Exhibit 10(g)(iii)

 

 
LETTER OF CREDIT REIMBURSEMENT AGREEMENT

Dated as of December 20, 2007,
 
among
 
SOUTH JERSEY INDUSTRIES, INC.,
as Borrower

and
 
THE SEVERAL LENDERS FROM
TIME TO TIME PARTY HERETO

and
 
JPMORGAN CHASE BANK, N.A.,
as Administrative Agent
 

 

 

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TABLE OF CONTENTS
 
 

   Page
ARTICLE I
DEFINITIONS.................................................................................................................................................................................................
1
SECTION 1.01
Certain Defined
Terms...................................................................................................................................
1
SECTION 1.02
Computation of Time
Periods.......................................................................................................................
12
SECTION 1.03
Accounting
Terms...........................................................................................................................................
12
SECTION 1.04
Internal
References.........................................................................................................................................
12
     
ARTICLE II CERTAIN ADMINISTRATIVE
MATTERS.............................................................................................................................................
13
SECTION 2.01
[Reserved]........................................................................................................................................................
13
SECTION 2.02
[Reserved]........................................................................................................................................................
13
SECTION 2.03
[Reserved]........................................................................................................................................................
13
SECTION 2.04
[Reserved]........................................................................................................................................................
13
SECTION 2.05
[Reserved]........................................................................................................................................................
13
SECTION 2.06
[Reserved]........................................................................................................................................................
13
SECTION 2.07
[Reserved]........................................................................................................................................................
13
SECTION 2.08
[Reserved]........................................................................................................................................................
13
SECTION 2.09
[Reserved]........................................................................................................................................................
13
SECTION 2.10
Payments..........................................................................................................................................................
13
SECTION 2.11
[Reserved]........................................................................................................................................................
13
SECTION 2.12
[Reserved]........................................................................................................................................................
13
SECTION 2.13
[Reserved]........................................................................................................................................................
13
SECTION 2.14
Increased
Costs...............................................................................................................................................
13
SECTION 2.15
[Reserved]........................................................................................................................................................
14
SECTION 2.16
Nature of Obligations of Lenders Regarding the Letter of Credit; Assumption by
the Administrative
Agent.....................................................................................................................................
 
14
SECTION 2.17
Net of Taxes,
Etc..............................................................................................................................................
15
SECTION 2.18
[Reserved]........................................................................................................................................................
16
SECTION 2.19
[Reserved]........................................................................................................................................................
16
SECTION 2.20
[Reserved]........................................................................................................................................................
16
     
ARTICLE III LETTER OF CREDIT
FACILITY...............................................................................................................................................................
17
SECTION 3.01
L/C
Commitment.............................................................................................................................................
17
SECTION 3.02
Application; Letter of
Credit........................................................................................................................
17
SECTION 3.03
Commissions and Other
Charges.................................................................................................................
18
SECTION 3.04
L/C
Participations..........................................................................................................................................
18
SECTION 3.05
Reimbursement Obligation of the
Borrower..............................................................................................
19
SECTION 3.06
Obligations
Absolute.....................................................................................................................................
20
     
ARTICLE IV CONDITIONS
PRECEDENT......................................................................................................................................................................
21
SECTION 4.01
Conditions Precedent to the Execution and Delivery of this
Agreement.............................................
21
SECTION 4.02
[Reserved]........................................................................................................................................................
23
SECTION 4.03
[Reserved]........................................................................................................................................................
23

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SECTION 4.04
Reliance on
Certificates................................................................................................................................
23
     
ARTICLE V REPRESENTATIONS AND
WARRANTIES...........................................................................................................................................
24
SECTION 5.01
Representations and Warranties of the
Borrower....................................................................................
24
     
ARTICLE VI COVENANTS OF THE
COMPANY.........................................................................................................................................................
28
SECTION 6.01
Affirmative
Covenants....................................................................................................................................
28
SECTION 6.02
Negative
Covenants.......................................................................................................................................
30
SECTION 6.03
Reporting
Requirements................................................................................................................................
31
SECTION 6.04
Financial
Covenants.....................................................................................................................................
33
     
ARTICLE VII EVENTS OF
DEFAULT............................................................................................................................................................................
34
SECTION 7.01
Events of
Default.............................................................................................................................................
34
SECTION 7.02
Upon an Event of
Default..............................................................................................................................
35
SECTION 7.03
Rights and Remedies Cumulative; Non-Waiver;
Etc................................................................................
36
     
ARTICLE VIII
RESERVED.................................................................................................................................................................................................
37
     
ARTICLE IX THE ADMINISTRATIVE
AGENT...........................................................................................................................................................
38
SECTION 9.01
Appointment....................................................................................................................................................
38
SECTION 9.02
Delegation of
Duties......................................................................................................................................
38
SECTION 9.03
Exculpatory
Provisions.................................................................................................................................
38
SECTION 9.04
Reliance by Administrative
Agent...............................................................................................................
39
SECTION 9.05
Notice of
Default.............................................................................................................................................
39
SECTION 9.06
Non Reliance on Administrative Agent and Other
Lenders...................................................................
39
SECTION 9.07
Indemnification...............................................................................................................................................
40
SECTION 9.08
Administrative Agent in Its Individual
Capacity......................................................................................
40
SECTION 9.09
Successor Administrative
Agent...................................................................................................................
40
SECTION 9.10
Issuing
Lender.................................................................................................................................................
41
SECTION 9.11
Notices; Actions Under Loan
Documents..................................................................................................
41
     
ARTICLE X
MISCELLANEOUS......................................................................................................................................................................................
42
SECTION 10.01
Amendments,
Etc.............................................................................................................................................
42
SECTION 10.02
Notices,
Etc......................................................................................................................................................
42
SECTION 10.03
No Waiver;
Remedies......................................................................................................................................
44
SECTION 10.04
Set
off.................................................................................................................................................................
44
SECTION 10.05
Indemnification...............................................................................................................................................
45
SECTION 10.06
Liability of the
Lenders..................................................................................................................................
45
SECTION 10.07
Costs, Expenses and
Taxes............................................................................................................................
46
SECTION 10.08
Binding
Effect..................................................................................................................................................
47
SECTION 10.09
Assignments and
Participation....................................................................................................................
47
SECTION 10.10
Severability......................................................................................................................................................
49
SECTION 10.11
Governing
Law................................................................................................................................................
49

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SECTION 10.12
Headings..........................................................................................................................................................
50
SECTION 10.13
Submission To Jurisdiction;
Waivers.........................................................................................................
50
SECTION 10.14
Acknowledgments..........................................................................................................................................
50
SECTION 10.15
Waivers of Jury
Trial......................................................................................................................................
51
SECTION 10.16
Confidentiality................................................................................................................................................
51
SECTION 10.17
Patriot
Act.......................................................................................................................................................
52
SECTION 10.18
Execution in
Counterparts...........................................................................................................................
52

 

EXHIBITS

Exhibit A
Form of Opinion of Counsel to the Borrower
Exhibit B
Form of Assignment and Acceptance
Exhibit C
Form of Compliance Certificate
   
SCHEDULES
   
Schedule I
Lenders, Applicable Lending Offices, Commitments and Initial Commitment
Percentages
Schedule II
Ownership
Schedule III
Letter of Credit

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LETTER OF CREDIT REIMBURSEMENT AGREEMENT

This LETTER OF CREDIT REIMBURSEMENT AGREEMENT (as it may be amended,
supplemented or otherwise modified in accordance with the terms hereof at any
time and from time to time, this “Agreement”) dated as of December 20, 2007,
among SOUTH JERSEY INDUSTRIES, INC., a New Jersey corporation (the “Borrower”),
the several banks and other financial institutions from time to time parties to
this Agreement (each a “Lender” and collectively, the “Lenders”), and JPMORGAN
CHASE BANK, N.A., a national banking association organized and existing under
the laws of the United States of America (“JPMCB”), as administrative agent for
the Lenders hereunder (in such capacity, together with its successors and
permitted assigns in such capacity, the “Administrative Agent”).
 
PRELIMINARY STATEMENTS
 
WHEREAS, the Borrower has requested that JPMCB, as Issuing Lender, issue and
that the Lenders participate in the Letter of Credit; and
 
WHEREAS, the Lenders are willing, on the terms and subject to the conditions set
forth in this Agreement, to extend credit under this Agreement as more
particularly hereinafter set forth.
 
NOW, THEREFORE, in consideration of the mutual agreements, provisions and
covenants contained herein, the parties agree as follows:
 
ARTICLE I
DEFINITIONS
 
SECTION 1.01     Certain Defined Terms.  As used in this Agreement, the
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
 
“Administrative Agent” has the meaning assigned to that term in the preamble
hereto.
 
“AML and Anti-Terrorist Acts” has the meaning assigned to that term in Section
6.01(m).
 
“Affiliate” means, with respect to any Person, any other Person directly or
indirectly controlling (including but not limited to all directors and officers
of such Person), controlled by, or under direct or indirect common control with
such Person. A Person shall be deemed to control another entity if such Person
possesses, directly or indirectly, the power to direct or cause the direction of
the management and policies of such entity, whether through the ownership of
voting securities, by contract, or otherwise.
 
“Agreement” means this Letter of Credit Reimbursement Agreement, as it may be
amended, supplemented or otherwise modified in accordance with the terms hereof
at any time and from time to time.
 

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“Applicable Law” means all applicable laws, statutes, treaties, rules, codes,
ordinances, regulations, permits, certificates, orders, interpretations,
licenses, and permits of any Governmental Authority and judgments, decrees,
injunctions, writs, orders or like action of any court, arbitrator or other
judicial or quasi–judicial tribunal (including, without limitation, those
pertaining to health, safety, the environment or otherwise).
 
“Applicable Lending Office” means, with respect to any Lender, the office of
such Lender specified as such opposite its name on Schedule I hereto or in the
Assignment and Acceptance pursuant to which it became a Lender, or such other
office of such Lender as such Lender may from time to time specify to the
Borrower and the Administrative Agent.
 
“Applicable Margin” means the rate per annum equal to 0.55%.
 
“Application” means an application, in the form specified by the Issuing Lender
from time to time, requesting the Issuing Lender to issue the Letter of Credit.
 
“Assignment and Acceptance” means an Assignment and Acceptance executed in
accordance with Section 10.09 in the form attached hereto as Exhibit B.
 
“Bankruptcy Code” means Title 11 of the United States Code, as now constituted
or hereafter amended.
 
“Base Rate” means, for any period, a fluctuating interest rate per annum as
shall be in effect from time to time, which rate per annum shall at all times be
equal to the higher of (i) the Prime Rate in effect on such day; and (ii) 1/2 of
one percent per annum above the Federal Funds Rate in effect from time to
time.  Any change in the Base Rate due to a change in the Prime Rate or the
Federal Funds Effective Rate shall be effective from and including the effective
date of such change in the Prime Rate or the Federal Funds Effective Rate,
respectively.
 
“Benefited Lender” has the meaning assigned to that term in Section 10.04(b).
 
“Borrower” has the meaning assigned to that term in the preamble hereto.
 
“Business Day” means any day that is not a Saturday, Sunday or other day on
which commercial banks in New York City are authorized or required by law to
remain closed.
 
“Capital Lease” means any lease which is required to be capitalized on a balance
sheet of the lessee in accordance with GAAP, consistently applied.
 
“Capital Stock” means, with respect to any Person, any and all shares,
interests, rights to purchase, warrants, options, participations or other
equivalents of or interests in (however designated) equity of such Person,
including any preferred interest, any limited or general partnership interest
and any limited liability company membership interest.
 

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“Change in Control” means the occurrence of either of the following: (i) any
entity, person (within the meaning of Section 14(d) of the Securities Exchange
Act of 1934, as amended (the “Exchange Act”) or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Exchange Act) which theretofore was
beneficial owner (as defined in Rule 13d-3 under the Exchange Act) of less than
20% of the Borrower’s then outstanding common stock either (x) acquires shares
of common stock of the Borrower in a transaction or series of transactions that
results in such entity, person or group directly or indirectly owning
beneficially 20% or more of the outstanding common stock of the Borrower, or (y)
acquires, by proxy or otherwise, the right to vote for the election of
directors, for any merger, combination or consolidation of the Borrower or any
of its direct or indirect Subsidiaries, or, for any other matter or question,
more than 20% of the then outstanding voting securities of the Borrower; or (ii)
20% or more of the directors of the board of directors of the Borrower fail to
consist of Continuing Directors.
 
“Closing Date” means December 20, 2007.
 
“Code” means the Internal Revenue Code of 1986, as amended from time to time,
and the regulations promulgated and rulings issued thereunder.
 
“Commitment” means (i) with respect to the Lenders, the aggregate amount of the
Commitments of the Lenders as set forth on Schedule I, and (ii) with respect to
a Lender, the amount of the Commitment of such Lender as set forth on Schedule
I, as such amounts may be modified in accordance with Section 10.09.
 
“Commitments” means the total of the Lenders’ Commitments.
 
“Commitment Percentage” means for each Lender, a fraction (expressed as a
decimal) the numerator of which is the Commitment of such Lender at such time
and the denominator of which are the Commitments of all of the Lenders at such
time.  The initial Commitment Percentage of each Lender is set out on Schedule
I.
 
“Compliance Certificate” means a certificate substantially in the form of
Exhibit C.
 
“Consolidated” means, when used with reference to any accounting term, the
amount described by such accounting term, determined on a consolidated basis in
accordance with GAAP, after elimination of intercompany items.
 
 “Consolidated Total Capitalization” means the sum of (i) Indebtedness of the
Borrower and its Consolidated Subsidiaries, plus (ii) the sum of the Capital
Stock (excluding treasury stock and capital stock subscribed for and unissued)
and surplus (including earned surplus, capital surplus, translation adjustment
and the balance of the current profit and loss account not transferred to
surplus) accounts of the Borrower and its Consolidated Subsidiaries appearing on
a consolidated balance sheet of the Borrower and its Consolidated Subsidiaries,
in each case prepared as of the date of determination in accordance with GAAP
consistent with those applied in the preparation of the financial statements
referred to in Section 4.01(f), after eliminating all intercompany transactions
and all amounts properly attributable to minority interests, if any, in the
stock and surplus of Subsidiaries.
 

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“Continuing Director” means, with respect to any Person as of any date of
determination, any member of the board of directors of such Person who (a) was a
member of such board of directors on the Closing Date, or (b) was nominated for
election or elected to such board of directors with the approval of a majority
of the Continuing Directors who were members of such board at the time of such
nomination or election.
 
“Default” means any event or condition that would constitute an Event of Default
but for the requirement that notice be given or time elapse or both.
 
“Default Rate” means a per annum rate equal to 2% greater than the Base Rate.
 
“Disclosure Documents” means the Borrower’s Annual Report on Form 10-K for the
year ended December 31, 2006, its Quarterly Reports on Form 10-Q for the
quarters ended March 31, 2007, June 30, 2007 and September 30, 2007, and any
Current Report on Form 8-K delivered to the Lenders at least three (3) Business
Days prior to the date of this Agreement.
 
“Dollar” or “$” means dollars in lawful currency of the United States of
America.
 
“Eligible Assignee” means, with respect to any assignment of the rights,
interest and obligations of a Lender hereunder, a Person that is at the time of
such assignment (a) a commercial bank organized or licensed under the laws of
the United States or any state thereof, having combined capital and surplus in
excess of $500,000,000, (b) a commercial bank organized under the laws of any
other country that is a member of the Organization of Economic Cooperation and
Development, or a political subdivision of any such country, having combined
capital and surplus in excess of $500,000,000, (c) a finance company, insurance
company or other financial institution which in the ordinary course of business
extends credit of the type extended hereunder and that has total assets in
excess of $1,000,000,000, (d) a Lender hereunder (whether as an original party
to this Agreement or as the assignee of another Lender), (e) an Affiliate or
Subsidiary of a Lender (whether as an original party to this Agreement or as the
assignee of another Lender) hereunder that does not otherwise qualify as an
Eligible Assignee provided such Lender continues to be obligated under this
Agreement, (f) the successor (whether by transfer of assets, merger or
otherwise) to all or substantially all of the commercial lending business of the
assigning Lender, or (g) any other Person that has been approved in writing as
an Eligible Assignee by the Administrative Agent and, if no Default or Event of
Default exists and is continuing, by the Borrower.
 
“Environmental Laws” means any federal, state or local laws, ordinances or
codes, rules, orders, or regulations relating to pollution or protection of the
environment, including, without limitation, laws relating to hazardous
substances, laws relating to reclamation of land and waterways and laws relating
to emissions, discharges, releases or threatened releases of pollutants,
contaminants, chemicals, or industrial, toxic or hazardous substances or wastes
into the environment (including, without limitation, ambient air, surface water,
ground water, land surface or subsurface strata) or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of pollution, contaminants, chemicals, or industrial,
toxic or hazardous substances or wastes.
 

