<PAGE>
FORM 8-A
SECURITIES AND EXCHANGE COMMISSION
Washington D. C. 20549
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
PUBLIC SERVICE ELECTRIC AND GAS CAPITAL, L.P.
-----------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
New Jersey 22-3325834
-----------------------------------------------------------------------------
(State of incorporation or organization) (I.R.S. Employer
Identification No.)
80 Park Plaza, P. O. Box 570, Newark, New Jersey 07101-0570
-----------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Securities to be registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
------------------- ------------------------------
Public Service Electric and Gas )
Capital, L.P._____% Cumulative ) New York Stock Exchange
Monthly Income Preferred )
Securities, Series B )
If this Form relates to the regristration of a class of debt securities
and is effective upon filing pursuant to General Instruction A.(c)(1) please
check the following line. ____
If this Form relates to the registration of a class of debt securities
and is to become effective simutaneously with the effectiveness of a
concurrent registration statement under the Securities Act of 1933 pursuant to
General Instruction A.(c)(2), please check the following line. ____
Securities to be registered pursuant to Section 12(g) of the Act:
None
----------------
(Title of Class)
<PAGE>
<PAGE>
Public Service Electric and Gas Capital, L.P.
---------------------------------------------
Item 1. Description of Registrant's Securities to be Registered.
------ --------------------------------------------------------
The information required by this Item 1 is incorporated by
reference to the preliminary prospectus supplement dated September 8,
1995 and prospectus dated September 8, 1995 filed with the Securities
and Exchange Commission pursuant to Rule 424(b) of the Securities Act
of 1933. Copies of the prospectus supplement and prospectus describing
the securities will be filed pursuant to Rule 424(b) of the Securities
Act of 1933 and shall be deemed incorporated by reference into this
Registration Statement filed on Form 8-A.
Item 2. Exhibits.
------ --------
1. Preliminary prospectus supplement dated September 8, 1995 and
prospectus dated September 8, 1995 (filed September 11, 1995
pursuant to rule 424(b) pursuant to the Securities Act of
1933, Registration Statement Nos. 33-55821 and 33-55821-01).
2. Certificate of Limited Partnership for the Partnership (filed
October 6, 1994 pursuant to the Securities Act of 1933,
Registration Statement Nos. 33-55821 and 33-55821-01, exhibit
number 3-1).
3. Form of Action of the General Partner (filed October 6, 1994
pursuant to the Securities Act of 1933, Registration
Statement Nos. 33-55821 and 33-55821-01, exhibit number 3-2).
4. Amended and Restated Limited Partnership Agreement of Public
Service Electric and Gas Capital, L.P. dated as of November
9, 1994.
5. Form of Preferred Security Certificate (included in exhibit 4
hereto).
<PAGE>
<PAGE>
SIGNATURE
----------
Pursuant to the requirements of Section 12 of the Securities
Exchange Act of 1934, the registrant has duly caused this
registration statement to be signed on its behalf by the
undersigned, thereto duly authorized.
PUBLIC SERVICE ELECTRIC AND GAS CAPITAL, L.P.
By: PUBLIC SERVICE ELECTRIC AND GAS COMPANY,
its general partner
By FRANCIS J. RIEPL
---------------------------------------
Francis J. Riepl
Vice President and Treasurer
Public Service Electric and Gas Company
Dated: September 11, 1995
<PAGE>
AMENDED AND RESTATED
LIMITED PARTNERSHIP AGREEMENT
OF PUBLIC SERVICE ELECTRIC AND GAS CAPITAL, L.P.
This AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT,
dated as of November 9, 1994, of Public Service Electric and Gas
Capital, L.P., a New Jersey limited partnership (the "Partnership"),
is made by and among Public Service Electric and Gas Company, as
General Partner, Fred F. Saunders, as Class A Limited Partner and the
Persons (as defined below) who become limited partners of the
Partnership in accordance with the provisions hereof.
WHEREAS, Public Service Electric and Gas Company and Fred
F. Saunders have heretofore formed a limited partnership pursuant to
the New Jersey Uniform Limited Partnership Law by filing a
Certificate of Limited Partnership (as defined below) with the
Secretary of State of the State of New Jersey on September 30, 1994,
and entering into a Limited Partnership Agreement of the Partnership
dated as of September 30, 1994 (the "Limited Partnership Agreement");
WHEREAS, the parties hereto desire to continue the
Partnership as a limited partnership under the New Jersey Uniform
Limited Partnership Law and to amend and restate the Limited
Partnership Agreement in its entirety.
NOW, THEREFORE, the parties hereto, intending to be legally
bound hereby, agree to amend and restate the Limited Partnership
Agreement in its entirety as follows:
ARTICLE I - Definitions
For purposes of this Agreement, each of the following terms
shall have the meaning set forth below (such meaning to be equally
applicable to both singular and plural forms of the terms so
defined).
<PAGE>
<PAGE>
"Action" shall have the meaning set forth in Section
13.01(b).
"Additional Amounts" shall have the meaning set forth in
Section 13.01(b)(ix).
"Affiliate" shall mean, with respect to the Person to which
it refers, a Person that directly or indirectly through one or more
intermediaries, controls or is controlled by, or is under common
control with, such subject Person.
"Agreement" shall mean this Amended and Restated Limited
Partnership Agreement, as amended, modified, supplemented or restated
from time to time, including, without limitation, by any Action
establishing a series of Preferred Partner Interests.
"Book Entry Interests" shall mean a beneficial interest in
the Certificates, ownership and transfers of which shall be made
through book entries by a Clearing Agency as described in Section
14.04.
"Business Day" shall mean any day other than a Saturday,
Sunday or other day on which banking institutions in The City of New
York or the State of New Jersey are authorized or required by law or
executive order to close.
"Capital Account" shall have the meaning set forth in
Section 4.01.
"Certificate" shall mean a certificate substantially in the
form attached hereto as Exhibit A, evidencing a Preferred Partner
Interest.
"Certificate of Limited Partnership" shall mean the
Certificate of Limited Partnership of the Partnership and any and all
amendments thereto and restatements thereof filed with the Secretary
of State of the State of New Jersey.
<PAGE>
<PAGE>
"Class A Limited Partner" shall mean Fred F. Saunders, in
his capacity as a limited partner of the Partnership.
"Clearing Agency" shall mean an organization registered as
a "Clearing Agency" pursuant to Section 17A of the Exchange Act.
"Clearing Agency Participant" shall mean a broker dealer,
bank, other financial institution or other Person for whom from time
to time a Clearing Agency effects book entry transfers and pledges of
securities deposited with the Clearing Agency.
"Code" shall mean the United States Internal Revenue Code
of 1986 and (unless the context requires otherwise) the rules and
regulations promulgated thereunder, as amended from time to time.
"Commission" shall mean the Securities and Exchange
Commission.
"Covered Person" shall mean any Partner or the Special
Representative, any Affiliate thereof or any officers, directors,
shareholders, partners, members, employees, representatives or agents
of a Partner, the Special Representative or their respective
Affiliates, or any employee or agent of the Partnership or its
Affiliates.
"Definitive Certificate" shall have the meaning set forth
in Section 14.04.
"Economic Risk of Loss" shall mean the "economic risk of
loss" that any Partner is treated as bearing under Treasury
Regulation Section 1.752-2 with respect to any Partnership liability.
"Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
<PAGE>
<PAGE>
"Fiscal Year" shall have the meaning set forth in Section
7.01.
"General Partner" shall mean Public Service Electric and
Gas Company, a New Jersey Corporation, in its capacity as general
partner of the Partnership, together with any successor thereto that
becomes a general partner of the Partnership pursuant to the terms of
this Agreement.
"Guarantee" shall mean the Payment and Guarantee Agreement
to be dated as of November 17, 1994, as amended or supplemented from
time to time, of PSE&G and any additional Payment and Guarantee
Agreements entered into by PSE&G for the benefit of the Partners.
"Indemnified Person" shall mean the General Partner or the
Special Representative, any Affiliate thereof or any officers,
directors, shareholders, partners, members, employees,
representatives or agents thereof, or any employee or agent of the
Partnership or its Affiliates.
"Indenture" shall mean the Indenture dated as of November
1, 1994, as amended or supplemented from time to time, between PSE&G
and First Fidelity Bank, National Association, as Trustee and any
additional Indentures entered into by PSE&G pursuant to which
Subordinated Debentures of PSE&G are to be issued.
"Interest" shall mean the entire partnership interest of a
Partner in the Partnership at any particular time, including the
right of such Partner to any and all benefits to which a Partner may
be entitled as provided in this Agreement, together with the
obligations of such Partner to comply with all of the terms and
provisions of this Agreement.
"Investment Company Act Event" shall mean the occurrence of
a change in law or regulation or a change in official interpretation
of law or regulation by any legislative
<PAGE>
<PAGE>
body, court, governmental agency or regulatory authority (a "Change
in 40 Act Law") to the effect that the Partnership is or will be
considered an "investment company" which is required to be registered
under the Investment Company Act of 1940, as amended (the "1940
Act"), which Change in 40 Act Law becomes effective on or after the
date of issuance of any series of Preferred Partner Interests;
provided, that no Investment Company Act Event shall be deemed to
have occurred if the Partnership has received an opinion of counsel
(which may be regular counsel to PSE&G or an Affiliate, but not an
employee thereof) experienced in such matters, to the effect that
PSE&G and/or the Partnership has taken reasonable measures, in its
discretion, to avoid such Change in 40 Act Law so that
notwithstanding such Change in 40 Act Law, the Partnership is not
required to be registered as an "investment company" within the
meaning of the 1940 Act.
"Limited Partners" shall mean the Class A Limited Partner,
if any, and the Preferred Partners.
"Liquidating Distributions" shall mean distributions of
Partnership property made upon a liquidation and dissolution of the
Partnership as provided in Article XII.
"Liquidating Trustee" shall have the meaning set forth in
Section 12.01.
"Liquidation Distribution" shall mean the liquidation
preference of each series of Preferred Partner Interests as set forth
in the Action for such series.
"Loss Items" shall mean, with respect to any fiscal period,
items of gross Partnership loss, deduction or expense for such
period.
<PAGE>
<PAGE>
"Net Income" or "Net Loss" shall mean, with respect to any
Fiscal Year, the sum of the Partnership's (a) net gain or loss from
the sale or exchange of the Partnership's capital assets during such
Fiscal Year, and (b) all other items of income, gain, loss, deduction
and expense for such Fiscal Year that are not included in (a). Net
Income or Net Loss shall be determined in accordance with Federal tax
accounting principles rather than generally accepted accounting
principles, except that a distribution in kind of Partnership
property shall be treated as a taxable disposition of such property
for its fair market value (taking into account Section 7701(g) of the
Code) on the date of distribution. For purposes of determining the
Capital Accounts as set forth in Article IV, "Net Income" and "Net
Loss" shall be computed in the same manner as the Partnership
computes its income for Federal income tax purposes, except that
adjustments shall be made in accordance with Treasury Regulation
Section 1.704-1(b)(2)(iv), which adjustments shall include any income
which is exempt from United States Federal income tax, all
Partnership losses and all expenses properly chargeable to the
Partnership, whether deductible or non-deductible and whether
described in Section 705(a)(2)(B) of the Code, treated as so
described pursuant to Treasury Regulations Section
1.704-1(b)(2)(iv)(i), or otherwise.
