Document:

vhgi8kex103092512.htm

EX. 10.3

 

THIS PROMISSORY NOTE (THIS “NOTE”) HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”).  THIS NOTE MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS NOTE UNDER THE ACT OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO VHGI HOLDINGS, INC., THAT SUCH REGISTRATION IS NOT REQUIRED AND THE SURRENDER OF THIS NOTE FOR REISSUANCE TO THE NEW HOLDER.

 

VHGI HOLDINGS, INC.

 

PROMISSORY NOTE

 

	
$211,918

	
September 24, 2012

 

FOR VALUE RECEIVED, the undersigned, VHGI Holdings, Inc., a Delaware corporation (“Maker”), hereby promises to pay to the order of Lily Group Holdings Company, or its successors or assigns (“Payee”), Two Hundred Eleven Thousand Nine Hundred Eighteen  and No/100 Dollars  ($211,918), together with interest thereon which shall accrue at a rate equal to .25 percent per annum; provided, however, upon the occurrence of an Event of Default (as defined below), then to the extent permitted by law, Maker will pay interest to the Payee on the outstanding principal balance of this Promissory Note (this “Note”) from the date of the Event of Default until payment in full at the rate of three percent (3%) per annum.  All payments on this Note shall be due and payable in lawful money of the United States of America.

 

1. Principal and Interest Payments.  The principal of, and accrued but unpaid interest on, this Note shall be due and payable on March 31, 2014.

 

2. Prepayments.  Maker may at its sole option prepay all or any part of the principal of this Note, or interest thereon, before maturity without penalty or premium.  All such prepayments shall first be applied to accrued interest under this Note, and the remaining balance of any such prepayments, if any, shall be applied to principal of this Note.

 

3. Method of Payment.  All payments made under this Note, whether of principal or interest, shall be made by Maker to Payee on the date specified or provided herein and shall be delivered by means of certified or cashiers’ check or wire transfer of immediately available funds to an account specified by the holder hereof.  Whenever payment hereunder shall be due on a day which is not a Business Day, the date for payment thereof shall be extended to the next succeeding Business Day.  If the date for any payment is extended by operation of law or otherwise, interest thereon shall be payable for such extended time.  “Business Day” means every day which is not a Saturday, Sunday or legal holiday.

 

4. Events of Default.  The following shall constitute events of default (“Events of Default”) hereunder:

 

 

  

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(a) failure of Maker to make any payment on this Note as and when the same becomes due and payable in accordance with the terms hereof and the continuance of such failure for a period of five (5) days after written notice specifying such default has been delivered to Maker by Payee;

 

(b) failure of Maker to perform any other covenant contained herein, if the same has continued for thirty (30) days after written notice specifying such default has been delivered to Maker by Payee;

 

(c) if Maker makes an assignment for the benefit of creditors, or petitions or applies for the appointment of a liquidator, receiver or custodian (or similar official) of it or of any substantial part of its assets, or if Maker commences any proceeding or case relating to it under the Bankruptcy Code or any other bankruptcy, reorganization, arrangement, insolvency, readjustment of debt, dissolution or liquidation or similar law of any jurisdiction, or takes any action to authorize any of the foregoing; or

 

(d) if any petition or application of the type described in subparagraph (c) immediately above is filed or if any such proceeding or case described in subparagraph (c) is commenced against Maker and is not dismissed within sixty (60) days, or if Maker indicates its approval thereof, consents thereto or acquiesces therein, or if an order is entered appointing any such liquidator or receiver or custodian (or similar official), or adjudicating Maker bankrupt or insolvent, or approving a petition in any such proceeding, or if a decree or order for relief is entered in respect of Maker in an involuntary case under the Bankruptcy Code or any other bankruptcy, reorganization, arrangement, insolvency, readjustment of debt, dissolution or liquidation or similar law of any jurisdiction.

 

In the event any one or more of the Events of Default specified above occurs and is continuing, the holder of this Note may (i) accelerate the maturity of this Note with notice to Maker at which time all such amounts shall be immediately due and payable, (ii) proceed to protect and enforce its rights either by suit in equity or by action at law, or by other appropriate proceedings, whether for the specific performance of any covenant or agreement contained in this Note or in aid of the exercise of any power or right granted by this Note, and/or (iii) enforce any other legal or equitable right of the holder of this Note.