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“ERISA” means the Employee Retirement Income Security Act of 1974, as amended
from time to time.
 
“ERISA Affiliate” means any Person which for purposes of Title IV of ERISA is a
member of the Borrower’s controlled group, or under common control with the
Borrower, within the meaning of Section 414 of the Code, and the regulations
promulgated and rulings issued thereunder.
 
“ERISA Event” means (i) the occurrence of a reportable event, within the meaning
of Section 4043 of ERISA, unless the 30-day notice requirement with respect
thereto has been waived by the PBGC; (ii) the provision by the administrator of
any Plan of a notice of intent to terminate such Plan, pursuant to Section
4041(a)(2) of ERISA (including any such notice with respect to a plan amendment
referred to in Section 404l(e) of ERISA); (iii) the cessation of operations at a
facility in the circumstances described in Section 4062(e) of ERISA; (iv) the
withdrawal by the Borrower or an ERISA Affiliate from a Multiemployer Plan
during a plan year for which it was a “substantial employer” as defined in
Section 4001(a)(2) of ERISA; (v) the failure by the Borrower or any ERISA
Affiliate to make a payment to a Plan required under Section 302 of ERISA, which
results in a lien pursuant to Section 302(f) of ERISA; (vi) the adoption of an
amendment to a Plan requiring the provision of security to such Plan, pursuant
to Section 307 of ERISA; or (vii) the institution by the PBGC of proceedings to
terminate a Plan, pursuant to Section 4042 of ERISA, or the occurrence of any
event or condition which might reasonably constitute grounds under Section 4042
of ERISA for the termination of, or the appointment of a trustee to administer,
a Plan by the PBGC.
 
“Event of Default” has the meaning assigned to that term in Section 7.01.
 
“Existing Credit Facility” means that certain Five-Year Revolving Credit
Agreement, dated as of August 22, 2006, among the Borrower, the lenders referred
to therein and Wachovia Bank, National Association, as administrative agent (as
such agreement has been amended or supplemented from time to time).

 “Federal Funds Rate” means, for any period, a fluctuating interest rate per
annum equal for each day during such period to the weighted average of the rates
on overnight Federal funds transactions with members of the Federal Reserve
System arranged by Federal funds brokers, as published for such day (or, if such
day is not a Business Day, for the next preceding Business Day) by the Federal
Reserve Lender of New York, or, if such rate is not so published for any day
which is a Business Day, the average of the quotations for such day on such
transactions received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by it.
 
“GAAP” means generally accepted accounting principles, as recognized by the
American Institute of Certified Public Accountants and the Financial Accounting
Standards Board, consistently applied and maintained on a consistent basis for
the Borrower and its Consolidated Subsidiaries throughout the period indicated
and consistent with the prior financial practice of the Borrower and its
Consolidated Subsidiaries.
 

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“Governmental Action” means all authorizations, consents, approvals, waivers,
exceptions, variances, orders, licenses, exemptions, publications, filings,
notices to and declarations of or with any Governmental Authority, other than
routine reporting requirements the failure to comply with which will not affect
the validity or enforceability of this Agreement or any other Loan Document or
have a material adverse effect on the transactions contemplated by this
Agreement or any other Loan Document.
 
“Governmental Authority” means any nation or government, any state or other
political subdivision thereof and any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government.
 
“Hazardous Materials” means any petrochemical or petroleum products, any
flammable materials, explosives, radioactive materials, hazardous materials,
hazardous wastes, hazardous or toxic substances, or related or similar
materials, asbestos or any material containing asbestos, or any other substance
or material as so defined and regulated by any Federal, state or local
environmental law, ordinance, rule, or regulation including, without limitation,
the Comprehensive Environmental Response, Compensation, and Liability Act of
1980, as amended (42 U.S.C. Sections 9601, et seq.), the Hazardous Materials
Transportation Act, as amended (49 U.S.C. Sections 1801, et seq.), and the
Resource Conservation and Recovery Act, as amended (42 U.S.C. Sections 6901, et
seq.), and the regulations adopted and publications promulgated pursuant
thereto.
 
“Hedging Obligations” means, with respect to any Person, the obligations of such
Person under any interest rate or currency swap agreement, interest rate or
currency future agreement, interest rate collar agreement, swap agreement (as
defined in 11 U.S.C. § 101), interest rate or currency hedge agreement, and any
put, call or other agreement or arrangement designed to protect such Person
against fluctuations in interest rates or currency exchange rates.
 
“Indebtedness” means, for any Person, all obligations of such Person which in
accordance with GAAP should be classified on a balance sheet of such Person as
liabilities of such Person, and in any event shall include, without duplication,
all (i) indebtedness for borrowed money, (ii) obligations evidenced by bonds,
debentures, notes or other similar instruments, (iii) obligations to pay the
deferred purchase price of property or services, (iv) obligations as lessee
under leases which shall have been or should be, in accordance with GAAP,
recorded as capital leases, (v) obligations as lessee under operating leases
which have been recorded as off-balance sheet liabilities, (vi) obligations
under Hedging Obligations, (vii) reimbursement obligations (contingent or
otherwise) in respect of outstanding letters of credit, (viii) indebtedness of
the type referred to in clauses (i) through (vi) above secured by (or for which
the holder of such indebtedness has an existing right, contingent or otherwise,
to be secured by) any lien or encumbrance on, or security interest in, property
(including, without limitation, accounts and contract rights) owned by such
Person, even though such Person has not assumed or become liable for the payment
of such indebtedness, and (ix) obligations under direct or indirect guaranties
in respect of, and obligations (contingent or otherwise) to purchase or
otherwise acquire, or otherwise to assure a creditor against loss in respect of,
indebtedness or obligations of others of the kinds referred to in clauses (i)
through (vii) above.For the avoidance of doubt and notwithstanding anything to
the contrary set forth above, Permitted Hedging Obligations and Capital Stock,
including Capital Stock having a preferred interest, shall not constitute
Indebtedness for purposes of this Agreement.
 

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“Information” has the meaning assigned to that term in Section 10.16(b).
 
“ISP 98” means the International Standby Practices (1998 Revision, effective
January 1, 1999), International Chamber of Commerce Publication No. 590.
 
“Issuing Lender” means JPMCB, in its capacity as issuer of the Letter of Credit,
or any successor thereto.
 
“JPMCB” has the meaning assigned to that term in the preamble hereto.
 
 “L/C Commitment” means the aggregate amount of all Commitments under this
Agreement.
 
“L/C Facility” means the letter of credit facility established pursuant to
Article III.
 
“L/C Obligations” means at any time, an amount equal to the sum of (a) the
aggregate undrawn and unexpired amount of the Letter of Credit and (b) the
aggregate amount of drawings under the Letter of Credit which have not then been
reimbursed pursuant to Section 3.05.
 
“L/C Participants” means the collective reference to all the Lenders other than
the Issuing Lender.
 
“Lenders” has the meaning assigned to that term in the preamble hereto, and, in
each case, includes their respective successors and permitted assigns.
 
“Letter of Credit” that certain letter of credit issued on the Closing Date in
the original face amount of $30,690,411.00, in substantially the form of
Schedule III attached hereto.
 
“Lien” means, with respect to any asset, any mortgage, lien, pledge, charge,
security interest or encumbrance of any kind in respect of such asset.  For the
purposes of this Agreement, a Person or any of its Subsidiaries shall be deemed
to own, subject to a Lien, any asset that it has acquired or holds subject to
the interest of a vendor or lessor under any conditional sale agreement, capital
lease or other title retention agreement relating to such asset.
 
“Loan Documents” means this Agreement, the Application and any other document
evidencing, relating to or securing any L/C Obligation, and any other document
or instrument delivered from time to time in connection with this Agreement or
the Letter of Credit, as such documents and instruments may be amended or
supplemented from time to time.
 
“Marina” means Marina Energy LLC, a New Jersey limited liability company.
 

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“Material Adverse Change” means (a) a materially adverse change in the business,
assets, liabilities (actual or contingent), operations, condition (financial or
otherwise) or prospects of (i) the Borrower or (ii) the Borrower and its
Subsidiaries, taken as a whole, (b) any material impairment of the ability of
the Borrower to perform any of its Obligations under this Agreement, any other
Loan Document or (c) any material impairment of the rights of, or benefits
available to, the Administrative Agent, the Issuing Lender or the Lenders under
this Agreement, any other Loan Document.
 
 “Moody’s” means Moody’s Investors Service, Inc., or any successor thereto.
 
“Multiemployer Plan” means a multiemployer plan, as defined in Section
4001(a)(3) of ERISA, which is subject to Title IV of ERISA and to which the
Borrower or any ERISA Affiliate is making or accruing an obligation to make
contributions, or has within any of the preceding five plan years made or
accrued an obligation to make contributions, such plan being maintained pursuant
to one or more collective bargaining agreements.
 
“Multiple Employer Plan” means a single employer plan, as defined in Section
4001(a)(15) of ERISA, which is subject to Title IV of ERISA and which (i) is
maintained for employees of the Borrower or an ERISA Affiliate and at least one
Person other than the Borrower and its ERISA Affiliates or (ii) was so
maintained and in respect of which the Borrower or an ERISA Affiliate could have
liability under Section 4064 or 4069 of ERISA in the event such plan has been or
were to be terminated.
 
“Obligations” means, in each case, whether now in existence or hereafter
arising: (a) the principal of and interest on (including interest accruing after
the filing of any bankruptcy or similar petition) the L/C Obligations, (b) all
payment and other obligations owing by the Borrower to any Lender or the
Administrative Agent under any other agreement to which a Lender is a party (or
any Affiliate of a Lender) which is related to and permitted under this
Agreement, any of the other Loan Documents, and (c) all other fees and
commissions (including attorney’s fees), charges, indebtedness, loans,
liabilities, financial accommodations, obligations, covenants and duties owing
by the Borrower or any Subsidiary to the Lenders, the Issuing Lender, or the
Administrative Agent, in each case under or in respect of this Agreement, the
Letter of Credit, any of the other Loan Documents of every kind, nature and
description, direct or indirect, absolute or contingent, due or to become due,
contractual or tortious, liquidated or unliquidated, and whether or not
evidenced by any note, and whether or not for the payment of money under or in
respect of this Agreement, the Letter of Credit, any of the other Loan
Documents.
 
“OFAC” has the meaning assigned to that term in Section 5.01(v).
 
“Participant” has the meaning assigned to that term in Section 10.09(e).
 
“PBGC” means the Pension Benefit Guaranty Corporation or any successor thereto.
 

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“Permitted Commodity Hedges” means obligations of the Borrower with respect to
commodity agreements or other similar agreements or arrangements entered into in
the ordinary course of business designed to protect against, or mitigate risks
with respect to, fluctuations of commodity prices to which the Borrower or any
Subsidiary is exposed to in the conduct of its business so long as (i) the
management of the Borrower has determined that entering into such agreements or
arrangements are bona fide hedging activities which comply with the Borrower’s
risk management policies and (ii) such agreements or arrangements are not
entered into for speculative purposes and are not of a speculative nature.
 
“Permitted Indebtedness” means any of the following:
 

 
                (1)             Indebtedness under the Existing Credit Facility
and under this Agreement;
 
(2)            Indebtedness (other than the type described in clause (3) below)
of the Borrower and its Subsidiaries (other than South Jersey Gas) in an
aggregate principal amount not to exceed $275,000,000 (inclusive of the type
described in clause (1) above but excluding any non-recourse debt of the
Borrower and its Subsidiaries) at any time outstanding so long as before and
immediately after the incurrence of such Indebtedness, the Borrower is in
compliance with Section 6.04;
 
(3)            Indebtedness of the Borrower under Hedging Obligations covering a
notional amount not to exceed the face amount of outstanding Indebtedness;
 
(4)            Indebtedness of South Jersey Gas, under that certain Five-Year
Revolving Credit Agreement, dated as of August 3, 2006, among South Jersey Gas,
the lenders party thereto, and Wachovia Bank, National Association, as
administrative agent on behalf of said lenders (as amended to date, the “SJG
Credit Agreement”);

(5)            Indebtedness of South Jersey Gas under the First Mortgage Notes
(as defined in the SJG Credit Agreement) existing as of August 3, 2006 and as
identified on Schedule IVto the SJG Credit Agreement, and subsequent First
Mortgage Notes, so long as before and immediately after the incurrence of such
Indebtedness, South Jersey Gas is in compliance with Section 6.04of the SJG
Credit Agreement;

(6)            Indebtedness (other than the type described in clause (7) below)
of South Jersey Gas, so long as before and immediately after the incurrence of
such Indebtedness, South Jersey Gas is in compliance with Section 6.04of the SJG
Credit Agreement;

(7)            Indebtedness of South Jersey Gas under Hedging Obligations
covering a notional amount not to exceed the face amount of such outstanding
Indebtedness; and

(8)            Permitted Commodity Hedges.

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“Permitted Investments”  means (1) noncallable, direct general obligations of,
or obligations the payment of the principal of and interest on which are
unconditionally guaranteed by, the United States of America; (2) bonds,
participation certificates or other obligations of Federal National Mortgage
Association, Government National Mortgage Association and Federal Home Loan
Mortgage Corporation; (3) certificates of deposit, bankers’ acceptances or other
obligations issued by commercial banks which are fully insured by the Federal
Deposit Insurance Corporation or certificates of deposit, bankers’ acceptances
or other deposit obligations issued by commercial banks whose unsecured
obligations are rated in one of the two highest rating categories by Moody’s or
Standard S&P; (4) obligations issued or guaranteed by a state or political
subdivision of a state rated in one of the two highest rating categories by
Moody’s or S&P; or (5) any other investments permitted under this Agreement and
which the Administrative Agent has approved in writing.

“Permitted Liens” means, with respect to any Person, any of the following:
 
(1)            Liens for taxes, assessments or governmental charges not
delinquent or being contested in good faith and by appropriate proceedings and
for which adequate reserves in accordance with GAAP are maintained on such
Person’s books;
 
(2)            Liens arising out of deposits in connection with workers’
compensation, unemployment insurance, old age pensions or other social security
or retirement benefits legislation;
 
(3)            Deposits or pledges to secure bids, tenders, contracts (other
than contracts for the payment of money), leases, statutory obligations, surety
and appeal bonds, and other obligations of like nature arising in the ordinary
course of such Person’s business, including, without limitation, deposits and
pledges of funds securing Permitted Commodity Hedging Obligations;
 
(4)            Liens imposed by law, such as mechanics’, workers’,
materialmen’s, carriers’ or other like liens arising in the ordinary course of
such Person’s business which secure the payment of obligations which are not
past due or which are being diligently contested in good faith by appropriate
proceedings and for which adequate reserves in accordance with GAAP are
maintained on such Person’s books;
 
(5)            Rights of way, zoning restrictions, easements and similar
encumbrances affecting such Person’s real property which do not materially
interfere with the use of such property;
 
(6)            Liens securing Permitted Indebtedness of the type described in
clauses (2) and (3) of the definition of “Permitted Indebtedness,” not in excess
of $15,000,000 in the aggregate;
 
(7)            Liens securing Permitted Indebtedness of the type described in
clause (5) of the definition of “Permitted Indebtedness”;
 
(8)            Liens securing Permitted Indebtedness of the type described in
clause (6) of the definition of “Permitted Indebtedness,” not in excess of
$12,500,000 in the aggregate; and
 

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(9)            Purchase money security interests for the purchase of equipment
to be used in such Person’s business, encumbering only the equipment so
purchased, and which secures only the purchase-money Indebtedness incurred to
acquire the equipment so purchased, which Indebtedness qualifies as Permitted
Indebtedness.
 
 “Person” means an individual, partnership, corporation (including, without
limitation, a business trust), joint stock company, limited liability company,
trust, unincorporated association, joint venture or other entity, or a
government or any political subdivision or agency thereof.
 
“Plan” means a Single Employer Plan or a Multiple Employer Plan.
 
“Prime Rate” means the rate of interest per annum publicly announced from time
to time by JPMCB as its prime rate in effect at its principal office in New York
City; each change in the Prime Rate shall be effective from and including the
date such change is publicly announced as being effective.
 
“Register” has the meaning assigned to that term in Section 10.09(c).
 
“Required Lenders” means Lenders whose aggregate Commitment Percentages total
more than 50%.
 
“S&P” means Standard & Poor’s Ratings Services, a division of the McGraw-Hill
Companies, Inc., or any successor thereto.
 