"New Jersey Law" shall mean the New Jersey Uniform Limited
Partnership Law (1976), N.J.S.A. 42:2A-1 et seq. as amended from time
to time or any successor statute thereto.
"1940 Act" shall mean the Investment Company Act of 1940,
as amended.
"Partners" shall mean the General Partner and the Limited
Partners.
"Partnership" shall mean Public Service Electric and Gas
Capital, L.P., a limited partnership formed under the New Jersey Law.
<PAGE>
<PAGE>
"Person" shall mean any individual, general partnership,
limited partnership, corporation, limited liability company, joint
venture, trust, business trust, cooperative or association and the
heirs, executors, administrators, legal representatives, successors
and assigns of such Person where the context so admits.
"Preferred Partner" shall mean a limited partner of the
Partnership who holds one or more Preferred Partner Interests.
"Preferred Partner Interest Owner" shall mean, with respect
to a Book Entry Interest, a Person who is the beneficial owner of
such Book Entry Interest, as reflected on the books of the Clearing
Agency, or on the books of a Person maintaining an account with such
Clearing Agency (directly as a Clearing Agency Participant or as an
indirect participant, in each case in accordance with the rules of
such Clearing Agency).
"Preferred Partner Interests" shall mean the Interests
described in Article XIII.
"PSE&G" shall mean Public Service Electric and Gas Company
and its successors.
"Purchase Price" shall mean the amount paid for each
Preferred Partner Interest.
"Redemption Price" shall have the meaning set forth in
Section 13.01(b)(v).
"Securities Act" shall mean the Securities Act of 1933, as
amended.
"Special Event" shall mean a Tax Event or an Investment
Company Act Event.
"Special Representative" shall have the meaning set forth
in Section 13.02(d).
<PAGE>
<PAGE>
"Subordinated Debentures" shall mean the Debentures of
PSE&G issued under the Indenture.
"Tax Event" shall mean that the Partnership shall have
received an opinion of counsel (which may be regular counsel to PSE&G
or an Affiliate, but not an employee thereof) experienced in such
matters to the effect that, as a result of any amendment to, or
change (including any announced prospective change) in, the laws (or
any regulations thereunder) of the United States or any political
subdivision or taxing authority thereof or therein affecting
taxation, or as a result of any official administrative pronouncement
or judicial decision interpreting or applying such laws or
regulations, which amendment or change is effective or such
interpretation or pronouncement is announced on or after the date of
original issuance of any series of Preferred Partner Interests, there
is more than an insubstantial risk that (i) the Partnership is
subject to United States Federal income tax with respect to interest
received on the Subordinated Debentures or the Partnership will
otherwise not be taxed as a Partnership or (ii) interest payable by
PSE&G to the Partnership on the Subordinated Debentures will not be
deductible for United States Federal income tax purposes or (iii) the
Partnership is subject to more than a de minimis amount of other
taxes, duties, assessments or other governmental charges.
"Tax Matters Partner" shall have the meaning set forth in
Section 7.05.
"Transfer" shall mean any transfer, sale, assignment, gift,
pledge, hypothecation or other disposition or encumbrance of an
interest in the Partnership.
"Treasury Regulations" shall mean the final and temporary
income tax regulations, as well as the procedural and administrative
regulations, promulgated by the United States Department of the
Treasury under the Code, as amended from time to time.
<PAGE>
<PAGE>
"Trustee" shall mean the First Fidelity Bank, National
Association or any other trustee under the Indenture.
"Underwriting Agreement" shall mean the Underwriting
Agreement entered into on November 9, 1994 among the Partnership,
PSE&G and the underwriters named therein with regard to the sale of
Preferred Partner Interests and related securities and any additional
Underwriting Agreements entered into by the Partnership and PSE&G
with regard to the sale of additional Preferred Partner Interests and
related securities.
ARTICLE II - Continuation; Name; Purposes; Term; Definitions
Section 2.01. Formation. The parties hereto hereby join
together to continue a limited partnership which shall exist under
and be governed by the New Jersey Law. The Partnership shall make
any and all filings or disclosures required under the laws of the
State of New Jersey or otherwise with respect to its continuation as
a limited partnership, its use of a fictitious name or otherwise as
may be required. The Partnership shall be a limited partnership
among the Partners solely for the purposes specified in Section 2.03
hereof, and this Agreement shall not be deemed to create a
partnership among the Partners with respect to any activities
whatsoever other than the activities within the business purposes of
the Partnership as specified in Section 2.03. No Partner shall have
any power to bind any other Partner with respect to any matter except
as specifically provided in this Agreement. No Partner shall be
responsible or liable for any indebtedness or obligation of any other
Partner incurred either before or after the execution of this
Agreement. The assets of the Partnership shall be owned by the
Partnership as an entity, and no Partner individually shall own any
direct interest in the assets of the Partnership.
<PAGE>
<PAGE>
Section 2.02. Name and Place of Business. The name of the
Partnership is "Public Service Electric and Gas Capital, L.P." The
Partnership may operate under the name of "Public Service Electric
and Gas Capital" and such name shall be used for no purposes other
than those set forth herein. The principal place of business of the
Partnership shall be 80 Park Plaza, Newark, New Jersey 07101, or at
such other place as may be selected by the General Partner in its
sole discretion.
Section 2.03. Purposes. The sole purposes of the
Partnership are to issue and sell Interests in the Partnership,
including, without limitation, Preferred Partner Interests, and to
use the proceeds of all sales of Interests in the Partnership to
purchase Subordinated Debentures issued by PSE&G pursuant to the
Indenture and to effect other similar arrangements permitted by this
Agreement, and to engage in any and all activities necessary,
convenient, advisable or incidental thereto. The Partnership shall
not borrow money or issue debt or mortgage or pledge any of its
assets.
Section 2.04. Term. The Partnership was formed on
September 30, 1994 and shall continue without dissolution through
September 30, 2093, unless sooner dissolved as provided in Article XI
hereof.
Section 2.05. Qualification in Other Jurisdictions. The
General Partner shall cause the Partnership to be qualified, formed
or registered under assumed or fictitious name statutes or similar
laws in any jurisdiction in which the Partnership transacts business.
The General Partner shall execute, deliver and file any certificates
(and any amendments and/or restatements thereof) necessary for the
Partnership to qualify to do business in any jurisdiction in which
the Partnership may wish to conduct business.
Section 2.06. Admission of Preferred Partners. Without
execution of this Agreement, upon receipt by a Person of a
Certificate and payment for the Preferred Partner Interest
<PAGE>
<PAGE>
being acquired by such Person, which shall be deemed to constitute a
request by such Person that the books and records of the Partnership
reflect its admission as a Preferred Partner, such Person shall be
admitted to the Partnership as a Preferred Partner and shall become
bound by this Agreement.
Section 2.07. Records. The name and mailing address of
each Partner and the amount contributed to the capital of the
Partnership shall be listed on the books and records of the
Partnership. The Partnership shall keep such other records as are
required by Section 2A-9 of the New Jersey Law. The General Partner
shall update the books and records from time to time as necessary to
accurately reflect the information therein.
Section 2.08. Withdrawal of Class A Limited Partner. Upon
the admission of at least one Preferred Partner as a limited partner
of the Partnership, the Class A Limited Partner shall be deemed to
have withdrawn from the Partnership as a limited partner of the
Partnership, and upon such withdrawal, the Class A Limited Partner
shall have its capital contribution returned to it without any
interest or deduction and shall have no further interest in the
Partnership.
ARTICLE III - Capital Contributions
Section 3.01. Capital Contributions. The General Partner
has contributed or will contribute the amount of $1,000 to the
capital of the Partnership and shall make any further contributions
required to satisfy its obligations under Section 3.04. Each
Preferred Partner, or its predecessor in interest, will contribute to
the capital of the Partnership the amount of the Purchase Price for
the Preferred Partner Interests held by it.
Section 3.02. Additional Capital Contributions. No
Partner shall be required to make any additional contributions or
advances to the Partnership except as provided in Section 3.04. or by
law. The General Partner may make additional capital contributions
in excess of the amounts required under this Agreement at any time.
<PAGE>
<PAGE>
Section 3.03. No Interest or Withdrawals. No interest
shall accrue on any capital contribution made by a Partner, and no
Partner shall have the right to withdraw or to be repaid any portions
of its capital contributions so made, except as specifically provided
in this Agreement.
Section 3.04. Minimum Capital Contribution of General
Partner. Whenever any Limited Partner makes a capital contribution,
the General Partner shall immediately make the capital contribution
sufficient to cause the aggregate capital contribution of the General
Partner to equal 3% of the aggregate capital contributed by all
Partners. Any such additional contributions shall constitute
additional capital contributions made by the General Partner.
Section 3.05. Partnership Interests. Unless otherwise
provided herein, the percentage interests of the Partners shall be as
determined in proportion to the capital contributions of the
Partners.
Section 3.06. Interests. Each Partner's respective
Preferred Partner Interests shall be set forth on the books and
records of the Partnership. Each Partner hereby agrees that its
Interests shall for all purposes be personal property. No Partner
has an interest in specific Partnership property. The Partnership
shall not issue any additional interest in the Partnership after the
date hereof other than General Partner Interests or Preferred Partner
Interests or as required to preserve the valid existence of the
Partnership.
ARTICLE IV - Capital Accounts
Section 4.01. Capital Accounts. There shall be
established on the books of the Partnership a capital account
("Capital Account") for each Partner that shall consist of the
initial capital contribution to the Partnership made by such Partner
(or such Partner's predecessor in interest), increased
<PAGE>
<PAGE>
by: (a) any additional capital contributions made by such Partner,
(b) the agreed value of any property subsequently contributed to the
capital of the Partnership by such Partner; and (c) Net Income
allocated to any Partner (or predecessor thereof). A Partner's
Capital Account shall be decreased by: (a) Net Loss allocated to any
Partner (or predecessor thereof); and (b) any distributions made to
such Partner. In addition to and notwithstanding the foregoing,
Capital Accounts shall be otherwise adjusted in accordance with the
tax accounting principles set forth in Treasury Regulation Section
1.704-1(b)(2)(iv).
Section 4.02. Compliance With Treasury Regulations. The
foregoing provisions and the other provisions of this Agreement
relating to the maintenance of Capital Accounts are intended to
comply with Section 704(b) of the Code and Treasury Regulation
Section 1.704-1(b) and shall be interpreted and applied in a manner
consistent with such regulations. In the event that the General
Partner shall determine that it is prudent to modify the manner in
which the Capital Accounts, or any debits or credits thereto, are
determined in order to comply with such regulations, the General
Partner may make such modification.