 

5. Delay or Omission Not Waiver.  No delay or omission on the part of the holder of this Note in the exercise of any power, remedy or right under this Note, or under any other instrument executed pursuant hereto, shall operate as a waiver thereof, nor shall a single or partial exercise of any such power or right preclude any other or further exercise thereof or the exercise of any other right or power hereunder.

 

6. Waiver.  Any term, covenant, agreement or condition of this Note may, with the written consent of Maker and Payee, be amended or compliance therewith may be waived (either generally or in a particular instance and either retroactively or prospectively), altered, modified or amended.

 

7. Attorneys’ Fees and Costs.  In the event an Event of Default shall occur, and in the event that thereafter this Note is placed in the hands of an attorney for collection, or in the event this Note is collected in whole or in part through legal proceedings of any nature, then and in any such case Maker promises to pay all costs of collection, including, but not limited to, reasonable attorneys’ fees and court costs incurred by the holder hereof on account of such collection, whether or not suit is filed.

 

 

  

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8. Successors and Assigns.  All of the covenants, stipulations, promises and agreements in this Note made by Maker and Payee shall bind its successors and assigns, whether so expressed or not.

 

9. Maximum Lawful Rate. It is the intent of the Maker and holder of this Note to conform to and contract in strict compliance with applicable usury law from time to time in effect.  In no way, nor in any event or contingency (including but not limited to prepayment, default, demand for payment, or acceleration of the maturity of any obligation), shall the rate of interest taken, reserved, contacted for, charged or received under this Note exceed the highest lawful interest rate permitted under applicable law.  If the holder of this Note shall ever receive anything of value which is characterized as interest under applicable law and which would apart from this provision be in excess of the highest lawful interest rate permitted under applicable law, an amount equal to the amount which would have been excessive interest shall, without penalty, be applied to the reduction of the principal amount owing on this Note in the inverse order of its maturity and not to the payment of interest, or refunded to Maker or the other payor thereof if and to the extent such amount which would have been excessive exceeds such unpaid principal.  All interest paid or agreed to be paid to the holder hereof shall, to the extent permitted by applicable law, be amortized, prorated, allocated and spread throughout the full stated term (including any renewal or extension) of this Note so that the amount of interest on account of such obligation does not exceed the maximum permitted by applicable law.  As used in this Section, the term “applicable law” shall mean the laws of the State of Texas or the federal laws of the United States, whichever laws allow the greater interest, as such laws now exist or may be changed or amended or come into effect in the future.

 

10. Governing Law; Venue.  This Note shall be governed by and construed in accordance with the substantive laws (but not the rules governing conflicts of laws) of the State of Texas.  Any and all disputes arising or relating to this Note shall be adjudicated exclusively in Dallas, Texas.

 

11. Notice.  Any notice or demand given hereunder shall be deemed to have been given and received (i) when actually received by the receiving party, if delivered in person, by facsimile transmission (as evidenced by confirmation), by e-mail or by overnight courier service, or (ii) if mailed, on the earlier of the date actually received or (whether ever received or not) five Business Days after a letter containing such notice, certified or registered, with postage prepaid, addressed to the receiving party, is deposited in the United States mail.  The address of: (i) Maker is 103 North Court Street, Sullivan, IN 47882, Attn: Chief Executive Officer; and (ii) Payee is as provided on the signature page of this Note; in each case of (i) or (ii) above, or such other address as either Maker or Payee shall advise the other by the procedure set forth above.

 

12. Severability.  In case any one or more of the provisions contained in this Note shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision hereof.

 

 

  

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EXECUTED as of the date set forth above.

 

	 	
VHGI HOLDINGS, INC.

 

 

By: ______________________________

Michael E. Fasci

Chief Financial Officer

 

 

 

  

4PHILADELPHIA-6747181-v1-SJG_Form_of_September_2012_Tranche_A_Note_for_Form_8-KDOC

REGISTERED 

REGISTERED PPN:  
SOUTH JERSEY GAS COMPANY
MEDIUM TERM NOTE, SERIES D, 2012-2, TRANCHE A 

NOTE NO.:  NA2012-[__]

ORIGINAL ISSUE DATE:  SEPTEMBER 20, 2012         PRINCIPAL AMOUNT: $[__________]

INTEREST RATE:  3.00%              STATED MATURITY DATE:  September 20, 2024

REDEMPTION TERMS, IF ANY: As described below.       OTHER TERMS: As described below.