“Significant Subsidiary” means, with respect to any Person, a Subsidiary which
meets any of the following conditions:
 
(a)            such Person’s and its other Subsidiaries’ investments in and
advances to the Subsidiary exceed 10% of the total assets of such Person and its
Consolidated Subsidiaries as of the end of the most recently completed fiscal
quarter;
 
(b)            such Person’s and its other Subsidiaries’ proportionate share (as
determined by ownership interests) of the total assets (after intercompany
eliminations) of the Subsidiary exceeds 10% of the total assets of such Person
and its Consolidated Subsidiaries as of the end of the most recently completed
fiscal quarter;
 
(c)            such Person’s and its other Subsidiaries’ proportionate share (as
determined by ownership interests) in the income from continuing operations
before income taxes, extraordinary items and cumulative effect of changes in
accounting principles of the Subsidiary exceeds 10% of such income of such
Person and its Consolidated Subsidiaries for the most recently completed fiscal
quarter; or
 
(d)            with respect to the Borrower, such Subsidiaries shall include,
without limitation, Marina and South Jersey Gas.
 

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“Single Employer Plan” means a single employer plan, as defined in Section
4001(a)(15) of ERISA, which is subject to Title IV of ERISA and which (i) is
maintained for employees of the Borrower or an ERISA Affiliate and no Person
other than the Borrower and its ERISA Affiliates or (ii) was so maintained and
in respect of which the Borrower or an ERISA Affiliate could have liability
under Section 4069 of ERISA in the event such plan has been or were to be
terminated.
 
“Solvent”means, with respect to any Person, that such Person (a) has capital
sufficient to carry on its business and transactions and all business and
transactions in which it is about to engage and is able to pay its debts as they
mature, (b) owns property having a value, both at fair valuation and at present
fair saleable value, greater than the amount required to pay its probable
liabilities (including contingencies), and (c) does not believe that it will
incur debts or liabilities beyond its ability to pay such debts or liabilities
as they mature.
 
“South Jersey Gas” means South Jersey Gas Company, a New Jersey corporation.
 
“Stated Termination Date”means November 1, 2010.
 
“Subsidiary” means, with respect to any Person, any corporation or
unincorporated entity of which more than 50% of the outstanding capital stock
(or comparable interest) having ordinary voting power (irrespective of whether
at the time capital stock (or comparable interest) of any other class or classes
of such corporation or entity shall or might have voting power upon the
occurrence of any contingency) is at the time directly or indirectly owned by
said Person (whether directly or through one of more other Subsidiaries).  In
the case of an unincorporated entity, a Person shall be deemed to have more than
50% of interests having ordinary voting power only if such Person’s vote in
respect of such interests comprises more than 50% of the total voting power of
all such interests in the unincorporated entity.
 
“Taxes” has the meaning assigned to that term in Section 2.17.
 
“Termination Date” means the earliest of (a) the Stated Termination Date, and
(b) the date of termination of the Commitments pursuant to Section 7.02(a).
 
SECTION 1.02     Computation of Time Periods. In this Agreement, in the
computation of a period of time from a specified date to a later specified date,
the word “from” means “from and including” and the words “to” and “until” each
means “to but excluding”.
 
SECTION 1.03      Accounting Terms. All accounting terms not specifically
defined herein shall be construed in accordance with GAAP, except as otherwise
stated herein.
 
SECTION 1.04     Internal References. The words “herein”, “hereof” and
“hereunder” and words of similar import, when used in this Agreement, shall
refer to this Agreement as a whole and not to any provision of this Agreement,
and “Article”, “Section”, “subsection”, “paragraph”, “Exhibit”, “Schedule” and
respective references are to this Agreement unless otherwise
specified.  References herein or in any Loan Document to any agreement or other
document shall, unless otherwise specified herein or therein, be deemed to be
references to such agreement or document as it may be amended, modified or
supplemented after the date hereof from time to time in accordance with the
terms hereof or of such agreement or document, as the case may be.
 

 
[End of Article I]
 

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ARTICLE II
 
CERTAIN ADMINISTRATIVE MATTERS
 
SECTION 2.01     [Reserved].
 
SECTION 2.02     [Reserved].
 
SECTION 2.03     [Reserved].
 
SECTION 2.04     [Reserved].
 
SECTION 2.05     [Reserved].
 
SECTION 2.06     [Reserved].
 
SECTION 2.07     [Reserved].
 
SECTION 2.08     [Reserved].
 
SECTION 2.09     [Reserved].
 
SECTION 2.10     Payments.
 
(a)                Intentionally Omitted.
 
(b)                Intentionally Omitted.
 
(c)                Intentionally Omitted.
 
(d)                Intentionally Omitted.
 
(e)                Payments.  The Borrower shall make each payment hereunder not
later than 12:00 noon (New York City time) on the day when due in lawful money
of the United States of America to the Administrative Agent at its address
referred to in Section 10.02 in same day funds. The Administrative Agent shall
distribute any such payments received by it for the account of any other Person
to the appropriate recipient promptly following receipt thereof.
 
(f)                Intentionally Omitted.
 
SECTION 2.11     [Reserved].
 
SECTION 2.12     [Reserved].
 
SECTION 2.13     [Reserved].
 
SECTION 2.14     Increased Costs.
 

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(a)                If any Lender determines that compliance with any law or
regulation or any guideline or request from any central bank or other
governmental authority (whether or not having the force of law), in any case
promulgated, implemented or occurring on or after the date hereof, affects or
would affect the amount of capital required or expected to be maintained by any
such Lender or any corporation controlling any such Lender and that the amount
of such capital is increased by or based upon the existence of such Lender’s
Commitment hereunder and other Commitments, then, upon demand by any such
Lender, as the case may be (with a copy of such demand to the Administrative
Agent), the Borrower shall immediately pay to such Lender, as the case may be,
from time to time as specified by such Lender, additional amounts sufficient to
compensate such Lender, or such corporation in the light of such circumstances,
for any difference in the rate of return of any such Lender to the extent that
such Lender, as the case may be,  reasonably determines such increase in capital
to be allocable to the existence of such Lender’s Commitment hereunder, as the
case may be.  Each Lender agrees to notify the Borrower of any such additional
amount as soon as reasonably practicable after the any Lender makes such
determination.  A certificate as to such amounts submitted to the Borrower and
the Administrative Agent by such Lender shall be conclusive and binding for all
purposes, absent manifest error.
 
SECTION 2.15     [Reserved].
 
SECTION 2.16     Nature of Obligations of Lenders Regarding the Letter of
Credit; Assumption by the Administrative Agent.
 
The obligations of the Lenders under this Agreement to issue or participate in
the Letter of Credit are several and are not joint or joint and several.  Unless
the Administrative Agent shall have received notice from a Lender prior to a
proposed borrowing date that such Lender will not make available to the
Administrative Agent such Lender’s ratable portion of the amount to be borrowed
on such date (which notice shall not release such Lender of its obligations
hereunder), the Administrative Agent may assume that such Lender has made such
portion available to the Administrative Agent on the proposed borrowing date in
accordance with this Agreement and the Administrative Agent may, in reliance
upon such assumption, make available to the Borrower on such date a
corresponding amount.  If such amount is made available to the Administrative
Agent on a date after such borrowing date, such Lender shall pay to the
Administrative Agent on demand an amount, until paid, equal to the product of
(a) the amount not made available by such Lender in accordance with the terms
hereof, times (b) the daily average Federal Funds Rate (or, if such amount is
not made available for a period of three (3) Business Days after the borrowing
date, the Base Rate) during such period as determined by the Administrative
Agent, times (c) a fraction the numerator of which is the number of days that
elapse from and including such borrowing date to the date on which such amount
not made available by such Lender in accordance with the terms hereof shall have
become immediately available to the Administrative Agent and the denominator of
which is 360.  A certificate of the Administrative Agent with respect to any
amounts owing under this Section 2.16 shall be conclusive, absent manifest
error.If such
 

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 Lender’s Commitment Percentage of such borrowing is not made available to the
Administrative Agent by such Lender within three (3) Business Days of such
borrowing date, the Administrative Agent shall be entitled to recover such
amount made available by the Administrative Agent with interest thereon at the
rate per annum equal to the Base Rate, on demand, from the Borrower.
 
SECTION 2.17      Net of Taxes, Etc.
 
(a)                All payments made by the Borrower under this Agreement shall
be made free and clear of, and without deduction or withholding for or on
account of, any present or future income, stamp or other taxes, levies, imposts,
duties, charges, fees, deductions or withholdings, now or hereafter imposed,
levied, collected, withheld or assessed by any Governmental Authority,
excluding, in the case of the Administrative Agent and each Lender, taxes
imposed on its overall net income, and franchise taxes imposed on it by the
jurisdiction under the laws of which the Administrative Agent or such Lender (as
the case may be) is organized or any political subdivision thereof and, in the
case of each Lender, taxes imposed on its overall net income, and franchise
taxes imposed on it by the jurisdiction of such Lender’s Applicable Lending
Office or any political subdivision thereof (all such non-excluded taxes,
levies, imposts, deductions, charges, withholdings and liabilities being
hereinafter referred to as “Taxes”).  If any Taxes are required to be withheld
from any amounts payable to the Administrative Agent or any Lender hereunder,
the amounts so payable to the Administrative Agent or such Lender shall be
increased to the extent necessary to yield to the Administrative Agent or such
Lender (after payment of all Taxes) interest or any such other amounts payable
hereunder at the rates or in the amounts specified in this Agreement.  Whenever
any Taxes are payable by the Borrower, as promptly as possible thereafter the
Borrower shall send to the Administrative Agent for its own account or for the
account of such Lender, a certified copy of an original official receipt
received by the Borrower showing payment thereof.  If the Borrower fails to pay
any Taxes when due to the appropriate taxing authority or fails to remit to the
Administrative Agent the required receipts or other required documentary
evidence, the Borrower shall indemnify the Administrative Agent and the Lenders
for any incremental taxes, interest or penalties that may become payable by the
Administrative Agent or any Lender as a result of any such failure.  The
agreements in this Section shall survive the termination of this Agreement and
the payment of the obligations hereunder and all other amounts payable
hereunder.
 
(b)                Each Lender that is not incorporated under the laws of the
United States of America or a state thereof agrees that it will deliver to the
Borrower and the Administrative Agent on or before the latter of the date hereof
and the date such Lender becomes a Lender (i) two duly completed copies of
United States Internal Revenue Service Form W-8BEN or W-8ECI or successor
applicable form, as the case may be. Each such Lender also agrees to deliver to
the Borrower and the Administrative Agent two further copies of said Form W-8BEN
or W-8ECI, or successor applicable forms or other manner of certification, as
the case may be, on or before the date that any such form previously delivered
expires or becomes obsolete or after the occurrence of any event requiring a
change in the most recent form previously delivered by it to the Borrower, and
such extensions or renewals thereof as may reasonably be requested by the
Borrower or the Administrative Agent, unless in any such case an event
(including, without limitation, any change in treaty, law or regulation) has
 

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occurred prior to the date on which anysuch delivery would otherwise be required
which renders all such forms inapplicable or which would prevent such Lender
from duly completing and delivering any such form with respect to it and such
Lender so advises the Borrower and the Administrative Agent.  Such Lender shall
certify that it is entitled to receive payments under this Agreement without
deduction or withholding of any United States federal income taxes and that it
is entitled to an exemption from United States backup withholding tax.
 
(c)                If any Lender shall request compensation for costs pursuant
to this Section 2.17, (i) such Lender shall make reasonable efforts (which shall
not require such Lender to incur a loss or unreimbursed cost or otherwise suffer
any disadvantage deemed by it to be significant) to make within thirty (30) days
an assignment of its rights and delegation and transfer of its obligations
hereunder to another of its offices, branches or affiliates, if such assignment
would reduce such costs in the future, (ii) the Borrower may with the consent of
the Required Lenders, which consent shall not be unreasonably withheld, secure a
substitute bank to replace such Lender which substitute bank shall, upon
execution of a counterpart of this Agreement and payment to such Lender of any
and all amounts due under this Agreement, be deemed to be a Lender hereunder
(any such substitution referred to in clause (ii) shall be accompanied by an
amount equal to any loss or reasonable expense incurred by such Lender as a
result of such substitution); provided, that this Section 2.17(c) shall not be
construed as limiting the liability of the Borrower to indemnify or reimburse
such Lender for any costs or expenses the Borrower is required hereunder to
indemnify or reimburse.
 
SECTION 2.18     [Reserved] .
 
SECTION 2.19     [Reserved].
 
SECTION 2.20     [Reserved].
 
[End of Article II]
 

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ARTICLE III
 
LETTER OF CREDIT FACILITY
 
SECTION 3.01     L/C Commitment.
 
(a)                Subject to the terms and conditions of this Agreement, the
Issuing Lender, in reliance on the agreements of the other Lenders set forth in
Section 3.04(a), agrees to issue the Letter of Credit for the account of the
Borrower or the Borrower’s Subsidiaries on the Closing Date.
 
(b)                The Letter of Credit shall (i) be denominated in Dollars in a
minimum amount of $100,000, (ii) be a letter of credit issued to support
obligations of the Borrower or any of its Subsidiaries, contingent or otherwise,
incurred in the ordinary course of business, (iii) (A) have a term not exceeding
the Termination Date, and (B) otherwise be reasonably satisfactory to the
Issuing Lender, and (iv) be subject to the Uniform Customs and/or ISP 98, as set
forth in the Application or as determined by the Issuing Lender and, to the
extent not inconsistent therewith, the laws of the State of New York. The
Issuing Lender shall not at any time be obligated to issue the Letter of Credit
hereunder if such issuance would conflict with, or cause the Issuing Lender or
any L/C Participant to exceed any limits imposed by, any Applicable Law.
References herein to “issue” and derivations thereof with respect to the Letter
of Credit shall also include extensions or modifications of the Letter of
Credit, unless the context otherwise requires.
 
SECTION 3.02      Application; Letter of Credit.
 
(a)                The Application shall be irrevocable and in such form as the
Issuing Lender shall from time to time require or agree to accept (including any
type of electronic form or means of communication). The Issuing Lender’s records
of the content of any inquiry, communication or instruction (whether written,
telegraphic, facsimile, electronic or other written communication) regarding the
Letter of Credit, the Application and this Agreement shall be conclusive absent
manifest error.  The Issuing Lender may transmit the Letter of Credit (or any
amendment, replacement, extension or modification thereof) by S.W.I.F.T. message
and thereby bind the Borrower directly and as indemnitor to the S.W.I.F.T.
rules, including rules obligating the Borrower or the Issuing Lender to pay
charges.
 
(b)                If the Letter of Credit is issued subject to UCP 500 or 600
(the “Uniform Customs”), unless otherwise agreed, in the event that any
installment of the Letter of Credit is not drawn within the period allowed for
that installment, the Letter of Credit may continue to be available for any
subsequent installments in the sole discretion of the Issuing Lender,
notwithstanding Article 41 of UCP 500 or Article 32 of UCP 600.
 

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(c)                If the Letter of Credit provides for automatic extension
without amendment, the Borrower agrees that it will notify the Issuing Lender in
writing at least sixty (60) days prior to the last day specified in the Letter
of Credit by which the Issuing Lender must give notice of nonextension as to
whether or not it wishes the Letter of Credit to be extended. Any decision to
extend or not extend the Letter of Credit shall be in the Issuing Lender’s sole
discretion and judgment.  The Borrower hereby acknowledges that in the event the
Issuing Lender notifies the beneficiary of the Letter of Credit that the Issuing
Lender has elected not to extend the Letter of Credit and the beneficiary draws
on the Letter of Credit after receiving the notice of non-extension, the
Borrower acknowledges and agrees that the Borrower shall have no claim or cause
of action against the Issuing Lender, the Administrative Agent or any Lender or
defense against payment under the Letter of Credit for the Issuing Lender’s
discretionary decision to extent or not extend the Letter of Credit.
 
(d)                If the Letter of Credit’s terms and conditions provide that
the Issuing Lender  give the beneficiary a notice of pending expiration, the
Borrower agrees that it will notify the Issuing Lender in writing at least sixty
(60) days prior to the last day specified in the Letter of Credit by which the
Issuing Lender must give such notice of the pending expiration date.  In the
event that the Borrower fails to so notify the Issuing Lender and the Letter of
Credit is extended, the Borrower’s obligations under this Agreement and the
other Loan Documents shall continue in effect and be binding on the Borrower
with regard to the Letter of Credit so extended.
 
(e)                The Issuing Lender shall promptly furnish to the Borrower a
copy of the Letter of Credit and promptly notify each Lender of the issuance and
upon request by any Lender, furnish to such Lender a copy of the Letter of
Credit and the amount of such Lender’s L/C Participation therein.
 
SECTION 3.03     Commissions and Other Charges.
 
