 times such fixed charges, as required by said Subdivision C); and for the purpose of this condition (a) such fixed charges shall in each case include interest on the bonds applied for, notwithstanding the parenthetical provision contained in clause (4) of said Subdivision C, and (b) in computing such net earnings there shall be included in expenses of operation (under paragraph (c) of said Subdivision C) all charges against earnings for depreciation, renewals or replacements, and all certificates with respect to net earnings delivered to the Trustee in connection with any authentication of additional bonds under said Article Two shall so state; and (2) except to the extent of 60% (in lieu of 75% as permitted by Subdivision A of Section 7 of said Article Two) of the cost or fair value to the Company of the additions or improvements forming the basis for such authentication of additional bonds. SECTION 4.03. Restriction on Dividends. The Company will not declare or pay any dividend on any shares of its common stock (other than dividends payable in shares of its common stock) or make any other distribution on any such shares, or purchase or otherwise acquire any such shares (except shares acquired without cost to the Company) whenever such action would reduce the earned surplus of the Company to an amount less than $10,000,000 or such lesser amount as may remain after deducting from said $10,000,000 all amounts appearing in the books of account of the Company on December 31, 1948, which shall thereafter, pursuant to any order or rule of any regulatory body entered after said date, be required to be removed, in whole or in part, from the books of account of the Company by charges to earned surplus. 21 SECTION 4.04. Use of Facsimile Seal and Signatures. The seal of the Company and any or all signatures of the officers of the Company upon any of the bonds of the Pollution Control Series X may be facsimiles. SECTION 4.05. Effective Period of Supplemental Indenture. The preceding provisions of Articles I, II and III of this supplemental indenture shall remain in effect only so long as any of the bonds of the Pollution Control Series X shall remain outstanding. SECTION 4.06. Time for Making of Payment. All payments of principal or redemption price of and interest on the bonds of the Pollution Control Series X shall be made to the Authority Trustee in such funds as shall constitute immediately available funds when payment is due. In any case where the date of payment of the principal or redemption price of or interest on the bonds of the Pollution Control Series X or the date fixed for redemption of any such bonds shall be in the city of payment a Saturday, Sunday or a legal holiday or a day on which banking institutions are authorized by law to close, then such payment need not be made on such date but may be made on the next succeeding business day with the same force and effect as if made on the date of maturity or the date fixed for redemption, and no interest on such payment shall accrue for the period after such date. SECTION 4.07. Effect of Approval of Board of Public Utilities of the State of New Jersey. The approval of the Board of Public Utilities of the State of New Jersey of the execution and delivery of these presents and of the issue of any bonds of the Pollution Control Series X shall not be construed as approval of said Board of any other act, matter or thing which requires approval of said Board under the laws of the State of New Jersey. SECTION 4.08. Execution Counterparts. For the purpose of facilitating the recording hereof, this supplemental indenture has been executed in several counterparts, each of which shall be and shall be taken to be an original, and all collectively but one instrument. 22 IN WITNESS WHEREOF, Public Service Electric and Gas Company, party hereto of the first part, after due corporate and other proceedings, has caused this supplemental indenture to be signed and acknowledged or proved by its President or one of its Vice Presidents and its corporate seal hereunto to be affixed and to be attested by the signature of its Secretary or an Assistant Secretary; and First Union National Bank, as Trustee, party hereto of the second part, has caused this supplemental indenture to be signed and acknowledged or proved by its President, one of its Vice Presidents or one of its Assistant Vice Presidents and its corporate seal to be hereunto affixed and to be attested by the signature of one of its Vice Presidents, Assistant Vice Presidents, its Cashier, one of its Assistant Cashiers, or one of its Corporate Trust Officers. Executed and delivered this 1st day of April, 1997. PUBLIC SERVICE ELECTRIC AND GAS COMPANY By /s/ F. J. Riepl ---------------- F. J. Riepl Vice President Attest: /s/ E. J. Biggins, Jr. --------------------- E. J. Biggins, Jr. Secretary FIRST UNION NATIONAL BANK By /s/ F. Gallagher ---------------- F. Gallagher Vice President Attest: /s/ J. J. Waters ---------------- J. J. Waters Vice President 23 STATE OF NEW JERSEY } COUNTY OF ESSEX } ss.: BE IT REMEMBERED, that on this 1st day of April, 1997, before me, the subscriber, a Notary Public of the State of New Jersey, personally appeared F. J. Riepl who, I am satisfied, is a Vice President of PUBLIC SERVICE ELECTRIC AND GAS COMPANY, one of the corporations named in and which executed the foregoing instrument, and is the person who signed the said instrument as such officer for and on behalf of such corporation, and I having first made known to him the contents thereof, he did acknowledge that he signed the said instrument as such officer, that the said instrument was made by such corporation and sealed with its corporate seal, that the said instrument is the voluntary act and deed of such corporation, made by virtue of authority from its Board of Directors, and that said corporation, the mortgagor, has received a true copy of said instrument. /s/ Catherine M. Golda --------------------------------- Catherine M. Golda A Notary Public of New Jersey My Commission Expires 5-14-2000 STATE OF NEW JERSEY } COUNTY OF ESSEX } ss.: BE IT REMEMBERED, that on this 1st day of April, 1997, before me, the subscriber, a Notary Public of the State of New Jersey, personally appeared F. Gallagher who, I am satisfied, is a Vice President of FIRST UNION NATIONAL BANK, one of the corporations named in and which executed the foregoing instrument, and is the person who signed the said instrument as such officer, for and on behalf of such corporation, and I having first made known to him the contents thereof, he did acknowledge that he signed the said instrument as such officer, that the said instrument was made by such corporation and sealed with its corporate seal; and that the said instrument is the voluntary act and deed of such corporation, made by virtue of authority from its Board of Directors. /s/ Bernice Rivera ----------------------------------- Bernice Rivera Notary Public of New Jersey Commission Expires May 10, 2001 24 CERTIFICATE OF RESIDENCE First Union National Bank, Mortgagee and Trustee within named, hereby certifies that its precise residence is 765 Broad Street, Newark, New Jersey 07101. FIRST UNION NATIONAL BANK By /s/ F. Gallagher ------------------- F. Gallagher Vice President EX-4 7 EXHIBIT 4A(98) EXHIBIT 4(A)(98) SUPPLEMENTAL MORTGAGE - -------------------------------------------------------------------------------- Supplemental Indenture DATED ------------------ SUPPLEMENTAL TO FIRST AND REFUNDING MORTGAGE DATED AUGUST 1, 1924 ------------------ PUBLIC SERVICE ELECTRIC AND GAS COMPANY TO FIRST UNION NATIONAL BANK TRUSTEE 765 BROAD STREET NEWARK, NEW JERSEY 07101 ------------------ PROVIDING FOR THE ISSUE OF $ FIRST AND REFUNDING MORTGAGE BONDS, % SERIES DUE - -------------------------------------------------------------------------------- RECORD IN MORTGAGE BOOK AND RETURN TO: JAMES T. FORAN, ESQ. 80 PARK PLAZA, T5B P.O. BOX 570 NEWARK, N.J. 07101 PREPARED BY ( , Esq.) TABLE OF CONTENTS ------------------
PAGE ---- RECITALS.............................................................................. 1 FORM OF BOND [FACE]................................................................... 3 FORMS OF CERTIFICATES OF AUTHENTICATION............................................... 5 FORM OF BOND [REVERSE]................................................................ 6 GRANTING CLAUSES...................................................................... 9
ARTICLE I. BONDS OF THE SERIES
DESCRIPTION OF SERIES................................................................... 11
ARTICLE II. REDEMPTION OF BONDS -- SINKING OR IMPROVEMENT FUND -- OF SERIES
SECTION 2.01. Redemption -- Redemption Prices................................... 12 SECTION 2.02. Sinking or Improvement Fund -- Sinking or Improvement Fund Redemptions -- Redemptions Pursuant to Section 4C of Article Eight of the Indenture.................................. 12 SECTION 2.03. Redemption at Election of Company................................. 14 SECTION 2.04. Called Bonds to be Surrendered -- Interest to Cease............... 15 SECTION 2.05. Bonds Called in Part.............................................. 16 SECTION 2.06. Provisions of Indenture Not Applicable............................ 16
ARTICLE III. MISCELLANEOUS.