SOUTH JERSEY GAS COMPANY, a corporation of the state of New Jersey (the “Company”), for value received hereby promises to pay to [________________] or its registered assigns, the principal sum of [____________] DOLLARS on the Maturity Date set forth above, and to pay interest thereon from the Original Issue Date set forth above or from the most recent date to which interest has been paid or duly provided for, semiannually in arrears on March 20 and September 20 in each year (each, an “Interest Payment Date”), commencing March 20, 2013, at the per annum Interest Rate set forth above, until the principal hereof is paid or made available for payment. No interest shall accrue on or after the Maturity Date so long as the principal amount of this Note is paid in full on the Maturity Date.  The interest so payable and punctually paid or duly provided for on any such Interest Payment Date will, as provided in the Indenture (as defined on the reverse hereof), be paid to the Person in whose name this Note is registered at the close of business on the Regular Record Date for such interest, which shall be the March 5 or September 5, as the case may be, next preceding such Interest Payment Date; provided that interest payable on the Maturity Date set forth above or, if applicable, upon redemption or acceleration, shall be payable to the Person to whom principal shall be payable. 
Except as otherwise provided in the Indenture, any such interest not so punctually paid or duly provided for will forthwith cease to be payable to the Holder on such Regular Record Date and shall be paid to the Person in whose name this Note is registered at the close of business on a Special Record Date for the payment of such defaulted interest to be fixed by the Trustee, notice whereof shall be given to Noteholders not more than 15 days nor less than 10 days prior to such 

Special Record Date.  Principal, applicable premium and interest due at the maturity of this Note shall be payable in immediately available funds in accordance with the terms of the Note Purchase Agreement (as defined on the reverse hereof).  Interest on this Note (other than interest payable at maturity) shall be paid by wire transfer payable in immediately available funds to the Holder as its name appears on the register as of the close of business on the Regular Record Date to a bank located within the continental United States designated by such Holder in its request or by direct deposit into the account of such Holder designated by such Holder in its request if such account is maintained with the Trustee or any paying agent.
REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS NOTE SET FORTH IN FULL ON THE REVERSE HEREOF, WHICH FURTHER PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT AS IF SET FORTH IN FULL AT THIS PLACE. 
Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof directly or through an Authenticating Agent by manual signature of an authorized officer, this Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.  
IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed.

SOUTH JERSEY GAS COMPANY

By:     
Title:     

Attest:__________________________
Title:___________________________

TRUSTEE’S CERTIFICATE  OF AUTHENTICATION
This Note is one of the Notes of the series herein designated, described or provided for in the within‐mentioned Indenture.