(a)                The Borrower shall pay to the Administrative Agent, for the
account of the Issuing Lender and the L/C Participants, a letter of credit
commission with respect to the Letter of Credit in an amount equal to the
product of (i) the average daily maximum amount available to be drawn during the
relevant quarter under the Letter of Credit and (ii) the Applicable Margin
(determined on a per annum basis). Such commission shall be payable quarterly in
arrears on the last Business Day of each calendar quarter and on the Termination
Date commencing on the last Business Day of the calendar quarter in which the
Letter of Credit is issued. The Administrative Agent shall, promptly following
its receipt thereof, distribute to the Issuing Lender and the L/C Participants
all commissions received pursuant to this Section 3.03(a) in accordance with
their respective Commitment Percentages.  All commissions and fees provided
hereunder shall be computed on the basis of a 360-day year and assessed for the
actual number of days elapsed.
 
(b)                [Intentionally Omitted].
 
(c)                In addition to the foregoing fees and commissions, the
Borrower shall pay or reimburse the Issuing Lender for such normal and customary
costs and expenses as are incurred or charged by the Issuing Lender in issuing,
effecting payment under, transferring, amending or otherwise administering the
Letter of Credit.

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        SECTION 3.04     L/C Participations.
 
(a)                The Issuing Lender irrevocably agrees to grant and hereby
grants to each L/C Participant, and, to induce the Issuing Lender to issue the
Letter of Credit, each L/C Participant irrevocably agrees to accept and purchase
and hereby accepts and purchases from the Issuing Lender, on the terms and
conditions hereinafter stated, for such L/C Participant’s own account and risk
an undivided interest equal to such L/C Participant’s Commitment Percentage in
the Issuing Lender’s obligations and rights under and in respect of the Letter
of Credit issued (or deemed issued) hereunder and the amount of each draft paid
by the Issuing Lender thereunder.  Each L/C Participant unconditionally and
irrevocably agrees with the Issuing Lender that, if a draft is paid under the
Letter of Credit for which the Issuing Lender is not reimbursed in full by the
Borrower in accordance with the terms of this Agreement, such L/C Participant
shall pay to the Issuing Lender upon demand at the Issuing Lender’s address for
notices specified herein an amount equal to such L/C Participant’s Commitment
Percentage multiplied by the amount of such draft, or any part thereof, which is
not so reimbursed.
 
(b)                Upon becoming aware of any amount required to be paid by any
L/C Participant to the Issuing Lender pursuant to Section 3.04(a) in respect of
any unreimbursed portion of any payment made by the Issuing Lender under the
Letter of Credit, the Issuing Lender shall notify each L/C Participant of the
amount and due date of such required payment and such L/C Participant shall pay
to the Issuing Lender the amount specified on the applicable due date.  If any
such amount is paid to the Issuing Lender after the date such payment is due,
such L/C Participant shall pay to the Issuing Lender on demand, in addition to
such amount, the product of (i) such amount, times (ii) the daily average
Federal Funds Rate (or Base Rate, if such amount is not paid within three
Business Days of demand) as determined by the Administrative Agent during the
period from and including the date such payment is due to the date on which such
payment is immediately available to the Issuing Lender, times (iii) a fraction
the numerator of which is the number of days that elapse during such period and
the denominator of which is 360.  A certificate of the Issuing Lender with
respect to any amounts owing under this Section 3.04(b) shall be conclusive in
the absence of manifest error.  With respect to payment to the Issuing Lender of
the unreimbursed amounts described in this Section 3.04(b), if the L/C
Participants receive notice that any such payment is due (A) prior to 1:00 p.m.
(New York City time) on any Business Day, such payment shall be due that
Business Day, and (B) after 1:00 p.m. (New York City time) on any Business Day,
such payment shall be due on the following Business Day.
 
(c)                Whenever, at any time after the Issuing Lender has made
payment under the Letter of Credit and has received from any L/C Participant its
Commitment Percentage of such payment in accordance with this Section 3.04, the
Issuing Lender receives any payment related to the Letter of Credit (whether
directly from the Borrower or otherwise) including, without limitation, payments
made pursuant to Section 3.03, or any payment of interest on account thereof,
the Issuing Lender will distribute to such L/C Participant its pro rata share
thereof; provided, that in the event that any such payment received by the
Issuing Lender shall be required to be returned by the Issuing Lender, such L/C
Participant shall return to the Issuing Lender the portion thereof previously
distributed by the Issuing Lender to it.

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SECTION 3.05     Reimbursement Obligation of the Borrower.
 
(a)            The Letter of Credit.
 
(i)            In the event of any drawing under the Letter of Credit, the
Borrower agrees to reimburse, in same day funds, the Issuing Lender on each date
on which the Issuing Lender notifies the Borrower of the date and amount of a
draft paid under the Letter of Credit for the amount of (x) such draft so paid
and (y) any amounts referred to in Section 3.03(c) incurred by the Issuing
Lender in connection with such payment.
 
(ii)            If the Borrower shall fail to reimburse the Issuing Lender as
provided in this Section 3.05(a), the unreimbursed amount of such drawing shall
bear interest at the Default Rate from the date such amounts become payable
(whether at stated maturity, by acceleration or otherwise) until payment in
full.
 
(b)            Intentionally Omitted.
 
(c)            Each Lender acknowledges and agrees that its obligation to
reimburse the Issuing Lender for any draft paid under the Letter of Credit is
absolute and unconditional and shall not be affected by any circumstance
whatsoever, including, without limitation, the existence of a Default or an
Event of Default other than a Default or Event of Default that the Issuing
Lender had actual knowledge of at the time of the issuance of the Letter of
Credit.
 
SECTION 3.06                                            Obligations
Absolute.                                                      
 
The Borrower’s obligations under this Article III (including, without
limitation, the Obligations) shall be absolute and unconditional under any and
all circumstances and irrespective of any set-off, counterclaim or defense to
payment which the Borrower may have or have had against the Issuing Lender or
any beneficiary of the Letter of Credit or any other Person.  The Borrower also
agrees that the Issuing Lender and the L/C Participants shall not be responsible
for, and the Borrower’s reimbursement obligation under Section 3.05 shall not be
affected by, among other things, the validity or genuineness of documents or of
any endorsements thereon, even though such documents shall in fact prove to be
invalid, fraudulent or forged, or any dispute between or among the Borrower and
any beneficiary of the Letter of Credit or any other party to which the Letter
of Credit may be transferred or any claimswhatsoever of the Borrower against any
beneficiary of the Letter of Credit or any such transferee, except for such
matters caused by the Issuing Lender’s gross negligence or willful
misconduct.  The Issuing Lender shall not be liable for any error, omission,
interruption or delay in transmission, dispatch or delivery of any message or
advice, however transmitted, in connection with the Letter of Credit, except for
errors or omissions caused by the Issuing Lender’s gross negligence or willful
misconduct.  The Borrower agrees that any action taken or omitted by the Issuing
Lender under or in connection with the Letter of Credit or the related drafts or
documents, if done in the absence of gross negligence or willful misconduct and
in accordance with the standards of care specified in ISP 98 or the Uniform
Customs, as the case may be, and, to the extent not inconsistent therewith, the
UCC, shall be binding on the Borrower and shall not result in any liability of
the Issuing Lender or Lenders.
 
[End of Article III]
 

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ARTICLE IV
 
CONDITIONS PRECEDENT
 
SECTION 4.01     Conditions Precedent to the Execution and Delivery of this
Agreement.
 
       The obligation of the Lenders to execute and deliver this Agreement and
to issue the Letter of Credit is subject to the conditions precedent that the
Administrative Agent (and the Lenders, if applicable) shall have received on or
before the Closing Date, the following, each dated such date, in form and
substance reasonably satisfactory to the Administrative Agent and the Lenders,
with copies for each Lender:
 
       (a)            Agreement.  Receipt by the Administrative Agent of
counterparts of this Agreement, duly executed by the Borrower, the
Administrative Agent, the Issuing Lender and the Lenders;
 
       (b)            Secretary’s Certificate.  Receipt by the Administrative
Agent of (A) a certificate of the secretary or assistant secretary of the
Borrower, as applicable, dated the Closing Date and certifying (1) that attached
thereto is a true and complete copy of the certificate of incorporation and all
amendments thereto of the Borrower, certified as of a recent date by the
appropriate Governmental Authority in its jurisdiction of organization, (2) that
attached thereto is a true and complete copy of the by-laws of the Borrower in
effect on the Closing Date and at all times since a date prior to the date of
the resolutions described in clause (3) below, (3) that attached thereto is a
true and complete copy of resolutions or consents, as applicable, duly adopted
by the board of directors of the Borrower authorizing, as applicable, the
execution, delivery and performance of this Agreement and that such resolutions
have not been modified, rescinded or amended and are in full force and effect,
(4) that the organizational documents of the Borrower have not been amended
since the date of the last amendment thereto shown on the certificate of good
standing attached thereto, and (5) as to the incumbency and specimen signature
of each officer of the Borrower executing this Agreement and any other document
delivered in connection herewith on its behalf; and (B) a certificate of another
officer as to the incumbency and specimen signature of such secretary or
assistant secretary executing the certificate pursuant to (A) above;
 
       (c)            Officer’s Certificate.  Receipt by the Administrative
Agent of a certificate from the chief executive officer or chief financial
officer of the Borrower, as applicable, in form and substance reasonably
satisfactory to the Administrative Agent, to the effect that, as of the Closing
Date, all representations and warranties of the Borrower contained in this
Agreement and the other Loan Documents are true, correct and complete; that the
Borrower is not in violation or aware of any event that would cause a Material
Adverse Change in the business or operation as reflected in the Disclosure
Documents; that the Borrower is not in violation of any of the covenants
contained in this Agreement and the other Loan Documents; that, after giving
effect to the transactions contemplated by this Agreement, no Default or Event
of Default has occurred and is continuing; and that the Borrower has satisfied
each of the conditions precedent set forth in this Section 4.01;

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       (d)            Consents.  Receipt by the Administrative Agent of a
written representation from the Borrower that (i) all governmental, shareholder,
member, partner and third party consents and approvals necessary or, in the
reasonable opinion of the Administrative Agent, desirable, in connection with
the transactions contemplated hereby have been received and are in full force
and effect and (ii) no condition or requirement of law exists which could
reasonably be likely to restrain, prevent or impose any material adverse
condition on the transactions contemplated hereby;
 
       (e)            Proceedings. Receipt by the Administrative Agent of a
certificate from the Borrower certifying that no action, proceeding,
investigation, regulation or legislation has been instituted, or, to the
Borrower’s knowledge, threatened or proposed before any court, government agency
or legislative body to enjoin, restrain or prohibit, or to obtain damages in
respect of, or which is related to or arises out of this Agreement or any other
Loan Documents or the consummation of the transactions contemplated hereby or
thereby or which, in the Administrative Agent’s reasonable determination,
would prohibit the extension of the Letter of Credit or could reasonably be
expected to result in any such prohibition or a Material Adverse Change on the
Borrower, Marina, South Jersey Gas Company and the Borrower’s other
Subsidiaries, taken as a whole;
 
       (f)            Financial Statements.  Receipt by the Administrative Agent
of the Disclosure Documents and financial statements required pursuant to
Section 6.03, which demonstrate, in the Administrative Agent’s reasonable
judgment, together with all other information then available to the
Administrative Agent, that the Borrower can repay its debts and satisfy its
other obligations as and when they become due, and can comply with the financial
covenants contained in this Agreement;
 
       (g)            Good Standing Certificate.  Receipt by the Administrative
Agent of a certificate of good standing for the Borrower, dated on or
immediately prior to the Closing Date, from the Secretary of State of the state
of organization of the Borrower and from all states in which the Borrower is
required to obtain a certificate of good standing or like certificate due to the
nature of its operations in such state;
 
       (h)            Fees.  Receipt by the Administrative Agent and the Lenders
of the fees set forth or referenced in this Agreement and any other accrued and
unpaid fees, expenses or commissions due hereunder (including, without
limitation, legal fees and expenses of counsel to the Administrative Agent), and
to any other Person such amount as may be due thereto in connection with the
transactions contemplated hereby, including all taxes, fees and other charges
related to the Loan Documents;
 
     (i)            Application.  The Administrative Agent shall have received
an Application signed by duly authorized officer of the Borrower, dated such
date, stating that:

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    (i)            The representations and warranties of the Borrower contained
in Section 5.01 of this Agreement are true and correct on and as of the date of
the issuance of the Letter of Credit as though made on and as of such date, both
before and after giving effect to the issuance of the Letter of Credit and to
the application of the proceeds thereof; and
 
    (ii)            Since December 31, 2006, there has been no Material Adverse
Change; and
 
    (iii)            No event has occurred and is continuing, or would result
from the issuance of the Letter of Credit or the application of the proceeds
thereof, as the case may be, which constitutes a Default or an Event of Default;
 
       (j)            Intentionally Omitted;
 
      (k)            Opinions.  Opinions of Cozen O’Connor, counsel to the
Borrower, in substantially the form of Exhibit A hereto, and as to such other
matters as the Administrative Agent and the Lenders may reasonably request,
addressed to the Administrative Agent and the Lenders;
 
    (l)            Intentionally Omitted;
 
       (m)            Intentionally Omitted; and
 
       (n)            Other.  Receipt by the Administrative Agent of all other
opinions, certificates and instruments in connection with the transactions
contemplated by this Agreement satisfactory in form and substance to the
Required Lenders.
 
SECTION 4.02      [Reserved].
 
SECTION 4.03      [Reserved].
 
SECTION 4.04      Reliance on Certificates.
 
    Each of the Lenders, the Issuing Lender and the Administrative Agent shall
be entitled to rely conclusively upon the certificates delivered from time to
time by officers of the Borrower as to the names, incumbency, authority and
signatures of the respective Persons named therein until such time as the
Administrative Agent may receive a replacement certificate, in form acceptable
to the Administrative Agent, from an officer of the Borrower identified to the
Administrative Agent as having authority to deliver such certificate, setting
forth the names and true signatures of the officers and other representatives of
the Borrower thereafter authorized to act on its behalf.
 
[End of Article IV]
 

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ARTICLE V
 
REPRESENTATIONS AND WARRANTIES
 
SECTION 5.01         Representations and Warranties of the Borrower. The
Borrower hereby represents and warrants as follows:
 
(a)                Each of the Borrower and its Subsidiaries is an entity duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization, as applicable and is duly
qualified to do business in, and is in good standing in, all other jurisdictions
where the nature of its business or the nature of property owned or used by it
makes such qualification necessary, except where such failure would not result
in a Material Adverse Change. Each of the Borrower and its Subsidiaries has all
requisite corporate (or other applicable) powers and authority to own or lease
and operate its properties and to carry on its business as now conducted and as
proposed to be conducted.
 
(b)                The execution, delivery and performance by the Borrower and,
where applicable, each Subsidiary of this Agreement, each Loan Document to which
it is a party are within the Borrower’s or Subsidiary’s corporate (or other
applicable) powers, have been duly authorized by all necessary corporate (or
other applicable) action, do not contravene (i) the Borrower’s or Subsidiary’s
certificate of incorporation (or other applicable formation document or
operating agreement), (ii) any law, rule or regulation applicable to the
Borrower or such Subsidiary or (iii) any contractual or legal restriction
binding on or affecting the Borrower or such Subsidiary, and will not result in
or require the imposition of any lien or encumbrance on, or security interest
in, any property (including, without limitation, accounts or contract rights) of
the Borrower or its Subsidiaries, except as provided in this Agreement and any
other the Loan Document.
 
(c)                No Governmental Action is required for the execution or
delivery by the Borrower or its Subsidiaries of this Agreement, any other Loan
Document to which it is a party or for the performance by the Borrower or its
Subsidiaries of its obligations under this Agreement, any other Loan Document to
which it is a party other than those which have previously been duly obtained,
are in full force and effect, are not subject to any pending or, to the
knowledge of the Borrower, threatened appeal or other proceeding seeking
reconsideration and as to which all applicable periods of time for review,
rehearing or appeal with respect thereto have expired.
 
(d)                This Agreement and each Loan Document to which the Borrower
or any Subsidiary is a party is a legal, valid and binding obligation of the
Borrower or Subsidiary party thereto, enforceable against the Borrower or
applicable Subsidiary in accordance with its terms subject to the effect of
bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium and
other similar laws of general application affecting rights and remedies of
creditors generally.
 

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(e)                Except as disclosed in the Disclosure Documents, there is no
pending or, to the Borrower’s knowledge, threatened action or proceeding
(including, without limitation, any proceeding relating to or arising out of
Environmental Laws) affecting the Borrower or any of its Subsidiaries before any
court, governmental agency or arbitrator that has a reasonable possibility of
resulting in a Material Adverse Change.
 