ARTICLE V - Allocations
Section 5.01. Profits and Losses. Each fiscal period, the
Net Income of the Partnership shall be allocated (i) first, to the
Preferred Partners, pro rata in proportion to the number of Preferred
Partner Interests held by each Preferred Partner and at the
distribution rate specified in the Action for each series of
Preferred Partner Interests, in an amount equal to the excess of (a)
the distributions accrued on such Preferred Partner Interests since
their date of issuance through and including the close of the current
fiscal period (whether or not paid) over (b) the amount of profits
allocated to the Preferred Partners pursuant to this Section 5.01(i)
in all prior fiscal periods; and (ii) thereafter, to the General
Partner. The Net Losses of the Partnership shall be allocated each
year to the General Partner.
<PAGE>
<PAGE>
Section 5.02. Allocation Rules. For purposes of
determining the profits, losses or any other items allocable to any
period, profits, losses and any such other items shall be determined
on a daily, monthly or other basis, as determined by the General
Partner in its sole and absolute discretion using any method that is
permissible under Section 706 of the Code and the Treasury
Regulations thereunder. The Partners are aware of the income tax
consequences of the allocations made by this Article V and hereby
agree to be bound by the provisions of this Article V in reporting
their shares of Partnership income and loss for income tax purposes.
Section 5.03. Adjustments to Reflect Changes in Interests.
Notwithstanding the foregoing, with respect to any Fiscal Year during
which any Partner's percentage interest in the Partnership changes,
whether by reason of the admission of a Partner, the withdrawal of a
Partner, a non-pro rata contribution of capital to the Partnership or
any other event described in Section 706(d)(1) of the Code and the
Treasury Regulations issued thereunder, allocations of the items of
income, gain, loss and deduction of the Partnership shall be adjusted
appropriately to take into account the varying interests of the
Partners during such Fiscal Year. The General Partner shall consult
with the Partnership's accountants and other tax advisors and shall
select the method of making such adjustments, which method shall be
used consistently thereafter.
Section 5.04. Tax Allocations. For Federal, state and
local income tax purposes, Partnership income, gain, loss, deduction
or credit (or any item thereof) for each Fiscal Year shall be
allocated to and among the Partners in order to reflect the
allocations made pursuant to the provisions of this Article V for
such Fiscal Year (other than allocations of items which are not
deductible or are excluded from taxable income), taking into account
any variation between the adjusted tax basis and book value of
Partnership property in accordance with the principles of Section
704(c) of the Code.
<PAGE>
<PAGE>
Section 5.05. Qualified Income Offset. Notwithstanding any
other provision hereof, if any Partner unexpectedly receives an
adjustment, allocation or distribution described in Treasury
Regulation Section 1.704- 1(b)(2)(ii)(d)(4), (5), and (6) which
creates or increases a deficit in the Capital Account of such Partner
(and, for this purpose, the existence of a deficit shall be
determined by reducing the Partner's Capital Account by the items
described in Treasury Regulation Section 1.704-1(b)(2)(ii)(d)(4),
(5), and (6)), the next available gross income of the Partnership
shall be allocated to the Partners having such deficit balances, in
proportion to the deficit balances, until such deficit balances are
eliminated as quickly as possible. The provisions of this Section
5.05 are intended to constitute a "qualified income offset" within
the meaning of Treasury Regulation Section 1.704- 1(b)(2)(ii)(d) and
shall be interpreted and implemented as therein provided.
Section 5.06. Taxpayer Information. Any Person who holds
Preferred Partner Interests as a nominee for another Person is
required to furnish to the Partnership (a) the name, address and
taxpayer identification number of the beneficial owner and the
nominee; (b) information as to whether the beneficial owner is (i) a
Person that is not a United States Person, (ii) a foreign government,
an international organization or any wholly owned agency or
instrumentality of either of the foregoing, or (ii) a tax-exempt
entity; (c) the amount and description of Preferred Partner Interests
held, acquired or transferred for the beneficial owner; and (d)
certain information including the dates of acquisitions and
transfers, means of acquisitions and transfers, and acquisitions cost
for purchases, as well as the amount of net proceeds from sales.
<PAGE>
<PAGE>
ARTICLE VI - Distributions
Section 6.01. Distributions. Preferred Partners shall
receive periodic distributions, if any, in accordance with the
applicable terms of the Preferred Partner Interests, as and when
declared by the General Partner. Subject to the rights of the
holders of the Preferred Partner Interests, the General Partner shall
receive such distributions, if any, as may be declared from time to
time by the General Partner.
Section 6.02. Certain Distributions Prohibited.
Notwithstanding anything in this Agreement to the contrary, all
Partnership distributions shall be subject to the following
limitations:
(a) No distribution shall be made to any Partner if, and
to the extent that, such distribution would not be permitted under
Section 2A-45 of the New Jersey Law or other applicable law.
(b) No distribution shall be made to any Partner to the
extent that such distribution, if made, would create or increase a
deficit balance in the Capital Account of such Partner.
(c) Other than Liquidating Distributions, no distribution
of Partnership property shall be made in kind. Notwithstanding
anything in the New Jersey Law or this Agreement to the contrary, in
the event of a Liquidating Distribution, a Partner may be compelled
in accordance with Section 12.01 to accept a distribution of
Subordinated Debentures, cash or any other asset in kind from the
Partnership even if the percentage of the asset distributed to it
exceeds a percentage of that asset which is equal to the percentage
in which such Partner shares in distributions from the Partnership.
<PAGE>
<PAGE>
ARTICLE VII - Accounting Matters; Banking
Section 7.01. Fiscal Year. The fiscal year ("Fiscal
Year") of the Partnership shall be the calendar year, or such other
year as is required by the Code.
Section 7.02. Certain Accounting Matters. (a) At all
times during the existence of the Partnership, the General Partner
shall keep, or cause to be kept, full books of account, records and
supporting documents, which shall reflect in reasonable detail, each
transaction of the Partnership. The books of account shall be
maintained on the accrual method of accounting, in accordance with
generally accepted accounting principles, consistently applied. The
Partnership shall use the accrual method of accounting for United
States Federal income tax purposes. The books of account and the
records of the Partnership shall be examined by and reported upon as
of the end of each Fiscal Year by a firm of independent certified
public accountants selected by the General Partner.
(b) The General Partner shall cause to be prepared and
delivered to each of the Partners, within 90 days after the end of
each Fiscal Year of the Partnership, annual financial statements of
the Partnership, including a balance sheet of the Partnership as of
the end of such Fiscal Year and the related statements of income or
loss and a statement indicating such Partner's share of each item of
Partnership income, gain, loss, deduction or credit for such Fiscal
Year for income tax purposes.
(c) Notwithstanding anything in this Agreement to the
contrary, the General Partner may, to the maximum extent permitted by
applicable law, keep confidential from the Partners for such period
of time as the General Partner deems reasonable any information which
the General Partner reasonably believes to be in the nature of trade
secrets or other information the disclosure of which the General
Partner in good faith believes is not in the best interest of the
Partnership or could damage the Partnership or which the Partnership
or a third party is required by law or by an agreement to keep
confidential.
<PAGE>
<PAGE>
(d) The General Partner may make, or revoke, in its sole
and absolute discretion, any elections for the Partnership that are
permitted under tax or other applicable laws, including elections
under Section 704(c) of the Code, provided that the General Partner
shall not make any elections pursuant to Section 754 of the Code.
Section 7.03. Banking. The Partnership shall maintain one
or more bank accounts in the name and for the sole benefit of the
Partnership. The sole signatories for such accounts shall be
designated by the General Partner. Reserve cash, cash held pending
the expenditure of funds for the business of the Partnership or cash
held pending a distribution to one or more of the Partners may be
invested in any manner at the sole and absolute discretion of the
General Partner.
Section 7.04. Right to Rely on Authority of General
Partner. No Person that is not a Partner, in dealing with the
General Partner, shall be required to determine such General
Partner's authority to make any commitment or engage in any
undertaking on behalf of the Partnership, or to determine any fact or
circumstance bearing upon the existence of the authority of the
General Partner.
Section 7.05. Tax Matters Partner. The "tax matters
partner," as defined in Section 6231 of the Code, of the Partnership
shall be the General Partner (the "Tax Matters Partner"). The Tax
Matters Partner shall receive no compensation from the Partnership
for its services in that capacity. The Tax Matters Partner is
authorized to employ such accountants, attorneys and agents as it, in
its sole and absolute discretion deems necessary or appropriate. Any
Person who serves as Tax Matters Partner shall not be liable to the
Partnership or to any Partner for any action it takes or fails to
take as Tax Matters Partner with respect to any administrative or
judicial proceeding involving "partnership items" (as defined in
Section 6231 of the Code) of the Partnership.<PAGE>
<PAGE>
ARTICLE VIII - Management
Section 8.01. Management. (a) The General Partner shall
have full and exclusive authority with respect to all matters
concerning the conduct of the business and affairs of the
Partnership, including (without limitation) the power, without the
consent of the Limited Partners, to make all decisions it deems
necessary, advisable, convenient or appropriate to accomplish the
purposes of the Partnership. The acts of the General Partner acting
alone shall serve to bind the Partnership and shall constitute the
acts of the Partners.
(b) The Limited Partners in their capacity as such shall
not take part in the management, operation or control of the business
of the Partnership or transact any business in the name of the
Partnership. In addition, the Limited Partners, in their capacity as
such, shall not be agents of the Partnership and shall not have the
power to sign or bind the Partnership to any agreement or document.
The Limited Partners shall have the right to vote only with respect
to those matters specifically provided for in this Agreement.
Notwithstanding anything herein to the contrary, the Preferred
Partners may exercise all rights provided to them, if any, under the
Indenture and the Guarantee.
(c) The General Partner is authorized and directed to use
its best efforts to conduct the affairs of, and to operate, the
Partnership in such a way that the Partnership would not be deemed to
be an "investment company" required to be registered under the 1940
Act or taxed as a corporation for Federal income tax purposes and so
that the Subordinated Debentures will be treated as indebtedness of
PSE&G for Federal income tax purposes. In this connection, the
General Partner is authorized to take any action not inconsistent
with applicable law, the Certificate of Limited Partnership or this
Agreement that does not materially adversely affect the interests of
holders of Preferred Partner Interests that the General Partner
determines in its sole and absolute discretion to be necessary,
advisable or desirable for such purposes.
<PAGE>
<PAGE>
Section 8.02 Fiduciary Duty. (a) To the extent that, at
law or in equity, an Indemnified Person has duties (including
fiduciary duties) and liabilities relating thereto to the Partnership
or to any other Covered Person, an Indemnified Person acting under
this Agreement shall not be liable to the Partnership or to any other
Covered Person for its good faith reliance on the provisions of this
Agreement or the advice of counsel selected by the Indemnified Person
in good faith. The provisions of this Agreement, to the extent that
they restrict the duties and liabilities of an Indemnified Person
otherwise existing at law or in equity, are agreed by the parties
hereto to replace such other duties and liabilities of such
Indemnified Person.