THE BANK OF NEW YORK MELLON,
as Trustee

Dated:  September 20, 2012

By:     
Authorized Officer

[FORM OF REVERSE OF NOTE]
SOUTH JERSEY GAS COMPANY MEDIUM TERM NOTES, SERIES D, 2012-2, TRANCHE A
This Note is one of a duly authorized issue of Medium Term Notes, Series D, 2012-2 (the “Notes of this Series”) of the Company issued and to be issued under an Indenture dated as of October 1, 1998 between the Company and The Bank of New York Mellon, as trustee (the “Trustee,” which term includes any successor Trustee under the Indenture) and indentures supplemental thereto (collectively, the “Indenture”) and pursuant to that certain Note Purchase Agreement dated as of September 20, 2012 among the Company and the purchasers listed therein (the “Note Purchase Agreement”).  Under the Indenture, one or more series of notes may be issued and, as used herein, the term “Notes” refers to the Notes of this Series and any other outstanding series of Notes. Reference is hereby made to the Indenture for a more complete statement of the respective rights, limitations of rights, duties and immunities under the Indenture of the Company, the Trustee and the Noteholders and of the terms upon which the Notes are and are to be authenticated and delivered.  Reference is also hereby made to the Note Purchase Agreement for certain rights and obligations of the Holder and the Company referred to in this Note as more fully set forth in the Note Purchase Agreement, the relevant provisions of which are incorporated by reference herein.  The Notes of this Series are limited in aggregate principal amount to $85,000,000, of which up to $50,000,000 aggregate principal amount are designated Medium Term Notes, Series D, 2011-2, Tranche A (“Tranche A Notes”), and up to $35,000,000 aggregate principal amount are designated Medium Term Notes, Series D, 2012-2, Tranche B.  This Note is a Tranche A Note..
Prior to the Substitution Date (as hereinafter defined), the Notes will be secured by first mortgage bonds (the “Pledged First Mortgage Bonds”) delivered by the Company to the Trustee for the benefit of the Holders of the Notes, issued under the Indenture of First Mortgage, dated October 1, 1947 from the Company to The Bank of New York Mellon, as successor trustee to Guarantee Bank and Trust Company (“Mortgage Trustee”), as supplemented and amended (the “Mortgage”).  Reference is made to the Mortgage and the Indenture for a description of the rights of the Trustee as holder of the Pledged First Mortgage Bonds, the property mortgaged and pledged under the Mortgage, the rights of the Company and of the Mortgage Trustee in respect thereof, the duties and immunities of the Mortgage Trustee, the terms and conditions upon which the Pledged First Mortgage Bonds are secured and the circumstances under which additional first mortgage bonds may be issued. 
FROM AND AFTER SUCH TIME AS ALL FIRST MORTGAGE BONDS (OTHER THAN PLEDGED FIRST MORTGAGE BONDS) ISSUED UNDER THE MORTGAGE HAVE BEEN RETIRED THROUGH PAYMENT, REDEMPTION OR OTHERWISE (INCLUDING THOSE 

FIRST MORTGAGE BONDS THE PAYMENT FOR WHICH HAS BEEN PROVIDED FOR IN ACCORDANCE WITH THE MORTGAGE) AT, BEFORE OR AFTER THE MATURITY THEREOF (THE “SUBSTITUTION DATE”), THE PLEDGED FIRST MORTGAGE BONDS SHALL CEASE TO SECURE THE NOTES IN ANY MANNER, AND THE NOTES OF THIS SERIES WILL BE SECURED BY FIRST MORTGAGE BONDS ISSUED UNDER AN INDENTURE OTHER THAN THE MORTGAGE IN ACCORDANCE WITH THE TERMS OF THE NOTE PURCHASE AGREEMENT.  IN CERTAIN CIRCUMSTANCES PRIOR TO THE SUBSTITUTION DATE AS PROVIDED IN THE INDENTURE, THE COMPANY IS PERMITTED TO REDUCE THE AGGREGATE PRINCIPAL AMOUNT OF A SERIES OF PLEDGED FIRST MORTGAGE BONDS HELD BY THE TRUSTEE, BUT IN NO EVENT PRIOR TO THE SUBSTITUTION DATE TO AN AMOUNT LESS THAN THE AGGREGATE OUTSTANDING PRINCIPAL AMOUNT OF THE RELATED SERIES OF NOTES INITIALLY ISSUED CONTEMPORANEOUSLY WITH SUCH PLEDGED FIRST MORTGAGE BONDS. 
The Company will make required prepayments of principal on the dates and in the amounts specified in the Note Purchase Agreement.  This Note is also subject to optional prepayment, in whole or from time to time in part, at the times and on the terms specified in the Note Purchase Agreement, but not otherwise.
If an Event of Default, as defined in the Note Purchase Agreement, shall occur and be continuing, the principal of this Note may be declared or otherwise become due and payable in the manner, at the price (including any applicable Make-Whole Amount) and with the effect provided in the Note Purchase Agreement.
Interest payments for this Note shall be computed and paid on the basis of a 360‐day year of twelve 30‐day months.  Anything in the Note Purchase Agreement or the Indenture to the contrary notwithstanding (but without limiting the requirement in Section 8.4 of the Note Purchase Agreement that the notice of any optional prepayment specify a Business Day as the date fixed for such prepayment), any payment of principal of or Make-Whole Amount or interest on this Note that is due on a date other than a Business Day shall be made on the next succeeding Business Day without including the additional days elapsed in the computation of the interest payable on such next succeeding Business Day; provided that if the maturity date of this Note is a date other than a Business Day, the payment otherwise due on such maturity date shall be made on the next succeeding Business Day and shall include the additional days elapsed in the computation of interest payable on such next succeeding Business Day. 
The Company, at its option, and subject to the terms and conditions provided in the Indenture, will be discharged from any and all obligations in respect of the Notes of this Series (except for certain obligations as specifically set forth in the Indenture) if the Company deposits with the Trustee 

money, U.S. Government Obligations which through the payment of interest thereon and principal thereof in accordance with their terms will provide money, or a combination of money and U.S. Government Obligations, in any event in an amount sufficient, without reinvestment, as certified by an independent public accounting firm of national reputation in a written certification delivered to the Trustee, to pay at maturity or the applicable redemption date (provided that notice of redemption shall have been duly given or irrevocable provision satisfactory to the Trustee shall have been duly made for the giving of any notice of redemption) all outstanding Notes of this Series, including principal and any premium and interest due or to become due to such date of maturity, as the case may be.  
The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modifications of the rights and obligations of the Company and the rights of the Noteholders under the Indenture at any time by the Company and the Trustee with the consent of the Holders of not less than a majority in principal amount of the outstanding Notes affected by such amendment or modifications.  Any such consent or waiver by the Holder of this Note shall be conclusive and binding upon such Holder and upon all future Holders of this Note and of any Note issued upon the registration of transfer hereof or in exchange therefor in lieu thereof whether or not notation of such consent or waiver is made upon the Note.  
If any Default or Event of Default has occurred and is continuing, and irrespective of whether this Note has become or has been declared immediately due and payable under the Note Purchase Agreement, the Holder of this Note at the time outstanding may proceed to protect and enforce the rights of such Holder by an action at law, suit in equity or other appropriate proceeding, whether for the specific performance of any agreement contained in the Note Purchase Agreement or in this Note, or for an injunction against a violation of any of the terms thereof or hereof, or in aid of the exercise of any power granted thereby or hereby or by law or otherwise.  
No reference herein to the Indenture and to provisions of this Note or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and any premium and interest on this Note as prescribed herein or in the Indenture.  
As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Note is registrable in the Note register.  Upon surrender of this Note for registration or transfer at the corporate trust office of the Trustee or such other office or agency as may be designated by the Company in the city and state of New York, endorsed by or accompanied by a written instrument of transfer in form satisfactory to the Company and the Note registrar, duly executed by the Holder hereof or the attorney in fact of such Holder duly authorized in writing, one or more new Notes of like tenor and of authorized denominations and for the same aggregate principal amount will be issued to the designated transferee or transferees. 

The Notes of this Series are issuable only in registered form, without coupons, in denominations of $1,000 and any integral multiple thereof.  As provided in the Indenture and subject to certain limitations therein set forth, Notes are exchangeable for a like aggregate principal amount of Notes of like tenor and of a different authorized denomination, as requested by the Holder surrendering the same. 
No service charge shall be made for any such registration of transfer or exchange but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Note for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Note is registered as the owner thereof for all purposes, whether or not this Note is overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary. The Indenture and the Notes shall be governed by, and construed in accordance with, the laws of the State of New York. 
All capitalized terms used but not otherwise defined in this Note shall have the respective meanings assigned to them in the Indenture; provided, however, that the terms “Default” and “Event of Default” shall have the meanings assigned to them in the Note Purchase Agreement.  
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of this instrument, shall be construed as though they were written out in full according to applicable laws or regulations:  TEN COM - as tenants in common UNIF GIFT MIN ACT - ________________ Custodian ________________ (Cust) (Minor)  TEN ENT - as tenants by the entireties Under Uniform Gifts to Minors JT TEN - as joint tenants with right of survivorship and not as tenants in common.
Additional abbreviations may also be used though not in the above list.

FOR VALUE RECEIVED the undersigned hereby sell(s),  assign(s) and transfer(s) unto  PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE ___________________________________________. 
Please print or type name and address including postal zip code of assignee the within note and all rights thereunder, hereby irrevocably constituting and appointing attorney to transfer said note on the books of the Company, with full power of substitution in the premises. 

		
	Dated:_____________________ 
	         

NOTICE:  The signature to this assignment must correspond with the name as written upon the face of the within instrument in every particular, without alteration or enlargement or any change whatever.

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