(f)                The audited consolidated balance sheet of the Borrower and
its Consolidated Subsidiaries, as at December 31, 2006, and the related
consolidated statements of income, retained earnings and cash flows of the
Borrower and its Consolidated Subsidiaries for the fiscal year then ended, and
the unaudited consolidated balance sheet of the Borrower and its Consolidated
Subsidiaries as at September 30, 2007, and the related consolidated statements
of income, retained earnings and cash flows of the Borrower and its Consolidated
Subsidiaries for the six (6) months then ended, copies of which have been
furnished to the Administrative Agent and each Lender, fairly present in all
material respects the financial condition of the Borrower and its Consolidated
Subsidiaries as at such dates and the results of the operations of the Borrower
and its Consolidated Subsidiaries for the periods ended on such dates, all in
accordance with GAAP consistently applied, subject, solely in the case of
unaudited consolidated balance sheets, to normal year end adjustments. Since
December 31, 2006, there has been no Material Adverse Change, or material
adverse change in the facts and information regarding such entities as
represented to the Closing Date.
 
(g)                The issuance of, and the existence of, the Letter of Credit
and the use of the proceeds thereof will comply with all provisions of
applicable law and regulation in all material respects.
 
(h)                Neither the Borrower nor any Subsidiary of the Borrower is an
“investment company” or a company “controlled” by an “investment company”,
within the meaning of the Investment Company Act of 1940, as amended.
 
(i)                Intentionally Deleted.
 
(j)                Neither the Borrower nor its Subsidiaries is engaged in the
business of extending credit for the purpose of buying or carrying margin stock
(within the meaning of Regulation U issued by the Board of Governors of the
Federal Reserve System), and no proceeds of any drawing on the Letter of Credit
will be used to buy or carry any margin stock or to extend credit to others for
the purpose of buying or carrying any margin stock.
 
(k)                No ERISA Event has occurred or is reasonably expected to
occur with respect to any Plan which reasonably could be expected to result in a
Material Adverse Change. Since the actuarial valuation date specified in the
most recent Schedule B (Actuarial Information) to the annual report of Plans
maintained by the Borrower (Form 5500 Series), if any, (i) there has been no
Material Adverse Change in the funding status of the Plans referred to therein
and (ii) no “prohibited transaction” has occurred with respect thereto. Neither
 

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the Borrower nor any of itsrespective ERISA Affiliates has incurred nor
reasonably expects to incur any material withdrawal liability under ERISA to any
Multiemployer Plan.
 
(l)                Except as set forth in the Disclosure Documents, the Borrower
and its Subsidiaries are in compliance in all material respects with all
applicable Federal, state and local statutes, rules, regulations, orders and
other provisions of law relating to Hazardous Materials, air emissions, water
discharge, noise emission and liquid disposal, and other environmental, health
and safety matters, other than those the non-compliance with which would not
result in a Material Adverse Change (taking into consideration all fines,
penalties and sanctions that may be imposed because of such non-compliance) or
on the ability of the Borrower to perform its obligations under this Agreement
or any other Loan Document to which the Borrower is a party. Except as set forth
in the Disclosure Documents, neither the Borrower nor any of its respective
Subsidiaries has received from any Governmental Authority any notice of any
material violation of any such statute, rule, regulation, order or provision.
 
(m)                The Borrower and its Subsidiaries have filed all tax returns
(Federal, state and local) required to be filed and paid all taxes shown thereon
to be due, including interest and penalties, except to the extent that the
Borrower or any such Subsidiary is diligently contesting any such taxes in good
faith and by appropriate proceedings, and for which adequate reserves for
payment thereof have been established.
 
(n)                No event has occurred or is continuing which constitutes a
Default or an Event of Default, or which constitutes, or which with the passage
of time or giving of notice or both would constitute, a default or event of
default by the Borrower or Subsidiary thereof under any material agreement or
contract, judgment, decree or order by which the Borrower or any of its
respective properties may be bound or which would require the Borrower or
Subsidiary thereof to make any payment thereunder prior to the scheduled
maturity date therefore, where such default could reasonably be expected to
result in a Material Adverse Change.
 
(o)                As of the Closing Date, the Borrower and each of its
Subsidiaries will be Solvent.
 
(p)                The capitalization of the Borrower and each Significant
Subsidiary of the Borrower consists of the Capital Stock, authorized, issued and
outstanding, of such classes and series, with or without par value, described on
Schedule II hereto.  All such outstanding Capital Stock has been duly authorized
and validly issued and are fully paid and nonassessable.  Except as set forth in
the Disclosure Documents, there are no outstanding warrants, subscriptions,
options, securities, instruments or other rights of any type or nature
whatsoever, which are convertible into, exchangeable for or otherwise provide
for or permit the issuance of, Capital Stock of the Borrower or any Subsidiary
of the Borrower or are otherwise exercisable by any Person.
 
(q)                The Borrower and each Subsidiary of the Borrower has good and
marketable title to all assets and other property purported to be owned by it.
 

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(r)                None of the properties or assets of the Borrower is subject
to any Lien, except Permitted Liens.
 
(s)                All written information, reports and other papers and data
produced by or on behalf of the Borrower and furnished to the Administrative
Agent and the Lenders were, at the time the same were so furnished, complete and
correct in all material respects. No document furnished or written statement
made to the Administrative Agent or the Lenders by the Borrower in connection
with the negotiation, preparation or execution of this Agreement or any other
Loan Documents contains or will contain any untrue statement of a fact material
to the creditworthiness of the Borrower or its Subsidiaries or omits or will
omit to state a fact necessary in order to make the statements contained therein
not misleading.
 
(t)                Intentionally Omitted.
 
(u)                Intentionally Omitted.
 
(v)                The Borrower is not listed on the specially Designated
Nationals and Blocked Persons List maintained by the Office of Foreign Asset
Control, Department of the Treasury (“OFAC”)  pursuant to Executive Order No.
13224, 66 Fed. Reg. 49079 (Sept. 25, 2001), and/or any other list maintained
pursuant to any of the rules and regulations of OFAC or pursuant to any other
applicable Executive Orders or otherwise subject to sanction under an OFAC
implemented regulation.
 

 
[End of Article V]
 

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ARTICLE VI
 
COVENANTS OF THE COMPANY
 
SECTION 6.01      Affirmative Covenants.
 
    Until the Obligations have been finally and indefeasibly paid and satisfied
in full and the Commitments terminated, the Borrower will, and will cause each
of its Subsidiaries, unless the Required Lenders shall otherwise consent in
writing, to:
 
(a)                Preservation of Existence, Etc.  Preserve and maintain, and
cause each of its Subsidiaries to preserve and maintain, its corporate or
company, as applicable, existence, material rights (statutory and otherwise) and
franchises, and take such other action as may be necessary or advisable to
preserve and maintain its right to conduct its business in the states where it
shall be conducting its business, except where failure to do so does not result
in, or could not reasonably be expected to have, a Material Adverse Change.
 
(b)                Maintenance of Properties, Etc.  Maintain, and cause each of
its Subsidiaries to maintain, good and marketable title to all of its properties
which are used or useful in the conduct of its business, and preserve, maintain,
develop and operate, and cause each of its Subsidiaries to preserve, maintain,
develop and operate, in substantial conformity with all laws and material
contractual obligations, all such properties in good working order and
condition, ordinary wear and tear excepted, except where such failure would not
result in a Material Adverse Change.
 
(c)                Ownership.  Cause the Borrower to own, at all times, 100% of
the Capital Stock having voting rights of Marina and South Jersey Gas.
 
(d)                Compliance with Material Contractual Obligations, Laws,
Etc.  Comply, and cause each of its Subsidiaries to comply, with the
requirements of all material contractual obligations and all applicable laws,
rules, regulations and orders, the failure to comply with which could reasonably
be expected to result in a Material Adverse Change, such compliance to include,
without limitation, paying before the same become delinquent all taxes,
assessments and governmental charges imposed upon it or upon its property except
to the extent diligently contested in good faith and by appropriate proceedings
and for which adequate reserves for the payment thereof have been established,
and complying with the requirements of all applicable Federal, state and local
statutes, rules, regulations, orders and other provisions of law relating to
Hazardous Materials, air emissions, water discharge, noise emission and liquid
disposal, and other environmental, health and safety matters.
 
(e)                Insurance.  Maintain, and cause each of its Subsidiaries to
maintain, insurance with financially sound and reputable insurance companies or
associations in such amounts and covering such risks as are usually carried by
companies engaged in the same or similar businesses and similarly situated.
 

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(f)                Visitation Rights; Keeping of Books.  At any reasonable time
and from time to time, upon reasonable advance notice, permit the Administrative
Agent or any of the Lenders or any agents or representatives thereof, to examine
and make copies of and abstracts from the records and books of account of, and
visit the properties of, the Borrower and any of its Subsidiaries, and to
discuss the affairs, finances and accounts of the Borrower and any of its
Subsidiaries with any of their respective officers or directors and with their
respective independent certified public accountants and keep proper books of
record and account, in which full and correct entries shall be made of all
financial transactions and the assets and liabilities of the Borrower in
accordance with GAAP, consistent with the procedures applied in the preparation
of the financial statements referred to in Section 5.01(f) hereof.
 
(g)                Transactions with Affiliates.  Conduct, and cause each of its
Subsidiaries to conduct, all transactions otherwise permitted under this
Agreement with any of its Affiliates on terms that are fair and reasonable and
no less favorable to the Borrower or such Subsidiary than it would obtain in a
comparable arm’s-length transaction with a Person not an Affiliate.
 
(h)                Use of Proceeds.  Use the proceeds of the facility created by
this Agreement solely for the following purposes: the issuance of the Letter of
Credit to support the Borrower’s obligations under that certain Equity
Contribution Agreement, dated as of December 20, 2007, by and among the
Borrower, DCO Energy, LLC, Las Vegas Energy Partners, LLC and Sumitomo Mitsui
Banking Corporation, as administrative agent.
 
(i)                Loan Documents.   Perform and comply in all material respects
with each of the provisions of each Loan Document to which it is a party.
 
(j)                Risk Management.  Perform and comply in all material
respects, and require its Subsidiaries to perform and comply in all material
respects, with any risk management policies developed by the Borrower, including
such policies, if applicable, related to (i) the retail and wholesale inventory
distribution and trading procedures and (ii) dollar and volume limits.
 
(k)                Intentionally Omitted.
 
(l)                Intentionally Omitted.
 
(m)                OFAC Compliance.  Comply with any obligations that it may
have under the  USA Patriot Act (Title III of Pub. L. 107-56 (signed into law
October 26, 2001), all laws and executive orders administered by OFAC and all
regulations promulgated and executive orders having the force of law issued
pursuant thereto, as amended or supplemented from time to time (collectively,
“AML and Anti-Terrorist Acts”).  In the event that the Borrower becomes aware
that it is not in compliance with any applicable AML and Anti-Terrorist Acts,
the Borrower shall notify the Administrative Agent and diligently take all
actions required thereunder to become compliant.
 

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(n)                Further Assurances.  At the expense of the Borrower, promptly
execute and deliver, or cause to be promptly executed and delivered, all further
instruments and documents, and take and cause to be taken all further actions,
that may be reasonably necessary or that the Required Lenders through the
Administrative Agent may reasonably request, to enable the Lenders and the
Administrative Agent to enforce the terms and provisions of this Agreement and
the Loan Documents and to exercise their rights and remedies hereunder.  In
addition, the Borrower will use all reasonable efforts to duly obtain
Governmental Actions required from time to time on or prior to such date as the
same may become legally required, and thereafter to maintain all such
Governmental Actions in full force and effect, except where such failure would
not result in a Material Adverse Change.
 
SECTION 6.02     Negative Covenants.
 
    Until all of the Obligations have been finally and indefeasibly paid and
satisfied in full and the Commitments terminated, the Borrower will not, and
will not cause or permit any of its Subsidiaries, without the written consent of
the Required Lenders, to:
 
(a)                Liens, Etc.  Except as permitted in Section 6.02(c), create,
incur, assume, or suffer to exist, or permit any of its Subsidiaries to create,
incur, assume, or suffer to exist, any Lien other than Permitted Liens.
 
(b)                Indebtedness.  Create or suffer, or permit any Subsidiary to
create or suffer, to exist any Indebtedness except for Permitted Indebtedness.
 
(c)                Obligation to Ratably Secure.  Except as permitted by Section
6.02(a), create or suffer to exist, or permit any of its Subsidiaries to create
or suffer to exist, any Lien other than a Permitted Lien, in each case to secure
or provide for the payment of Indebtedness, unless, on or prior to the date
thereof, the Borrower shall have (i) pursuant to documentation reasonably
satisfactory to the Administrative Agent and Required Lenders, equally and
ratably secured the Obligations of the Borrower under this Agreement by a Lien
acceptable to the Administrative Agent and Required Lenders, and (ii) caused the
creditor or creditors, as the case may be, in respect of such Indebtedness to
have entered into an intercreditor agreement in form, scope and substance
reasonably satisfactory to the Administrative Agent and the Required Lenders.
 
(d)                Mergers, Etc.  Merge or consolidate with or into any Person,
or permit any of its Subsidiaries to do so, except that (i) any Subsidiary of
the Borrower may merge or consolidate with or into, any other Subsidiary of the
Borrower and (ii) any Subsidiary of the Borrower may merge or consolidate with
and into the Borrower; provided, that the Borrower is the surviving corporation;
provided, further, that in each case, immediately after giving effect to such
proposed transaction, no Event of Default or Default would exist.
 
(e)                Sale of Assets, Etc.  Sell, transfer, lease, assign or
otherwise convey or dispose, or permit any Subsidiary to sell, transfer, lease,
assign or otherwise convey or dispose, of assets (whether now owned or hereafter
acquired), in any single transaction or series of transactions, whether or not
related having an aggregate book value in excess of 10% of the Consolidated
assets of the Borrower and its Consolidated Subsidiaries, except for
dispositions of capital assets in the ordinary course of business as presently
conducted.

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(f)                Restricted Investments. Other than in the ordinary course of
business (i) make or permit to exist any loans or advances to, or any other
investment in, any Person except for investments in Permitted Investments, or
(ii) acquire any assets or property of any other Person.
 
(g)                New Business.  Permit the Borrower or any of its Subsidiaries
to enter into any business which is not substantially similar to that existing
on the Closing Date.
 
(h)                Distributions.  Pay any dividends on or make any other
distributions in respect of any Capital Stock or redeem or otherwise acquire any
such Capital Stock without in each instance obtaining the prior written consent
of the Required Lenders; provided, that (i) any Subsidiary of the Borrower may
pay regularly scheduled dividends or make other distributions to the Borrower;
and (ii) if no Default or Event of Default exists or would result therefrom, the
Borrower may pay distributions or dividends in either cash or Capital Stock or
may redeem or otherwise acquire Capital Stock.
 
(i)                Compliance with ERISA.  (i) Permit to exist any “accumulated
funding deficiency” (as defined in Section 412(a) of the Code), unless such
deficiency exists with respect to a Multiple Employer Plan or Multiemployer Plan
and the Borrower has no control over the reduction or elimination of such
deficiency, (ii) terminate, or permit any ERISA Affiliate to terminate, any Plan
of the Borrower or such ERISA Affiliate so as to result in any material
liability of the Borrower or ERISA Affiliate to the PBGC, or (iii) permit to
exist any occurrence of any reportable event (within the meaning of Section 4043
of ERISA), or any other event or condition, which presents a material risk of a
termination by the PBGC of any Plan of the Borrower or such ERISA Affiliate and
such a material liability of the Borrower or ERISA Affiliate to the PBGC.
 
(j)                Constituent Documents, Etc.  Change in any material respect
the nature of its certificate of incorporation, by-laws, or other similar
documents, or accounting policies or accounting practices (except as required or
permitted by the Financial Accounting Standards Board or GAAP).
 
(k)                Fiscal Year.  Change its Fiscal Year.
 
(l)                Intentionally Omitted.
 
SECTION 6.03     Reporting Requirements.
 