(b) Unless otherwise expressly provided herein,
(i) whenever a conflict of interest exists or arises between Covered
Persons, or (ii) whenever this Agreement or any other agreement
contemplated herein or therein provides that an Indemnified Person
shall act in a manner that is, or provides terms that are, fair and
reasonable to the Partnership or any Partner, the Indemnified Person
shall resolve such conflict of interest, taking such action or
providing such terms, considering in each case the relative interest
of each party (including its own interest) to such conflict,
agreement, transaction or situation and the benefits and burdens
relating to such interests, any customary or accepted industry
practices, the advice of counsel selected by the Indemnified Person
in good faith, and any applicable generally accepted accounting
practices or principles. In the absence of bad faith by the
Indemnified Person, the resolution, action or term so made, taken or
provided by the Indemnified Person shall not constitute a breach of
this Agreement or any other agreement contemplated herein or of any
duty or obligation of the Indemnified Person at law or in equity or
otherwise.
(c) Whenever in this Agreement an Indemnified Person is
permitted or required to make a decision (i) in its "discretion" or
under a grant of similar authority or latitude,
<PAGE>
<PAGE>
the Indemnified Person shall be entitled to consider only such
interests and factors as it desires, including its own interests, and
shall have no duty or obligation to give any consideration to any
interest of or factors affecting the Partnership or any other Person,
or (ii) in its "good faith" or under another express standard, the
Indemnified Person shall act under such express standard and shall
not be subject to any other or different standard imposed by this
Agreement or other applicable law.
Section 8.03. Specific Obligations of the General Partner.
The General Partner hereby undertakes:
(a) to devote to the affairs of the Partnership so much of
its time as shall be necessary to carry on properly the Partnership's
business and its responsibilities hereunder;
(b) to cause the Partnership to do or refrain from doing
such acts as shall be required by the laws of the State of New Jersey
in order to preserve the valid existence of the Partnership as a New
Jersey limited partnership and to preserve the limited liability of
the Limited Partners; and
(c) to pay directly all, and the Partnership shall not be
obligated to pay, directly or indirectly, any, of the costs and
expenses of the Partnership (including, without limitation, costs and
expenses relating to the organization of, and offering of limited
partner interests in, the Partnership and costs and expenses relating
to the operation of the Partnership, including without limitation,
costs and expenses of accountants, attorneys, statistical or
bookkeeping services and computing or accounting equipment, paying
agent(s), registrar(s), transfer agent(s), duplicating, travel and
telephone and costs and expenses incurred in connection with the
acquisition, financing, and disposition of Partnership assets).
<PAGE>
<PAGE>
Section 8.04. Powers of the General Partner. The General
Partner shall have the right, power and authority, in the management
of the business and affairs of the Partnership, to do or cause to be
done any and all acts deemed by the General Partner to be necessary
or appropriate to effectuate the business, purposes and objectives of
the Partnership. Without limiting the generality of the foregoing,
the General Partner shall have the power and authority without any
further act, approval or vote of any Partner to:
(a) issue Interests, including Preferred Partner
Interests, and classes and series thereof, in accordance with this
Agreement;
(b) act as, or appoint another Person to act as,
registrar and transfer agent for the Preferred Partner Interests;
(c) establish a record date with respect to all
actions to be taken hereunder that require a record date to be
established, including with respect to allocations, distributions and
voting rights and declare distributions and make all other required
payments on General Partner, Class A Limited Partner and Preferred
Partner Interests as the Partnership's paying agent;
(d) enter into and perform one or more Indentures or
supplemental indentures and one or more Underwriting Agreements and
use the proceeds from the issuance of the Interests to purchase the
Subordinated Debentures, in each case on behalf of the Partnership;
(e) bring and defend on behalf of the Partnership
actions and proceedings at law or in equity before any court or
governmental, administrative or other regulatory agency, body or
commission or otherwise;
<PAGE>
<PAGE>
(f) employ or otherwise engage employees and agents
(who may be designated as officers with titles) and managers,
contractors, advisors and consultants and pay reasonable compensation
for such services;
(g) redeem each series of Preferred Partner Interests
(which shall constitute a return of capital and not a distribution of
income) in accordance with its terms and/or to the extent that the
related series of Subordinated Debentures is redeemed or reaches
maturity; and
(h) execute all documents or instruments, perform all
duties and powers and do all things for and on behalf of the
Partnership in all matters necessary, convenient, advisable or
incidental to the foregoing.
The expression of any power or authority of the General
Partner in this Agreement shall not in any way limit or exclude any
other power or authority which is not specifically or expressly set
forth in, or precluded by, this Agreement.
Section 8.05. Independent Affairs. Any Partner or any
Affiliate thereof may engage in or possess an interest in any other
business venture of whatever nature and description, independently or
with others, wherever located and whether or not comparable to or in
competition with the Partnership or the General Partner, or any
Affiliate thereof, and neither the Partnership nor any of the
Partners shall, by virtue of this Agreement, have any rights with
respect to, or interests in, such independent ventures or the income,
profits or losses derived therefrom. No Partner or Affiliate thereof
shall be obligated to present any particular investment opportunity
to the Partnership even if such opportunity is of a character that,
if presented to the Partnership, could be taken by the Partnership,
and any Partner or Affiliate thereof shall have the right to take for
its own account (individually or as a partner or fiduciary) or to
recommend to others any such particular investment opportunity.
<PAGE>
<PAGE>
Section 8.06. Meetings of the Partners. Meetings of the
Partners of any class or series or of all classes or series of the
Partnership's Interests may be called at any time by the Partners
holding 10% in liquidation preference of such class or series of
Interests, or of all classes or series of Interests, as the case may
be, or as provided in any Action establishing a series of Preferred
Partner Interests. Except to the extent otherwise provided in any
such Action, the following provisions shall apply to meetings of
Partners.
(a) Notice of any meeting shall be given to all
Partners not less than ten (10) business days nor more than sixty
(60) days prior to the date of such meeting. Partners may vote in
person or by proxy at such meeting. Whenever a vote, consent or
approval of Partners is permitted or required under this Agreement,
such vote, consent or approval may be given at a meeting of Partners
or by written consent. If action is taken by written consent without
a meeting, a written report of such action shall be furnished to the
Limited Partners in accordance with Section 2A-29.3 of the New Jersey
Law.
(b) Each Partner may authorize any Person to act for
it by proxy on all matters in which a Partner is entitled to
participate, including waiving notice of any meeting, or voting or
participating at a meeting. Every proxy must be signed by the
Partner or its attorney-in-fact. No proxy shall be valid after the
expiration of eleven (11) months from the date thereof unless
otherwise provided in the proxy. Every proxy shall be revocable at
the pleasure of the Partner executing it.
(c) Each meeting of Partners shall be conducted by
the General Partner or by such other Person that the General Partner
may designate.
(d) Subject to the provisions of this Section 8.06,
the General Partner, in its sole and absolute discretion, shall
establish all other provisions relating to meetings of Partners,
including notice of the time, place or purpose of any
<PAGE>
<PAGE>
meeting at which any matter is to be voted on by any Partners, waiver
of any such notice, action by consent without a meeting, the
establishment of a record date, quorum requirements, voting in person
or by proxy or any other matter with respect to the exercise of any
such right to vote; provided, however, that unless the General
Partner has established a lower percentage, a majority of the
Partners entitled to vote thereat shall constitute a quorum at all
meetings of the Partners.
Section 8.07. Net Worth of the General Partner. By
execution of this Agreement, the General Partner represents and
covenants that (a) as of the date hereof and at all times during the
existence of the Partnership it will maintain a fair market value net
worth of at least ten percent (10%) of the total capital
contributions less redemptions to the Partnership, throughout the
life of the Partnership, in accordance with Rev. Proc. 89-12, 1989-1
C.B. 798, or such other amount as may be required from time to time
pursuant to any amendment, modification or successor to Rev. Proc.
89-12 (such net worth being computed excluding any interest in, or
receivable due from, the Partnership and including any income tax
liabilities that would become due by the General Partner upon
disposition by the General Partner of all assets included in
determining such net worth), and (b) it will not make any voluntary
dispositions of assets which would reduce its net worth below the
amount described in (a).
Section 8.08. Restrictions on General Partner. So long as
any series of Subordinated Debentures are held by the Partnership,
the General Partner shall not (i) direct the time, method and place
of conducting any proceeding for any remedy available to the Trustee,
or executing any trust or power conferred on the Trustee with respect
to such series, (ii) waive any default under the Indenture, (iii)
exercise any right to rescind or annul a declaration that the
principal of all of a series of Subordinated Debentures shall be due
and payable or (iv) consent to any amendment, modification or
termination of the Indenture, where consent by the holder of the
Subordinated Debentures shall be required, without, in each case,
obtaining
<PAGE>
<PAGE>
the prior approval of the Special Representative, or, if no Special
Representative has been appointed, the holders of not less than
66 2/3% of the aggregate stated liquidation preference of all series
of Preferred Partner Interests affected thereby, acting as a single
class; provided, however, that where a consent under the Indenture
would require the consent of each holder affected thereby, no such
consent shall be given by the General Partner without the prior
consent of each holder of all series of Preferred Partner Interests
affected thereby. The General Partner shall not revoke any action
previously authorized or approved by a vote of any series of
Preferred Partner Interests. The General Partner shall notify all
holders of such Preferred Partner Interests of any notice of default
received from the Trustee with respect to such series of Subordinated
Debentures.
ARTICLE IX - Liability and Indemnification
Section 9.01. Partnership Expenses and Liabilities.
(a) Except as provided by the New Jersey Law, the
General Partner shall have the liabilities of a partner in a
partnership without limited partners to Persons other than the
Partnership and the other Partners.
(b) Except as otherwise expressly required by law, a
Limited Partner, in its capacity as such, shall have no liability in
excess of (i) the amount of its capital contributions to the
Partnership, (ii) its share of any assets and undistributed profits
of the Partnership, and (iii) the amount of any distributions
wrongfully distributed to it.
Section 9.02. No Liability. Except as otherwise expressly
provided in Section 9.01(a) or by the New Jersey Law, no Covered
Person shall be liable to the Partnership or to any other Partner for
any act or omission performed or omitted pursuant to the authority
granted to it hereunder or by law, or
<PAGE>
<PAGE>
from a loss resulting from any mistake or error in judgment on its
part or from the negligence, dishonesty, fraud or bad faith of any
employee, independent contractor, broker or other agent of the
Partnership, provided that such act or omission, such mistake or
error in judgment or the selection of such employee, independent
contractor, broker or other agent, as the case may be, did not result
from the willful misconduct, gross negligence or fraud of such
Covered Person. Any Covered Person shall be fully protected in
relying in good faith upon the records of the Partnership and upon
such information, opinions, reports or statements presented to the
Partnership by any Person as to matters the Covered Person reasonably
believes are within such other Person's professional or expert
competence and who has been selected with reasonable care by or on
behalf of the Partnership, including information, opinions, reports
or statements as to the value and amount of the assets, liabilities,
profits, losses, or any other facts pertinent to the existence and
amount of assets from which distributions to Partners might properly
be paid.