SECTION 3.01. Authentication of Bonds of Series................................. 16 SECTION 3.02. Authenticating Agent.............................................. 16 SECTION 3.03. Additional Restrictions on Authentication of Additional Bonds Under Indenture................................................. 17 SECTION 3.04. Restriction on Dividends.......................................... 18 SECTION 3.05. Use of Facsimile Seal and Signatures.............................. 18 SECTION 3.06. Time for Making of Payment........................................ 18 SECTION 3.07. Effective Period of Supplemental Indenture........................ 19 SECTION 3.08. Effect of Approval of Board of Public Utilities of the State of New Jersey...................................................... 19 SECTION 3.09. Execution in Counterparts......................................... 19 Acknowledgments........................................................................ 20 Certificate of Residence............................................................... 21
SUPPLEMENTAL INDENTURE, dated the day of for convenience of reference and effective from the time of execution and delivery hereof, between PUBLIC SERVICE ELECTRIC AND GAS COMPANY, a corporation organized under the laws of the State of New Jersey, hereinafter called the "Company", party of the first part, and FIRST UNION NATIONAL BANK, a national banking association organized under the laws of the United States of America, as Trustee under the indenture dated August 1, 1924, below mentioned, hereinafter called the "Trustee", party of the second part. WHEREAS, on July 25, 1924, the Company executed and delivered to FIDELITY UNION TRUST COMPANY (now known as FIRST UNION NATIONAL BANK), a certain indenture dated August 1, 1924 (hereinafter called the "Indenture"), to secure and to provide for the issue of First and Refunding Mortgage Gold Bonds of the Company; and WHEREAS, the Indenture has been recorded in the following counties of the State of New Jersey, in the offices, and therein in the books and at the pages, as follows: PAGE COUNTY OFFICE BOOK NUMBER NUMBER - ----------- ------------ ---------------------------- ---------------- Atlantic Clerk's 1955 of Mortgages 160 Bergen Clerk's 94 of Chattel Mortgages 123 etc. 693 of Mortgages 85 etc. Burlington Clerk's 52 of Chattel Mortgages Folio 8, etc. 177 of Mortgages Folio 354, etc. Camden Register's 45 of Chattel Mortgages 184 etc. 239 of Mortgages 1 etc. Cumberland Clerk's 786 of Mortgages 638 & c. Essex Register's 437 of Chattel Mortgages 1-48 T-51 of Mortgages 341-392 Gloucester Clerk's 34 of Chattel Mortgages 123 etc. 142 of Mortgages 7, etc. Hudson Register's 453 of Chattel Mortgages 9, etc. 1245 of Mortgages 484, etc. Hunterdon Clerk's 151 of Mortgages 344 Mercer Clerk's 67 of Chattel Mortgages 1 etc. 384 of Mortgages 1 etc. Middlesex Clerk's 113 of Chattel Mortgages 3 etc. 437 of Mortgages 294, etc. Monmouth Clerk's 951 of Mortgages 291 & c. Morris Clerk's N-3 of Chattel Mortgages 446 etc. F-10 of Mortgages 269 etc. Ocean Clerk's 1809 of Mortgages 40 Passaic Register's M-6 of Chattel Mortgages 178, etc. R-13 of Mortgages 268 etc. Salem Clerk's 267 of Mortgages 249 & c. 2 PAGE COUNTY OFFICE BOOK NUMBER NUMBER - --------- ------------ --------------------------- --------- Somerset Clerk's 46 of Chattel Mortgages 207 etc. N-10 of Mortgages I etc. Sussex Clerk's 123 of Mortgages 10 & c. Union Register's 128 of Chattel Mortgages 28 & c. 664 of Mortgages 259 etc. Warren Clerk's 124 of Mortgages 141 etc. and WHEREAS, the Indenture has also been recorded in the following counties of the Commonwealth of Pennsylvania, in the offices, and therein in the books and at the pages, as follows: PAGE COUNTY OFFICE BOOK NUMBER NUMBER - ------------- ------------ ------------------- ------ Adams Recorder's 22 of Mortgages 105 Armstrong Recorder's 208 of Mortgages 381 Bedford Recorder's 90 of Mortgages 917 Blair Recorder's 671 of Mortgages 430 Cambria Recorder's 407 of Mortgages 352 Cumberland Recorder's 500 of Mortgages 136 Franklin Recorder's 285 of Mortgages 373 Huntingdon Recorder's 128 of Mortgages 47 Indiana Recorder's 197 of Mortgages 281 Lancaster Recorder's 984 of Mortgages 1 Montgomery Recorder's 5053 of Mortgages 1,221 Westmoreland Recorder's 1281 of Mortgages 198 York Recorder's 31-V of Mortgages 446 and WHEREAS, the Indenture granted, bargained, sold, aliened, remised, released, conveyed, confirmed, assigned, transferred and set over unto the Trustee certain property of the Company, more fully set forth and described in the Indenture, then owned or which might thereafter be acquired by the Company; and WHEREAS, the Company, by various supplemental indentures, supplemental to the Indenture, the last of which was dated , has granted, bargained, sold, aliened, remised, released, conveyed, confirmed, assigned, transferred and set over unto the Trustee certain property of the Company acquired by it after the execution and delivery of the Indenture; and WHEREAS, since the execution and delivery of said supplemental indenture dated , the Company has acquired property which, in accordance with the provisions 3 of the Indenture, is subject to the lien thereof and the Company desires to confirm such lien; and WHEREAS, the Indenture has been amended or supplemented from time to time; and WHEREAS, it is provided in the Indenture that no bonds other than those of the 5 1/2% Series due 1959 therein authorized may be issued thereunder unless a supplemental indenture providing for the issue of such additional bonds shall have been executed and delivered by the Company to the Trustee; and WHEREAS, the Company desires to provide for the issue of $ principal amount of bonds secured by said Indenture of a series to be designated as "First and Refunding Mortgage Bonds, % Series due " (hereinafter sometimes called "Series "); and WHEREAS, the text of the bonds of the Series and of the certificates of authentication to be borne by the bonds of the Series shall be substantially of the following tenor: [FORM OF BOND] [FACE] REGISTERED REGISTERED NUMBER AMOUNT RU $ PUBLIC SERVICE ELECTRIC AND GAS COMPANY FIRST AND REFUNDING MORTGAGE BOND, % SERIES DUE . Public Service Electric and Gas Company (hereinafter called the "Company"), a corporation of the State of New Jersey, for value received, hereby promises to pay to , or registered assigns, on the surrender hereof, the principal sum of Dollars, on and to pay interest thereon from the date hereof, at the rate of % per annum, and until payment of said principal sum, such interest to be payable and in each year. Both the principal hereof and interest hereon shall be paid at the corporate trust office of First Union National Bank, in the City of Newark, State of New Jersey, or (at the option of the registered owner) at the corporate trust office of Morgan Guaranty Trust Company of New York, in the Borough of Manhattan, City and State of New York, in such coin or currency of the United States of America as at the time of payment shall constitute legal tender for the payment of public and private debts. 4 Reference is hereby made to the further provisions of this Bond set forth on the reverse hereof and such further provisions shall for all purposes have the same effect as though fully set forth at this place. This Bond shall not be entitled to any security or benefit under the indenture mentioned on the reverse hereof, as amended and supplemented, and shall not become valid or obligatory for any purpose, until the certificate of authentication, hereon endorsed, shall have been signed by or on behalf of First Union National Bank, as Trustee, or by or on behalf of its successor in trust under said indenture. IN WITNESS WHEREOF, the Company has caused this Bond to be duly executed by its proper officers under its corporate seal. Dated PUBLIC SERVICE ELECTRIC AND GAS COMPANY, By .................................. (Vice) President (Seal) Attest: .................................... (Assistant) Secretary 5 [FORM OF CERTIFICATE OF AUTHENTICATION] CERTIFICATE OF AUTHENTICATION This Bond is one of the Bonds of the series designated therein which are described in the within-mentioned indenture and supplemental indenture dated , as secured thereby. FIRST UNION NATIONAL BANK, TRUSTEE By .................................. Authorized Signatory [FORM OF ALTERNATE CERTIFICATE OF AUTHENTICATION] ALTERNATE CERTIFICATE OF AUTHENTICATION This Bond is one of the Bonds of the series designated therein which are described in the within-mentioned indenture and supplemental indenture dated , as secured thereby. FIRST UNION NATIONAL BANK, TRUSTEE By .................................. Authenticating Agent By .................................. Authorized Signatory 6 [FORM OF BOND] [REVERSE] PUBLIC SERVICE ELECTRIC AND GAS COMPANY FIRST AND REFUNDING MORTGAGE BOND, % SERIES DUE This Bond is one of the First and Refunding Mortgage Bonds of the Company issued and to be issued under and pursuant to, and all equally secured by, an indenture of mortgage or deed of trust dated August 1, 1924, as supplemented and amended by supplemental indentures thereto, including supplemental indentures dated March 1, 1942, June 1, 1949, May 1, 1950, October 1, 1953, May 1, 1954, November 1, 1956, September 1, 1957, August 1, 1958, June 1, 1959, September 1, 1960, August 1, 1962, June 1, 1963, September 1, 1964, September 1, 1965, June 1, 1967, June 1, 1968, April 1, 1969, March 1, 1970, May 15, 1971, November 15, 1971, April 1, 1972, March 1, 1974, October 1, 1974. April 1, 1976, September 1, 1976, October 1, 1976, June 1, 1977, September 1, 1977, November 1, 1978, July 1, 1979, September 1, 1979 (No. 1), September 1, 1979 (No. 2), November 1, 1979, June 1, 1980, August 1, 1981, April 1, 1982, September 1, 1982, December 1, 1982, June 1, 1983, August 1, 1983, July 1, 1984, September 1, 1984, November 1, 1984 (No. 1), November 1, 1984 (No. 2), July 1, 1985, January 1, 1986, March 1, 1986, April 1, 1986 (No. 1), April 1, 1986 (No. 2), March 1, 1987, July 1, 1987 (No. 1), July 1, 1987 (No. 2), May 1, 1988, September 1, 1988, July 1, 1989, July 1, 1990 (No. 1), July 1, 1990 (No. 2), June 1, 1991 (No. 1), June 1, 1991 (No. 2), November 1, 1991 (No. 1), November 1, 1991 (No. 2), November 1, 1991 (No. 3), February 1, 1992 (No. 1), February 1, 1992 (No. 2), June 1, 1992 (No. 1), June 1, 1992 (No. 2), June 1, 1992 (No. 3), January 1, 1993 (No. 1), January 1, 1993 (No. 2), March 1, 1993, May 1, 1993, May 1, 1993 (No. 2), May 1, 1993 (No. 3), July 1, 1993, August 1, 1993, September 1, 1993, September 1, 1993 (No. 2), November 1, 1993, February 1, 1994, March 1, 1994 (No. 1), March 1, 1994 (No. 2), May 1, 1994, June 1, 1994, August 1, 1994, October 1, 1994 (No. 1), October 1, 1994 (No. 2), October 1, 1995 (No. 1), October 1, 1995 (No. 2), January 1, 1996 (No. 1), January 1, 1996 (No. 2), December 1, 1996 and April 1, 1997, each duly executed by the Company and First Union National Bank (formerly known as Fidelity Union Trust Company), a national banking association organized under the laws of the United