    So long as any Lender shall have any Commitment hereunder or the Borrower
shall have any obligation to pay any amount to the Administrative Agent or any
Lender hereunder, the Borrower will, unless the Required Lenders shall otherwise
consent in writing, provide to the Administrative Agent:

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       (a)                as soon as available and in any event within sixty
(60) days after the end of each of the first three quarters of each fiscal year
of the Borrower, a consolidated and consolidating balance sheet of the Borrower
and its Consolidated Subsidiaries as at the end of such quarter and consolidated
and consolidating statements of income, retained earnings and cash flows of the
Borrower and its Consolidated Subsidiaries for the period commencing at the end
of the previous fiscal year and ending with the end of such quarter, all in
reasonable detail and duly certified by the chief financial officer or the
treasurer of the Borrower as fairly presenting in all material respects the
financial condition of the Borrower and its Consolidated Subsidiaries as at such
date and the results of operations of the Borrower and its Consolidated
Subsidiaries for the periods ended on such date, except for normal year end
adjustments, all in accordance with GAAP consistently applied (for purposes
hereof delivery of the Borrower’s appropriately completed Form 10-Q will be
sufficient in lieu of delivery of such consolidated balance sheet and
consolidated statements of income, retained earnings and cash flows), together
with a Compliance Certificate, in the form of Exhibit C, of the chief financial
officer or the treasurer of the Borrower (A) demonstrating and certifying
compliance by the Borrower with the covenants set forth in Section 6.04 and (B)
stating that no Event of Default or Default has occurred and is continuing or,
if an Event of Default or Default has occurred and is continuing, a statement as
to the nature thereof and the action which the Borrower has taken and proposes
to take with respect thereto;
 
(b)                as soon as available and in any event within one hundred five
(105) days after the end of each fiscal year of the Borrower, a copy of the
annual report for such year for the Borrower and its Consolidated Subsidiaries,
containing consolidated and consolidating financial statements for such year
certified by, and accompanied by an unqualified opinion of, independent public
accountants reasonably acceptable to the Administrative Agent (for purposes
hereof, delivery of the Borrower’s appropriately completed Form 10-K will be
sufficient in lieu of delivery of such financial statements), together with a
Compliance Certificate, in the form of Exhibit C, of the chief financial officer
or the treasurer of the Borrower (A) demonstrating and certifying compliance by
the Borrower with the covenants set forth in Section 6.04 and (B) stating that
no Event of Default or Default has occurred and is continuing or, if an Event of
Default or Default has occurred and is continuing, a statement as to the nature
thereof and the action which the Borrower has taken and proposes to take with
respect thereto;
 
(c)                as soon as possible and in any event within five (5) days
after the occurrence of each Event of Default and each Default known to the
Borrower, a statement of the chief financial officer of the Borrower setting
forth details of such Event of Default or Default and the action which the
Borrower has taken and proposes to take with respect thereto;
 
(d)                as soon as possible and in any event within five (5) days
after receipt thereof by the Borrower or any of its ERISA Affiliates from the
PBGC copies of each notice received by the Borrower or such ERISA Affiliate of
the PBGC’s intention to terminate any Plan of the Borrower or such ERISA
Affiliate or to have a trustee appointed to administer any such Plan;
 
(e)                as soon as possible and in any event within five (5) days
after receipt thereof by the Borrower or any ERISA Affiliate from a
Multiemployer Plan sponsor, a copy of each notice received by the Borrower or
such ERISA Affiliate concerning the imposition of withdrawal liability in the
amount of at least $1,000,000 pursuant to Section 4202 of ERISA in respect of
which the Borrower or such ERISA Affiliate is reasonably expected to be liable;
 
(f)                as soon as possible and in any event within five (5) days
after the Borrower becomes aware of the occurrence thereof, notice of all
actions, suits, proceedings or other events (A) of the type described in Section
5.01(e) or (B) for which the Administrative Agent or the Lenders will be
entitled to indemnity under Section 10.05;

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       (g)                as soon as possible and in any event within five (5)
days after the sending or filing thereof, copies of all material reports that
the Borrower sends to any of its security holders, and copies of all reports and
registration statements which the Borrower or any of its Subsidiaries files with
the Securities and Exchange Commission or any national securities exchange;
 
(h)                as soon as possible and in any event within five (5) days
after requested, such other information respecting the business, properties,
assets, liabilities (actual or contingent), results of operations, prospects,
condition or operations, financial or otherwise, of the Borrower or any
Subsidiary thereof as any Lender through the Administrative Agent may from time
to time reasonably request;
 
(i)                from time to time and promptly upon each request, information
with respect to the Borrower as a Lender may request in order to comply with the
USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001);
and
 
(j)                as soon as possible and in any event within fifteen (15) days
after the occurrence of each ERISA Event, a statement of the chief financial
officer of the Borrower setting forth details of such ERISA Event and the action
which the Borrower has taken and proposes to take with respect thereto.
 
Information required to be delivered pursuant to this Section 6.03 shall be
deemed to have been delivered if such information shall have been posted by the
Borrower on an Intralinks or similar site to which the Administrative Agent has
been granted access or shall be available on the website of the Securities and
Exchange Commission at http://www.sec.gov and the Borrower shall have notified
the Administrative Agent of the availability of all Form 10-Q and Form 10-K
reports; provided that, if requested by the Administrative Agent or any Lender,
the Borrower shall deliver a paper copy of such information to the
Administrative Agent or such Lender.  Information required to be delivered
pursuant to this Section 6.03 may also be delivered by electronic communications
pursuant to procedures reasonably approved by the Administrative Agent.

SECTION 6.04     Financial Covenants.
 
    So long as any Lender shall have any Commitment hereunder or the Borrower
shall have any obligation to pay any amount to the Administrative Agent or any
Lender hereunder, the Borrower will, unless the Required Lenders shall otherwise
consent in writing, maintain at the end of each fiscal quarter a ratio of
Indebtedness to Consolidated Total Capitalization of the Borrower and its
Consolidated Subsidiaries of not more than 0.65 to 1.0.

[End of Article VI]

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ARTICLE VII
 
EVENTS OF DEFAULT
 
SECTION 7.01     Events of Default.
 
    Each of the following events should they occur and be continuing shall
constitute an “Event of Default”:
 
(a)                The Borrower shall fail to pay (i) any amount of principal
when the same becomes due and payable or (ii) any interest, fees or any other
amount payable hereunder within five (5) Business Days of when the same becomes
due and payable; or
 
(b)                Any representation or warranty made by or on behalf of the
Borrower or any Subsidiary in this Agreement, any Loan Document or by or on
behalf of the Borrower or any Subsidiary (or any of their officers) in
connection with this Agreement, any Loan Document shall prove to have been
incorrect in any material respect when made or deemed made; or
 
(c)                The Borrower shall fail to perform or observe any term,
covenant or agreement contained in Section 6.01(a), (c), (e), (g), (h), (i) or
(j), Section 6.02(a), (b), (c), (d), (e), (f), (g), (h), or (l), Section 6.03 or
Section 6.04, or (ii) the Borrower shall fail to perform or observe any other
term, covenant or agreement contained in this Agreement (other than obligations
specifically set forth elsewhere in this Section 7.01) on its part to be
performed or observed if the failure to perform or observe such other term,
covenant or agreement, shall remain unremedied for thirty (30) days after
written notice thereof shall have been given to the Borrower by the
Administrative Agent or any Lender; or
 
(d)                The Borrower or any Significant Subsidiary thereof shall fail
to pay any principal of or premium or interest on any Indebtedness (other than
Indebtedness incurred under this Agreement) thereof in the aggregate (for all
such Persons) in excess of $15,000,000, when the same becomes due and payable
(whether by scheduled maturity, required prepayment, acceleration, demand or
otherwise), and such failure shall continue after the applicable grace period,
if any, specified in the agreement or instrument relating to such Indebtedness;
or any other event shall occur or condition shall exist under any agreement or
instrument relating to any such Indebtedness and shall continue after the
applicable grace period, if any, specified in such agreement or instrument, if
the effect of such event or condition is to accelerate, or to permit the
acceleration of, the maturity of such Indebtedness; or any such Indebtedness
shall be declared to be due and payable, or required to be prepaid (other than
by a regularly scheduled required prepayment), prior to the stated maturity
thereof; or
 

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(e)                The Borrower or any Significant Subsidiary thereof shall
generally not pay its debts as such debts become due, or shall admit in writing
its inability to pay its debts generally, or shall make a general assignment for
the benefit of creditors, or any proceeding shall be instituted by or against
the Borrower or a Significant Subsidiary thereof seeking to adjudicate it a
bankrupt or insolvent, or seeking liquidation, winding up, reorganization,
arrangement, adjustment, protection, relief, or composition of it or its debts
under any law relating to bankruptcy, insolvency or reorganization or relief of
debtors, or seeking the entry of an order for relief or the appointment of a
receiver, trustee, custodian or other similar official for it or for any
substantial part of its property and, in the case of any such proceeding
instituted against it (but not instituted by it), such proceeding shall remain
undismissed or unstayed for a period of forty-five (45) days, any of the actions
sought in such proceeding (including, without limitation, the entry of an order
for relief against, or the appointment of a receiver, trustee, custodian or
other similar official for, it or for any substantial part of its property)
shall occur or the Borrower or a Significant Subsidiary thereof shall consent to
or acquiesce in any such proceeding; or the Borrower or a Significant Subsidiary
thereof shall take any corporate action to authorize any of the actions set
forth above in this subsection (e); or
 
(f)                Any judgments or orders for the payment of money in excess of
$15,000,000 (in the aggregate) shall be rendered against the Borrower or any
Significant Subsidiary thereof and either (i) enforcement proceedings shall have
been commenced by any creditor upon any such judgment or order or (ii) there
shall be any period of ten (10) consecutive days during which a stay of
enforcement of any such judgment or order, by reason of a pending appeal or
otherwise, shall not be in effect; or
 
(g)                The obligations of the Borrower or any Subsidiary under this
Agreement, any other Loan Document shall become unenforceable, or the Borrower
or any Subsidiary, or any court or governmental or regulatory body having
jurisdiction over the Borrower or any Subsidiary, shall so assert in writing or
the Borrower or any Subsidiary shall contest in any manner the validity or
enforceability thereof; or
 
(h)                Any ERISA Event shall have occurred with respect to a Plan
and, thirty (30) days after notice thereof shall have been given to the Borrower
by the Administrative Agent or any Lender, (i) such ERISA Event shall still
exist and (ii) such ERISA Event is reasonably likely to result in a liability or
lien in excess of $15,000,000 against the Borrower or any ERISA Affiliate; or
 
(i)                The Borrower or any Affiliate thereof as employer under a
Multiemployer Plan shall have made a complete or partial withdrawal from such
Multiemployer Plan and the plan sponsor of such Multiemployer Plan shall have
notified such withdrawing employer that such employer has incurred a withdrawal
liability in an annual amount exceeding $5,000,000; or
 
(j)                Any Governmental Approval shall be rescinded, revoked,
otherwise terminated, or amended or modified in any manner which is materially
adverse to the interests of the Lenders and the Administrative Agent; or
 

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(k)                An “Event of Default” or “Default” under the SJG Credit
Agreement; or
 
(l)                [Intentionally Omitted].
 
(m)                A Change in Control shall occur.
 
SECTION 7.02      Upon an Event of Default.
 
    Upon the occurrence of an Event of Default, with the consent of the Required
Lenders, the Administrative Agent may, or upon the request of the Required
Lenders, the Administrative Agent shall, by notice to the Borrower:
 
(a)                Acceleration; Termination of Credit Facility.  (i) Declare
the principal of and interest on the L/C Obligations and the other Obligations
at the time outstanding, and all other amounts owed to the Lenders and to the
Administrative Agent under this Agreement (including, without limitation, all
L/C Obligations, whether or not the beneficiaries of the Letter of Credit shall
have presented the documents required thereunder), to be forthwith due and
payable, whereupon the same shall immediately become due and payable without
presentment, demand, protest or other notice of any kind, all of which are
expressly waived, anything in this Agreement to the contrary notwithstanding
and/or (ii) terminate the Commitment; provided, that upon the occurrence of an
Event of Default specified in Section 7.01(e), the Commitments shall be
automatically terminated and all Obligations shall automatically become due and
payable without presentment, demand, protest or other notice of any kind, all of
which are expressly waived, anything in this Agreement or in any other Loan
Document to the contrary notwithstanding.
 
(b)                The Letter of Credit.  If presentment for honor of the Letter
of Credit shall not have occurred at the time of an acceleration pursuant to
Section 7.02(a), the Borrower shall at such time deposit in a cash collateral
account with the Administrative Agent an amount equal to the aggregate then
undrawn and unexpired amount of the Letter of Credit.  Amounts held in such cash
collateral account shall be applied by the Administrative Agent to the payment
of drafts drawn under the Letter of Credit, and the unused portion thereof after
the Letter of Credit shall have expired or been fully drawn upon, if any, shall
be applied to repay the other Obligations.  After the Letter of Credit shall
have expired or been fully drawn upon, and all Obligations shall have been paid
in full, the balance, if any, in such cash collateral account shall be returned
to the Borrower.
 
SECTION 7.03      Rights and Remedies Cumulative; Non-Waiver; Etc.
 
    The enumeration of the rights and remedies of the Administrative Agent and
the Lenders set forth in this Agreement is not intended to be exhaustive, and
the exercise by the Administrative Agent and the Lenders of any right or remedy
shall not preclude the exercise of any other rights or remedies, all of which
shall be cumulative, and shall be in addition to any other right or remedy given
hereunder or that may now or hereafter exist in law or in equity or by suit or
otherwise.  No delay or failure to take action on the part of the Administrative
Agent or any Lender in exercising any right, power or privilege shall operate as
a waiver thereof, nor shall any single or partial exercise of any such right,
power or privilege preclude other or further exercise thereof or the exercise of
any other right, power or privilege or shall be construed to be a waiver of any
Event of Default.  No course of dealing between the Borrower, the Administrative
Agent and the Lenders or their respective agents or employees shall be effective
to change, modify or discharge any provision of this Agreement or any of the
other Loan Documents or to constitute a waiver of any Event of Default.
 
[End of Article VII]
 

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ARTICLE VIII
 
RESERVED
 

[End of Article VIII]
 

 

 

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ARTICLE IX
 
THE ADMINISTRATIVE AGENT
 
SECTION 9.01      Appointment.
 
    Each Lender hereby irrevocably designates and appoints JPMCB as the
Administrative Agent of such Lender and the Issuing Lender under this Agreement,
the other Loan Documents, and each such Lender and the Issuing Lender
irrevocably authorizes JPMCB, as the Administrative Agent for such Lender and
the Issuing Lender, to take such action on its behalf under the provisions of
this Agreement, the other Loan Documents and to exercise such powers and perform
such duties as are expressly delegated to the Administrative Agent by the terms
of this Agreement, the other Loan Documents, together with such other powers as
are reasonably incidental thereto. Notwithstanding any provision to the contrary
elsewhere in this Agreement, the Administrative Agent shall not have any duties
or responsibilities, except those expressly set forth herein, in the Loan
Documents, or any fiduciary relationship with any Lender, and no implied
covenants, functions, responsibilities, duties, obligations or liabilities shall
be read into this Agreement, any other Loan Documents or otherwise exist against
the Administrative Agent.
 
SECTION 9.02      Delegation of Duties.
 
    The Administrative Agent may execute any of its duties under this Agreement,
the Letter of Credit, the other Loan Documents by or through agents or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties.  The Administrative Agent shall not be
responsible for the negligence or misconduct of any agents or attorneys-in-fact
selected by it with reasonable care.
 
SECTION 9.03      Exculpatory Provisions.
 
    Neither the Administrative Agent nor any of its officers, directors,
employees, agents, attorneys-in-fact or affiliates shall be (i) liable for any
action lawfully taken or omitted to be taken by it or such Person under or in
connection with this Agreement, any other Loan Document (except in the case of
gross negligence or willful misconduct as determined by a court of competent
jurisdiction) or (ii) responsible in any manner to any of the Lenders for any
recitals, statements, representations or warranties made by the Borrower or any
officer thereof contained in this Agreement, any other Loan Document or in any
certificate, report, statement or other document referred to or provided for in,
or received by the Administrative Agent under or in connection with, this
Agreement, any other Loan Document or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or the Letter of
Credit, any other Loan Document or for any failure of the Borrower or its
Subsidiaries to perform its obligations hereunder or thereunder.  The
Administrative Agent shall not be under any obligation to any Lender to
ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement, any other Loan
Document, or to inspect the properties, books or records of the Borrower.

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SECTION 9.04       Reliance by Administrative Agent.
 
    The Administrative Agent shall be entitled to rely, and shall be fully
protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, cablegram, telegram, telecopy, telex or teletype
message, statement, order or other document or conversation believed by it to be
genuine and correct and to have been signed, sent or made by the proper Person
or Persons and upon advice and statements of legal counsel (including, without
limitation, counsel to the Borrower), independent accountants and other experts
selected by the Administrative Agent.  The Administrative Agent may deem and
treat the payee of any evidence of indebtedness in respect of any indebtedness
hereunder as the owner thereof for all purposes unless a written notice of
assignment, negotiation or transfer thereof shall have been filed with the
Administrative Agent.  The Administrative Agent shall be fully justified in
failing or refusing to take any action under this Agreement, the Letter of
Credit, any Loan Document unless it shall first receive such advice or
concurrence of the Required Lenders (unless all of the Lenders’ action is
required hereunder) as it deems appropriate or it shall first be indemnified to
its satisfaction by the Lenders against any and all liability and expense which
may be incurred by it by reason of taking or continuing to take any such
action.  The Administrative Agent shall in all cases be fully protected in
acting, or in refraining from acting, under this Agreement, the Loan Documents
in accordance with a request of the Required Lenders (unless all of the Lenders’
action is required hereunder), and such request and any action taken or failure
to act pursuant thereto shall be binding upon all the Lenders.
 