Section 9.03. Indemnification. To the fullest extent
permitted by applicable law, except as set forth in Section 8.03(c),
an Indemnified Person shall be entitled to indemnification from the
Partnership for any loss, damage or claim incurred by such
Indemnified Person by reason of any act or omission performed or
omitted by such Indemnified Person in good faith on behalf of the
Partnership and in a manner reasonably believed to be within the
scope of authority conferred on such Indemnified Person by this
Agreement, except that no Indemnified Person shall be entitled to be
indemnified in respect of any loss, damage or claim incurred by such
Indemnified Person by reason of willful misconduct, gross negligence
or fraud with respect to such acts or omissions; provided, however,
that any indemnity under this Section 9.03 shall be provided out of
and to the extent of Partnership assets only, and except as otherwise
provided by the New Jersey Law, no Covered Person shall have any
personal liability on account
<PAGE>
<PAGE>
thereof. To the fullest extent permitted by applicable law, expenses
(including legal fees) incurred by an Indemnified Person in defending
any claim, demand, action, suit or proceeding shall, from time to
time, be advanced by the Partnership prior to the final disposition
of such claim, demand, action, suit or proceeding upon receipt by the
Partnership of an undertaking by or on behalf of the Indemnified
Person to repay such amount if it shall be determined that the
Indemnified Person is not entitled to be indemnified as authorized in
this Section 9.03.
ARTICLE X - Withdrawal; Transfer Restrictions
Section 10.01. Transfer by General Partner; Admission of
Substituted General Partner. The General Partner may not Transfer
its Interest (in whole or in part) to any Person without the consent
of all other Partners, provided that the General Partner may, without
the consent of any Partner, Transfer its Interest to any direct or
indirect wholly owned subsidiary of PSE&G. Notwithstanding anything
else herein, the General Partner may merge with or into another
Person, may permit another Person to merge with or into the General
Partner and may Transfer all or substantially all of its assets to
another Person if the General Partner is the survivor of such merger
or the Person into which the General Partner is merged or to which
the General Partner's assets are transferred is a Person organized
under the laws of the United States or any state thereof or the
District of Columbia and the General Partner shall have the right to
admit the assignee or transferee of its Interest which is permitted
hereunder as a substituted or additional general partner of the
Partnership, without the consent of the Limited Partners. Any such
assignee or transferee of all or a part of the Interest of a General
Partner shall be deemed admitted to the Partnership as a general
partner of the Partnership immediately prior to the effective date of
such Transfer, and such additional or successor General Partner is
hereby authorized to and shall continue the business of the
Partnership without dissolution.
<PAGE>
<PAGE>
Section 10.02. Withdrawal of Limited Partners. A
Preferred Partner may not withdraw from the Partnership prior to the
dissolution and winding up of the Partnership except upon the
assignment of its Preferred Partner Interests (including any
redemption, repurchase, exchange or other acquisition by the
Partnership), as the case may be, in accordance with the provisions
of this Agreement. Any Person who has been assigned one or more
Interests shall provide the Partnership with a completed Form W-8 or
such other documents or information as are requested by the
Partnership for tax reporting purposes. A withdrawing Preferred
Partner shall not be entitled to receive any distribution and shall
not otherwise be entitled to receive the fair value of its Preferred
Partner Interest except as otherwise expressly provided in this
Agreement.
ARTICLE XI - Dissolution of the Partnership
Section 11.01. No Dissolution. The Partnership shall not
be dissolved by the admission of Partners in accordance with the
terms of this Agreement. The death, withdrawal, incompetency,
bankruptcy, dissolution or other cessation to exist as a legal entity
of a Limited Partner, or the occurrence of any other event that
terminates the Interest of a Limited Partner in the Partnership,
shall not in and of itself cause the Partnership to be dissolved and
its affairs wound up. To the fullest extent permitted by applicable
law, upon the occurrence of any such event, the General Partner,
subject to the terms of this Agreement, may, without any further act,
vote or approval of any Partner, admit any Person to the Partnership
as an additional or substitute Limited Partner, which admission shall
be effective as of the date of the occurrence of such event, and the
business of the Partnership shall be continued without dissolution.
Section 11.02. Events Causing Dissolution. The
Partnership shall be dissolved and its affairs shall be wound up upon
the occurrence of any of the following events:
<PAGE>
<PAGE>
(a) The expiration of the term of the Partnership, as
provided in Section 2.04 hereof;
(b) The withdrawal, removal or bankruptcy of the
General Partner or Transfer (other than a grant of a security
interest) by the General Partner of its entire Interest in the
Partnership when the assignee is not admitted to the Partnership as
an additional or successor General Partner in accordance with Section
10.01 hereof, or the occurrence of any other event that results in
the General Partner ceasing to be a general partner of the
Partnership under the New Jersey Law, provided, the Partnership shall
not be dissolved and required to be wound up in connection with any
of the events specified in this clause (b) if (i) at the time of the
occurrence of such event there is at least one remaining general
partner of the Partnership who is hereby authorized to, agrees to and
does carry on the business of the Partnership, or (ii) within ninety
(90) days after the occurrence of such event, a majority in Interest
of the remaining Partners (or such greater percentage in Interest as
is required by the New Jersey Law) agree in writing to continue the
business of the Partnership and to the appointment, effective as of
the date of such event, if required, of one or more additional
general partners of the Partnership;
(c) The entry of a decree of judicial dissolution
under the New Jersey Law;
(d) the written consent of the General Partner and
all of the Preferred Partners; or
(e) in the sole and absolute discretion of the
General Partner upon the occurrence of a Special Event.
Section 11.03. Notice of Dissolution. Upon the
dissolution of the Partnership, the General Partner shall promptly
notify the Partners of such dissolution.
<PAGE>
<PAGE>
ARTICLE XII - Liquidation of Partnership Interests
Section 12.01. Liquidation. Upon dissolution of the
Partnership, the General Partner, or, in the event that the
dissolution is caused by an event described in Section 11.02(b) and
there is no other General Partner, a Person or Persons who may be
approved by Preferred Partners holding not less than a majority in
liquidation preference of the Preferred Partner Interests as
liquidating trustee (the "Liquidating Trustee") shall immediately
commence to wind up the Partnership's affairs; provided, however,
that a reasonable time shall be allowed for the orderly liquidation
of the assets of the Partnership and the satisfaction of liabilities
to creditors so as to enable the Partners to minimize the normal
losses attendant upon a liquidation. The Preferred Partners shall
continue to share profits and losses during liquidation in the same
proportions, as specified in Articles V and VI hereof, as before
liquidation. The proceeds of liquidation shall be distributed, as
realized, in the following order and priority:
(a) to creditors of the Partnership, including
Preferred Partners who are creditors, to the extent otherwise
permitted by law, in satisfaction of the liabilities of the
Partnership (whether by payment or the making of reasonable provision
for payment thereof), other than liabilities for which reasonable
provision for payment has been made and liabilities for distributions
to Partners;
(b) to the holders of Preferred Partner Interests of
each series then outstanding in accordance with the terms of the
Action or Actions for such Series; and
(c) to all Partners in accordance with their
respective positive Capital Account balances, after giving effect to
all contributions, distributions and allocations for all periods.
<PAGE>
<PAGE>
Section 12.02. Termination. The Partnership shall
terminate when all of the assets of the Partnership have been
distributed in the manner provided for in this Article XII, and the
Certificate of Limited Partnership shall have been cancelled in the
manner required by the New Jersey Law.
Section 12.03. Duty of Care. The General Partner or the
Liquidating Trustee, as the case may be, shall not be liable to the
Partnership or any Partner for any loss attributable to any act or
omission of the General Partner taken in good faith in connection
with the liquidation of the Partnership and distribution of its
assets in belief that such course of conduct was in the best interest
of the Partnership. The General Partner or the Liquidating Trustee,
as the case may be, may consult with counsel and accountants with
respect to liquidating the Partnership and distributing its assets
and shall be justified in acting or omitting to act in accordance
with the written opinion of such counsel or accountants, provided
they shall have been selected with reasonable care.
Section 12.04. No Liability for Return of Capital. The
General Partner and its respective officers, directors, members,
shareholders, employees, representatives, agents, partners and
Affiliates shall not be personally liable for the return of the
contributions of any Partner to the Partnership. No Partner shall be
obligated to restore to the Partnership any amount with respect to a
negative Capital Account.
ARTICLE XIII - Preferred Partner Interests
Section 13.01. Preferred Partner Interests.
(a) The aggregate number of Preferred Partner Interests
which the Partnership shall have authority to issue is unlimited.
Each series of Preferred Partner Interests shall rank equally and all
Preferred Partner Interests shall rank senior to all other Interests
in respect of the right to receive
<PAGE>
<PAGE>
distributions and the right to receive payments out of the assets of
the Partnership upon voluntary or involuntary dissolution and winding
up of the Partnership. The issuance of any Interests ranking senior
to the Preferred Partner Interests shall be deemed to materially
adversely affect the rights of the Preferred Partner Interests under
this Agreement.
(b) The General Partner on behalf of the Partnership is
authorized to issue Preferred Partner Interests, in one or more
series, having such designations, rights, privileges, restrictions,
and other terms and provisions, whether in regard to distributions,
return of capital or otherwise, as may from time to time be
established in a written action or actions (each, an "Action") of the
General Partner providing for the issue of such series. In
connection with the foregoing, the General Partner is expressly
authorized, prior to issuance, to set forth in an Action or Actions
providing for the issue of such series, the following:
(i) The distinctive designation of such series which
shall distinguish it from other series;
(ii) The number of Preferred Partner Interests
included in such series, which number may be increased or
decreased from time to time unless otherwise provided by the
General Partner in creating the series;
(iii) The distribution rate (or method of determining
such rate) for Preferred Partner Interests of such series, the
amount of interest, if any, which shall accrue on accrued and
unpaid distributions, the method of calculation of interest
payments and the first date upon which distributions shall be
payable;
(iv) The amount or amounts which shall be paid out of
the assets of the Partnership to the holders of such series of
Preferred Partner Interests upon voluntary or involuntary
dissolution and winding up of the Partnership;
<PAGE>
<PAGE>
(v) The price or prices at which (the "Redemption
Price"), the period or periods within which and the terms and
conditions upon which the Preferred Partner Interests of such
series may be redeemed or purchased, in whole or in part, at the
option of the Partnership;
(vi) The obligation of the Partnership to purchase or
redeem Preferred Partner Interests of such series pursuant to a
sinking fund or otherwise and the price or prices at which, the
period or periods within which and the terms and conditions upon
which the Preferred Partner Interests of such series shall be
redeemed, in whole or in part, pursuant to such obligation;
(vii) The period or periods within which and the
terms and conditions, if any, including the price or prices or
the rate or rates of conversion or exchange and the terms and
conditions of any adjustments thereof, upon which the Preferred
Partner Interests of such series shall be convertible or
exchangeable at the option of the Preferred Partner, or the
Partnership, into any other Interests or securities or other
property or cash or into any other series of Preferred Partner
Interests;
(viii) The voting rights, if any, of the Preferred
Partner Interests of such series in addition to those required
by law or set forth herein, and any requirement for the approval
by the Preferred Partner Interest, or of the Preferred Partner
Interests of one or more series, or of both, as a condition to
specified Action or amendments to this Agreement;
(ix) The additional amounts, if any, which the
Partnership will pay as a distribution as necessary in order
that the net amounts received by the Preferred Partners who hold
such series of Preferred Partner Interests after withholding or
deduction on account of certain taxes, duties,
<PAGE>
<PAGE>
assessments or governmental charges will equal the amount which
would have been receivable in respect of such Preferred Partner
Interests in the absence of such withholding or deduction
("Additional Amounts"); and
(x) Any other relative rights, powers, preferences or
limitations of the Preferred Partner Interests of the series not
inconsistent with this Agreement or with applicable law.