States of America, as Trustee. This Bond is one of the % Series due , which series is limited to aggregate principal amount of and is issued pursuant to said supplemental indenture dated . Reference is hereby made to said indenture and all supplements thereto for a specification of the principal amount of Bonds from time to time issuable thereunder, and for a description of the properties mortgaged and conveyed or assigned to said Trustee or its successors, the nature and 7 extent of the security, and the rights of the holders of said Bonds and any coupons appurtenant thereto, and of the Trustee in respect of such security. In and by said indenture, as amended and supplemented, it is provided that with the written approval of the Company and the Trustee, any of the provisions of said indenture may from time to time be eliminated or modified and other provisions may be added thereto provided the change does not alter the annual interest rate, redemption price or date, date of maturity or amount payable on maturity of any then outstanding Bond or conflict with the Trust Indenture Act of 1939 as then in effect, and provided the holders of 85% in principal amount of the Bonds secured by said indenture and then outstanding (including, if such change affect the Bonds of one or more series but less than all series then outstanding, a like percentage of the then outstanding Bonds of each series affected by such change, and excluding Bonds owned or controlled by the Company or by the parties owning at least 10% of the outstanding voting stock of the Company, as more fully specified in said indenture) consent in writing thereto, all as more fully set forth in said indenture, as amended and supplemented. First and Refunding Mortgage Bonds issuable under said indenture are issuable in series, and the Bonds of any series may be for varying principal amounts and in the form of coupon bonds and of registered bonds without coupons, and the Bonds of any one series may differ from the Bonds of any other series as to date, maturity, interest rate and otherwise, all as in said indenture provided and set forth. The Bonds of the % Series due , in which this Bond is included, are designated "First and Refunding Mortgage Bonds, % Series due ". In case of the happening of an event of default as specified in said indenture and said supplemental indenture dated March 1, 1942, the principal sum of the Bonds of this series my be declared or may become due and payable forthwith, in the manner and with the effect in said indenture provided. Said supplemental indenture dated provides for a sinking or improvement fund the requirements of which may be satisfied, at the option of the Company, in whole or in part by payment of cash, by delivery of Bonds of this Series, or by utilization of additions or improvements, all as more fully provided therein. As more fully provided in said supplemental indenture dated , the Bonds of this series are subject to redemption prior to maturity, on notice given as below provided, (a) as a whole at any time or in part on any interest payment date, at the election of the Company (subject to the approval of the Board of Public Utilities of the State of New Jersey first applied for and obtained), upon payment of the percentages of the principal amount thereof specified below under "Regular Redemption Price" during the respective 12-month periods beginning of each of the years mentioned below, provided, however, that prior to no Bonds of this series may be so redeemed, and (b) on 8 of each year, beginning in , by operation of said sinking or improvement fund, or at any time by the application of proceeds of released property or other money held by the Trustee and which, pursuant to the provisions of said indenture, as amended ant supplemented, is applied to the redemption of Bonds of this series, upon payment of the percentages of the principal amount thereof specified below under "Special Redemption Price" during such respective 12-month periods:
12-MONTH 12-MONTH PERIOD REGULAR SPECIAL PERIOD REGULAR SPECIAL BEGINNING REDEMPTION REDEMPTION BEGINNING REDEMPTION REDEMPTION 1 PRICE PRICE 1 PRICE PRICE - ---------- ---------- ---------- --------- ---------- ---------- % % % %
together in each case with accrued interest to the date fixed for redemption. Notice of any such redemption shall be given by mailing the same to the respective registered owners of the Bonds of this series so called for redemption, not less than 30 nor more than 40 days in advance of the date fixed for redemption. In the case of redemption of Bonds of this series at the election of the Company, the notice of redemption may be conditioned upon the deposit of the total regular redemption price of all the Bonds so called, with accrued interest thereon to the redemption date, with the Trustee on or before the date fixed for redemption. If this Bond or any portion thereof be called for redemption and payment be duly provided therefor, interest shall cease to accrue on this Bond or such portion on the date fixed for such redemption. This Bond is transferable, but only as provided in said indenture, upon surrender hereof, by the registered owner in person or by attorney duly authorized in writing, at either of said offices where the principal hereof and interest hereon are payable; upon any such transfer a new Bond similar hereto will be issued to the transferee. No service charge shall be made for any such transfer, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto. The Company and the Trustee and any paying agent may deem and treat the person in whose name this Bond is registered as the absolute owner hereof for the purpose of receiving payment of or on account of the principal hereof and the interest hereon and for all other purposes; and neither the Company nor the Trustee nor any paying agent shall be affected by any notice to the contrary. 9 The Bonds of this series are issuable only in fully registered form, in denominations of $1,000 and any multiple of $1,000. Such fully registered Bonds of the several denominations may be exchanged for fully registered Bonds of other authorized denominations, but only as provided in said indenture, upon surrender thereof, by the registered owner in person or by attorney duly authorized in writing, at either of said offices where the principal thereof and interest thereon are payable. No service charge shall all be made for any such exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge that my be imposed in relation thereto. The Company shall not be required to issue or make transfers or exchanges of Bonds of this series for a period of ten days next preceding any interest payment date or next preceding the date of any drawing of such Bonds to be redeemed, and the Company shall not be required to make transfers or exchanges of any such Bonds drawn in whole or in part for such redemption. No recourse under or upon any obligation, covenant or agreement contained in said indenture or in any indenture supplemental thereto, or in any Bond or coupon issued thereunder, or because of any indebtedness arising thereunder, shall be had against any incorporator, or against any past, present or future stockholder, officer, or director, as such, of the Company or of any successor corporation, either directly or through the Company or any successor corporation, under any rule of law, statute or constitutional provision or by the enforcement of any assessment or by any legal or equitable proceeding or otherwise, it being expressly agreed and understood that said indenture, any indenture supplemental thereto and the obligations issued thereunder, are solely corporate obligations, and that no personal liability whatever shall attach to, or be incurred by, such incorporators, stockholders, officers or directors, as such, of the Company, or of any successor corporation, or any of them, because of the incurring of the indebtedness thereby authorized, or under or by reason of any of the obligations, covenants or agreements contained in the indenture or in any indenture supplemental thereto or in any of the Bonds or coupons issued thereunder, or implied therefrom. ------------------------ WHEREAS, the execution and delivery of this supplemental indenture have been duly authorized by the Board of Directors of the Company; and WHEREAS, the Company represents that all things necessary to make the bonds of the series hereinafter described, when duly authenticated by or on behalf of the Trustee and issued by the Company, valid, binding and legal obligations of the Company, and to make this supplemental indenture a valid and binding agreement supplemental to the Indenture, have been done and performed; NOW, THEREFORE, THIS SUPPLEMENTAL INDENTURE WITNESSETH that the Company, in consideration of the premises and the execution and delivery by the Trustee of this 10 supplemental indenture, and in pursuance of the covenants and agreements contained in the Indenture and for other good and valuable consideration, the receipt of which is hereby acknowledged, has granted, bargained, sold, aliened, remised, released, conveyed, confirmed, assigned, transferred and set over, and by these presents does grant, bargain, sell, alien, remise, release, convey, confirm, assign, transfer and set over unto the Trustee, its successors and assigns, forever, all the right, title and interest of the Company in and to all property of every kind and description (except cash, accounts and bills receivable and all merchandise bought, sold or manufactured for sale in the ordinary course of the Company's business, stocks, bonds or other corporate obligations or securities, other than such as are described in Part V of the Granting Clauses of the Indenture, not acquired with the proceeds of bonds secured by the Indenture, and except as in the Indenture and herein otherwise expressly excluded) acquired by the Company since the execution and delivery of the supplemental indenture dated subsequent to the Indenture (except any such property duly released from, or disposed of, free from the lien of the Indenture, in accordance with the provisions thereof) and all such property which at any time hereafter may be acquired by the Company; All of which property it is intended shall be included in and granted by this supplemental indenture and covered by the lien of the Indenture as heretofore and hereby amended and supplemented; UNDER AND SUBJECT to any encumbrances or mortgages existing on property acquired by the Company at the time of such acquisition and not heretofore discharged of record; and SUBJECT also, to the exceptions, reservations and provisions in the Indenture and in this supplemental indenture recited, and to the liens, reservations, exceptions, limitations, conditions and restrictions imposed by or contained in the several deeds, grants, franchises and contracts or other instruments through which the Company acquired or claims title to the aforesaid property; and SUBJECT, also, to the existing leases, to liens on easements or rights of way, to liens for taxes, assessments and governmental