SECTION 9.05       Notice of Default.
 
    The Administrative Agent shall not be deemed to have knowledge or notice of
the occurrence of any Event of Default hereunder unless the Administrative Agent
has received notice from a Lender or the Borrower referring to this Agreement,
describing such Event of Default and stating that such notice is a “notice of
default”. In the event that the Administrative Agent receives such a notice, the
Administrative Agent shall give notice thereof to the Lenders.  The
Administrative Agent shall take such action with respect to such Event of
Default as shall be reasonably directed by the Required Lenders; provided, that
unless and until the Administrative Agent shall have received such directions,
the Administrative Agent may (but shall not be obligated to) take such action,
or refrain from taking such action, with respect to such Event of Default as it
shall deem advisable in the best interests of the Issuing Lender and the
Lenders.
 
SECTION 9.06      Non-Reliance on Administrative Agent and Other Lenders.
 
    Each Lender expressly acknowledges that neither the Administrative Agent nor
any of its officers, directors, employees, agents, attorneys-in-fact or
affiliates has made any representations or warranties to it and that no act by
the Administrative Agent hereinafter taken, including any review of the affairs
of the Borrower, shall be deemed to constitute any representation or warranty by
the Administrative Agent to any Lender.  Each Lender represents to the
Administrative Agent that it has, independently and without reliance upon the

 
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Administrative Agent or any other Lender, and based on such documents and
information as it has deemed appropriate, made its own appraisal of and
investigation into the business, operations, property, financial and other
condition and creditworthiness of the Borrower and made its own decision to
enter into this Agreement.  Each Lender also represents that it will,
independently and without reliance upon the Administrative Agent or any other
Lender, and based on such documents and information as it shall deem appropriate
at the time, continue to make its own credit analysis, appraisals and decisions
in taking or not taking action under this Agreement, the Loan Documents and to
make such investigation as it deems necessary to inform itself as to the
business, operations, property, financial and other condition and
creditworthiness of the Borrower.  Except for notices, reports and other
documents expressly required to be furnished to the Lenders by the
Administrative Agent hereunder, the Administrative Agent shall not have any duty
or responsibility to provide any Lender with any credit or other information
concerning the business, operations, property, condition (financial or
otherwise), prospects or creditworthiness of the Borrower which may come into
the possession of the Administrative Agent or any of its officers, directors,
employees, agents, attorneys-in-fact or affiliates.
 
SECTION 9.07      Indemnification.
 
    The Lenders agree to indemnify the Administrative Agent in its capacity as
such (to the extent not reimbursed by the Borrower and without limiting the
obligation of the Borrower to do so), ratably according to the respective
amounts of their Commitments, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind whatsoever which may at any time
(including, without limitation, at any time following the termination of the
Letter of Credit or Commitment) be imposed on, incurred by or asserted against
the Administrative Agent in any way relating to or arising out of this
Agreement, the Letter of Credit, any of the other Loan Documents, or any
documents contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by the
Administrative Agent under or in connection with any of the foregoing; provided,
that no Lender shall be liable for the payment of any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from the Administrative Agent’s gross
negligence or willful misconduct.  The agreements in this Section shall survive
the termination of this Agreement, the Letter of Credit and the payment of all
amounts payable hereunder.
 
SECTION 9.08     Administrative Agent in Its Individual Capacity.
 
    The Administrative Agent and its affiliates may make loans to, accept
deposits from and generally engage in any kind of business with, the Borrower as
though the Administrative Agent was not the Administrative Agent
hereunder.  With respect to its interest in the L/C Obligations and any other
amounts owed to it hereunder, the Administrative Agent shall have the same
rights and powers under this Agreement as any Lender and may exercise the same
as though it were not the Administrative Agent, and the terms “Lender” and
“Lenders” shall include the Administrative Agent in its individual capacity.

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SECTION 9.09        Successor Administrative Agent.
 
    The Administrative Agent may resign as Administrative Agent upon ten (10)
days’ notice to the Lenders and the Borrower.  If the Administrative Agent shall
resign as Administrative Agent under this Agreement, then the Required Lenders,
with the consent of the Borrower, shall appoint from among the Lenders a
successor agent for the Lenders, whereupon such successor agent shall succeed to
the rights, powers and duties of the Administrative Agent, and the term
“Administrative Agent” shall mean such successor agent effective upon its
appointment, and the former Administrative Agent’s rights, powers and duties as
Administrative Agent shall be terminated, without any other or further act or
deed on the part of such former Administrative Agent or any of the parties to
this Agreement.  After any retiring Administrative Agent’s resignation as
Administrative Agent, the provisions of this Section shall inure to its benefit
as to any actions taken or omitted to be taken by it while it was Administrative
Agent under this Agreement.  In the event the Administrative Agent resigns
pursuant to this Section 9.09, the Administrative Agent shall also resign in its
capacity as Issuing Lender.
 
SECTION 9.10         Issuing Lender.
 
    Each Lender hereby acknowledges that the provisions of this Article IX shall
apply to the Issuing Lender in its capacity as such; in the same manner, as such
provisions are expressly stated to apply to the Administrative Agent.
 
SECTION 9.11         Notices; Actions Under Loan Documents.
 
    All notices received by the Issuing Lender pursuant to this Agreement, any
other Loan Document shall be promptly delivered by the receiving party to the
Administrative Agent, for distribution to the Lenders, and any notices, reports
or other documents received by the Administrative Agent pursuant to this
Agreement shall be promptly delivered to the Issuing Lender and the
Lenders.  The Issuing Lender hereby agrees not to amend or waive any provision
or consent to the amendment or waiver of any Loan Document without the consent
of the Required Lenders (or, to the extent required pursuant to Section 10.01,
all of the Lenders).
 
[End of Article IX]
 

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ARTICLE X
 
MISCELLANEOUS
 
SECTION 10.01       Amendments, Etc.
 
    No amendment or waiver of any provision of this Agreement, nor consent to
any departure by the Borrower therefrom, shall in any event be effective unless
the same shall be in writing and signed by the Required Lenders and the
Borrower, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given; provided, no
such waiver and no such amendment, supplement or modification shall, without the
written consent of all the Lenders (a) extend the Termination Date or the
maturity of any unreimbursed drawing, or reduce the rate or extend the time of
payment of interest in respect thereof, or reduce any fee payable to any Lender
hereunder or extend the time for the payment thereof or change the amount of any
Lender’s Commitment, in each case without the written consent of all the
Lenders, (b) amend, modify or waive any provision of this Section 10.01 or
Section 10.09(e) or reduce the percentage specified in the definition of
Required Lenders, or consent to the assignment or transfer by the Borrower of
any of its rights and obligations under this Agreement, in each case without the
written consent of all the Lenders, (c) amend, modify or waive any provision of
Article IX without the written consent of the Administrative Agent, (d) waive,
modify or eliminate any of the conditions precedent specified in Article IV, in
each case without the written consent of all the Lenders, (e) forgive principal,
interest, fees or other amounts payable hereunder or (f) waive any requirement
for the release of collateral.
 
SECTION 10.02        Notices, Etc.
 
All notices and other communications provided for hereunder shall be in writing
(including telegraphic communication) and mailed, telecopied, telegraphed or
delivered as follows:
 
The Borrower:
 
South Jersey Industries, Inc.
1 South Jersey Plaza
Folsom, New Jersey 08037
Attention:  Stephen H. Clark
Telecopy No.:  (609) 561-8225
 
With a copy to:
 
Cozen O’Connor
The Atrium
1900 Market Street
Philadelphia, Pennsylvania 19103
Attention:  Richard J. Busis, Esq.
Telecopy No.:  (215) 665-2013

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The Administrative Agent or the Issuing Lender:

JPMorgan Chase Bank, N.A.
420 West Van Buren Street, Floor 02
Chicago, IL 60606-3534
Attention:  Fiore (Frank) Petrassi
Vice President - Global Trade Services
Phone: 312-954-1933
Telecopy:      312-954-5303
Email:  fiore.petrassi@jpmchase.com
Global Trade Customer Service Hot Line: 800-634-1969

With a copy to (other than in the case of any draw in respect of the Letter of
Credit or payment of any fees hereunder):

JPMorgan Chase Bank, N.A.
10 South Dearborn, 9th Floor
Chicago, IL 60603
Attention: Nancy R. Barwig
Mail Code IL1-0090
Telecopy: 312-732-1762

and to

JPMorgan Chase Bank, N.A.
10 South Dearborn, 9th Floor
Chicago, IL 60603
Attention:  Lisa Tverdek
Mail Code IL1-0874
Telecopy: 312-325-3238

and if to any Lender, at its address or telecopy number set forth on Schedule I
hereto; or, as to each party, at such other address as shall be designated by
such party in a written notice to the other parties.  All such notices and
communications shall, when mailed, be effective three (3) days after being
deposited in the mails or when sent by telecopy or telex or delivered to the
telegraph company, respectively, addressed as previously aforesaid.
 
   The Administrative Agent and the Issuing Lender are authorized to accept and
process any Application and any amendments, transfers, assignments of proceeds,
instructions, consents, waivers and all documents relating to the Letter of
Credit or any Application which are sent to the Administrative Agent or the
Issuing Lender by electronic transmission, including S.W.I.F.T., electronic
mail, telex, telecopy, telefax, courier, mail or other computer generated
telecommunications and such electronic communication shall have the same legal
effect as if written and shall be binding upon and enforceable against the
Borrower.  The Administrative Agent and the Issuing Lender may, but shall not be
obligated to, require authentication of such electronic transmission or that the
Administrative Agent or the Issuing Lender receive original documents prior to
acting on such electronic transmission.  If it is a condition of the Letter of
Credit that payment may be made upon receipt by the Issuing Lender of an
electronic transmission advising negotiation, the Borrower hereby agrees to
reimburse the Issuing Lender on demand for the amount indicated in such
electronic transmission advice, and further agrees to hold the Issuing Lender
harmless if the documents fail to arrive, or if, upon the arrival of the
documents, the Issuing Lender should determine that the documents do not comply
with the terms and conditions of the Letter of Credit.

 
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SECTION 10.03      No Waiver; Remedies.
 
    No failure on the part of the Administrative Agent, the Issuing Lender or
any Lender to exercise, and no delay in exercising, any right hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right hereunder preclude any other or further exercise thereof or the exercise
of any other right.  The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.
 
SECTION 10.04      Set-off.
 
(a)                Upon the occurrence and during the continuance of any Event
of Default, the Administrative Agent and each Lender is hereby authorized at any
time and from time to time, to the fullest extent permitted by law, to set-off
and apply any and all deposits (general or special, time or demand, provisional
or final) at any time held and other indebtedness at any time owing by the
Administrative Agent or such Lender to or for the credit or the account of the
Borrower against any and all of the obligations of the Borrower now or hereafter
existing under this Agreement, irrespective of whether or not the Administrative
Agent or such Lender shall have made any demand hereunder and although such
obligations may be contingent or unmatured.
 
(b)                If any Lender (a “Benefited Lender”) shall at any time
receive any payment of all or part of the L/C Obligations or other obligations
of the Borrower to it hereunder (such Lender’s “Borrower Obligations”), or
interest thereon, or receive any collateral in respect thereof (whether
voluntarily or involuntarily, by set-off, pursuant to events or proceedings of
the nature referred to in Section 7.01(e), or otherwise), in a greater
proportion than any such payment to or collateral received by any other Lender,
if any, in respect of such other Lender’s Borrower Obligations, or interest
thereon, such Benefited Lender shall purchase for cash from the other Lenders
such portion of each such other Lender’s Borrower Obligations, or shall provide
such other Lenders with the benefits of any such collateral, or the proceeds
thereof, as shall be necessary to cause such Benefited Lender to share the
excess payment or benefits of such collateral or proceeds ratably with each of
the Lenders; provided, that if all or any portion of such excess payment or
benefits is thereafter recovered from such Benefited Lender, such purchase shall
be rescinded, and the purchase price and benefits returned, to the extent of
such recovery, but without interest.  The Borrower agrees that each Lender so
purchasing a portion of another Lender’s Borrower Obligations may exercise all
rights of payment (including, without limitation, rights of set-off) with
respect to such portion as fully as if such Lender were the direct holder of
such portion.

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(c)                The Administrative Agent and each Lender agree promptly to
notify the Borrower after any such set-off and application referred to in
subsection (a) above; provided that the failure to give such notice shall not
affect the validity of such set-off and application.  The rights of the
Administrative Agent and each Lender under this Section 10.04 are in addition to
other rights and remedies (including, without limitation, other rights of
set-off) which the Administrative Agent and each Lender may have.
 
SECTION 10.05      Indemnification.
 
    The Borrower hereby indemnifies and holds the Issuing Lender, the
Administrative Agent and each Lender harmless from and against any and all
claims, damages, losses, liabilities, costs and expenses which such party may
incur or which may be claimed against such party by any Person:
 
(a)                by reason of any inaccuracy or alleged inaccuracy in any
material respect, or any untrue statement or alleged untrue statement of any
material fact, or by reason of the omission or alleged omission to state therein
a material fact necessary to make such statements, in the light of the
circumstances under which they were made, not misleading, in each case relating
to any of the Loan Documents and the transactions contemplated thereby, the
Disclosure Documents or in any manner, whether direct or indirect, related to
this Agreement; or
 
(b)                by reason of or in connection with the execution, delivery or
performance of this Agreement, the other Loan Documents, or any transaction
contemplated by this Agreement, the other Loan Documents, other than as
specified in subsection (c) below; or
 
(c)                by reason of or in connection with the execution and delivery
or transfer of, or payment or failure to make payment under this Agreement, the
Letter of Credit, any other Loan Document; provided, that the Borrower shall not
be required to indemnify any such party pursuant to this Section 10.05(c) for
any claims, damages, losses, liabilities, costs or expenses to the extent caused
by (i) the Issuing Lender’s willful misconduct or gross negligence in
determining whether documents presented under the Letter of Credit comply with
terms of the Letter of Credit or (ii) the Issuing Lender’s willful or grossly
negligent failure to make lawful payment under the Letter of Credit after the
presentation to it of a certificate strictly complying with the terms and
conditions of the Letter of Credit.
 
Nothing in this Section 10.05 is intended to limit the Borrower’s obligations
contained in Article II.  Without prejudice to the survival of any other
obligation of the Borrower hereunder, the indemnities and obligations of the
Borrower contained in this Section 10.05 shall survive the payment in full of
amounts payable pursuant to Article II and Article III and the termination of
the Commitment.
 
SECTION 10.06       Liability of the Lenders.
 
    The Borrower assumes all risks of the acts or omissions of each beneficiary
or transferee of the Letter of Credit with respect to their use of the Letter of
Credit.  None of the Issuing Lender, the Administrative Agent, the Lenders nor
any of their respective officers or directors shall be liable or responsible
for: (a) the use which may be made of the Letter of Credit or any acts or
omissions of each beneficiary or transferee in connection therewith; (b) the
validity, sufficiency or genuineness of documents, or of any endorsement
thereon, even if such documents should prove to be in any or all respects
invalid, insufficient, fraudulent or forged; (c) payment by the Issuing Lender
against presentation of documents which do not comply with the terms of the
Letter of Credit, including failure of any documents to bear any reference or
adequate reference to the Letter of Credit; or (d) any other
 
 
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circumstances whatsoever in making or failing to make payment under the Letter
of Credit, except that the Borrower shall have a claim against the Issuing
Lender and the Issuing Lender shall be liable to the Borrower, to the extent of
any direct, as opposed to consequential, damages suffered by the Borrower which
the Borrower proves were caused by (i) the Issuing Lender’s willful misconduct
or gross negligence in determining whether documents presented under the Letter
of Credit are genuine or comply with the terms of the Letter of Credit or (ii)
the Issuing Lender’s willful or grossly negligent failure, as determined by a
court of competent jurisdiction, to make lawful payment under the Letter of
Credit after the presentation to it of a certificate strictly complying with the
terms and conditions of the Letter of Credit.  In furtherance and not in
limitation of the foregoing, the Issuing Lender may accept original or facsimile
(including telecopy) certificates presented under the Letter of Credit that
appear on their face to be in order, without responsibility for further
investigation, regardless of any notice or information to the contrary.  Any
action or proceeding in respect of any matter arising under or in connection
with the Letter of Credit, this Agreement or any other Loan Document must be
brought by the Borrower against the Administrative Agent, Issuing Lender or
Lender, as applicable, within the time period specified in Section 5-115 of the
Uniform Commercial Code.