In connection with the foregoing and without limiting the
generality thereof, the General Partner is hereby expressly
authorized, without the vote or approval of any other Partner, to
take any Action to create under the provisions of this Agreement a
series of Preferred Partner Interests that was not previously
outstanding. Without the vote or approval of any other Partner, the
General Partner may execute, swear to, acknowledge, deliver, file and
record whatever documents may be required in connection with the
issue from time to time of Preferred Partner Interests in one or more
series as shall be necessary, convenient or desirable to reflect the
issue of such series. The General Partner shall do all things it
deems to be appropriate or necessary to comply with the New Jersey
Law and is authorized and directed to do all things it deems to be
necessary or permissible in connection with any future issuance,
including compliance with any statute, rule, regulation or guideline
of any Federal, state or other governmental agency or any securities
exchange.
Any Action or Actions taken by the General Partner pursuant
to the provisions of this paragraph (b) shall be deemed an amendment
and supplement to and part of this Agreement.
(c) Except as otherwise provided in this Agreement or in
any Action in respect of any series of the Preferred Partner
Interests and as otherwise required by law, all rights to the
management and control of the Partnership shall be vested exclusively
in the General Partner.
<PAGE>
<PAGE>
(d) No holder of Interests shall be entitled as a matter
of right to subscribe for or purchase, or have any preemptive right
with respect to, any part of any new or additional issue of Interests
of any class or series whatsoever, or of securities convertible into
any Interests of any class or series whatsoever, whether now or
hereafter authorized and whether issued for cash or other
consideration or by way of distribution. Any Person acquiring
Preferred Partner Interests shall be admitted to the Partnership as a
Preferred Partner upon compliance with Section 2.06.
Section 13.02. Terms of All Preferred Partner Interests.
Notwithstanding anything else in any Action to the contrary, all
Preferred Partner Interests of the Partnership shall have the
following voting rights, preferences, participating, optional and
other special rights and the qualifications, limitations or
restrictions of, and other matters relating to, the Preferred Partner
Interests as set forth below in this Section 13.02.
(a) Distributions.
(i) The Preferred Partners shall be entitled to
receive, when, as and if declared by the General Partner out of
funds held by the Partnership to the extent that the Partnership
has cash on hand sufficient to permit such payments and funds
legally available therefor, cumulative cash distributions at a
rate per annum established by the General Partner, payable in
United States dollars monthly in arrears on the last day of each
calendar month of each year. In the event that any date on
which distributions are payable on the Preferred Partner
Interests is not a Business Day, then payment of the
distribution payable on such date will be made on the next
succeeding day which is a Business Day (and without any interest
or other payment in respect of any such delay) except that, if
such Business Day is in the next succeeding calendar year, such
payment shall be made on the immediately preceding Business Day,
in
<PAGE>
<PAGE>
each case with the same force and effect as if made on such
date. Such distributions will accrue and be cumulative from the
original date of issue whether or not they have been declared
and whether or not there are profits, surplus or other funds of
the Partnership legally available for the payment of
distributions, or whether they are deferred.
(ii) If distributions have not been paid in full on
any series of Preferred Partner Interests, the Partnership may
not:
(A) pay any distributions on any other series of
Preferred Partner Interests, unless the amount of any
distributions paid on any Preferred Partner Interests
is paid on all Preferred Partner Interests then
outstanding on a pro rata basis, on the date such
distributions are paid, so that
(1) (x) the aggregate amount of
distributions paid on such series of Preferred
Partner Interests bears to (y) the aggregate
amount of distributions paid on all such
Preferred Partner Interests outstanding the same
ratio as
(2) (x) the aggregate of all accumulated
arrears of unpaid distributions in respect of
such series of Preferred Partner Interests bears
to (y) the aggregate of all accumulated arrears
of unpaid distributions in respect of such
Preferred Partner Interests outstanding;
(B) pay any distribution on any general partner
Interest; or
<PAGE>
<PAGE>
(C) redeem, purchase or otherwise acquire any
other Preferred Partner Interests or any general
partner Interest; until, in each case, such time as
all accumulated and unpaid distributions on all series
of Preferred Partner Interests shall have been paid in
full for all distribution periods terminating on or
prior to, in the case of clauses (A) and (B), such
payment and, in the case of clause (C), the date of
such redemption, purchase or acquisition.
(b) Redemption Procedures.
(i) Notice of any redemption (a "Notice of
Redemption") of the Preferred Partner Interests will
be given by the Partnership by mail or delivery to
each record holder of Preferred Partner Interests to
be redeemed not fewer than thirty (30) nor more than
sixty (60) days prior to the date fixed for redemption
thereof. For purposes of the calculation of the date
of redemption and the dates on which notices are given
pursuant to this paragraph (b)(i), a Notice of
Redemption shall be deemed to be given on the day such
notice is first mailed by first-class mail, postage
prepaid, or on the date it was delivered, either in
person, receipt acknowledged, or by delivery service,
to the holders of such Preferred Partner Interests.
Each Notice of Redemption shall be addressed to the
record holders of the Preferred Partner Interests at
the address of the holder appearing in the books and
records of the Partnership. No defect in the Notice
of Redemption or in the mailing or delivery thereof or
publication of its contents shall affect the validity
of the redemption proceedings.
<PAGE>
<PAGE>
(ii) The Partnership may not redeem any
Preferred Partner Interests unless all accumulated and
unpaid distributions have been paid on all Preferred
Partner Interests for all monthly distribution periods
terminating on or prior to the date of redemption. In
the case of a partial redemption resulting from a
requirement that the Partnership pay Additional
Amounts or withhold or deduct certain amounts, the
Partnership will (A) cause the global certificates
representing all of such series of Preferred Partner
Interests to be withdrawn from The Depository Trust
Company or its successor securities depository, (B)
issue certificates in definitive form representing
such series of Preferred Partner Interests, and (C)
redeem the series or portion of the series of
Preferred Partner Interests subject to such
requirement to withhold or deduct Additional Amounts.
Subject to applicable law, PSE&G or its Affiliates may
at any time and from time to time purchase outstanding
Preferred Partner Interests by tender, in the open
market or by private agreement. If a partial
redemption of outstanding Preferred Partner Interests
would result in a delisting of a series of Preferred
Partner Interests from any national securities
exchange on which the series of Preferred Partner
Interests is then listed, the Partnership may then
only redeem the series of Preferred Partner Interests
in whole.
<PAGE>
<PAGE>
(iii) If Notice of Redemption shall have been
given and payment shall have been made by the
Partnership to the record holders of the Preferred
Partner Interests, then upon the date of such payment,
all rights in respect of such Preferred Partner
Interests so called for redemption will cease, except
the right of the holders of such securities to receive
the Redemption Price, but without interest. In the
event that any date fixed for redemption of Preferred
Partner Interests is not a Business Day, then payment
of the Redemption Price payable on such date will be
made on the next succeeding day which is a Business
Day (and without any interest or other payment in
respect of any such delay), except that, if such
Business Day falls in the next succeeding calendar
year, such payment will be made on the immediately
preceding Business Day (in each case with the same
force and effect as if made on such day). In the
event that payment of the Redemption Price in respect
of Preferred Partner Interests is not made either by
the Partnership or by PSE&G pursuant to the Guarantee,
distributions on such Preferred Partner Interests will
continue to accrue at the then applicable rate, from
the original redemption date to the date of payment,
in which case the actual payment date will be
considered the date fixed for redemption for purposes
of calculating the Redemption Price.
(c) Liquidation Distribution. If, upon any liquidation,
the Liquidation Distribution on any series of Preferred Partner
Interests can be paid only in part because the Partnership has
insufficient assets available to pay in full the
<PAGE>
<PAGE>
aggregate Liquidation Distribution on all Preferred Partner
Interests, then the amounts payable directly by the Partnership on
such series of Preferred Partner Interests and on all other series of
Preferred Partner Interests shall be paid on a pro rata basis, so
that
(i) (1) the aggregate amount paid in respect of
the Liquidation Distribution bears to (2) the
aggregate amount paid as liquidation distributions on
all other Preferred Partner Interests the same ratio
as
(ii) (1) the aggregate Liquidation Distribution
bears to (2) the aggregate maximum liquidation
distributions on all other Preferred Partner
Interests.
(d) Voting Rights. The Limited Partners shall not have
any right to vote on matters concerning the Partnership except as
specifically set forth in this Agreement, in the Guarantee or as
otherwise required by law. If (i) the Partnership fails to pay
distributions in full on any series of Preferred Partner Interests
for eighteen (18) consecutive months; (ii) a default under the
Indenture occurs and is continuing; or (iii) PSE&G is in default on
any of its payment or other obligations under the Guarantee, then the
holders of the Preferred Partner Interests, will be entitled by a
vote of the majority of the aggregate stated liquidation preference
of all outstanding Preferred Partner Interests having a right to vote
to appoint and authorize a special representative ("Special
Representative"), to enforce the Partnership's rights under the
Subordinated Debentures and the Indenture against PSE&G and enforce
the obligations undertaken by PSE&G under the Guarantee, including,
after failure to pay distributions for 60 consecutive monthly
distribution periods, to declare and pay distributions on such series
of Preferred Partner Interests, the General Partner agreeing to
execute and deliver such documents as may be
<PAGE>
<PAGE>
necessary, appropriate or convenient for the Special Representative
to enforce such rights and obligations. Notwithstanding anything
else herein, the Special Representative shall not be admitted as a
partner of the Partnership or otherwise be deemed a partner of the
Partnership and shall have no liability for the debts, obligations or
liabilities of the Partnership.
In furtherance of the foregoing, and without limiting the
powers of any Special Representative so appointed and for the
avoidance of any doubt concerning the powers of the Special
Representative, any Special Representative, in its own name and as
trustee of an express trust, may institute a proceeding, including,
without limitation, any suit in equity, an action at law or other
judicial or administrative proceeding, to enforce the Partnership's
creditor rights directly against PSE&G or any other obligor in
connection with such obligations to the same extent as the
Partnership and on behalf of the Partnership, and may pursue such
proceeding to judgment or final decree, and enforce the same against
PSE&G or any other obligor in connection with such obligations and
collect, out of the property, wherever situated, of PSE&G or any such
other obligor upon such obligations, the monies adjudged or decreed
to be payable in the manner provided by law.
For purposes of determining whether the Partnership has
failed to pay distributions in full for eighteen (18) consecutive
monthly distribution periods, distributions shall be deemed to remain
in arrears, notwithstanding any payments in respect thereof, until
full cumulative distributions have been or contemporaneously are
declared and paid with respect to all monthly distribution periods
terminating on or prior to the date of payment of such full
cumulative distributions. Subject to the requirements of applicable
law, not later than thirty (30) days after such right to appoint a
Special Representative arises, the General Partner will convene a
general meeting for the above purpose. If the General Partner fails
to convene such
<PAGE>
<PAGE>
meeting within such 30-day period, the Preferred Partners who hold
10% of the aggregate stated liquidation preference of the outstanding
Preferred Partner Interests will be entitled to convene such meeting.