charges not in default or the payment of which is deferred, pending appeal or other contest by legal proceedings, pursuant to Section 4 of Article Five of the Indenture, or the payment of which is deferred pending billing, transfer of title or final determination of amount, to easements for alleys, streets, highways, rights of way and railroads that may run across or encroach upon the said property, to joint pole and similar agreements, to undetermined liens and charges, if any, incidental to construction, and other encumbrances permitted by the Indenture as heretofore and hereby amended and supplemented; TO HAVE AND TO HOLD the property hereby conveyed or assigned, or intended to be conveyed or assigned, unto the Trustee, its successor or successors and assigns, forever; 11 IN TRUST, NEVERTHELESS, upon the terms, conditions and trusts set forth in the Indenture as heretofore and hereby amended and supplemented, to the end that the said property shall be subject to the lien of the Indenture as heretofore and hereby amended and supplemented, with the same force and effect as though said property had been included in the Granting Clauses of the Indenture at the time of the execution and delivery thereof; AND THIS SUPPLEMENTAL INDENTURE FURTHER WITNESSETH that for the considerations aforesaid, it is hereby covenanted between the Company and the Trustee as follows: ARTICLE I. BONDS OF THE SERIES The series of bonds authorized by this supplemental indenture to be issued under and secured by the Indenture shall be designated "First and Refunding Mortgage Bonds, % Series due "; shall be limited to the aggregate principal amount of $ ; shall mature ; shall bear interest at the rate of % per annum, payable on and of each year; shall be payable as to both principal and interest in such coin or currency of the United States of America as at the time of payment shall constitute legal tender for the payment of public and private debts, at the corporate trust office of First Union National Bank, in the City of Newark, State of New Jersey, or, as may be desired by the persons entitled to receive such principal and interest respectively, at the corporate trust office of Morgan Guaranty Trust Company of New York, in the Borough of Manhattan, City and State of New York; shall be issuable only in the form of fully registered bonds in the denominations of $1,000 and any multiple of $1,000; and the several denominations shall be interchangeable. The date of each bond of the Series shall be the semi-annual interest payment date next preceding the date of authentication, unless such date of authentication be an interest payment date, in which case the date shall be the date of authentication, or unless such date of authentication be prior to the first semi-annual interest payment date, in which case the date shall be . The Company shall not be required to issue or make transfers or exchanges of bonds of the Series for a period of ten days next preceding any interest payment date or next preceding the date of any drawing of such bonds to be redeemed, and the Company shall not be required to make transfers or exchanges of any such bonds drawn in whole or in part for such redemption. 12 ARTICLE II. REDEMPTION OF BONDS -- SINKING OR IMPROVEMENT FUND -- OF SERIES . SECTION 2.01. REDEMPTION -- REDEMPTION PRICES. Bonds of the Series shall be subject to redemption (a) as a whole at any time or in part on any interest payment date, at the election of the Company (subject to the approval of the Board of Public Utilities of the State of New Jersey first applied for and obtained) as provided in Section 2.03 hereof, upon payment of the percentages of the principal amount thereof specified under "Regular Redemption Price" in the tabulation in the Form of Bond hereinbefore set forth during the respective 12-month periods beginning , of each of the years mentioned in said tabulation, provided, however, that prior to no bonds of the Series may be so redeemed, and (b) on of each year, beginning in , by operation of the sinking or improvement fund as provided in Section 2.02 hereof, or at any time by the application of any proceeds of released property or other money held by the Trustee and which, pursuant to Section 4C of Article Eight of the Indenture, as amended and supplemented, is applied to the redemption of bonds of the Series , upon payment of the percentages of the principal amount thereof specified under "Special Redemption Price" in the tabulation in the Form of Bond hereinbefore set forth during the respective 12-month periods beginning of each of the years mentioned in said tabulation, together in each case with accrued interest to the date fixed for redemption. The amounts specified in said tabulation under said heading (exclusive of accrued interest) are herein referred to, respectively, as "regular redemption prices" and "special redemption prices". SECTION 2.02. SINKING OR IMPROVEMENT FUND -- SINKING OR IMPROVEMENT FUND REDEMPTIONS -- REDEMPTIONS PURSUANT TO SECTION 4C OF ARTICLE EIGHT OF THE INDENTURE. The Company covenants to pay to the Trustee for a sinking or improvement fund on of each year, commencing on , an amount equal to the special redemption price, in effect on such , of % of the maximum principal amount of bonds of the Series outstanding at any one time prior to the date of such payment, the amount of such payment, however, to be reduced by any credit to which the Company may be entitled under the next succeeding paragraph of this Section. The Company may, at any time not later than prior to the due date of each sinking or improvement fund installment, elect to satisfy such installment, in whole or in part, as provided in the following subdivision (a) or as provided in the following subdivision (b), or partly as provided in said subdivision (a) and partly as provided in said subdivision (b): 13 (a) by delivering to the Trustee outstanding bonds of the Series , in negotiable form or registered in the name of the Company, not later than prior to the due date of such installment, upon receipt of which the Trustee shall credit the same against such installment at the special redemption price applicable upon the due date of such installment, or (b) by delivering to the Trustee not later than the prior to the due date of such installment, a certificate signed by the President or a Vice President and by the Treasurer or an Assistant Treasurer of the Company which shall state the following items: (1) an amount (to the extent the Company shall elect to include the same) equal to the cost of any additions or improvements acquired or constructed by the Company to its property after December 31, 1948, which shall not have formed the basis for any authentication of bonds, withdrawal of cash, or release of property under the Indenture, as supplemented and amended, and which shall not have been included in any maintenance certificate filed under any indenture supplemental to the Indenture, or in any certificate filed with the Trustee pursuant to any sinking or improvement fund under any indenture supplemental to the Indenture, after deducing from such cost the cost (or the estimated cost if the actual cost is not ascertainable) of property retired after December 31, 1948, and which shall not theretofore have been deducted upon any authentication of bonds, withdrawal of cash, or release of property under the Indenture, as supplemented and amended, or in any such maintenance certificate or in any such certificate filed pursuant to any sinking or improvement fund, and (2) an amount equal to 60% of the amount stated in item (1) above. Upon the receipt of such certificate the Trustee shall credit against such installment an amount determined by multiplying the amount set forth in item (2) thereof by the percentage specified as the special redemption price applicable upon the due date of such installment. No additions or improvements included in item (1) of any such certificate shall thereafter be available as the basis for authentication of bonds or the withdrawal of cash or the release of property under any provisions of the Indenture, as supplemented and amended, or be included in any maintenance certificate filed under any indenture supplemental to the Indenture, or in any certificate filed with the Trustee pursuant to any sinking or improvement fund under any Indenture supplemental to the Indenture, and no retirements deducted in such item (1) shall thereafter be required to be deducted under Section 7C(3) of Article Two of the Indenture. The Company shall, not later than prior to the due date of each sinking or improvement fund installment, deliver to the Trustee a certificate signed by its President or a Vice President and by its Treasurer or an Assistant Treasurer specifying the amount, 14 if any, which the Company will pay to the Trustee on the following pursuant to the provisions of this Section 2.02. The Trustee, not later than 30 days prior to the due date of each sinking or improvement fund installment, shall draw by lot according to such method as it shall deem proper, from all the bonds of the Series then outstanding, such principal amount thereof as the balance of such sinking or improvement fund installment (after crediting against the same any credits to which the Company shall be entitled under the second paragraph of this Section) shall, at the special redemption price prevailing on the next ensuing interest payment date, suffice to redeem. After such drawing the Trustee shall, beginning not later than 30 nor earlier than 40 days in advance of the next ensuing interest payment date, give, in the name of the Company, notice by mail that bonds of the Series bearing the serial numbers specified have been called for redemption through the sinking or improvement fund, that they will be due and payable on the next ensuing interest payment date, at the corporate trust office of the Trustee in Newark, New Jersey, or (at the option of the holder) at the office or agency of the Company in the Borough of Manhattan, City and State of New York, at a stated amount (which shall be the special redemption price applicable upon such redemption date), and that all interest thereon will cease to accrue after said date. Such notice shall be mailed to the several registered owners of the bonds so called, at their respective addresses as the same may appear on the registry books. Failure duly to give such notice of redemption to the registered owner of any bond called for redemption in whole or in part shall not affect the validity of the proceedings for the redemption of any other bond. If, pursuant to Section 4C of Article Eight of the Indenture, as amended and supplemented, any proceeds of released property or other money then held by the Trustee shall be applied to the redemption of bonds of the Series , such redemption shall be effected in the manner provided in the next two preceding paragraphs of this Section in respect of redemption of bonds of said series through the sinking or improvement fund. Bonds of said series so redeemed shall be cancelled. All bonds of the Series delivered to the Trustee as a credit against any sinking or improvement fund installment or redeemed by operation of the sinking or improvement fund shall be cancelled and such bonds shall not be made the basis for the authentication and delivery of bonds under the provisions of Section 5 of Article Three of the Indenture. SECTION 2.03. REDEMPTION AT ELECTION OF COMPANY. The election of the Company to redeem any of the bonds of the Series shall be evidenced by a resolution of the Board of Directors of the Company calling for redemption on a stated date all or a stated principal amount thereof. Any such call may be conditioned upon the deposit with the Trustee, on or before such redemption date, of the total regular redemption price of the bonds so called, with accrued interest thereon to the redemption date. At least 40 days prior to such redemption date (or at such later time as shall be satisfactory to the Trustee) the Company 15 shall file with the Trustee a certified copy of such resolution. Unless such call shall be conditioned upon the deposit of the regular redemption price and accrued interest with the Trustee on or before the redemption date and unless the notice below provided for shall so state, the Company shall on or before such redemption date deposit with the Trustee the total regular redemption price of all the bonds so called, with accrued interest thereon to the redemption date. If the Company elects to redeem less than all of the bonds of the Series , the particular bonds or portions thereof to be redeemed shall, upon request of the Company, be drawn by lot by the Trustee, according to such method as it shall deem proper, from the bonds of said series then outstanding. The Trustee shall certify to the Company the serial numbers of the bonds so drawn. The Company shall thereupon give notice of such redemption, in the manner and substantially in the form provided in Section 2.02 hereof to be given in the case of bonds of the Series called through the sinking or improvement fund, except that (1) such notice shall state that the bonds specified have been called for redemption at the election of the Company, and that they will be payable on the date specified in the resolution of the Board of Directors of the Company at a stated amount (which shall be the regular redemption price applicable upon such redemption date), (2) if all the bonds of the Series be called, the notice shall so state and may omit the serial numbers thereof, (3) if the date fixed for redemption be other than an interest payment date, the notice shall state that the bonds will be payable at the stated redemption price, plus accrued interest to the redemption date, (4) the mailing of such notice to registered owners of bonds of said series shall take place not less than 30 nor more than 40 days in advance of the date fixed for redemption, but failure duly to give such notice of redemption to the registered owner of any bond called for redemption in whole or in part shall not affect the validity of the proceedings for the redemption of any other bond, and (5) if the call of such bonds for redemption shall have been conditioned upon the deposit of the regular redemption price and accrued interest with the Trustee on or before the redemption date, as above permitted, the notice shall so state, and shall state that unless such deposit is made on or before such date the call for redemption and the notice shall be of no effect. Before any money shall be applied by the Trustee to the redemption of bonds under this Section, the Company shall deliver to the Trustee a certificate or opinion by the President or a Vice President of the Company and an opinion of counsel, stating that all conditions precedent provided for herein (including any covenants compliance with which constitutes a condition precedent) relating to such redemption have been complied with. SECTION 2.04. CALLED BONDS TO BE SURRENDERED -- INTEREST TO CEASE. Each bond or portion thereof the Series so called under either Sections 2.02 or 2.03 hereof shall be due and payable (upon surrender thereof) at the places and price and on the date specified 16 in such notice, anything herein or in such bond to the contrary notwithstanding, except that if the call of any bonds or portions thereof under Section 2.03 hereof shall have been conditioned upon the deposit of the redemption price with the Trustee on or before the redemption date specified in such notice, with accrued interest thereon to the redemption date, such bonds or such portions thereof shall not be due and payable on the specified redemption date unless such deposit shall have been so made with the Trustee on or before such date. From and after the date when each bond or portion thereof of the Series shall be due and payable as aforesaid (unless upon said date the full amount due thereon shall not be held by the Trustee and be immediately available for payment), all further interest shall cease to accrue on such bond or on such portion thereof, as the case may be. SECTION 2.05. BONDS CALLED IN PART. If only a portion of any bond of the Series shall be drawn by lot by the Trustee pursuant to Sections 2.02 or 2.03 hereof, the notice of redemption hereinbefore provided for shall specify the serial number of such bond and the portion of the principal amount thereof to be redeemed. Upon surrender of such bond for partial redemption and upon payment of the portion so called for redemption, a new bond or bonds of the Series , in aggregate principal amount equal to the unredeemed portion of such surrendered bond, shall be executed by the Company, authenticated by or on behalf of the Trustee, and delivered to the registered owner thereof, without expense to such owner. SECTION 2.06. PROVISIONS OF INDENTURE NOT APPLICABLE. The provisions of Article Four of the Indenture, as amended and supplemented, shall not apply to the administration of the sinking or improvement fund provided for in this Article or to the procedure for the exercise of any right of redemption reserved by the Company in this Article in respect of the bonds of the Series . ARTICLE III. MISCELLANEOUS. SECTION 3.01. AUTHENTICATION OF BONDS OF SERIES . None of the bonds of the Series , the issue of which is provided for by this supplemental indenture, shall be authenticated by or on behalf of the Trustee except in accordance with the provisions of the Indenture, as amended and supplemented, and this supplemental indenture, and upon compliance with the conditions in that behalf therein contained. SECTION 3.02. AUTHENTICATING AGENT. As long as any of the bonds of the Series remain outstanding, the Trustee may appoint an authenticating agent to act on its behalf and subject to its direction in connection with the authentication of bonds of the Series . Such authenticating agent shall be appointed by the Trustee by an instrument in writing and shall have no responsibility or liability for any action taken by it at the direction 17 of the Trustee. Such authenticating agent shall at all times be a corporation organized and doing business under the laws of the United States or of any State or Territory or of the District of Columbia authorized under such laws to act as authenticating agent, having a combined capital and surplus of at least $5,000,000, subject to supervision or examination by Federal, State, Territorial, or District of Columbia authority and, if there be such a corporation willing and able to act as authenticating agent on reasonable and customary terms, having its principal office and place of business in The City of New York. If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of the aforesaid supervising or examining authority, then for the purposes of this Section 3.02 the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. Any corporation into which any authenticating agent may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion, or consolidation to which any authenticating agent shall be a party, or any corporation succeeding to the corporate agency business of any authenticating agent, shall continue to be the authenticating agent without the execution or filing of any paper or any further act on the part of the Trustee or the authenticating agent. Any authenticating agent may at any time resign by giving written notice of resignation to the Trustee and to the Company. The Trustee may at any time terminate the agency of any authenticating agent by giving written notice of termination to such authenticating agent and to the Company. Upon receiving such a notice of resignation or upon such a termination, or in case at any time any authenticating agent shall cease to be eligible in accordance with the provisions of this Section 3.02, the Trustee may appoint a successor authenticating agent. The Trustee shall give written notice of such appointment to the Company and shall mail notice of such appointment to all registered owners of the bonds of the Series , at their respective addresses as the same may appear on the registry books. Any successor authenticating agent, upon acceptance of its appointment, shall become vested with all the rights, powers, duties and responsibilities of its predecessor, with like effect as if originally appointed authenticating agent. No successor authenticating agent shall be appointed unless eligible under the provisions of this Section 3.02. The Trustee agrees to pay to the authenticating agent from time to time reasonable compensation for its services, and the Trustee shall be entitled to be reimbursed for such payments as provided in the Indenture. SECTION 3.03. ADDITIONAL RESTRICTIONS ON AUTHENTICATION OF ADDITIONAL BONDS UNDER INDENTURE. The Company covenants that from and after the date of execution of this supplemental indenture, no additional bonds (as defined in Section 1 of Article Two of the Indenture) shall be authenticated and delivered by the Trustee under Subdivision A of 18 Section 4 of said Article Two on account of additions or improvements to the mortgaged property: (1) unless the net earnings of the Company for the period required by Subdivision C of Section 6 of said Article Two shall have been at least twice the fixed charges (in lieu of 1 3/4 times such fixed charges, as required by said Subdivision C); and for the purpose of this condition (a) such fixed charges shall in each case include interest on the bonds applied for, notwithstanding the parenthetical provision contained in clause (4) of said Subdivision C, and (b) in computing such net earnings there shall be included in expenses of operation (under paragraph (c) of said Subdivision C) all charges against earnings for depreciation, renewals or replacements, and all certificates with respect to net earnings delivered to the Trustee in connection with any authentication of additional bonds under said Article Two shall so state; and (2) except to the extent of 60% (in lieu of 75% as permitted by Subdivision A of Section 7 of said Article Two) of the cost or fair value to the Company of the additions or improvements forming the basis for such authentication of additional bonds. SECTION 3.04. RESTRICTION ON DIVIDENDS. The Company will not declare or pay any dividend on any shares of its common stock (other than dividends payable in shares of its common stock) or make any other distribution on any such shares, or purchase or otherwise acquire any such shares (except shares acquired without cost to the Company) whenever such action would reduce the earned surplus of the Company to an amount less than $10,000,000 or such lesser amount as may remain after deducting from said $10,000,000 all amounts appearing in the books of account of the Company on December 31, 1948, which shall thereafter, pursuant to any order or rule of any regulatory body entered after said date, be required to be removed, in whole or in part, from the books of account of the Company by charges to earned surplus. SECTION 3.05. USE OF FACSIMILE SEAL AND SIGNATURES. The seal of the Company and any or all signatures of the officers of the Company upon any of the bonds of the Series may be facsimiles. SECTION 3.06. TIME FOR MAKING PAYMENT. All payments of principal or redemption price of, interest on and sinking or improvement fund installments for, the bonds of the Series shall be made either prior to the due date thereof, or on the due date thereof in immediately available funds. In any case where the date of any such payment shall be a Saturday or Sunday or a legal holiday or a day on which banking institutions in the city of payment are authorized by law to close, then such payment need not be made on such date but may be made on the next succeeding business day with the same force and effect as if made on the due date, and no interest on such payment shall accrue for the period after such date. 19 SECTION 3.07. EFFECTIVE PERIOD OF SUPPLEMENTAL INDENTURE. The preceding provisions of Articles I, II and III of this supplemental indenture shall remain in effect only so long as any of the bonds of the Series shall remain outstanding. SECTION 3.08. EFFECT OF APPROVAL OF BOARD OF PUBLIC UTILITIES OF THE STATE OF NEW JERSEY. The approval of the Board of Public Utilities of the State of New Jersey of the execution and delivery of these presents and of the issue of any bonds of the Series shall not be construed as approval of said Board of any other act, matter or thing which requires approval of said Board under the laws of the State of New Jersey. SECTION 3.09. EXECUTION IN COUNTERPARTS. For the purpose of facilitating the recording hereof, this supplemental indenture has been executed in several counterparts, each of which shall be and shall be taken to be an original, and all collectively but one instrument. IN WITNESS WHEREOF, Public Service Electric and Gas Company, party hereto of the first part, after due corporate and other proceedings, has caused this supplemental indenture to be signed and acknowledged or proved by its President or one of its Vice Presidents and its corporate seal hereunto to be affixed and to be attested by the signature of its Secretary or an Assistant Secretary; and First Union National Bank, as Trustee, party hereto of the second part, has caused this supplemental indenture to be signed and acknowledged or proved by one of its Vice Presidents and its corporate seal to be hereunto affixed and to be attested by the signature of one of its Vice Presidents, Executed and delivered this day of . PUBLIC SERVICE ELECTRIC AND GAS COMPANY By .................................. ( ) Vice President Attest: .................................... ( ) Assistant Secretary (CORPORATE SEAL) FIRST UNION NATIONAL BANK By .................................. ( ) Vice President Attest: .................................... ( ) Vice President (CORPORATE SEAL) 20 STATE OF NEW JERSEY COUNTY OF ESSEX ss.:) BE IT REMEMBERED, that on this day of , before me, the subscriber, a Notary Public of the State of New Jersey, personally appeared who, I am satisfied, is a Vice President of PUBLIC SERVICE ELECTRIC AND GAS COMPANY, one of the corporations named in and which executed the foregoing instrument, and is the person who signed the said instrument as such officer, for and on behalf of such corporation, and I having first made known to him the contents thereof, he did acknowledge that he signed the said instrument as such officer, that the said instrument was made by such corporation and sealed with its corporate seal, that the said instrument is the voluntary act and deed of such corporation, made by virtue of authority from its Board of Directors, and that said corporation, the mortgagor, has received a true copy of said instrument. STATE OF NEW JERSEY COUNTY OF ESSEX ss.:) BE IT REMEMBERED, that on this day of , before me, the subscriber, a Notary Public of the State of New Jersey, personally appeared who, I am satisfied, is a Vice President of FIRST UNION NATIONAL BANK, one of the corporations named in and which executed the foregoing instrument, and is the person who signed the said instrument as such officer, for and on behalf of such corporation, and I having first made known to him the contents thereof, he did acknowledge that he signed the said instrument as such officer, that the said instrument was made by such corporation and sealed with its corporate seal, and that the said instrument is the voluntary act and deed of such corporation, made by virtue of authority from its Board of Directors. 21 CERTIFICATE OF RESIDENCE First Union National Bank, Mortgagee and Trustee within named, hereby certifies that its precise residence is 765 Broad Street, Newark, New Jersey 07101. FIRST UNION NATIONAL BANK By .................................. ( ) VICE PRESIDENT EX-5 8 EXHIBIT 5 EXHIBIT 5 [PSE&G LOGO] Public Service Electric and Gas Company JAMES T. FORAN 80 Park Plaza, Newark, NJ 07101 201-430-6131 Mailing Address: P.O. Box 570, Newark, NJ 07101 General Corporate Counsel -- T5B May 21, 1997 Gentlemen: In connection with the proposed issuance and sale by Public Service Electric and Gas Company (the "Company") of not more than $150,000,000 principal amount of its First and Refunding Mortgage Bonds in one or more series (the "Bonds"), to be issued under its First and Refunding Mortgage, dated August 1, 1924, made to Fidelity Union Trust Company (now known as First Union National Bank), Trustee (the "Trustee"), as supplemented and amended by the supplemental indentures thereto that have not heretofore been cancelled, and as to be further supplemented by a separate supplemental indenture thereto for each series of Bonds to be dated the first day of the month in which such series of Bonds is issued (the "Supplemental Indenture") (said First and Refunding Mortgage as so supplemented and amended and to be supplemented being hereinafter called the "Mortgage"), I have examined and considered the following: (1) the Petition, including exhibits and supplements thereto, relating to certain of the Bonds, as filed by the Company with the Board of Public Utilities of the State of New Jersey (the "BPU"); (2) the Registration Statement, including the Prospectus and Exhibits, relating to the Bonds, with which this opinion is being filed; and (3) the form of the Supplemental Indenture, including the form of the Bonds, and the form of Bid with the Purchase Agreement attached for the sale of the Bonds, filed as Exhibits to said Registration Statement. As General Corporate Counsel of the Company, I am familiar with the Mortgage, and with the corporate organization and by-laws of the Company and the statutes and decisions applicable thereto and to the issuance by the Company of its securities. On the basis of the foregoing, and of my examination and consideration of such other legal and factual matters as I have deemed appropriate, I am of the following opinion: (1) the Company is a corporation duly incorporated and validly existing under the laws of the State of New Jersey; (2) the Company, being a public utility company, is subject to the jurisdiction of the BPU, and the execution of the Supplemental Indenture and the issuance and sale of the Bonds by the Company require the authorization of the BPU; and (3) Upon (a) the Registration Statement registering the Bonds under the Securities Act of 1933 becoming effective; (b) the qualification of the Mortgage under the Trust Indenture Act of 1939; (c) the authorization by the BPU of the execution and delivery of the Supplemental Indenture and the issuance and sale of the Bonds; (d) the adoption of appropriate corporate resolutions relating to the execution and delivery of the Supplemental Indenture, to the acceptance of the Bid thereby evidencing the effectiveness of the Purchase Agreement and to the authorization, execution, authentication, issuance, sale and delivery of each series of Bonds; (e) the acceptance of the Bid related thereto; (f) the execution and delivery of the Supplemental Indenture; (g) the execution of the Bonds of such series by the Company and the authentication thereof by the Trustee; and (h) the delivery of the Bonds of such series by the Company and the receipt by the Company of payment therefor in accordance with the authorization of the BPU and the provisions of said Purchase Agreement; the Bonds of such series will be legally issued and will be binding obligations of the Company. This opinion does not cover the necessity of filings under the provisions of securities laws of any state in which the Bonds may be sold. I hereby consent to the use of this opinion as Exhibit 5 to the above-mentioned Registration Statement relating to the Bonds, and to the reference to me under the heading "EXPERTS" in the Prospectus filed as part of said Registration Statement. Very truly yours, JAMES T. FORAN .............................. James T. Foran General Corporate Counsel 2 EX-23 9 EXHIBIT 23A EXHIBIT 23A INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in this Registration Statement of Public Service Electric and Gas Company on Form S-3 of our report dated February 14, 1997 appearing in the 1996 Annual Report on Form 10-K of Public Service Electric and Gas Company and to the reference to us under the heading "Experts" in the Prospectus which is part of this Regristration Statement. DELOITTE & TOUCHE LLP Parsippany, New Jersey May 21, 1997 EX-23 10 EXHIBIT 23B EXHIBIT 23B CONSENT OF BALLARD SPAHR ANDREWS & INGERSOLL Public Service Electric and Gas Company: We consent to the references to us under the headings "EXPERTS" and "LEGAL OPINIONS" in the Prospectus filed as a part of the Registration Statement relating to Mortgage Bonds to which this Consent is attached as an Exhibit. BALLARD SPAHR ANDREWS & INGERSOLL Philadelphia, Pennsylvania May 21, 1997 EX-24 11 EXHIBIT 24 EXHIBIT 24 POWER OF ATTORNEY Each Director of Public Service Electric and Gas Company whose signature appears below hereby appoints Robert C. Murray and James T. Foran, the agents for service named in this Registration Statement, as attorneys-in-fact, to execute in the name of each such person and to file with the Securities and Exchange Commission this Registration Statement and any and all amendments, including post-effective amendments to this Registration Statement.
SIGNATURE TITLE DATE - ------------------------------------------------------ ------------------------------------- ------------- /s/E. JAMES FERLAND Chairman of the Board and Chief May 20, 1997 ------------------- Executive Officer and Director E. JAMES FERLAND (Principal Executive Officer) /s/ROBERT C. MURRAY Senior Vice President and Chief May 20, 1997 ------------------- Financial Officer (Principal ROBERT C. MURRAY Financial Officer) /s/PATRICIA A. RADO Vice President and Controller May 20, 1997 ------------------- (Principal Accounting Officer) PATRICIA A. RADO /s/LAWRENCE R. CODEY Director May 20, 1997 -------------------- LAWRENCE R. CODEY /s/RAYMOND V. GILMARTIN Director May 20, 1997 ----------------------- RAYMOND V. GILMARTIN /s/IRWIN LERNER Director May 20, 1997 --------------- IRWIN LERNER /s/FORREST J. REMICK Director May 20, 1997 -------------------- FORREST J. REMICK /s/ CONRAD K. HARPER Director May 20, 1997 -------------------- CONRAD K. HARPER
EX-25/A 12 EXHIBIT 25 EXHIBIT 25 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------ FORM T-1 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS A TRUSTEE ------------------------ CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(B)(2) [X] ------------------------ FIRST UNION NATIONAL BANK (Exact name of trustee as specified in its charter) 22-1147033 (Jurisdiction of incorporation or (I.R.S. employer organization if not a U.S. national bank) Identification No.) 102 PENNSYLVANIA AVENUE, AVONDALE, PENNSYLVANIA 19311 (Address of principal executive offices) (Zip Code) ------------------------ (Name, address and telephone number of agent for service) PUBLIC SERVICE ELECTRIC AND GAS COMPANY (Exact name of obligor as specified in its charter) NEW JERSEY 22-1212800 (State or other jurisdiction of (I.R.S. employer incorporation or organization) Identification No.) 80 PARK PLAZA, NEWARK, NEW JERSEY 07101 (Address of principal executive (Zip Code) offices) ------------------------ FIRST AND REFUNDING MORTGAGE BONDS* (Title of the indenture securities) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- * The indenture securities are to be issued in one or more series pursuant to a Registration Statement on Form S-3 filed by the obligor with the Commission pursuant to Rule 415, to which this Form T-1 is an Exhibit. GENERAL ITEM 1. GENERAL INFORMATION. Furnish the following information as to the trustee: (A) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO WHICH IT IS SUBJECT. Comptroller of the Currency, Washington, D.C. Board of Governors of Federal Reserve System, New York, N.Y. Federal Deposit Insurance Corporation, Washington, D.C. (B) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS. The Trustee is authorized to exercise corporate trust powers. ITEM 2. AFFILIATIONS WITH OBLIGOR. IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH AFFILIATION. None. ITEM 3. VOTING SECURITIES OF THE TRUSTEE. FURNISH THE FOLLOWING INFORMATION AS TO EACH CLASS OF VOTING SECURITIES OF THE TRUSTEE: APRIL 30, 1997 - ------------------------------------------------------------------------------ COL. A COL. B - ------------------------------------------------------------------------------ TITLE OF CLASS AMOUNT OUTSTANDING - ------------------------------------------------------------------------------ Not Applicable ITEM 4. TRUSTEESHIPS UNDER OTHER INDENTURES. IF THE TRUSTEE IS A TRUSTEE UNDER ANOTHER INDENTURE UNDER WHICH ANY OTHER SECURITIES, OR CERTIFICATES OF INTEREST OR PARTICIPATION IN ANY OTHER SECURITIES, OF THE OBLIGOR ARE OUTSTANDING, FURNISH THE FOLLOWING INFORMATION: (A) TITLE OF THE SECURITIES OUTSTANDING UNDER EACH SUCH OTHER INDENTURE. Not Applicable (B) A BRIEF STATEMENT OF THE FACTS RELIED UPON AS A BASIS FOR THE CLAIM THAT NO CONFLICTING INTEREST WITHIN THE MEANING OF SECTION 310(B)(1) OF THE ACT ARISES AS A RESULT OF THE TRUSTEESHIP UNDER ANY SUCH OTHER INDENTURE, INCLUDING A STATEMENT AS TO HOW THE INDENTURE SECURITIES WILL RANK AS COMPARED WITH THE SECURITIES ISSUED UNDER SUCH OTHER INDENTURE. Not Applicable ITEM 5. INTERLOCKING DIRECTORATES AND SIMILAR RELATIONSHIPS WITH THE OBLIGOR OR UNDERWRITERS. IF THE TRUSTEE OR ANY OF THE DIRECTORS OR EXECUTIVE OFFICERS OF THE TRUSTEE IS A DIRECTOR, OFFICER, PARTNER, EMPLOYEE, APPOINTEE, OR REPRESENTATIVE OF THE OBLIGOR OR OF ANY UNDERWRITER FOR THE OBLIGOR, IDENTIFY EACH SUCH PERSON HAVING ANY SUCH CONNECTION AND STATE THE NATURE OF EACH SUCH CONNECTION. Not Applicable ITEM 6. VOTING SECURITIES OF THE TRUSTEE OWNED BY THE OBLIGOR OR ITS OFFICIALS. FURNISH THE FOLLOWING INFORMATION AS TO THE VOTING SECURITIES OF THE TRUSTEE OWNED BENEFICIALLY BY THE OBLIGOR AND EACH DIRECTOR, PARTNER AND EXECUTIVE OFFICER OF THE OBLIGOR. APRIL 30, 1997 - ------------------------------------------------------------------------ COL. A COL. B COL. C COL. D - ------------------------------------------------------------------------ PERCENTAGE OF VOTING SECURITIES REPRESENTED BY AMOUNT OWNED AMOUNT GIVEN IN NAME OF OWNER TITLE OF CLASS BENEFICIALLY COL. C - ------------------------------------------------------------------------ Not Applicable ITEM 7. VOTING SECURITIES OF THE TRUSTEE OWNED BY UNDERWRITERS OR THEIR OFFICIALS. FURNISH THE FOLLOWING INFORMATION AS TO THE VOTING SECURITIES OF THE TRUSTEE OWNED BENEFICIALLY BY EACH UNDERWRITER FOR THE OBLIGOR AND EACH DIRECTOR, PARTNER, AND EXECUTIVE OFFICER OF EACH SUCH UNDERWRITER. APRIL 30, 1997 - ------------------------------------------------------------------------ COL. A COL. B COL. C COL. D - ------------------------------------------------------------------------ PERCENTAGE OF VOTING SECURITIES REPRESENTED BY AMOUNT OWNED AMOUNT GIVEN IN NAME OF OWNER TITLE OF CLASS BENEFICIALLY COL. C - ------------------------------------------------------------------------ Not Applicable ITEM 8. SECURITIES OF THE OBLIGOR OWNED OR HELD BY THE TRUSTEE. FURNISH THE FOLLOWING INFORMATION AS TO SECURITIES OF THE OBLIGOR OWNED OR HELD AS COLLATERAL SECURITY FOR THE OBLIGATIONS IN DEFAULT BY THE TRUSTEE. APRIL 30, 1997 - -------------------------------------------------------------------------------- COL. A COL. B COL. C COL. D - -------------------------------------------------------------------------------- WHETHER THE SECURITIES ARE AMOUNT OWNED BENEFICIALLY PERCENT OF CLASS VOTING OR OR HELD AS COLLATERAL REPRESENTED BY NONVOTING SECURITY FOR OBLIGATIONS AMOUNT GIVEN IN TITLE OF CLASS SECURITIES IN DEFAULT BY TRUSTEE COL. C - -------------------------------------------------------------------------------- Not Applicable 2 ITEM 9. SECURITIES OF THE UNDERWRITERS OWNED OR HELD BY THE TRUSTEE. IF THE TRUSTEE OWNS BENEFICIALLY OR HOLDS AS COLLATERAL SECURITY FOR OBLIGATIONS IN DEFAULT ANY SECURITIES OF AN UNDERWRITER FOR THE OBLIGOR, FURNISH THE FOLLOWING INFORMATION AS TO EACH CLASS OF SECURITIES OF SUCH UNDERWRITER ANY OF WHICH ARE SO OWNED OR HELD BY THE TRUSTEE. APRIL 30, 1997 - -------------------------------------------------------------------------------- COL. A COL. B COL. C COL. D - -------------------------------------------------------------------------------- AMOUNT OWNED BENEFICIALLY PERCENT OF CLASS NAME OF ISSUER OR HELD AS COLLATERAL REPRESENTED BY AND TITLE OF AMOUNT SECURITY FOR OBLIGATIONS AMOUNT GIVEN IN CLASS OUTSTANDING IN DEFAULT BY TRUSTEE COL. C - -------------------------------------------------------------------------------- Not Applicable ITEM 10. OWNERSHIP OR HOLDINGS BY THE TRUSTEE OF VOTING SECURITIES OF CERTAIN AFFILIATES OR SECURITY HOLDERS OF THE OBLIGOR. IF THE TRUSTEE OWNS BENEFICIALLY OR HOLDS COLLATERAL SECURITY FOR OBLIGATIONS IN DEFAULT VOTING SECURITIES OF A PERSON WHO, TO THE KNOWLEDGE OF THE TRUSTEE (1) OWNS 10 PERCENT OR MORE OF THE VOTING SECURITIES OF THE OBLIGOR OR (2) IS AN AFFILIATE, OTHER THAN A SUBSIDIARY, OF THE OBLIGOR, FURNISH THE FOLLOWING INFORMATION AS TO THE VOTING SECURITIES OF SUCH PERSON. APRIL 30, 1997 - -------------------------------------------------------------------------------- COL. A COL. B COL. C COL. D - -------------------------------------------------------------------------------- AMOUNT OWNED BENEFICIALLY PERCENT OF CLASS NAME OF ISSUER OR HELD AS COLLATERAL REPRESENTED BY AND TITLE OF AMOUNT SECURITY FOR OBLIGATIONS AMOUNT GIVEN IN CLASS OUTSTANDING IN DEFAULT BY TRUSTEE COL. C - -------------------------------------------------------------------------------- Not Applicable ITEM 11. OWNERSHIP OR HOLDINGS BY THE TRUSTEE OF ANY SECURITIES OF A PERSON OWNING 50 PERCENT OR MORE OF THE VOTING SECURITIES OF THE OBLIGOR. IF THE TRUSTEE OWNS BENEFICIALLY OR HOLDS COLLATERAL SECURITY FOR OBLIGATIONS IN DEFAULT ANY SECURITIES OF A PERSON WHO, TO THE KNOWLEDGE OF THE TRUSTEE OWNS 50 PERCENT OR MORE OF THE VOTING SECURITIES OF THE OBLIGOR, FURNISH THE FOLLOWING INFORMATION AS TO EACH CLASS OF SECURITIES OF SUCH PERSON ANY OF WHICH ARE SO OWNED OR HELD BY THE TRUSTEE. APRIL 30, 1997 - -------------------------------------------------------------------------------- COL. A COL. B COL. C COL. D - -------------------------------------------------------------------------------- AMOUNT OWNED BENEFICIALLY PERCENT OF CLASS NAME OF ISSUER OR HELD AS COLLATERAL REPRESENTED BY AND TITLE OF AMOUNT SECURITY FOR OBLIGATIONS AMOUNT GIVEN IN CLASS OUTSTANDING IN DEFAULT BY TRUSTEE COL. C - -------------------------------------------------------------------------------- Not Applicable 3 ITEM 12. INDEBTEDNESS OF THE OBLIGOR TO THE TRUSTEE. EXCEPT AS NOTED IN THE INSTRUCTIONS, IF THE OBLIGOR IS INDEBTED TO THE TRUSTEE, FURNISH THE FOLLOWING INFORMATION: - --------------------------------------------------------------- COL. A COL. B COL. C - --------------------------------------------------------------- NATURE OF INDEBTEDNESS AMOUNT OUTSTANDING DATE DUE - --------------------------------------------------------------- Not Applicable ITEM 13. DEFAULTS BY THE OBLIGOR. (A) STATE WHETHER THERE IS OR HAS BEEN A DEFAULT WITH RESPECT TO THE SECURITIES UNDER THIS INDENTURE. EXPLAIN THE NATURE OF ANY SUCH DEFAULT. None (B) IF THE TRUSTEE IS A TRUSTEE UNDER ANOTHER INDENTURE UNDER WHICH ANY OTHER SECURITIES, OR CERTIFICATES OF INTEREST OR PARTICIPATION IN ANY OTHER SECURITIES, OF THE OBLIGOR ARE OUTSTANDING, OR IS TRUSTEE FOR MORE THAN ONE OUTSTANDING SERIES OF SECURITIES UNDER THE INDENTURE, STATE WHETHER THERE HAS BEEN A DEFAULT UNDER ANY SUCH INDENTURE OR SERIES, IDENTIFY THE INDENTURE OR SERIES AFFECTED, AND EXPLAIN THE NATURE OF ANY SUCH DEFAULT. None ITEM 14. AFFILIATIONS WITH THE UNDERWRITERS. IF ANY UNDERWRITER IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE ANY SUCH AFFILIATION. Not Applicable ITEM 15. FOREIGN TRUSTEE. IDENTIFY THE ORDER OR RULE PURSUANT TO WHICH THE FOREIGN TRUSTEE IS AUTHORIZED TO ACT AS SOLE TRUSTEE UNDER INDENTURES QUALIFIED OR TO BE QUALIFIED UNDER THE ACT. Not Applicable ITEM 16. LIST OF EXHIBITS. 1* -- Copy of Articles of Association of the Trustee as now in effect. 2 -- Copy of certificate of authority of the Trustee to commence business. 3 -- Copy of the authorization of the Trustee to exercise corporate trust powers. 4* -- Copy of the existing By-Laws of the Trustee, as now in effect. 5 -- Not Applicable. 6 -- The consent of the Trustee required by Section 321(b) of the Act. 7 -- A copy of the latest report of Condition of the Trustee published pursuant to the law or the requirements of its supervising or examining authority. 8 -- Not Applicable 9 -- Not Applicable - --------------- * Exhibits thus designated have heretofore been filed with the Securities and Exchange Commission, have not been amended since filing and are incorporated herein by reference (see Exhibits T-1 and T-4 Registration Number 333-24137). In answering any item in this statement of eligibility and qualification which relates to matters peculiarly within the knowledge of the obligor or of its directors or officers, or an underwriter for the obligor, the undersigned, First Union National Bank, has relied upon information furnished to it by the obligor or such underwriter. 4 SIGNATURE Pursuant to the requirements of the Trust Indenture Act of 1939 the Trustee, First Union National Bank, a national banking association organized and existing under the laws of the United States, has duly caused this Statement of Eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of Newark, and State of New Jersey, on the 21st day of May, 1997. FIRST UNION NATIONAL BANK (Trustee) (CORPORATE SEAL) /s/ F. GALLAGHER By: ............................... F. Gallagher VICE PRESIDENT 5 EXHIBIT 2 Comptroller of the Currency Administrator of National Banks Washington, DC 20219 CERTIFICATE I, Eugene A. Ludwig, Comptroller of the Currency, do hereby certify that: 1. The Comptroller of the Currency, pursuant to Revised Statutes 324, et seq., as amended, 12 U.S.C. 1, et seq., as amended, has possession, custody and control of all records pertaining to the chartering, regulation and supervision of all National Banking Associations. 2. "First Union National Bank," Avondale, Pennsylvania (Charter No. 22693), is a National Banking Association formed under the laws of the United States and is authorized thereunder to transact the business of banking on the date of this Certificate. IN TESTIMONY WHEREOF, I have hereunto subscribed my name and caused my seal of office to be affixed to these presents at the Treasury Department, in the City of Washington and District of Columbia, this 17th day of December, 1996. /s/ EUGENE A. LUDWIG ----------------------------------- Comptroller of the Currency 6 EXHIBIT 3 Comptroller of the Currency Administrator of National Banks Washington, DC 20219 Certification of Fiduciary Powers I, Eugene A. Ludwig, Comptroller of the Currency, do hereby certify the records in this office evidence "First Union National Bank", Elkton, Maryland, (Charter No. 22693), was granted, under the hand and seal of the Comptroller, the right to act in all fiduciary capacities authorized under the provisions of The Act of Congress approved September 28, 1962, 76 Stat. 668, 12 U.S.C. 92a. I further certify the authority so granted remains in full force and effect. IN TESTIMONY WHEREOF, I have hereunto subscribed my name and caused my seal of Office of the Comptroller of the Currency to be affixed to these presents at the Treasury Department, in the City of Washington and District of Columbia, this 5th day of July, 1996. /s/ EUGENE A. LUDWIG ----------------------------------- Comptroller of the Currency 7 EXHIBIT 6 CONSENT OF TRUSTEE Pursuant to the requirements of Section 321 (b) of the Trust Indenture Act of 1939, and in connection with the proposed issue of Public Service Electric and Gas Company, we hereby consent that reports of examinations by Federal, State, Territorial or District authorities may be furnished by such authorities to the Securities and Exchange Commission upon request therefor. FIRST UNION NATIONAL BANK By: /s/ FRANK GALLAGHER ----------------------------- Frank Gallagher Vice President Newark, NJ May 3, 1997 8 EXHIBIT 7 REPORT OF CONDITION Consolidating domestic and foreign subsidiaries of the First Union National Bank of Avondale in the state of Pennsylvania, at the close of business on March 31, 1997, published in response to call made by Comptroller of the Currency, under title 12, United States Code, Section 161. Charter Number 33869 Comptroller of the Currency Northeastern District. STATEMENT OF RESOURCES AND LIABILITIES ASSETS THOUSAND OF DOLLARS Cash and balance due from depository institutions: Noninterest-bearing balances and currency and coin.................................................. 1,589,725 Interest-bearing balances........................................................................... 144,932 Securities.......................................................................................... 0 Hold-to-maturity securities......................................................................... 406,600 Available-for-sale securities....................................................................... 2,331,814 Federal funds sold and securities purchased under agreements to resell.............................. 2,102,868 Loans and lease financing receivables: Loan and leases, net of unearned income............................................................. 19,281,909 LESS: Allowance for loan and lease losses........................................................... 243,522 LESS: Allocated transfer risk reserve............................................................... 0 Loans and leases, net of unearned income, allowance, and reserve.................................... 19,038.387 Assets held in trading accounts..................................................................... 0 Premises and fixed assets (including capitalized leases)............................................ 405,170 Other real estate owned............................................................................. 49,059 Investment in unconsolidated subsidiaries and associated companies.................................. 32,905 Customer's liability to this bank on acceptances outstanding........................................ 45,474 Intangible assets................................................................................... 411,739 Other assets........................................................................................ 642,043 Total assets........................................................................................ 27,200,716 LIABILITIES Deposits: In domestic offices............................................................................... 21,310,047 Noninterest-bearing............................................................................. 4,381,335 Interest-bearing................................................................................ 16,928,712 In foreign offices, Edge and Agreement subsidiaries, and IBFs..................................... 519,225 Noninterest-bearing............................................................................. 215 Interest-bearing................................................................................ 519,010 Federal funds purchased and securities sold under agreements to repurchase.......................... 1,771,997 Demand notes issued to the U.S. Treasury............................................................ 99,992 Trading liabilities................................................................................. 0 Other borrowed money................................................................................ 0 With original maturity of one year or less.......................................................... 12,151 With original maturity of more than one year........................................................ 14,852 Mortgage indebtedness and obligations under capitalized leases Bank's liability on acceptances executed and outstanding.......................................................................... 45,884 Subordinated notes and debentures................................................................... 450,000 Other liabilities................................................................................... 642,872 Total liabilities................................................................................... 24,867,019 Limited-life preferred stock and related surplus.................................................... 0 EQUITY CAPITAL Perpetual preferred stock and related surplus....................................................... 160,540 Common Stock........................................................................................ 452,156 Surplus............................................................................................. 1,300,080 Undivided profits and capital reserves.............................................................. 452,724 Net unrealized holding gains (losses) on available-for-sale securities.............................. (31,803) Cumulative foreign currency translation adjustments................................................. 0 Total equity capital................................................................................ 2,333,697 Total liabilities, limited-life preferred stock and equity capital.................................. 27,200,716
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