SECTION 10.07      Costs, Expenses and Taxes.   The Borrower agrees to pay on
demand all costs and expenses in connection with the preparation, issuance,
delivery, filing, recording, and administration of this Agreement, the Letter of
Credit and any other documents which may be delivered in connection with this
Agreement, including, without limitation, the reasonable fees and out-of-pocket
expenses of counsel for the Administrative Agent and the Issuing Lender incurred
in connection with the preparation and negotiation of this Agreement, the Letter
of Credit and any document delivered in connection therewith and all costs and
expenses incurred by the Administrative Agent (and, in the case of clause (iii)
or (iv) below, any Lender) (including reasonable fees and out of pocket expenses
of counsel) in connection with (i) the transfer, drawing upon, change in terms,
maintenance, renewal or cancellation of this Agreement and the Letter of Credit,
(ii) any and all amounts which the Administrative Agent or any Lender has paid
relative to the Administrative Agent’s or such Lender’s curing of any Event of
Default resulting from the acts or omissions of the Borrower under this
Agreement, any other Loan Document, (iii) the enforcement of, or protection of
rights under, this Agreement, any other Loan Document (whether through
negotiations, legal proceedings or otherwise), (iv) any action or proceeding
relating to a court order, injunction, or other process or decree restraining or
seeking to restrain the Issuing Lender from paying any amount under the Letter
of Credit or (v) any waivers or consents or amendments to or in respect of this
Agreement, the Letter of Credit requested by the Borrower.  In addition, the
Borrower shall pay any and all stamp and other taxes and fees payable or
determined to be payable in connection with the execution, delivery, filing and
recording of this Agreement, the Letter of Credit or any of such other
documents, and agree to save the Issuing Lender, the Administrative Agent and
the Lenders harmless from and against any and all liabilities with respect to or
resulting from any delay in paying or omission to pay such taxes and fees.
 
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(a)                Intentionally Omitted.
 
SECTION 10.08      Binding Effect.
 
    This Agreement shall become effective when it shall have been executed and
delivered by the Borrower and the Issuing Lender, the Administrative Agent and
the Lenders and thereafter shall (a) be binding upon the Borrower, its
successors and assigns, and (b) inure to the benefit of and be enforceable by
the Lenders and each of their respective successors, assigns and permitted
transferees; provided, that the Borrower may not assign all or any part of its
rights or obligations under this Agreement without the prior written consent of
the Lenders.

SECTION 10.09       Assignments and Participation.   Each Lender may assign to
one or more Eligible Assignees all or a portion of its rights and obligations
under this Agreement and the Loan Documents (including, without limitation, all
or a portion of its Commitment); provided, that (i) the Borrower (unless a
Default or an Event of Default shall have occurred and be continuing) shall have
consented to such assignment (such consent not to be unreasonably withheld or
delayed) by signing the Assignment and Acceptance referred to in clause (iii)
below, (ii) each such assignment shall be in a minimum amount of $5,000,000 (or,
if less, the entire amount of such Lender’s Commitment) and be of a constant,
and not a varying, percentage of all of the assigning Lender’s rights and
obligations under this Agreement and the Loan Documents and (iii) the parties to
each such assignment shall execute and deliver to the Administrative Agent, for
its acceptance and recording in the Register (as defined in Section 10.09(c)),
an Assignment and Acceptance, together with a processing and recordation fee of
$3,500, payable by the assigning Lender or the Eligible Assignee, as agreed upon
by such parties.  Upon such execution, delivery, acceptance and recording, from
and after the effective date specified in each Assignment and Acceptance, (x)
the Eligible Assignee thereunder shall be a party hereto and, to the extent that
rights and obligations hereunder have been assigned to it pursuant to such
Assignment and Acceptance, have the rights and obligations of a Lender hereunder
and (y) the Lender assignor thereunder shall, to the extent that rights and
obligations hereunder have been assigned by it pursuant to such Assignment and
Acceptance, relinquish its rights and be released from its obligations under
this Agreement (and, in the case of an Assignment and Acceptance covering all or
the remaining portion of an assigning Lender’s rights and obligations under this
Agreement, such Lender shall cease to be a party hereto).  Notwithstanding
anything to the contrary contained in this Agreement, any Lender may at any time
assign all or any portion of the Obligations owing to it to any Affiliate of
such Lender.  No such assignment referred to in the preceding sentence, other
than to an Affiliate of such Lender consented to by the Borrower (such consent
not to be unreasonably withheld or delayed), shall release the assigning Lender
from its obligations hereunder.  Nothing contained in this Section 10.09 shall
be construed to relieve the Issuing Lender of any of its obligations under the
Letter of Credit.
 
(b)         By executing and delivering an Assignment and Acceptance, the Lender
assignor thereunder and the Eligible Assignee thereunder confirm to and agree
with each other and the other parties hereto as follows: (i) other than as
provided in such Assignment and Acceptance, such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement, any other Loan Document or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement or any other
Loan Document or any other instrument or document furnished pursuant hereto;
(ii) such assigning Lender makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Borrower or the
performance or observance by the Borrower of any of its obligations under this
Agreement, any other Loan Document or any other instrument or document furnished
pursuant hereto or thereto; (iii) such Eligible Assignee confirms that it has
received a copy of this Agreement, together with copies of the financial
statements referred to in Section 5.01(f) and such other documents and

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information as it has deemed appropriate to make its own credit analysis and
decision to enter into such Assignment and Acceptance; (iv) such Eligible
Assignee will, independently and without reliance upon the Administrative Agent,
such assigning Lender or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement; (v) such
Eligible Assignee appoints and authorizes the Administrative Agent to take such
action as agent on its behalf and to exercise such powers under this Agreement
as are delegated to it by the terms hereof, together with such powers as are
reasonably incidental thereto; and (vi) such Eligible Assignee agrees that it
will perform in accordance with their terms all of the obligations which by the
terms of this Agreement are required to be performed by it as a Lender.
 
(c)          The Administrative Agent shall maintain at its address referred to
in Section 10.02 a copy of each Assignment and Acceptance delivered to and
accepted by it and a register for the recordation of the names and addresses of
the Lenders and the Commitment of, and principal amount of the Obligations owing
to, each Lender from time to time (the “Register”).  The entries in the Register
shall be conclusive and binding for all purposes, absent manifest error, and the
Borrower, the Administrative Agent, the Issuing Lender and the Lenders may treat
each Person whose name is recorded in the Register as a Lender hereunder for all
purposes of this Agreement.  The Register shall be available for inspection by
the Borrower or any Lender at any reasonable time and from time to time upon
reasonable prior notice.
 
(d)            Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender and an Eligible Assignee, the Administrative Agent shall, if
such Assignment and Acceptance has been completed and is in substantially the
form of Exhibit B hereto, and has been signed by the Borrower (if the Borrower’s
consent is required), (i) accept such Assignment and Acceptance, (ii) record the
information contained therein in the Register and (iii) give prompt notice of
such recordation to the Borrower.
 
(e)            Each Lender may sell participations to one or more banks,
financial institutions or other entities (a “Participant”) in all or a portion
of its rights and obligations under this Agreement and the Loan Documents
(including, without limitation, all or a portion of its Commitment); provided,
that (i) such Lender’s obligations under this Agreement (including, without
limitation, its Commitment to the Borrower hereunder) shall remain unchanged,
(ii) such Lender shall remain solely responsible to the other parties hereto for
the performance of such obligations, and (iii) the Borrower, the Administrative
Agent and the other Lenders shall continue to deal solely and directly with such
Lender in connection with such Lender’s rights and obligations under this
Agreement.  Any agreement pursuant to which any Lender may grant such a
participating interest shall provide that such Lender shall retain the sole
right and responsibility to enforce the obligations of the Borrower hereunder
including, without limitation, the right to approve any amendment, modification
or waiver of any provision of this Agreement; provided, that such participation
agreement may provide that such Lender will not agree to any modification,
amendment or waiver of this Agreement which would (a) waive, modify or eliminate
any of the conditions precedent specified in Article IV, (b) increase or extend
the Commitments of the Lenders or subject the Lenders to any additional
obligations, (c) forgive principal, interest, fees or other amounts payable
hereunder or reduce the rate at which interest or any fee is calculated, (d)
postpone any date fixed for any

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 payment of principal, interest, fees or other amounts payable hereunder, (e)
change the Commitment Percentage or the number of Lenders which shall be
required for the Lenders or any of them to take any action hereunder, or (f)
amend this Section 10.09(e).
 
(f)                Any Lender may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this Section
10.09 and in accordance with Section 10.16, disclose to the Eligible Assignee or
Participant or proposed Eligible Assignee or Participant, any Information
relating to the Borrower furnished to such Lender by or on behalf of the
Borrower; provided, that prior to any such disclosure, the Eligible Assignee or
Participant or proposed Eligible Assignee or Participant shall agree to preserve
the confidentiality of any confidential information relating to the Borrower
received by it from such Lender and use it only for purposes of this Agreement,
the Loan Documents and the transactions contemplated hereby and thereby, or for
any other reason, directly or indirectly, relating to this Agreement; provided,
further, that the Eligible Assignee or Participant or proposed Eligible Assignee
or Participant may disclose any such information to the extent such disclosure
is required by law or requested by any regulatory authority.
 
(g)                Anything in this Section 10.09 to the contrary
notwithstanding, any Lender may assign and pledge all or any portion of its
Commitment and other obligations owing to it to any Federal Reserve Lender (and
its transferees) as collateral security pursuant to Regulation A of the Board of
Governors of the Federal Reserve System and any Operating Circular issued by
such Federal Reserve Lender.  No such assignment shall release the assigning
Lender from its obligations hereunder.
 
(h)                [Intentionally Omitted].
 
SECTION 10.10      Severability.
 
    Any provision of this Agreement which is prohibited, unenforceable or not
authorized in any jurisdiction shall, as to such jurisdiction, be ineffective to
the extent of such prohibition, unenforceability or non-authorization without
invalidating the remaining provisions hereof or affecting the validity,
enforceability or legality of such provision in any other jurisdiction.
 
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SECTION 10.11      Governing Law.
 
    This agreement shall be governed by, and construed in accordance with, the
laws of the state of New York.
 
SECTION 10.12      Headings.
 
    Section headings in this Agreement are included herein for convenience of
reference only and shall not constitute a part of this Agreement for any other
purpose.

SECTION 10.13      Submission To Jurisdiction; Waivers.
 
    The Borrower hereby irrevocably and unconditionally:
 
(a)                submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to which it
is a party, or for recognition and enforcement of any judgment in respect
thereof, to the non-exclusive general jurisdiction of the Courts of the State of
New York, the courts of the United States of America for the Southern District
of New York, and appellate courts from any thereof;
 
(b)                consents that any such action or proceeding may be brought in
such courts and waives any objection that it may now or hereafter have to the
venue of any such action or proceeding in any such court or that such action or
proceeding was brought in an inconvenient court and agrees not to plead or claim
the same;
 
(c)                agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or certified
mail (or any substantially similar form of mail), postage prepaid, to the
Borrower at its address set forth in Section 10.02 or at such other address of
which the Administrative Agent shall have been notified pursuant thereto; and
 
(d)                agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the right
to sue in any other jurisdiction.
 
This Section 10.13 shall not be construed to confer a benefit upon, or grant a
right or privilege to, any Person other than the parties hereto.
 
SECTION 10.14      Acknowledgments.
 
    The Borrower hereby acknowledges:
 
(a)                it has been advised by counsel in the negotiation, execution
and delivery of this Agreement and other Loan Documents;
 
(b)                neither the Administrative Agent, the Issuing Lender nor any
Lender has a fiduciary relationship to the Borrower, and the relationship
between the Administrative Agent, the Issuing Lender and any Lender, on the one
hand, and the Borrower on the other hand, is solely that of debtor and creditor;
and
 
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(c)                no joint venture exists between the Borrower and the
Administrative Agent, the Issuing Lender or any Lender.
 
SECTION 10.15      Waivers of Jury Trial.
 
    To the fullest extent permitted by Applicable Law, each of the Borrower, the
Administrative Agent, the Issuing Lender and the Lenders hereby irrevocably and
unconditionally waives trial by jury in any legal action or proceeding relating
to this Agreement or any other Loan Document and for any counterclaim
therein.  This Section 10.15 shall not be construed to confer a benefit upon, or
grant a right or privilege to, any person other than the parties hereto.
 
SECTION 10.16      Confidentiality.    Each of the Administrative Agent, the
Issuing Lender and the Lenders agrees to maintain the confidentiality of the
Information (as defined below), and use it only for purposes of this Agreement,
the Loan Documents and the transactions contemplated hereby and thereby, or for
any other reason, directly or indirectly, relating to this Agreement, except
that Information may be disclosed (i) to its and its Affiliates’ directors,
officers, employees and agents, including accountants, legal counsel and other
advisors (it being understood that the Persons to whom such disclosure is made
will be informed of the confidential nature of such Information and instructed
to keep such Information confidential); (ii) to the extent requested by any
regulatory authority; (iii) to the extent required by Applicable Law; (iv) to
any other party to this Agreement; (v) in connection with the exercise of any
remedies hereunder or any suit, action or proceeding relating to this Agreement
or the enforcement of rights hereunder; (vi) subject to an agreement containing
provisions substantially the same as those of this Section, to (x) any Eligible
Assignee of or Participant in, or any prospective Eligible Assignee of or
Participant in, any of its rights or obligations under this Agreement or (y) any
direct or indirect contractual counterparty or prospective counterparty (or such
contractual counterparty’s or prospective counterparty’s professional advisor)
to any credit derivative transaction relating to obligations of the Borrower;
(vii) with the written consent of the Borrower; (viii) to the extent such
Information becomes publicly available other than as a result of a breach of
this Section or (ix) becomes available to the Administrative Agent or any Lender
on a nonconfidential basis from a source other than the Borrower and such source
is not known by the Administrative Agent or such Lender to be in violation of a
duty of confidentiality; or (x) to the National Association of Insurance
Commissioners or any other similar organization.
 
(b)         The Administrative Agent and the Lenders may disclose the existence
of this Agreement and information about this Agreement to market data
collectors, similar service providers to the lending industry, and service
providers to the Administrative Agent and the Lenders in connection with the
administration and management of this Agreement, the other Loan Documents and
the Commitments; provided, however, that information disclosed by the
Administrative Agent or any Lender to any such market data collectors or similar
service providers shall be of a type generally provided to such Persons in other
transactions.  For the purposes of this Section 10.16, “Information” means all
non-public information received from the Borrower relating to the Borrower or
its business.  Notwithstanding anything herein to the contrary, Information, for
purposes of this Section 10.16, shall not include, and the Administrative Agent
and each Lender may disclose to any and all Persons, without limitation of any
kind, any information with respect to the U.S. federal income
 

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 tax treatment and U.S. federal income tax structure of the transactions
contemplated hereby and all materials of any kind (including opinions or other
tax analyses) that are provided to the Administrative Agent or such Lender
relating to such tax treatment and tax structure.
 
(c)           Any Person required to maintain the confidentiality of Information
as provided in this Section 10.16 shall be considered to have complied with its
obligation to do so if such Person has exercised the same degree of care to
maintain the confidentiality of such Information as such Person would accord to
its own confidential information.  Each of the Administrative Agent, the Issuing
Lender, the Lenders and the Participants shall promptly notify the Borrower of
its receipt of any subpoena or similar process or authority, unless prohibited
therefrom by the issuing Person.
 
SECTION 10.17       Patriot Act
 
    Each of the Administrative Agent, the Issuing Lender and the Lenders hereby
notifies the Borrower that pursuant to the requirements of the USA Patriot Act
(Title III of Pub. L. 107-56 (signed into law October 26, 2001)), it is required
to obtain, verify and record information that identifies the Borrower, which
information includes the name and address of the Borrower and other information
that will allow such Lender or the Agent, as applicable, to identify the
Borrower in accordance with such Act.

SECTION 10.18       Execution in Counterparts.
 
    This Agreement may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement.
 
[SIGNATURE PAGES FOLLOW]
 

52

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IN WITNESS WHEREOF, the parties hereto have caused his Agreement to be duly
executed and delivered by their respective duly authorized officers as of the
date first above written.

SOUTH JERSEY INDUSTRIES, INC.

By:  ____________________________
Name:
Title:

JPMORGAN CHASE BANK, N.A., as Administrative Agent, as a Lender and as Issuing
Lender

By:  ____________________________
Name:
Title:
 
 
 
 
 
 

SIGNATURE PAGE TO LETTER OF CREDIT REIMBURSEMENT AGREEMENT

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