The provisions of this Agreement relating to the convening and
conduct of meetings of Partners will apply with respect to any such
meeting. Any Special Representative so appointed shall cease to act
in such capacity immediately if the Partnership (or PSE&G pursuant to
the Guarantee) shall have paid in full all accumulated and unpaid
distributions on the Preferred Partner Interests or such default or
breach by PSE&G, as the case may be, shall have been cured.
Notwithstanding the appointment of any such Special Representative,
PSE&G retains all rights under the Indenture, including the right to
extend the interest payment period on the Subordinated Debentures.
If any proposed amendment of this Agreement provides for,
or the General Partner otherwise proposes to effect (pursuant to an
Action or otherwise), any action which would materially adversely
affect the powers, preferences or special rights of any series of
Preferred Partner Interests, then holders of such series of
outstanding Preferred Partner Interests will be entitled to vote on
such amendment or action of the General Partner (but not on any other
amendment or action) and, in the case of an amendment which would
equally adversely affect the powers, preferences or special rights of
any other series of Preferred Partner Interests, all holders of such
series of Preferred Partner Interests, shall vote together as a class
on such amendment or action of the General Partner (but not on any
other amendment or action), and such amendment or action shall not be
effective except with the approval of Preferred Partners holding not
less than 66 2/3% of the aggregate stated liquidation preference of
such outstanding series of Preferred Partner Interests. Except as
otherwise provided under Section 11.02 or the New Jersey Law, the
Partnership will be dissolved and wound up only with the consent of
the holders of all outstanding Preferred Partner Interests.
<PAGE>
<PAGE>
The powers, preferences or special rights of any Preferred
Partner Interests will be deemed not to be adversely affected by the
creation or issue of, and no vote will be required for the creation
or issuance of, any additional series of Preferred Partner Interests
or additional general partner Interests.
Any required approval of Preferred Partner Interests may be
given at a separate meeting of such holders convened for such
purpose, at a meeting of the holders of all series of Preferred
Partner Interests or pursuant to written consent. The Partnership
will cause a notice of any meeting at which holders of any Preferred
Partner Interests are entitled to vote, or of any matter upon which
action by written consent of such holders is to be taken, to be
mailed to each holder of Preferred Partner Interests. Each such
notice will include a statement setting forth (a) the date of such
meeting or the date by which such action is to be taken, (b) a
description of any resolution proposed for adoption at such meeting
on which such holders are entitled to vote or of such matter upon
which written consent is sought, and (c) instructions for the
delivery of proxies or consents.
No vote or consent of the holders of the Preferred Partner
Interests will be required for the Partnership to redeem and cancel
the Preferred Partner Interests in accordance with this Agreement.
Notwithstanding that holders of Preferred Partner Interests
are entitled to vote or consent under any of the circumstances
described above, any of the Preferred Partner Interests that are
owned by PSE&G or any entity owned more than 50% by PSE&G, either
directly or indirectly, shall not be entitled to vote or consent and
shall, for the purposes of such vote or consent, be treated as if
they were not outstanding.
<PAGE>
<PAGE>
(e) Mergers. The Partnership may not consolidate,
amalgamate, merge with or into, or be replaced by, or convey,
transfer or lease its properties and assets as an entirety or
substantially as an entirety to any corporation or other entity,
except with the approval of the General Partner and the holders of
66 2/3% in aggregate stated liquidation preference of such
outstanding Preferred Partner Interests or as otherwise described
below. The General Partner may, without the consent of the holders
of the Preferred Partner Interests, cause the Partnership to
consolidate, amalgamate, merge with or into, or be replaced by, or
convey, transfer or lease its properties and assets as an entirety or
substantially as an entirety to, a corporation, a limited liability
company, limited partnership, trust or other entity organized as such
under the laws of any state of the United States of America or the
District of Columbia, provided that (i) such successor entity either
(x) expressly assumes all of the obligations of the Partnership under
the Preferred Partner Interests and the other obligations of the
Partnership or (y) substitutes for the Preferred Partner Interests
other securities having substantially the same terms as the Preferred
Partner Interests (the "Successor Securities") so long as the
Successor Securities rank, as regards participation in the profits or
assets of the successor entity, at least as high as the Preferred
Partner Interests rank, as regards participation in the profits or
assets of the Partnership, (ii) PSE&G confirms its obligations under
the Guarantee with regard to the Successor Securities, if any are
issued, (iii) such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not cause the Preferred Partner
Interests or Successor Securities to be delisted by any national
securities exchange or other organization on which the Preferred
Partner Interests are then listed, (iv) such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease does not
cause the Preferred Partner Interests or Successor Securities to be
downgraded by any "nationally recognized statistical rating
organization", as that term is defined by the Commission for
<PAGE>
<PAGE>
purposes of Rule 436(g)(2) under the Securities Act, (v) such merger,
consolidation, amalgamation, replacement, conveyance, transfer or
lease does not adversely affect the powers, preferences and special
rights of holders of Preferred Partner Interests or Successor
Securities in any material respect, (vi) such successor entity has a
purpose substantially identical to that of the Partnership and (vii)
prior to such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease PSE&G has received an opinion of
counsel (which may be regular counsel to PSE&G or an Affiliate, but
not an employee thereof) experienced in such matters to the effect
that (1) holders of outstanding Preferred Partner Interests will not
recognize any gain or loss for Federal income tax proposes as a
result of the merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease, (2) such successor entity will be
treated as a partnership for Federal income tax purposes, (3)
following such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease, PSE&G and such successor entity will
be in compliance with the 1940 Act without registering thereunder as
an "investment company," and (4) such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease will not
adversely affect the limited liability of holders of Preferred
Partner Interests or Successor Securities.
ARTICLE XIV - Transfers
Section 14.01. Transfers of Preferred Partner Interests.
Preferred Partner Interests may be freely transferred by a Preferred
Partner. No Interest shall be transferred, in whole or in part,
except in accordance with the terms and conditions set forth in this
Agreement. Any transfer or purported transfer of any Interest not
made in accordance with this Agreement shall be null and void.
Section 14.02. Transfer of Certificates. The General
Partner shall provide for the registration of Certificates. Upon
surrender for registration of transfer of any Certificate,
<PAGE>
<PAGE>
the General Partner shall cause one or more new Certificates to be
issued in the name of the designated transferee or transferees.
Every Certificate surrendered for registration of transfer shall be
accompanied by a written instrument of transfer and agreement to be
bound by the terms of this Agreement in a form satisfactory to the
General Partner duly executed by the Preferred Partner or his
attorney duly authorized in writing. Each Certificate surrendered
for registration of transfer shall be cancelled by the General
Partner. A transferee of a Certificate shall provide the Partnership
with a completed Form W-8 or such other documents or information as
are requested by the Partnership for tax reporting purposes and
thereafter shall be admitted to the Partnership as a Preferred
Partner and shall be entitled to the rights and subject to the
obligations of a Preferred Partner hereunder upon the receipt by such
transferee of a Certificate. The transferor of a Certificate shall
cease to be a limited partner of the Partnership at the time that the
transferee of the Certificate is admitted to the Partnership as a
Preferred Partner in accordance with this Section 14.02.
Section 14.03. Persons Deemed Preferred Partners. The
Partnership may treat the Person in whose name any Certificate shall
be registered on the books and records of the Partnership as the
Preferred Partner and the sole holder of such Certificate for
purposes of receiving distributions and for all other purposes
whatsoever and, accordingly, shall not be bound to recognize any
equitable or other claims to or interest in such Certificate on the
part of any other Person, whether or not the Partnership shall have
actual or other notice thereof.
Section 14.04. Book Entry Interests. The Certificates, on
original issuance, will be issued in the form of a typewritten
Certificate or Certificates representing the Book Entry Interests to
be delivered to The Depository Trust Company, the initial Clearing
Agency, by, or on behalf of, the Partnership. Such Certificates
shall initially be registered on
<PAGE>
<PAGE>
the books and records of the Partnership in the name of Cede & Co.,
the nominee of the initial Clearing Agency, and no Preferred Partner
Interest Owner will receive a definitive Certificate representing
such Preferred Partner Interest Owner's interests in such
Certificate, except as provided in Section 14.06. Unless and until
definitive, fully registered Certificates (the "Definitive
Certificates") have been issued to the Preferred Partner Interest
Owners pursuant to Section 14.06:
(a) The provisions of this Section shall be in full
force and effect;
(b) The Partnership and the General Partner shall be
entitled to deal with the Clearing Agency for all purposes of this
Agreement (including the payment of distributions on the Certificates
and receiving approvals, votes or consents hereunder) as the
Preferred Partner and the sole holder of the Certificates and shall
have no obligations to the Preferred Partner Interest Owners;
(c) The rights of the Preferred Partner Interest
Owners shall be exercised only through the Clearing Agency and shall
be limited to those established by law and agreements between such
Preferred Partner Interest Owners and the Clearing Agency and/or the
Clearing Agency Participants. Unless or until the Definitive
Certificates are issued pursuant to Section 14.06, the initial
Clearing Agency will make book entry transfers among the Clearing
Agency Participants and receive and transmit payments of
distributions on the Certificates to such Clearing Agency
Participants;
(d) To the extent that the provisions of this Section
conflict with any other provisions of this Agreement, the provisions
of this Section shall control; and
<PAGE>
<PAGE>
(e) Whenever this Agreement requires or permits
actions to be taken based upon approvals, votes or consents of a
percentage of the Preferred Partners, the Clearing Agency shall be
deemed to represent such percentage only to the extent that it has
received instructions to such effect from the Preferred Partner
Interest Owners and/or Clearing Agency Participants owning or
representing, respectively, such required percentage of the
beneficial interests in the Certificates and has delivered such
instructions to the General Partner.
Section 14.05. Notices to Clearing Agency. Whenever a
notice or other communication to the Preferred Partners is required
under this Agreement, unless and until Definitive Certificates shall
have been issued pursuant to Section 14.06, the General Partner shall
give all such notices and communications specified herein to be given
to the Preferred Partners to the Clearing Agency, and shall have no
obligations to the Preferred Partner Interest Owners.
Section 14.06. Definitive Certificates. If (i) the
Clearing Agency elects to discontinue its services as securities
depository and gives reasonable notice to the Partnership, or (ii)
the General Partner elects to terminate the book entry system through
the Clearing Agency, then the Definitive Certificates shall be
prepared by the Partnership. Upon surrender of the typewritten
Certificate or Certificates representing the Book Entry Interests by
the Clearing Agency, accompanied by registration instructions, the
General Partner shall cause the Definitive Certificates to be
delivered to the Preferred Partner Interest Owners in accordance with
the instructions of the Clearing Agency. The General Partner shall
not be liable for any delay in delivery of such instructions and may
conclusively rely on, and shall be protected in relying on, such
instructions. Any Person receiving a Definitive Certificate in
accordance with this Article XIV shall be admitted to the Partnership
as a Preferred Partner upon receipt of such Definitive Certificate.
The Clearing Agency or the
<PAGE>
<PAGE>
nominee of the Clearing Agency, as the case may be, shall cease to be
a Limited Partner of the Partnership under this Section 14.06 at the
time that at least one additional Person is admitted to the
Partnership as a Preferred Partner in accordance with this
Section 14.06. The Definitive Certificates shall be printed,
lithographed or engraved or may be produced in any other manner as is
reasonably acceptable to the General Partner, as evidenced by its
execution thereof. The General Partner will appoint a registrar,
transfer agent and paying agent for the Preferred Partner Interests.
Registration of transfers of Preferred Partner Interests will be
effected without charge by or on behalf of the Partnership, but upon
payment of any tax or other governmental charges which may be imposed
in relation to it. The Partnership will not be required to register
or cause to be registered the transfer of Preferred Partner Interests
after such Preferred Partner Interests have been called for
redemption.
ARTICLE XV - General
Section 15.01. Power of Attorney. (a) The Class A Limited
Partner and each Preferred Partner constitutes and appoints the
General Partner and the Liquidating Trustee as its true and lawful
representative and attorney-in-fact, in its name, place and stead, to
make, execute, sign, acknowledge and deliver or file (i) all
instruments, documents and certificates which may from time to time
be required by any law to effectuate, implement and continue the
valid and subsisting existence of the Partnership, (ii) all
instruments, documents and certificates that may be required to
effectuate the dissolution and termination of the Partnership in
accordance with the provisions hereof and the laws of the State of
New Jersey, (iii) all other amendments of this Agreement or the
Certificate of Limited Partnership and other filings contemplated by
this Agreement including, without limitation, amendments reflecting
the withdrawal of the General Partner, or the return, in whole or in
part, of the contribution of any
<PAGE>
<PAGE>
Partner, or the addition, substitution or increased contribution of
any Partner, or any action of the Partners duly taken pursuant to
this Agreement whether or not such Partner voted in favor of or
otherwise approved such action, and (iv) any other instrument,
certificate or document required from time to time to admit a
Partner, to effect its substitution as a Partner, to effect the
substitution of the Partner's assignee as a Partner or to reflect any
action of the Partners provided for in this Agreement.
(b) The powers of attorney granted herein (i) shall
be deemed to be coupled with an interest, shall be irrevocable and
shall survive the death, insanity, incompetency or incapacity (or, in
the case of a Partner that is a corporation, association,
partnership, limited liability company or trust, shall survive the
merger, dissolution or other termination of existence) of the Partner
and (ii) shall survive the assignment by the Partner of the whole or
any portion of his Interest, except that where the assignee of the
whole or any portion thereof has furnished a power of attorney, this
power of attorney shall survive such assignment for the sole purpose
of enabling the General Partner and the Liquidating Trustee to
execute, acknowledge and file any instrument necessary to effect any
permitted substitution of the assignee for the assignor as a Partner
and shall thereafter terminate. In the event that the appointment
conferred in this Section 15.01 would not constitute a legal and
valid appointment by any Partner under the laws of the jurisdiction
in which such Partner is incorporated, established or resident, upon
the request of the General Partner or the Liquidating Trustee, such
Partner shall deliver to the General Partner or the Liquidating
Trustee a properly authenticated and duly executed document
constituting a legal and valid power of attorney under the laws of
the appropriate jurisdiction covering the matters set forth in this
Section 15.01.
<PAGE>
<PAGE>
(c) The General Partner may require a power of
attorney to be executed by a transferee of a Partner as a condition
of its admission as a substitute Partner.
Section 15.02. Waiver of Partition. Each Partner hereby
irrevocably waives any and all rights that it may have to maintain an
action for partition of any of the Partnership's property or assets.
Section 15.03. Notices. Any notice permitted or required
to be given hereunder shall be in writing and shall be deemed given
(i) on the day the notice is first mailed to a Partner by first class
mail, postage prepaid, or (ii) on the date it was delivered to a
Partner, either in person, receipt acknowledged, or by delivery
service, at its address appearing on the books and records of the
Partnership. Another address may be designated by a Partner by such
Partner giving notice of its new address as provided in this Section
15.03.
Section 15.04. Entire Agreement. This Agreement,
including the exhibits annexed hereto and incorporated by reference
herein, contains the entire agreement of the parties hereto and
supersedes all prior agreements and understandings, oral or
otherwise, among the parties hereto with respect to the matters
contained herein.
Section 15.05. Waivers. Except as otherwise expressly
provided herein, no purported waiver by any party of any breach by
another party of any of his obligations, agreements or covenants
hereunder, or any part thereof, shall be effective unless made in a
writing executed by the party or parties sought to be bound thereby,
and no failure to pursue or elect any remedy with respect to any
default under or breach of any provision of this Agreement, or any
part hereof, shall be deemed to be a waiver of any other subsequent
similar or
<PAGE>
<PAGE>
different default or breach, or any election of remedies available in
connection therewith, nor shall the acceptance or receipt by any
party of any money or other consideration due him under this
Agreement, with or without knowledge of any breach hereunder,
constitute a waiver of any provision of this Agreement with respect
to such or any other breach.
Section 15.06. Headings. The section headings herein
contained have been inserted only as a matter of convenience of
reference and in no way define, limit or describe the scope or intent
of any provisions of this Agreement nor in any way affect any such
provisions.
Section 15.07. Separability. Each provision of this
Agreement shall be considered to be separable, and if, for any
reason, any such provision or provisions, or any part thereof, is
determined to be invalid and contrary to any existing or future
applicable law, such invalidity shall not impair the operation of, or
affect, those portions of this Agreement which are valid, and this
Agreement shall be construed and enforced in all respects as if such
invalid or unenforceable provision or provisions had been omitted.
Section 15.08. Contract Construction. Whenever the
context of this Agreement permits, the masculine gender shall include
the feminine and neuter genders, and reference to singular or plural
shall be interchangeable with the other. References in this
Agreement to particular sections of the Code or to provisions of the
New Jersey Law shall be deemed to refer to such sections or
provisions as they may be amended after the date of this Agreement.
Section 15.09. Counterparts. This Agreement may be
executed in one or more counterparts and each of such counterparts
for all purposes shall be deemed to be an original, but all of such
counterparts, when taken together, shall constitute but one and the
same instrument, binding upon all parties hereto, notwithstanding
that all of such parties may not have executed the same counterpart.
<PAGE>
<PAGE>
Section 15.10. Benefit. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their
respective successors and assigns, but shall not be deemed for the
benefit of creditors or any other Persons, nor shall it be deemed to
permit any assignment by a Partner of any of its rights or
obligations hereunder except as expressly provided herein.
Section 15.11. Further Actions. Each of the Partners
hereby agrees that it shall hereafter execute and deliver such
further instruments and do such further acts and things as may be
required or useful to carry out the intent and purposes of this
Agreement and as are not inconsistent with the terms hereof.
Section 15.12. Governing Law. This Agreement shall be
governed by and construed in accordance with the substantive laws of
the State of New Jersey, without regard to conflicts of laws.
Section 15.13. Amendments. Except as otherwise expressly
provided herein or as otherwise required by law, this Agreement may
only be amended by a written instrument executed by the General
Partner provided, however, that any amendment which would adversely
affect the powers, preferences or special rights of any series of
Preferred Partner Interests may be effected only as permitted by the
terms of such series of Preferred Partner Interests.
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this
Agreement as of the date first above written.
GENERAL PARTNER:
PUBLIC SERVICE ELECTRIC AND
GAS COMPANY
S/FRANCIS J. RIEPL
Name: FRANCIS J. RIEPL
Title: Vice President and Treasurer
CLASS A LIMITED PARTNER:
S/ FRED F. SAUNDERS
Name: Fred F. Saunders
Title: Assistant Treasurer
<PAGE>
<PAGE>
Exhibit A
Certificate Evidencing Preferred Partner Interests
of
Public Service Electric and Gas Capital, L.P.
__% Cumulative Monthly Income Preferred Securities
Series __ (liquidation preference
$__ per Preferred Security)
Public Service Electric and Gas Capital, L.P., a New Jersey
limited partnership (the "Partnership"), hereby certifies that Cede &
Co. (the "Holder") is the registered owner of ___________ (_________)
fully paid Preferred Securities of the Partnership designated the __%
Cumulative Monthly Income Preferred Securities, Series __
(liquidation preference $__ per Preferred Security) (the "Series __
Preferred Securities") representing preferred limited partner
interests in the Partnership transferable on the books and records of
the Partnership, in person or by a duly authorized attorney, upon
surrender of this Certificate duly endorsed and in proper form for
transfer. The powers, preferences and special rights and limitations
of the Series __ Preferred Securities are set forth in, and this
Certificate and the Series __ Preferred Securities represented hereby
are issued and shall in all respects be subject to the terms and
provisions of, the Amended and Restated Limited Partnership Agreement
dated as of November 9, 1994 of the Partnership as the same may, from
time to time, be amended (the "Partnership Agreement") authorizing
the issuance of the Series __ Preferred Securities and determining,
along with any actions of the General Partner of the Partnership as
authorized under the Partnership Agreement, the preferred, deferred
and
<PAGE>
<PAGE>
other special rights and restrictions, regarding distributions,
voting, redemption and otherwise and other matters relating to the
Series __ Preferred Securities. The Partnership will furnish a copy
of the Partnership Agreement to the Holder without charge upon
written request to the Partnership at its principal place of business
or registered office. Capitalized terms used herein but not defined
shall have the meaning given them in the Partnership Agreement. The
Holder is entitled to the benefits of the Payment and Guarantee
Agreement of Public Service Electric and Gas Company, dated as of
______, 199_ relating to the Preferred Securities (the "Guarantee")
and of the Indenture between Public Service Electric and Gas Company
and First Fidelity Bank, National Association, as Trustee, dated as
of November 1, 1994 (the "Indenture"), under and pursuant to which
the related series of Subordinated Debentures are issued and
outstanding, in either case to the extent provided therein. The
Holder is further entitled to enforce such rights of the Partnership
under the Indenture to the extent provided therein and in the
Partnership Agreement. The Partnership will furnish a copy of the
Guarantee and Indenture to the Holder without charge upon written
request to the Partnership at its principal place of business or
registered office.
The Holder, by accepting this Certificate, is deemed to
have (i) agreed that the Subordinated Debentures issued pursuant to
the Indenture are subordinate and junior in right of payment to all
general liabilities of Public Service Electric and Gas Company as and
to the extent provided in the Indenture and (ii) agreed that the
Guarantee is subordinate and junior in right of payment to all
general liabilities of Public Service Electric and Gas Company. Upon
receipt of this Certificate, the Holder is admitted to the
Partnership as a Preferred Partner, is bound by the Partnership
Agreement and is entitled to the benefits thereunder.
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the Partnership has executed this
Certificate this ____ day of ________________, 199_____.
PUBLIC SERVICE ELECTRIC AND GAS
CAPITAL, L.P.
By: Public Service Electric and
Gas Company, its General
Partner
By:______________________________
Name:
Title:
By:______________________________
Name:
Title:
