EXECUTION COPY


                           REVOLVING CREDIT AGREEMENT

                                   dated as of

                                October 10, 2003



                                      among



                              NUI UTILITIES, INC.,

                            THE LENDERS PARTY HERETO,

                                       and

                    DRAWBRIDGE SPECIAL OPPORTUNITIES FUND LP,
                               as Agent and Lender




            --------------------------------------------------------

         $50,000,000 Senior Unsecured Interim Revolving Credit Facility
            --------------------------------------------------------

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                                TABLE OF CONTENTS

ARTICLE I Definitions.........................................................5

         Section 1.01      Defined Terms......................................5

         Section 1.02      Terms Generally...................................17

         Section 1.03      Accounting Terms; GAAP............................18

ARTICLE II The Credits.......................................................18

         Section 2.01      Commitments.......................................18

         Section 2.02      Loans and Borrowings..............................18

         Section 2.03      Requests for Borrowings...........................19

         Section 2.04      Funding of Borrowings.............................19

         Section 2.05      Repayment of Loans; Evidence of Debt..............20

         Section 2.06      Prepayment of Loans...............................21

         Section 2.07      Fees     .........................................21

         Section 2.08      Interest .........................................21

         Section 2.09      Increased Costs...................................22

         Section 2.10      Additional Payments by the Borrower...............24

         Section 2.11      Taxes    .........................................24

         Section 2.12      Payments Generally; Pro Rata Treatment;
                             Sharing of Set-offs.............................26

         Section 2.13      Mitigation Obligations; Replacement
                             of Lenders......................................28

ARTICLE III Representations and Warranties...................................29

         Section 3.01      Corporate Existence...............................29

         Section 3.02      Corporate Authority...............................29

         Section 3.03      Enforceability....................................29

         Section 3.04      No Restrictions; No Default.......................29

         Section 3.05      Financial Statements..............................30

         Section 3.06      Litigation and Environmental Matters..............30

         Section 3.07      Tax Returns and Payments..........................30

         Section 3.08      ERISA    .........................................31

         Section 3.09      Compliance with Applicable Laws...................31

         Section 3.10      Governmental Approval.............................31

         Section 3.11      Regulations T, U and X............................31

         Section 3.12      Investment Company Act............................32
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         Section 3.13      Public Utility Holding Company Act................32

         Section 3.14      Disclosure........................................32

         Section 3.15      No Subsidiaries...................................32

         Section 3.16      Labor Matters.....................................32

         Section 3.17      Options...........................................32

         Section 3.18      Insurance.........................................32

         Section 3.19      Letters of Credit.................................32

         Section 3.20      Guarantees........................................32

         Section 3.21      Liens    .........................................33

         Section 3.22      Separation of Cash Pools..........................33

ARTICLE IV Affirmative Covenants.............................................33

         Section 4.01      Use of Proceeds...................................33

         Section 4.02      Furnishing Information............................33

         Section 4.03      Visitation........................................37

         Section 4.04      Preservation of Existence; Qualification..........37

         Section 4.05      Compliance with Governmental Rules................37

         Section 4.06      Payment of Taxes and Other Liabilities............37

         Section 4.07      Insurance.........................................37

         Section 4.08      Maintenance of Properties.........................38

         Section 4.09      Plans and Benefit Arrangement.....................38

         Section 4.10      Senior Debt Status................................38

         Section 4.11      Ownership.........................................38

         Section 4.12      Cash Management...................................38

         Section 4.13      Environmental Laws................................39

         Section 4.14      Additional Directors..............................39

ARTICLE V Negative Covenants.................................................39

         Section 5.01      Indebtedness......................................39

         Section 5.02      Liens.............................................40

         Section 5.03      Financial Covenants...............................40

         Section 5.04      [Intentionally omitted............................40

         Section 5.05      Regulation T, U and X Compliance..................40

         Section 5.06      ERISA.............................................40

         Section 5.07      Subsidiaries......................................41

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         Section 5.08      Limitation on Capital Expenditures................41

         Section 5.09      Limitation on Contingent Obligations..............41

         Section 5.10      Limitation on Investments, Loans and Advances.....41

         Section 5.11      Payments and Modifications of Certain Debt
                           Instruments; Modification to Certificate of
                           Incorporation, By-Laws and Agency Services
                           Agreement.........................................42

         Section 5.12      Transactions with Affiliates......................42

         Section 5.13      Sales and Leasebacks..............................42

         Section 5.14      Fundamental Changes...............................42

         Section 5.15      Use of Proceeds...................................42

         Section 5.16      Letter of Credit Facility under Existing Revolver.43

ARTICLE VI Conditions........................................................43

         Section 6.01      Conditions to Closing Date........................43

         Section 6.02      Conditions to each Credit Event...................45

         Section 6.03      Additional Conditions to Borrowings
                             on or After December 31, 2003...................46

ARTICLE VII Events of Default................................................47

         Section 7.01      Payment Default...................................47

         Section 7.02      Nonpayment of Other Indebtedness..................47

         Section 7.03      Bankruptcy; Insolvency............................47

         Section 7.04      Termination of Existence..........................48

         Section 7.05      Failure to Comply with Covenants..................48

         Section 7.06      Misrepresentation.................................48

         Section 7.07      Adverse Judgments, Etc............................48

         Section 7.08      Invalidity or Unenforceability....................48

         Section 7.09      ERISA.............................................48

         Section 7.10      Change of Control; Change of Beneficial
                             Ownership or Board..............................49

         Section 7.11      Regulatory Decisions..............................49

         Section 7.12      Consequences of an Event of Default...............49

         Section 7.13      Remedies Upon Default.............................50

ARTICLE VIII The Agent.......................................................50

ARTICLE IX Miscellaneous.....................................................52

         Section 9.01      Notices; Payment Instructions.....................52

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         Section 9.02      Waivers; Amendments...............................53

         Section 9.03      Expenses; Indemnity; Damage Waiver................54

         Section 9.04      Syndication.......................................55

         Section 9.05      Successors and Assigns............................55

         Section 9.06      Survival..........................................59

         Section 9.07      Counterparts; Integration; Effectiveness..........59

         Section 9.08      Severability......................................60

         Section 9.09      Right of Setoff...................................60

         Section 9.10      Governing Law; Jurisdiction; Consent to
                             Service of Process..............................60

         Section 9.11      WAIVER OF JURY TRIAL..............................61

         Section 9.12      Headings..........................................61

         Section 9.13      Confidentiality...................................61

         Section 9.14      Interest Rate Limitation..........................62



SCHEDULES

Schedule 2.01     -  Commitments
Schedule 5.01     -  Existing Indebtedness
Schedule 5.02     -  Existing Liens

EXHIBITS

Exhibit A         -  Form of Note
Exhibit B         -  Form of Assignment and Assumption
Exhibit C         -  Form of NUI Refinancing Letter Agreement
Exhibit D         -  Form of Solvency Certificate
Exhibit E         -  Form of Compliance Certificate
Exhibit F         -  Form of Section 2.11(e)(ii) Certificate

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     REVOLVING CREDIT AGREEMENT (this "Agreement") dated as of October 10, 2003,
among NUI  UTILITIES,  INC.,  a New Jersey  corporation  (the  "Borrower"),  the
LENDERS party hereto from time to time (the  "Lenders") and  DRAWBRIDGE  SPECIAL
OPPORTUNITIES FUND LP, as Agent and Lender.

     WHEREAS,  the  Lenders  have  agreed to extend a senior  unsecured  interim
revolving  credit facility to the Borrower in an aggregate  amount not to exceed
$50,000,000,  the  proceeds  of which  will be used for the  purposes  specified
herein.

     NOW, THEREFORE, the parties hereto agree as follows:

                                   ARTICLE I
                                  Definitions

     Section 1.01 Defined Terms. As used in this Agreement,  the following terms
have the meanings specified below:

     "Administrative  Questionnaire" means an Administrative  Questionnaire in a
form  supplied  by the Agent.

     "Affiliate" means, with respect to a specified Person,  another Person that
directly,  or  indirectly  through  one or more  intermediaries,  controls or is
controlled by or is under common control with the Person specified. For purposes
of  this  definition,  "control"  of a  Person  means  the  power,  directly  or
indirectly,  either (a) to vote 10% or more of the  securities  having  ordinary
voting power for the election of directors of such Person or (b) direct or cause
the  direction of the  management  and the  policies of such Person,  whether by
contract or otherwise.

     "Agency Services  Agreement"  means that certain Agency Services  Agreement
among NUI and its Subsidiaries (including the Borrower), dated as of February 7,
2003.

     "Agent" means Drawbridge Special  Opportunities Fund LP, in its capacity as
agent  for the  Lenders  hereunder.

     "Agreement" means this revolving credit agreement,  including the schedules
and  exhibits  attached  hereto,  all as may be amended,  amended and  restated,
supplemented or modified from time to time.

     "Applicable  Margin"  means,  for any day and  with  respect  to any  Loan,
3.125%.

     "Applicable  Percentage"  means, with respect to any Lender, the percentage
of  the  Total  Commitment  represented  by  such  Lender's  Commitment.  If the
Commitments  have  terminated or expired,  the Applicable  Percentages  shall be
determined based upon the Commitments most recently in effect,  giving effect to
any assignments.

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     "Approved  Fund"  shall mean with  respect to any Lender  that is a fund or
similar  investment vehicle that makes or invests in commercial loans, any other
fund or similar  investment  vehicle that invests in  commercial  loans which is
managed  or  advised  by the same  investment  advisor  as such  Lender or by an
Affiliate of such  investment  advisor.

     "Assignment and Assumption" means an assignment and assumption entered into
by a Lender and an  assignee  (with the  consent of any party  whose  consent is
required by Section 9.05),  and accepted by the Agent,  in the form of Exhibit B
or any  other  form  approved  by the  Agent.

     "Authorized  Officer" means the President,  any Vice  President,  the Chief
Financial Officer, the Controller or Comptroller, the Treasurer or the principal
accounting officer of the Borrower.  The Agent and the Lenders shall be entitled
to rely on the incumbency  certificate delivered pursuant to Section 6.01(c) for
the initial  designation of each Authorized  Officer.  Additions or deletions to
the  list of  Authorized  Officers  may be made by the  Borrower  at any time by
delivering  to the  Agent for  redelivery  to each  Lender a revised  incumbency
certificate.

     "Availability  Period"  means the period from and  including  the Effective
Date to but excluding the earlier of the Maturity  Date and the  termination  of
the  Commitments.

     "Board" means the Board of Governors of the Federal  Reserve  System of the
United States of America.

     "Borrower" means NUI Utilities,  Inc., a New Jersey  corporation.

     "Borrowing"  means a  borrowing  of Loans under this  Agreement.

     "Borrowing  Request"  means a request by the  Borrower  for a Borrowing  in
accordance  with  Section  2.03.

     "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  Adequacy  Event"  shall  have the  meaning  given  it in  Section
2.09(b).

     "Capital  Compensation  Amount"  shall have the meaning given it in Section
2.09(b).

     "Closing"  means the  conditions  specified in Sections 6.01 are satisfied.

     "Closing  Date" means the date on which  Closing  occurs.

     "Code"  means the Internal  Revenue  Code of 1986,  as amended from time to
time, or and successor legislation thereto.

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     "Commitment"  means,  with respect to each Lender,  the  commitment of such
Lender to make Loans hereunder,  expressed as an amount representing the maximum
aggregate amount of such Lender's Credit Exposure hereunder,  as such commitment
may be reduced or increased  from time to time pursuant to  assignments by or to
such  Lender  pursuant to Section  9.05.  The  initial  amount of each  Lender's
Commitment is set forth on Schedule  2.01, or in the  Assignment  and Assumption
pursuant to which such Lender shall have assumed its Commitment,  as applicable.

     "Commitment  Fee" means the fee described in Section  2.07(a).

     "Compliance  Certificate" means a certificate  substantially in the form of
Exhibit E delivered pursuant to Section 4.02(e).

     "Consolidated"  means, as to any two or more Persons,  the consolidation of
the  accounts  of such  Persons in  accordance  with GAAP.

     "Consolidated   Fixed  Charges"  means  for  any  period  the  sum  of  (a)
Consolidated  Interest Expense; (b) required  amortization of Consolidated Total
Indebtedness,  determined on a Consolidated  basis in accordance  with GAAP, for
the period  involved and discount or premium  relating to any such  Consolidated
Total Indebtedness for any period involved, whether expensed or capitalized; and
(c) Consolidated Lease Expense, determined without duplication of items included
in  Consolidated  Interest  Expense,  of the  Borrower.

     "Consolidated Interest Expense" means for any period the amount of interest
expense,  both  expensed  and  capitalized,  of the  Borrower,  determined  on a
Consolidated  basis in  accordance  with GAAP,  for such period on the aggregate
principal  amount of its  Indebtedness,  determined on a  Consolidated  basis in
accordance  with GAAP.

     "Consolidated  Lease Expense" means for any period, the aggregate amount of
fixed  and  contingent  rentals  payable  by  the  Borrower,   determined  on  a
Consolidated  basis in  accordance  with GAAP,  for such period with  respect to
leases of real and personal  property.

     "Consolidated Net Income" means for any period, net income of the Borrower,
determined on a  Consolidated  basis in  accordance  with GAAP,  without  giving
effect to any non-cash  gain,  any non-cash loss or any reversals or adjustments
to,  or  failure  to  recognize,  revenue  due to  changes  in  applicable  U.S.
accounting  rules  and  regulations,  in  each  case  to the  extent  reasonably
acceptable to the Agent, including without limitation due to the implementation,
effective as of October 25, 2002, of EITF 02-03 ("Issues  Involved in Accounting
for  Derivative  Contracts Held for Trading  Purposes and Contracts  Involved in
Energy  Trading  and Risk  Management  Activities"),  the  effects of which EITF
implementation  are  hereby  deemed  acceptable  to  the  Agent.

     "Consolidated   Shareholders'  Equity"  means  the  total  of  those  items
enumerated  under the heading  "Common  Shareholders'  Equity" in the Borrower's
relevant  balance

                                       7
<PAGE>

sheets determined on a Consolidated basis in accordance with GAAP,  consistently
applied.

     "Consolidated Total Capitalization" means, as of any date of determination,
the  sum  of  (i)  Consolidated   Total   Indebtedness  plus  (ii)  Consolidated
Shareholders' Equity.

     "Consolidated Total  Indebtedness"  means, at any date, all Indebtedness of
the Borrower at such date, determined on a Consolidated basis in accordance with
GAAP,  consistently applied.

     "Contractual  Obligation"  means,  as to any Person,  any  provision of any
security  issued  by  such  Person  or of any  agreement,  instrument  or  other
undertaking  to  which  such  Person  is a party  or by  which  it or any of its
property is bound.

     "Credit  Events"  means the  execution,  delivery  and  performance  by the
Borrower of this  Agreement,  the borrowing of Loans and the use of the proceeds
thereof.

     "Credit Exposure" means, with respect to any Lender at any time, the sum of
the aggregate outstanding principal amount of all such Lender's Loans.

     "Default" means any event or condition  which upon notice,  passage of time
or both would  become an Event of Default.

     "Dollars" or  "dollars" or "$" refers to lawful money of the United  States
of  America.

     "Effective  Date" shall mean the date first  above-written.

     "Environmental  Claim" means any notice of violation,  claim, suit, demand,
abatement  order or other order or direction  (conditional  or otherwise) by any
Governmental  Authority or any Person for any damage,  including personal injury
(including sickness,  disease or death), tangible or intangible property damage,
contribution,  indemnity,  indirect  or  consequential  damages,  damage  to the
environment,  nuisance, pollution, contamination or other adverse effects on the
environment,  human  health,  or natural  resources,  or for  fines,  penalties,
restrictions  or  injunctive  relief  resulting  from  or  based  upon  (a)  the
occurrence or existence of a Release or substantial threat of a material Release
(whether sudden or non-sudden or accidental or  non-accidental)  of, or exposure
to, any Hazardous Materials in, into or onto the environment at, in, by, from or
related to any real estate (the "Premises"), (b) the use, handling,  generation,
transportation,  storage,  treatment  or  disposal  of  Hazardous  Materials  in
connection with the operation of the Borrower or its former Subsidiaries, or (c)
the violation, or alleged violation, of any Environmental Law by the Borrower or
its  former   Subsidiaries.

     "Environmental Laws" means all laws, rules, regulations, codes, ordinances,
orders, decrees, judgments,  injunctions,  notices or binding agreements issued,

                                       8
<PAGE>

promulgated or entered into by any Governmental  Authority,  relating in any way
to the  environment,  preservation  or  reclamation  of natural  resources,  the
management, Release or threatened Release of any Hazardous Material or to health
and safety matters.

     "Environmental  Liability"  means any  liability,  contingent  or otherwise
(including any liability for damages, costs of environmental remediation, fines,
penalties or indemnities),  directly or indirectly  resulting from or based upon
(a)  violation of any  Environmental  Law, (b) the  generation,  use,  handling,
transportation,  storage,  treatment or disposal of any Hazardous Materials, (c)
exposure to any Hazardous  Materials,  (d) the Release or threatened  Release of
any Hazardous  Materials into the environment or (e) any contract,  agreement or
other consensual  arrangement  pursuant to which liability is assumed or imposed
with respect to any of the foregoing.

     "Environmental   Permits"  means  all  permits,   licenses,   certificates,
registrations   and   approvals   of   Governmental   Authorities   required  by
Environmental  Laws  and  necessary  for  the  business  of  Borrower.

     "Equity  Interests" means shares of capital stock,  partnership  interests,
membership  interests in a limited liability company,  beneficial interests in a
trust or other equity ownership interests in a Person, and any warrants, options
or other  rights  entitling  the holder  thereof to purchase or acquire any such
equity interest.

     "ERISA"  means the Employee  Retirement  Income  Security  Act of 1974,  as
amended  from  time to time.

     "ERISA Affiliate" means any trade or business (whether or not incorporated)
that, together with the Borrower,  is treated as a single employer under Section
414(b) or (c) of the Code or,  solely for  purposes  of Section 302 of ERISA and
Section 412 of the Code,  is treated as a single  employer  under Section 414 of
the Code.

     "ERISA  Event"  means (a) the  occurrence  of any  "reportable  event",  as
defined in  Section  4043 of ERISA or the  regulations  issued  thereunder  with
respect to a Plan  (other  than an event for which the 30-day  notice  period is
waived),  (b) the existence with respect to any Plan of an "accumulated  funding
deficiency"  (as  defined in Section  412 of the Code or Section  302 of ERISA),
whether or not waived,  (c) the filing pursuant to Section 412(d) of the Code or
Section  303(d) of ERISA of an application  for a waiver of the minimum  funding
standard with respect to any Plan,  (d) the incurrence by the Borrower or any of
its ERISA  Affiliates of any  liability  under Title IV of ERISA with respect to
the  termination  of any Plan,  (e) the  receipt  by the  Borrower  or any ERISA
Affiliate  from the PBGC or a plan  administrator  of any notice  relating to an
intention to terminate  any Plan or Plans or to appoint a trustee to  administer
any Plan, (f) the  incurrence by the Borrower or any of its ERISA  Affiliates of
any liability with respect to the withdrawal or partial withdrawal from any Plan
or Multiemployer Plan, or (g) the receipt by the Borrower or any ERISA Affiliate
of any notice, or the receipt by any Multiemployer Plan from the Borrower or any
ERISA Affiliate of any notice, concerning the imposition of Withdrawal Liability
or a determination  that a Multiemployer  Plan to

                                       9
<PAGE>

which  the  Borrower  or an  ERISA  Affiliate  makes  or  is  required  to  make
contributions is, or is expected to be, insolvent or in  reorganization,  within
the meaning of Title IV of ERISA.

     "Event of Default"  has the meaning  assigned to such term in Article  VII.

     "Excluded Taxes" means,  with respect to the Agent, any Lender or any other
recipient  of any payment to be made by or on account of any  obligation  of the
Borrower  hereunder,  (a) income or franchise  taxes imposed on (or measured by)
its net income by the United States of America, or by the jurisdiction under the
laws of which such  recipient is organized or in which its  principal  office is
located or, in the case of any Lender, in which its applicable lending office is
located, (b) any branch profits taxes imposed by the United States of America or
any  similar  tax  imposed by any other  jurisdiction  in which the  Borrower is
located and (c) in the case of a Foreign Lender (other than an assignee pursuant
to a request by the Borrower under Section  2.13(b)),  any  withholding tax that
(I) is  imposed  on  amounts  payable  to such  Foreign  Lender at the time such
Foreign  Lender  becomes a party to this  Agreement (or designates a new lending
office) or (II) is attributable to such Foreign  Lender's failure to comply with
Section  2.11(e),  except in the case of clause  (c)(I) above to the extent that
such  Foreign  Lender (or its  assignor,  if any) was  entitled,  at the time of
designation  of a new  lending  office (or  assignment),  to receive  additional
amounts  from the  Borrower  with  respect to such  withholding  tax pursuant to
Section 2.11(a).

     "Existing  Revolver"  means  that  certain  Credit  Agreement,  dated as of
February 12, 2003, by and among NUI Utilities,  Inc., the financial institutions
party thereto,  Fleet National Bank, as administrative  agent,  Citizens Bank of
Massachusetts  and CIBC  Inc.,  as  co-syndication  agents,  PNC  Bank  National
Association,  as  documentation  agent,  and  Fleet  Securities,  Inc.,  as sole
arranger and syndication agent, as amended by that First Amendment,  dated as of
August 11, 2003.

     "Federal Funds  Effective  Rate" means,  for any day, the weighted  average
(rounded  upwards,  if  necessary,  to the  next  1/100  of 1%) of the  rates on
overnight Federal funds  transactions with members of the Federal Reserve System
arranged by Federal funds brokers,  as published on the next succeeding Business
Day by the  Federal  Reserve  Bank  of New  York,  or,  if  such  rate is not so
published for any day that is a Business Day, the average (rounded  upwards,  if
necessary,  to the  next  1/100 of 1%) of the  quotations  for such day for such
transactions  received  by  the  Agent  from  three  Federal  funds  brokers  of
recognized  standing  selected  by  it.

     "Financial Officer" means the chief financial officer, principal accounting
officer,  treasurer or controller of the Borrower.

     "Fiscal  Quarter"  means the  three-month  fiscal period of the Borrower or
NUI, as the case may be,  beginning  on each  October 1,  January 1, April 1 and
July 1 and ending on the succeeding December 31, March 31, June 30 and September
30.

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<PAGE>

     "Fiscal  Year" means each fiscal period of the Borrower or NUI, as the case
may be, beginning October 1 and ending on the succeeding  September 30.

     "Focused Audit" means that certain focused audit of the Borrower  initiated
by the  NJBPU on March 20,  2003 and  conducted  by the  NJBPU  and the  Liberty
Consulting Group.

     "Foreign  Lender"  means any Lender that is  organized  under the laws of a
jurisdiction  other than the United States of America,  any State thereof or the
District of Columbia.

     "GAAP" means generally accepted accounting  principles in the United States
of America.

     "Gas Facilities Revenue Bonds" means, collectively, those certain (i) 6.35%
Gas Facilities Revenue Bonds, due 2022, (ii) 6.40% Gas Facilities Revenue Bonds,
due 2024, (iii) variable rate Gas Facilities Revenue Bonds, due 2026, (iv) 5.70%
Gas  Facilities  Revenue Bonds,  due 2032 and (v) 5.25% Gas  Facilities  Revenue
Bonds,  due 2033.

     "Governmental  Authority"  means the  government  of the  United  States of
America or any other nation or any political subdivision thereof,  whether state
or local, and any agency,  authority,  instrumentality,  regulatory body, court,
central  bank or  other  entity  exercising  executive,  legislative,  judicial,
taxing,  regulatory  or  administrative  powers or functions of or pertaining to
government,  including the Federal Deposit Insurance Corporation,  the Office of
the  Comptroller  of the  Currency  and the Board of  Governors  of the  Federal
Reserve  System,  and any central  bank of any other  country or any  comparable
authority.

     "Governmental Rule" means any law, statute,  rule,  regulation,  ordinance,
order,   judgment,   guideline  or  decision  of  any  Governmental   Authority.

     "Guarantee"  of or by any Person (the  "guarantor")  means any  obligation,
contingent or otherwise,  of the guarantor  guaranteeing  or having the economic
effect of guaranteeing  any Indebtedness or other obligation of any other Person
(the  "primary  obligor") in any manner,  whether  directly or  indirectly,  and
including any obligation of the guarantor,  direct or indirect,  (a) to purchase
or pay (or  advance  or  supply  funds  for the  purchase  or  payment  of) such
Indebtedness  or other  obligation or to purchase (or to advance or supply funds
for the purchase of) any  security for the payment  thereof,  (b) to purchase or
lease property,  securities or services for the purpose of assuring the owner of
such  Indebtedness or other obligation of the payment  thereof,  (c) to maintain
working capital,  equity capital or any other financial  statement  condition or
liquidity of the primary obligor so as to enable the primary obligor to pay such
Indebtedness  or other  obligation  or (d) as an account party in respect of any
letter of credit or letter of guaranty  issued to support such  Indebtedness  or
obligation; provided, that the term Guarantee shall not include endorsements for
collection or deposit in the ordinary course of business.

                                       11
<PAGE>

     "Hazardous  Materials"  means all  explosive or  radioactive  substances or
wastes  and all  hazardous  or toxic  substances,  wastes  or other  pollutants,
including  petroleum or petroleum  distillates,  asbestos or asbestos containing
materials,  polychlorinated  biphenyls,  radon gas, infectious or medical wastes
and all other  substances  or wastes of any  nature,  in each case to the extent
regulated  pursuant to any Environmental  Law.

     "Hedging  Obligation" means, with respect to any Person, all liabilities of
such Person under  interest swap  agreements,  interest rate cap  agreements and
interest  rate  collar  agreements,  and all other  agreements  or  arrangements
designed  to protect  such Person  against  fluctuations  in  interest  rates or
currency exchange rates.

     "Indebtedness"  as applied to any Person means,  without  duplication,  all
liabilities of such Person for borrowed money (other than trade accounts payable
arising in the  ordinary  course of business  consistent  with past  practices),
direct or contingent, whether evidenced by a bond, note, debenture or otherwise,
all  preferred  equity  interests  issued by such  Person and which by the terms
thereof could be (at the request of the holders thereof or otherwise) subject to
mandatory  sinking fund payments,  redemption or other  acceleration at any time
during the period  ending  one year  after the term of this  Agreement,  and all
obligations  and  liabilities in the nature of a capitalized  lease  obligation,
deferred  purchase price  arrangement  (other than trade accounts payable in the
ordinary  course of business  consistent with past  practices),  title retention
device, letter of credit obligation,  letter of credit reimbursement obligation,
Hedging Obligation,  reimbursement agreement,  Guaranty, obligations relating to
securitization  transactions,  synthetic lease  transactions and  sale-leaseback
transactions.

     "Indemnified    Taxes"   means   Taxes   other   than    Excluded    Taxes.

     "Intercompany  Balance" means the intercompany  amount that is due from NUI
to the Borrower in an amount equal to approximately  $112,000,000 as of June 30,
2003.

     "Lenders"  means the Persons  listed on Schedule  2.01 and any other Person
that shall have become a party hereto  pursuant to an Assignment and Assumption,
other than any such  Person  that  ceases to be a party  hereto  pursuant  to an
Assignment  and  Assumption.

     "Lien" means,  with respect to any asset, (a) any mortgage,  deed of trust,
lien, pledge, hypothecation,  encumbrance, charge or security interest in, on or
of such asset and (b) the interest of a vendor or a lessor under any conditional
sale  agreement,  capital lease or title  retention  agreement (or any financing
lease having  substantially  the same economic  effect as any of the  foregoing,
including  any rights under a lease which,  in  accordance  with GAAP,  would be
treated as a capitalized  item) relating to such asset.

     "Loan Documents"  means,  collectively,  this Agreement,  the Notes and all
other agreements,  instruments and documents executed in connection herewith and
therewith,  in each  case as the  same may be  amended,  restated,  modified  or
otherwise  supplemented  from time to time.

                                       12
<PAGE>

     "Loans"  means the loans made by the  Lenders to the  Borrower  pursuant to
this  Agreement.

     "Margin  Stock" is defined  herein as defined in  Regulation  U.

     "Material  Adverse Change" means any set of  circumstances  or events which
(a) has or could reasonably be expected to have any material adverse effect upon
the  validity  or  enforceability  of this  Agreement  or any of the other  Loan
Documents,  (b) is or could reasonably be expected to be material and adverse to
the business,  properties, assets, financial condition, results of operations or
prospects  of the  Borrower,  (c)  impairs  materially  or could  reasonably  be
expected to impair materially the ability of the Borrower to duly and punctually
pay its Indebtedness,  or (d) impairs materially or could reasonably be expected
to impair  materially  the ability of the Agent or any of the Lenders to enforce
their legal  remedies  pursuant to this  Agreement  or any other Loan  Document.

     "Material Adverse Effect" means, with respect to any Person relative to any
occurrence  of  whatever  nature  (including,  without  limitation,  any adverse
determination  in  any  litigation,  arbitration,   governmental  or  regulatory
investigation  or  proceeding),  an effect  that  results  in or causes or has a
reasonable  likelihood  of  resulting in or causing a Material  Adverse  Change.

     "Material  Indebtedness" means (i) as to the Borrower,  Indebtedness (other
than the Loans) or Hedging Obligations of the Borrower in an aggregate principal
amount  exceeding  $10,000,000  and (ii) as to NUI,  the NUI  Indebtedness.  For
purposes of determining  Material  Indebtedness,  the "principal  amount" of any
Hedging  Obligation at any time shall be the maximum  aggregate  amount  (giving
effect to any netting  agreements) that the Borrower would be required to pay if
such hedging  arrangements  were terminated at such time.

     "Maturity Date" means the earlier of February 11, 2004 or the date on which
(i) the NUI  Refinancing  is closed and funded,  (ii) the  aggregate  commitment
under the Existing Revolver is permanently reduced in whole or in part below its
current level of  $141,923,076.80,  or (iii) the principal  amount of the Medium
Term Notes or any of the Gas  Facilities  Revenue  Bonds is repaid or prepaid in
whole  or in  part;  provided,  that  a  refinancing  by  the  Borrower  of  its
$39,000,000  of variable  rate gas  facilities  revenue bonds due 2026 shall not
constitute a repayment or prepayment for purposes of this  definition so long as
the final maturity date of such  refinanced  bonds shall be no earlier than five
(5) years from the date such refinancing is completed.

     "Medium Term Notes" means those certain 8.35% Medium-Term Notes,  issued by
the Borrower,  due February 1, 2005.

     "Moody's" means Moody's Investors Service, Inc.

     "Multiemployer  Plan"  means a  multiemployer  plan as  defined  in Section
4001(a)(3)  of ERISA.

                                       13
<PAGE>

     "NJBPU" means the New Jersey Board of Public  Utilities.

     "Notes"  means  any  one or all of the  promissory  notes  of the  Borrower
evidencing  Indebtedness  of the Borrower under this  Agreement  which notes are
substantially  in the form of  Exhibit A to this  Agreement,  together  with all
extensions, renewals, amendments, modifications,  substitutions and replacements
thereto and thereof.

     "NUI"  means  NUI  Corporation,  a  New  Jersey  corporation.

     "NUI Credit  Agreement"  means that certain Credit  Agreement,  dated as of
February 12, 2003,  by and among NUI  Corporation,  the lenders  party  thereto,
Fleet National Bank, as Administrative Agent, Citizens Bank of Massachusetts and
CIBC, Inc., as Co-Syndication  Agents, and PNC Bank,  National  Association,  as
Documentation  Agent,  as amended on March 31, 2003.

     "NUI Indebtedness" means,  collectively,  the Indebtedness of NUI under (i)
the NUI Credit Agreement and (ii) that certain Note Purchase Agreement, dated as
of August 20, 2001,  among NUI and the Purchasers  listed on Schedule A thereto,
as amended on February 20, 2003 and April 1, 2003.

     "NUI  Refinancing"  means the  refinancing of any Material  Indebtedness of
NUI.

     "NUI  Refinancing  Letter  Agreement"  means that certain letter  agreement
among NUI and the Agent,  substantially in the form of Exhibit C, to be executed
and delivered to the Agent prior to the Closing Date in accordance  with Section
6.01(a).

     "Other  Taxes"  means any and all  present or future  stamp or  documentary
taxes or any other excise or property  taxes,  charges or similar levies arising
from any payment made hereunder or from the  execution,  delivery or enforcement
of, or performance of this Agreement.

     "Participant"  has the meaning set forth in Section  9.05(e).

     "Participant Register" has the meaning set forth in Section 9.05(e).

     "PBGC"  means the  Pension  Benefit  Guaranty  Corporation  referred to and
defined  in  ERISA  and  any  successor  entity  performing  similar  functions.

     "Permitted  Encumbrances"  means, as to the Borrower,  any of the following
Liens:

     (i) Liens for taxes, assessments,  governmental charges or levies on any of
the Borrower's  properties,  which taxes,  assessments,  governmental charges or
levies  are at the time not due and  payable or if they can  thereafter  be paid
without penalty or are being contested in good faith by appropriate  proceedings
diligently  conducted and with respect to which adequate reserves are maintained
on the books of the Borrower in conformity  with GAAP;

                                       14
<PAGE>



     (ii)  pledges  or  deposits  to secure  payment  of  workers'  compensation
obligations, unemployment insurance, deposits or indemnities to secure public or
statutory obligations or for similar purposes;

     (iii) Liens  arising out of  judgments  or awards  against the Borrower but
only to the extent  that the  creation of any such  encumbrance  shall not be an
event or condition which, with or without notice or lapse of time or both, would
cause the Borrower to be in violation of Section 7.07;

     (iv)  mechanics',   carriers',  workers',  repairmen's  and  other  similar
statutory Liens incurred in the ordinary course of the Borrower's  business,  so
long as the obligation secured is not overdue or, if overdue, is being contested
in good faith by appropriate actions or proceedings  diligently  conducted;

     (v) Liens  listed on Schedule  5.02,  securing  Indebtedness  permitted  by
Section  5.01(c);  provided  that no such Lien is amended after the date of this
Agreement to cover any additional property or to secure additional Indebtedness;

     (vi) easements, rights-of-way,  restrictions, leases or subleases to others
or other similar Liens created in the ordinary course of business which Liens do
not interfere in any material  respect with the ordinary conduct of the business
of the Borrower;

     (vii) Liens  securing (a) the  non-delinquent  performance  of bids,  trade
contracts (other than for borrowed money), leases or statutory obligations,  (b)
contingent  obligations on surety and appeal bonds, and (c) other non-delinquent
obligations of a like nature;  in each case,  incurred in the ordinary course of
business,  provided all such Liens in the aggregate would not (even if enforced)
cause a Material Adverse Effect on the Borrower; and

     (viii) security interests in favor of lessors of personal  property,  which
property is the subject of a true lease between such lessor and the Borrower.

     "Permitted Investments" means

     (i) marketable direct obligations  issued or unconditionally  guaranteed by
the United  States of America or issued by any agency  thereof and backed by the
full faith and credit of the United States of America;

     (ii)  marketable  general  obligations  issued by any  state of the  United
States of America or any political  subdivision  of any such state or any public
instrumentality  thereof and, at the time of acquisition,  having one of the two
highest ratings generally obtainable from either S&P or Moody's;

     (iii) commercial paper, at the time of acquisition,  having a rating of A-1
(or the  equivalent)  or higher from S&P and P-1 (or the  equivalent)  or higher
from Moody's; or

                                       15
<PAGE>

     (iv) mutual funds,  the assets of which are primarily  invested in items of
the kind described in clauses (i), (ii) and (iii) of this definition;

provided  in each case,  that such  obligations  are payable in Dollars and such
Permitted Investments by the Borrower are in accordance with Governmental Rules.

     "Person" means any natural person, corporation,  limited liability company,
trust, joint venture, association, company, partnership,  Governmental Authority
or other entity.

     "Plan" means any employee  pension benefit plan (other than a Multiemployer
Plan)  subject to the  provisions  of Title IV of ERISA or the  minimum  funding
standards under Section 412 of the Code or Section 302 of ERISA,  and maintained
by or  contributed  to (or required to be contributed to by) the Borrower or any
ERISA Affiliate for the employees of the Borrower or any ERISA Affiliate.

     "Prime  Rate"  for any day  means  the  prime  rate of  interest  per annum
published in The Wall Street  Journal on that day,  provided that for any day on
which The Wall Street  Journal is not published the Prime Rate shall be the rate
JPMorgan Chase Bank announces as its prime rate for such day.

     "Register" has the meaning set forth in Section 9.05(c).

     "Registered Loan" has the meaning set forth in Section 9.05(e).

     "Registered Note" has the meaning set forth in Section 9.05(e).

     "Regulations"  means all Regulations of the Board as in effect from time to
time.

     "Regulation  D" means  Regulation  D of the Board as in effect from time to
time.

     "Regulation  T" means  Regulation  T of the Board as in effect from time to
time.

     "Regulation  U" means  Regulation  U of the Board as in effect from time to
time.

     "Regulation  X" means  Regulation  X of the Board as in effect from time to
time.

     "Related  Parties"  means,  with  respect  to any  specified  Person,  such
Person's Affiliates and the respective directors,  officers,  employees,  agents
and advisors of such Person and such Person's Affiliates.

     "Release"  means  release,  spill,  emission,  leaking,  pumping,  pouring,
emptying, dumping, injection, deposit, disposal,  discharge,  dispersal, escape,
leaching,  or migration  into the indoor or outdoor  environment,  including the
movement of Hazardous  Materials  through or in the air, soil,  surface water or
groundwater.

                                       16
<PAGE>

     "Required  Lenders" means, at any time, Lenders having Credit Exposures and
unused  Commitments  representing  at least 51% of the sum of the  total  Credit
Exposures and unused Commitments at such time.

     "Restricted  Payment" means any dividend or other distribution  (whether in
cash,  securities or other property) with respect to any Equity Interests of the
Borrower,  or any  payment  (whether  in cash,  securities  or other  property),
including  any  sinking  fund or similar  deposit,  on account of the  purchase,
redemption,  retirement,  acquisition,  cancellation  or termination of any such
Equity  Interests  of the  Borrower  or any  option,  warrant or other  right to
acquire any such Equity Interests of the Borrower.

     "S&P" means Standard & Poor's Rating Group.

     "Senior  Ratings" means,  with respect to any Person,  the long term senior
unsecured public debt ratings in effect from time to time as assigned by Moody's
and S&P, as the case may be.

     "Solvency  Certificate"  means a certificate  substantially  in the form of
Exhibit D delivered pursuant to Section 6.01(f).

     "Subsidiary" means, as to any Person, any corporation, partnership, limited
liability  company  or  other  entity  of  which  at  least  a  majority  of the
outstanding  stock or other  applicable  ownership  interest having by the terms
thereof  ordinary  voting power to elect a majority of the Board of Directors or
other managers of such corporation,  partnership,  limited liability company, or
other entity is at the time directly or  indirectly  owned or controlled by such
Person and/or by one or more Subsidiaries of such Person.

     "Taxes" means any and all present or future taxes, levies, imposts, duties,
deductions,  charges  or  withholdings  imposed by any  Governmental  Authority,
including interest, penalties and other additions thereto.

     "Termination Proceedings" means any action taken by the PBGC under ERISA to
terminate any Plan.

     "Total Commitment" means $50,000,000.

     "Withdrawal  Liability" means liability to a Multiemployer Plan as a result
of a complete or partial withdrawal from such Multiemployer  Plan, as such terms
are defined in Part I of Subtitle E of Title IV of ERISA.

     Section 1.02 Terms  Generally.  The definitions of terms herein shall apply
equally to the  singular  and plural  forms of the terms  defined.  Whenever the
context may require,  any pronoun  shall  include the  corresponding  masculine,
feminine and neuter forms. The words "include", "includes" and "including" shall
be deemed to be followed  by the phrase  "without  limitation".  The word "will"
shall be  construed  to have the same  meaning  and effect as the word  "shall".
Unless the context requires otherwise (a) any

                                       17
<PAGE>

definition of or reference to any agreement, instrument or other document herein
shall be construed as referring to such agreement,  instrument or other document
as from time to time amended, supplemented or otherwise modified (subject to any
restrictions on such amendments, supplements or modifications set forth herein),
(b) any  reference  herein to any Person  shall be  construed  to  include  such
Person's  successors  and  assigns,   (c)  the  words  "herein",   "hereof"  and
"hereunder",  and words of similar  import,  shall be construed to refer to this
Agreement in its entirety and not to any particular  provision  hereof,  (d) all
references  herein  to  Articles,  Sections,  Exhibits  and  Schedules  shall be
construed to refer to Articles and Sections of, and Exhibits and  Schedules  to,
this  Agreement and (e) the words "asset" and  "property"  shall be construed to
have the same  meaning  and  effect  and to  refer to any and all  tangible  and
intangible  assets and  properties,  including  cash,  securities,  accounts and
contract rights.

     Section 1.03 Accounting Terms; GAAP. Except as otherwise expressly provided
herein,  all terms of an  accounting  or financial  nature shall be construed in
accordance  with GAAP,  as in effect from time to time;  provided  that,  if the
Borrower  notifies  the Agent that the  Borrower  requests an  amendment  to any
provision  hereof to eliminate the effect of any change occurring after the date
hereof in GAAP or in the application  thereof on the operation of such provision
(or if the Agent  notifies the Borrower  that the  Required  Lenders  request an
amendment to any provision  hereof for such purpose),  regardless of whether any
such notice is given  before or after such change in GAAP or in the  application
thereof,  then such  provision  shall be  interpreted on the basis of GAAP as in
effect and applied  immediately  before such change shall have become  effective
until  such  notice  shall  have been  withdrawn  or such  provision  amended in
accordance herewith.

                                   ARTICLE II
                                   The Credits

     Section 2.01  Commitments.  Subject to the terms and  conditions  set forth
herein,  each  Lender  agrees to make  Loans to the  Borrower  from time to time
during the  Availability  Period in an aggregate  principal amount that will not
result in (a) such Lender's Credit Exposure exceeding such Lender's  Commitment,
or (b) the sum of the total Credit  Exposures  exceeding  the Total  Commitment.
Unless  previously  terminated,  the Commitments shall terminate on the Maturity
Date.

     Section 2.02 Loans and Borrowings.

          (a) Each Loan shall be made by the Lenders  ratably in accordance with
their  respective  Commitments.  The  failure  of any  Lender  to make  any Loan
required to be made by it shall not relieve any other Lender of its  obligations
hereunder.

          (b) At the time that each Borrowing is made,  such Borrowing  shall be
in an  aggregate  amount that is an integral  multiple of $500,000  and not less
than $1,000,000; provided that a Borrowing may be in an aggregate amount that is
equal to the entire unused balance of the Total Commitment.

                                       18
<PAGE>

     Section 2.03 Requests for Borrowings.  To request a Borrowing, the Borrower
shall notify the Agent of such  request by telephone  not later than 12:00 noon,
New York City time two Business Days before the date of the proposed  Borrowing.
Each  such  telephonic  Borrowing  Request  shall be  irrevocable  and  shall be
confirmed  promptly  by hand  delivery  or  telecopy  to the  Agent of a written
Borrowing  Request in a form  approved by the Agent and signed by the  Borrower.
Each such telephonic and written  Borrowing  Request shall specify the following
information in compliance with Section 2.02:

          (i)  the aggregate amount of the requested Borrowing;

          (ii) the date of such Borrowing, which shall be a Business Day;

          (iii) the location and number of the Borrower's account to which funds
are to be disbursed,  which shall comply with the  requirements of Section 2.04;
and

          (iv)  with  respect  to  the  written   Borrowing  Request  only,  the
information  required  in  Section  6.02 or,  as  applicable,  that  each of the
conditions precedent set forth in Section 6.02 shall be satisfied as of the date
of such Borrowing.

Promptly  following  receipt  of a  Borrowing  Request in  accordance  with this
Section,  the Agent shall  advise each Lender of the details  thereof and of the
amount of such Lender's Loan to be made as part of the requested Borrowing.

     Section 2.04 Funding of Borrowings.

          (a) Each Lender shall make each Loan to be made by it hereunder on the
proposed date thereof by wire transfer of immediately  available  funds by 12:00
noon, New York City time to the account of the Agent most recently designated by
it for such  purpose  by notice to the  Lenders.  The Agent will make such Loans
available to the Borrower by promptly crediting the amounts so received, in like
funds,  to an  account  of  the  Borrower  designated  by  the  Borrower  in the
applicable Borrowing Request.

          (b) Unless the Agent shall have received notice from a Lender prior to
the proposed date of any Borrowing  that such Lender will not make  available to
the Agent such Lender's share of such Borrowing,  the Agent may assume that such
Lender has made such share  available on such date in accordance  with paragraph
(a) of this Section and may, in reliance upon such assumption, make available to
the Borrower a corresponding  amount. In such event, if a Lender has not in fact
made its share of the  applicable  Borrowing  available  to the Agent,  then the
applicable Lender and the Borrower severally agree to pay to the Agent forthwith
on demand such corresponding amount with interest thereon, for each day from and
including  the  date  such  amount  is

                                       19
<PAGE>

made  available  to the  Borrower  to but  excluding  the date of payment to the
Agent,  at (i) in the case of such  Lender,  the  greater of the  Federal  Funds
Effective  Rate and a rate  determined by the Agent in  accordance  with banking
industry  rules on interbank  compensation  or (ii) in the case of the Borrower,
the Prime Rate plus the  Applicable  Margin.  If such Lender pays such amount to
the Agent, then such amount shall constitute such Lender's Loan included in such
Borrowing.

     Section 2.05 Repayment of Loans; Evidence of Debt.


          (a) The Borrower hereby  unconditionally  promises to pay to the Agent
for the account of each Lender the then unpaid  principal amount of each Loan on
the Maturity Date.

          (b) Each Lender shall  maintain in accordance  with its usual practice
an account or  accounts  evidencing  the  Indebtedness  of the  Borrower to such
Lender  resulting  from each Loan made by such Lender,  including the amounts of
principal  and  interest  payable  and  paid to such  Lender  from  time to time
hereunder.

          (c) The Agent shall maintain accounts in which it shall record (i) the
amount of each Loan made hereunder, (ii) the amount of any principal or interest
due and  payable or to become due and payable  from the  Borrower to each Lender
hereunder  and (iii) the amount of any sum received by the Agent  hereunder  for
the account of the Lenders and each Lender's share thereof.

          (d) The entries made in the accounts  maintained pursuant to paragraph
(b) or (c) of this Section  shall be prima facie  evidence of the  existence and
amounts of the obligations  recorded  therein;  provided that the failure of any
Lender or the Agent to maintain  such accounts or any error therein shall not in
any  manner  affect  the  obligation  of the  Borrower  to  repay  the  Loans in
accordance with the terms of this Agreement.

          (e) The obligation of the Borrower to repay, on or before the Maturity
Date, the aggregate  unpaid  principal  amount of all Loans shall, to the extent
requested by the  respective  Lender,  be evidenced by the several  Notes,  each
substantially  in the form of  Exhibit A hereto,  drawn by the  Borrower  to the
order of a  Lender  in the  maximum  amount  of such  Lender's  Commitment.  The
principal  amount  actually  due and owing to a Lender at any time  shall be the
then aggregate unpaid principal amount of all Loans made by such Lender as shown
on the account established and maintained by the Agent in accordance with clause
(c) above.  Each Note shall be dated the date hereof and shall be  delivered  to
the Lenders on such date.

                                       20
<PAGE>

     Section 2.06 Prepayment of Loans.

          (a) The  Borrower  shall  have the  right at any time and from time to
time to prepay any  Borrowing  in whole or in part  without  premium or penalty,
subject to prior notice in accordance with paragraph (b) of this Section.

          (b) The Borrower  shall notify the Agent by  telephone  (confirmed  by
telecopy) of any  prepayment  hereunder not later than 12:00 noon, New York City
time, two Business Days before the date of prepayment. Each such notice shall be
irrevocable  and shall specify the prepayment  date and the principal  amount of
each Borrowing or portion thereof to be prepaid.  Promptly  following receipt of
any such notice  relating to a Borrowing,  the Agent shall advise the Lenders of
the contents  thereof.  Each partial  prepayment of any Borrowing shall be in an
amount  that would be  permitted  in the case of an advance  of a  Borrowing  as
provided  in Section  2.02.  Each  prepayment  of a  Borrowing  shall be applied
ratably to the Loans  included in the prepaid  Borrowing.  Prepayments  shall be
accompanied by accrued  interest to the extent  required by Section 2.08 and any
payment required under Section 2.10.

     Section 2.07 Fees.


          (a) The  Borrower  agrees to pay to the Agent for the  account of each
Lender a Commitment  Fee, which shall accrue at the rate of  five-eighths of one
percent  (0.625%) per annum on the average daily unused portion of such Lenders'
Commitment,  during  the  period  from  and  including  the date  hereof  to but
excluding the date on which such Commitment terminates.  Accrued Commitment Fees
shall be payable in arrears on the last Business Day of each calendar  month and
on the date on which the  Commitments  terminate,  commencing  on the first such
date to occur after the date hereof.  All  Commitment  Fees shall be computed on
the basis of a year of 360 days and shall be payable  for the  actual  number of
days elapsed (including the first day but excluding the last day).

          (b) The Borrower agrees to pay to the Agent, for its own account, fees
payable in the  amounts  and at the times  separately  agreed  upon  between the
Borrower and the Agent  pursuant to that certain  Commitment  Letter between the
Agent, the Borrower and NUI, dated as of September 22, 2003.

          (c) All fees  payable  hereunder  shall be paid on the dates  due,  in
immediately  available  funds,  to the  Agent for  distribution,  in the case of
Commitment  Fees.  Fees paid after the  Effective  Date shall not be  refundable
under any circumstances.

     Section 2.08 Interest.

          (a)  The  Loans  shall  bear  interest  at the  Prime  Rate  plus  the
Applicable Margin.

          (b) Notwithstanding the foregoing,  if any principal of or interest on
any Loan or any fee or other  amount  payable by the  Borrower  hereunder is not
paid when due, whether at stated maturity, upon acceleration or otherwise,  such
overdue

                                       21
<PAGE>

amount  shall bear  interest,  after as well as before  judgment,  at a rate per
annum equal to the Prime Rate plus 6.125%.

          (c) Accrued interest hereunder shall be payable in arrears on the last
Business  Day of each month;  provided  that (i)  interest  accrued  pursuant to
paragraph  (b) of this Section  shall be payable on demand and (ii) in the event
of any repayment or prepayment  of any Loan,  accrued  interest on the principal
amount  repaid or  prepaid  shall be payable  on the date of such  repayment  or
prepayment.

          (d) All interest hereunder shall be computed on the basis of a year of
360 days and shall be payable for the actual  number of days elapsed  (including
the first day but excluding the last day).  The  applicable  Prime Rate shall be
determined  by the Agent in accordance  with the  definition  thereof,  and such
determination shall be conclusive absent manifest error.

     Section 2.09 Increased Costs.

          (a)  If,  at  any  time  after  the  date  hereof,   the  adoption  or
effectiveness  of  any  Governmental   Rule  (including,   without   limitation,
Regulation D), or any change  therein,  or any change in the  interpretation  or
administration   thereof  by  any  Governmental   Authority   charged  with  the
administration thereof, shall:

               (i) subject any Lender to any tax,  levy,  impost,  charge,  fee,
duty, deduction or withholding of any kind with respect to payments of principal
or interest or other  amounts due  hereunder or pursuant to any Note (other than
any tax  imposed  or  based  upon the  income  of a Lender  and  payable  to any
Governmental Authority in the United States of America or any state thereof); or

               (ii) change the basis of  taxation of any Lender with  respect to
payments of principal or interest or other  amounts due hereunder or pursuant to
any Note (other than any change  which  affects,  and only to the extent that it
affects, the taxation by the United States or any state thereof of the total net
income of such Lender); or

               (iii)  impose,  modify or deem  applicable  any reserve,  special
deposit or similar  requirements against assets held by any Lender applicable to
the Commitments or Loans made hereunder (other than such requirements  which are
included in the determination of the applicable rate of interest hereunder); or

               (iv) impose  upon any Lender any other  obligation  or  condition
with  respect to this  Agreement,  and the result of any of the  foregoing is to
increase the cost to the affected  Lender,  reduce the income  receivable by the
affected Lender,  reduce the rate of return on the affected Lender's capital, or
impose any  expenses  upon the affected  Lender,  all with respect to any of the
Loans (or any portion thereof) by an amount which the affected Lender reasonably
deems  material,   and  if  the  affected

                                       22
<PAGE>

Lender is then demanding  similar  compensation  for such occurrences from other
borrowers who are similarly  situated and who have a similar  relationship  with
the affected  Lender and from which the affected  Lender has the right to demand
such compensation, then and in any such case:

               (1) the affected Lender shall promptly notify the Borrower of the
happening of such event and deliver to the Borrower a certificate (in reasonable
detail)  as to the  increased  cost or  reduced  amount as a result of any event
mentioned in this Section  2.09(a) in  accordance  with the  provisions  hereof,
which  certificate  shall be  prima  facie  evidence  as to the  amount  of such
increased cost or reduced amount;

               (2) the Borrower shall pay to the affected Lender, within 30 days
following  demand,  such amount as will  compensate the affected Lender for such
reduction in its rate of return; and

               (3) the  Borrower  may pay the  affected  portion of the affected
Lender's Loans in full without the payment of any additional  amount,  including
prepayment  penalties,  other than  amounts  payable on account of the  affected
Lender's  out-of-pocket  losses (including  funding loss, if any, as provided in
Section  2.10)  which  are  not  otherwise  provided  for  in  subparagraph  (2)
immediately above.

          (b) If, after the date hereof, (i) any adoption of or any change in or
in the  interpretation  of any  Governmental  Rule, or (ii)  compliance with any
Governmental Rule of any Governmental Authority exercising control over banks or
financial  institutions  generally  or  any  court  of  competent  jurisdiction,
requires that the  Commitment  (including,  without  limitation,  obligations in
respect of any Loans)  hereunder be treated as an asset or otherwise be included
for purposes of calculating the  appropriate  amount of capital to be maintained
by any Lender or any  corporation  controlling  any Lender (a "Capital  Adequacy
Event"),  the  result  of which is to reduce  the rate of  return on a  Lender's
capital  as a  consequence  of its  Commitment  to a level  below that which the
affected Lender could have achieved but for such Capital Adequacy Event,  taking
into consideration the Lender's policies with respect to capital adequacy, by an
amount which the affected Lender  reasonably deems to be material,  the affected
Lender shall promptly deliver to the Borrower a statement (in reasonable detail)
of the amount  necessary to compensate  the affected  Lender or the reduction in
the rate of return on its capital  attributable  to its Commitment (the "Capital
Compensation   Amount").   The  affected  Lender  shall  determine  the  Capital
Compensation  Amount in good faith,  using reasonable  attribution and averaging
methods. Each affected Lender shall from time to time notify the Borrower of the
amount so determined.  Each such  notification  shall be prima facie evidence of
the  amount of the  Capital  Compensation  Amount  set forth  therein,  and such
Capital  Compensation  Amount  shall be due and  payable by the  Borrower to the
affected Lender 30 days after such notice is given. As soon as practicable after
any Capital  Adequacy  Event,  the affected  Lender shall submit to the Borrower
estimates  of the  Capital  Compensation  Amounts  that  would be  payable  as a
function of the affected Lender's Commitment hereunder.

                                       23
<PAGE>

     Section 2.10 Additional Payments by the Borrower. If (i) the Borrower shall
fail to make any  payment  due  hereunder  on the due date  thereof  or (ii) the
Borrower shall fail on the date  specified  therefor to consummate any Borrowing
after  giving a request for an extension  of credit or notice of  conversion  or
renewal,  and, as a result of any such action or inaction,  a Lender  reasonably
incurs any losses and  expenses  which it would not have  incurred  but for such
action or  inaction,  the  Borrower  shall pay such  additional  amounts as will
compensate the affected Lender for such losses and expenses,  including the cost
of  reemployment  of any  funds  prepaid  at  rates  lower  than the cost to the
affected  Lender of such funds.  Such losses and  expenses,  which the  affected
Lender shall  exercise  reasonable  efforts to  minimize,  shall be specified in
writing (setting forth, in reasonable  detail,  the basis of calculation) to the
Borrower by the affected Lender,  which writing shall be prima facie evidence of
the amounts set forth therein,  and such amounts shall be payable within 30 days
of demand therefor.

     Section 2.11 Taxes.

          (a) Any and all  payments  by or on account of any  obligation  of the
Borrower hereunder shall be made free and clear of and without deduction for any
Indemnified  Taxes  or  Other  Taxes;  provided  that if the  Borrower  shall be
required to deduct any Indemnified Taxes or Other Taxes from such payments, then
(i) the sum payable  shall be  increased  as  necessary so that after making all
required deductions  (including deductions applicable to additional sums payable
under this Section) the Agent or any Lender  receives an amount equal to the sum
it would have received had no such deductions been made, (ii) the Borrower shall
make such  deductions and (iii) the Borrower shall pay the full amount  deducted
to the relevant Governmental Authority in accordance with applicable law.

          (b) In  addition,  the  Borrower  shall  pay any  Other  Taxes  to the
relevant Governmental Authority in accordance with applicable law.

          (c) The Borrower  shall  indemnify the Agent and each Lender within 10
days after written demand therefor, for the full amount of any Indemnified Taxes
or Other Taxes paid by the Agent or such Lender,  as the case may be, on or with
respect  to any  payment  by or on account  of any  obligation  of the  Borrower
hereunder (including  Indemnified Taxes or Other Taxes imposed or asserted on or
attributable to amounts payable under this Section) and any penalties,  interest
and reasonable  expenses arising  therefrom or with respect thereto,  whether or
not such  Indemnified  Taxes or Other Taxes were correctly or legally imposed or
asserted by the relevant Governmental Authority. The Agent and each Lender will,
at the  Borrower's  expense,  cooperate  in good faith with the  Borrower in any
contest  with a  Governmental  Authority  as to whether or not such  Indemnified
Taxes,  Other Taxes,  penalties,  interest or expenses were correctly or legally
imposed or asserted in the event such Indemnified Taxes, Other Taxes, penalties,
interest  or  expenses  were in the good  faith  judgment  of the  Agent or such
Lender,  as the  case  may  be,  not  legal  or not  correctly  asserted.  If in
connection with such contest such  Indemnified  Taxes,  Other Taxes,  penalties,
interest or expenses are refunded to the Agent or such Lender, the Agent or such
Lender  will pay such  refund to the  Borrower  to the  extent the Agent or such
Lender  determines in its sole discretion,  but

                                       24
<PAGE>

acting in good faith, that such refund is attributable to any Indemnified Taxes,
Other  Taxes,  penalties,  interest or expenses  paid by the Borrower and to the
extent the Borrower has previously indemnified the Agent or such Lender therefor
pursuant to this Section 2.11, net of expenses and without  interest  except any
interest (net of taxes) included in such refund.  The Borrower shall return such
refund  (together  with any taxes,  penalties or other charges) in the event the
Agent or such  Lender is  required  to repay such  refund.  Notwithstanding  the
foregoing,  nothing in this  Section  2.11 shall be construed to (i) entitle the
Borrower or any other Persons to any information  determined by the Agent or any
Lender in each case,  in its sole  discretion,  but acting in good faith,  to be
confidential or proprietary  information of the Agent or any Lender,  to any tax
or financial information of the Agent or any Lender, or to inspect or review any
books and records of the Agent or any Lender or (ii)  interfere  with the rights
of the Agent or any Lender to conduct  its fiscal or tax  affairs in such matter
as it deems fit. A  certificate  as to the  amount of any  payment or  liability
provided for hereunder  delivered to the Borrower by a Lender or by the Agent on
its own behalf or on behalf of a Lender,  shall be  conclusive  absent  manifest
error.

          (d) As soon as practicable  after any payment of Indemnified  Taxes or
Other Taxes by the Borrower to a  Governmental  Authority,  the  Borrower  shall
deliver to the Agent the original or a certified copy, to the extent  reasonably
available,  of a receipt issued by such Governmental  Authority  evidencing such
payment,  a copy of the return  reporting such payment or other evidence of such
payment reasonably satisfactory to the Agent.

          (e) Any  Foreign  Lender  that is  entitled  to an  exemption  from or
reduction  of  withholding  tax under the law of the  jurisdiction  in which the
Borrower is located,  or any treaty to which such  jurisdiction is a party, with
respect to payments under this  Agreement  shall deliver to the Borrower (with a
copy to the Agent),  at the time or times  prescribed  by  applicable  law, such
properly  completed and executed  documentation  prescribed by applicable law or
reasonably  requested  by the  Borrower as will permit such  payments to be made
without  withholding  or at a reduced  rate.  Each  Lender  that is not a United
States  person  (as such term is defined  in  Section  7701(a)(30)  of the Code)
agrees to deliver  to the  Borrower  and the Agent on or prior to the  Effective
Date,  or in the  case of a  Lender  that is an  assignee  or  transferee  of an
interest under this Agreement (unless the respective Lender was already a Lender
hereunder immediately prior to such assignment or transfer), on the date of such
assignment  or transfer to such Lender,  (i) two accurate and complete  original
signed  copies of Internal  Revenue  Service  Form  W-8ECI or Form W-8BEN  (with
respect to a complete exemption under an income tax treaty) (or successor forms)
certifying to such Lender's  entitlement as of such date to a complete exemption
from United  States  withholding  tax with  respect to payments to be made under
this  Agreement and under any Note, or (ii) if the Lender is not a "bank" within
the  meaning  of Section  881(c)(3)(A)  of the Code and  cannot  deliver  either
Internal  Revenue Service Form W-8ECI or Form W-8BEN (with respect to a complete
exemption  under an income tax  treaty)  pursuant  to clause  (i)  above,  (x) a
certificate  substantially  in the form of  Exhibit F (any such  certificate,  a
"Section  2.11(e)(ii)  Certificate")  and (y) two accurate and complete original
signed  copies of Internal  Revenue  Service  Form W-8BEN  (with  respect to the
portfolio  interest  exemption) (or successor form)  certifying to such

                                       25
<PAGE>

Lender's  entitlement as of such date to a complete exemption from United States
withholding  tax with  respect to  payments  of  interest  to be made under this
Agreement and under any Note. In addition,  each Lender agrees that from time to
time after the Effective Date,  when a lapse in time or change in  circumstances
renders the  previous  certification  obsolete  or  inaccurate  in any  material
respect,  it will  deliver to the  Borrower  or the Agent two new  accurate  and
complete  original signed copies of Internal  Revenue Service Form W-8ECI,  Form
W-8BEN (with  respect to the benefits of any income tax treaty),  or Form W-8BEN
(with respect to the portfolio  interest  exemption)  and a Section  2.11(e)(ii)
Certificate,  as the case may be, and such  other  forms as may be  required  in
order to confirm or  establish  the  entitlement  of such  Lender to a continued
exemption  from or reduction in United  States  withholding  tax with respect to
payments under this Agreement and any Note, or it shall  immediately  notify the
Borrower and the Agent of its inability to deliver any such Form or Certificate,
in which case such  Lender  shall not be  required  to deliver  any such Form or
Certificate pursuant to this Section 2.11(e).

          (f) If the Agent or a Lender determines,  in its sole discretion,  but
acting in good faith,  that it has received a refund of any Taxes or Other Taxes
as to which it has been indemnified by the Borrower or with respect to which the
Borrower has paid additional amounts pursuant to this Section 2.11, it shall pay
over such refund to the Borrower  (but only to the extent of indemnity  payments
made, or additional  amounts paid, by the Borrower  under this Section 2.11 with
respect to the Taxes or Other  Taxes  giving  rise to such  refund),  net of all
out-of-pocket  expenses of the Agent or such Lender and without  interest (other
than any interest paid by the relevant  Governmental  Authority  with respect to
such refund); provided, that the Borrower, upon the request of the Agent or such
Lender,  agrees  to  repay  the  amount  paid  over to the  Borrower  (plus  any
penalties,  interest  or other  charges  imposed  by the  relevant  Governmental
Authority)  to the Agent or such Lender in the event the Agent or such Lender is
required to repay such refund to such Governmental Authority. This Section shall
not be  construed to require the Agent or any Lender to make  available  its tax
returns  (or  any  other  information  relating  to its  taxes  which  it  deems
confidential) to the Borrower or any other Person.

     Section 2.12 Payments Generally; Pro Rata Treatment; Sharing of Set-offs.


          (a) The  Borrower  shall make each  payment  required to be made by it
hereunder  (whether of  principal,  interest,  fees or of amounts  payable under
Section  2.09,  2.10 or 2.11, or  otherwise)  prior to 1:00 p.m.,  New York City
time, on the date when due, in immediately  available funds,  without set-off or
counterclaim.  Any  amounts  received  after  such time on any date may,  in the
discretion of the Agent,  be deemed to have been received on the next succeeding
Business Day for purposes of  calculating  interest  thereon.  All such payments
shall be made to the Agent to the  account  of the  Agent  set forth in  Section
9.01(a),  as such account may be changed  from time to time upon written  notice
from the Agent to the  Borrower.  The Agent shall  distribute  any such payments
received by it for the account of any other Person to the appropriate  recipient
promptly  following receipt thereof.  If any payment hereunder shall be due on a
day that is not a Business  Day,  the date for payment  shall be extended to the
next succeeding Business Day, and, in the case of any payment accruing interest,
interest thereon shall be

                                       26
<PAGE>

payable for the period of such extension.  All payments  hereunder shall be made
in Dollars.

          (b)  Provided  that no Default or Event of Default has occurred and is
continuing,  if at any time insufficient  funds are received by and available to
the Agent to pay fully all  amounts  of  principal,  interest  and fees then due
hereunder,  such funds shall be applied (i) first,  towards  payment of interest
and fees then due  hereunder,  ratably  among the  parties  entitled  thereto in
accordance  with the amounts of interest  and fees then due to such  parties and
(ii) second, towards payment of principal then due hereunder,  ratably among the
parties entitled thereto in accordance with the amounts of principal then due to
such parties.

          (c) If any  Lender  shall,  by  exercising  any  right of  set-off  or
counterclaim or otherwise,  obtain payment in respect of any principal or any of
its Loans or interest  on any of its Loans  resulting  in such Lender  receiving
payment of a greater proportion of the aggregate amount of its Loans and accrued
interest  thereon than the  proportion  received by any other  Lender,  then the
Lender receiving such greater proportion shall purchase (for cash at face value)
participations in the Loans of other Lenders to the extent necessary so that the
benefit  of all  such  payments  shall  be  shared  by the  Lenders  ratably  in
accordance  with the  aggregate  amount of principal of and accrued  interest on
their  respective  Loans;  provided  that  (i) if any  such  participations  are
purchased  and  all or any  portion  of  the  payment  giving  rise  thereto  is
recovered,  such  participations  shall  be  rescinded  and the  purchase  price
restored  to the  extent  of such  recovery,  without  interest,  and  (ii)  the
provisions of this paragraph shall not be construed to apply to any payment made
by the Borrower  pursuant to and in  accordance  with the express  terms of this
Agreement  or  any  payment  obtained  by a  Lender  as  consideration  for  the
assignment of or sale of a participation  in any of its Loans to any assignee or
participant,  other than to the Borrower or any  Affiliate  thereof (as to which
the  provisions of this  paragraph  shall apply).  The Borrower  consents to the
foregoing and agrees,  to the extent it may  effectively do so under  applicable
law,  that any  Lender  acquiring  a  participation  pursuant  to the  foregoing
arrangements   may  exercise   against  the  Borrower   rights  of  set-off  and
counterclaim with respect to such  participation as fully as if such Lender were
a direct creditor of the Borrower in the amount of such participation.

          (d) Unless the Agent  shall have  received  notice  from the  Borrower
prior to the date on which any  payment  is due to the Agent for the  account of
the Lenders  hereunder  that the Borrower will not make such payment,  the Agent
may assume that the Borrower  has made such  payment on such date in  accordance
herewith and may, in reliance  upon such  assumption,  distribute to the Lenders
the  amount  due.  In such  event,  if the  Borrower  has not in fact  made such
payment,  then  each of the  Lenders  severally  agrees  to repay  to the  Agent
forthwith  on demand the amount so  distributed  to such  Lender  with  interest
thereon,  for each day from and including the date such amount is distributed to
it to but  excluding  the date of payment to the  Agent,  at the  greater of the
Federal Funds  Effective  Rate and a rate  determined by the Agent in accordance
with banking industry rules on interbank compensation.

                                       27
<PAGE>

          (e) If any Lender  shall fail to make any payment  required to be made
by it  pursuant  to Section  2.04(b)  or  2.12(d),  then the Agent  may,  in its
discretion  (notwithstanding  any contrary provision hereof),  apply any amounts
thereafter  received by the Agent for the account of such Lender to satisfy such
Lender's obligations under such Sections until all such unsatisfied  obligations
are fully paid.

     Section 2.13 Mitigation Obligations; Replacement of Lenders.

          (a) Each Lender agrees that,  upon the  occurrence of any event giving
rise to the operation of Section 2.09(a) or 2.09(b) with respect to such Lender,
it will,  if requested  by the  Borrower,  use  reasonable  efforts  (subject to
overall  policy  considerations  of such  Lender) to designate  another  lending
office for any Loans  affected  by such event  with the object of  avoiding  the
consequences  of such event;  provided,  that such  designation is made on terms
that,  in the sole  judgment of such  Lender,  cause such Lender and its lending
office(s) to suffer no economic, legal or regulatory disadvantage, and provided,
further,  that  nothing in this  Section  shall  affect or  postpone  any of the
obligations  of the  Borrower  or the rights of any Lender  pursuant  to Section
2.09(a) or 2.09(b).  In determining  whether  designating another lending office
would  cause  such  Lender  or  its  lending   office(s)   to  suffer   economic
disadvantage,  such Lender shall  disregard any economic  disadvantage  that the
Borrower  agrees in form and  substance  satisfactory  to such  Lender,  in such
Lender's sole discretion, to indemnify and hold such Lender harmless therefrom.

          (b) If any Lender requests  compensation under Section 2.09, or if the
Borrower  is  required  to  pay  any  additional  amount  to any  Lender  or any
Governmental  Authority for the account of any Lender  pursuant to Section 2.11,
or if any Lender  defaults in its obligation to fund Loans  hereunder,  then the
Borrower may, at its sole expense and effort, upon notice to such Lender and the
Agent,  require  such  Lender to  assign  and  delegate,  without  recourse  (in
accordance with and subject to the restrictions  contained in Section 9.05), all
its interests,  rights and obligations  under this Agreement to an assignee that
shall assume such obligations (which assignee may be another Lender, if a Lender
accepts such assignment); provided that (i) the Borrower shall have received the
prior written  consent of the Agent,  which consent  shall not  unreasonably  be
withheld, (ii) such Lender shall have received payment of an amount equal to the
outstanding principal of its Loans, accrued and unpaid interest thereon, accrued
and unpaid fees and all other amounts payable to it hereunder, from the assignee
(to the extent of such outstanding principal and accrued and unpaid interest and
fees) or the Borrower  (in the case of all other  amounts) and (iii) in the case
of any such  assignment  resulting from a claim for  compensation  under Section
2.09 or payments  required to be made pursuant to Section 2.11,  such assignment
will result in a reduction in such compensation or payments.  A Lender shall not
be required to make any such  assignment and delegation if, prior thereto,  as a
result of a waiver by such Lender or otherwise,  the circumstances entitling the
Borrower to require such assignment and delegation cease to apply.

                                       28
<PAGE>

                                  ARTICLE III
                         Representations and Warranties

         The Borrower represents and warrants to the Lenders that:

     Section  3.01  Corporate  Existence.  The  Borrower is a  corporation  duly
organized,  validly existing and in good standing under the laws of its state of
incorporation  and it is  duly  qualified  and in  good  standing  as a  foreign
corporation authorized to do business in each jurisdiction where, because of the
nature of its properties or businesses,  such  qualification  is required or, if
not  so  qualified  or  in  good  standing  in  any  state,  the  lack  of  such
qualification  or good  standing will not  materially  affect the Agent's or the
Lenders'  ability  to  enforce  this  Agreement,  the  Notes or the  other  Loan
Documents or will not have a material  adverse effect on the Borrower's  ability
to carry on its business as currently  conducted  or the  Borrower's  ability to
comply with this Agreement, the Notes or the other Loan Documents.

     Section  3.02  Corporate  Authority.  The  Borrower is duly  authorized  to
execute and deliver this  Agreement,  the Notes and the other Loan  Documents to
which it is or will become a party; all necessary  corporate action to authorize
the  execution  and  delivery  of this  Agreement,  the Notes and the other Loan
Documents to which it is or will become a party has been properly taken;  and it
is and will continue to be duly  authorized  to borrow  hereunder and to perform
all of the other terms and provisions of this Agreement, the Notes and the other
Loan Documents to which it is or will become a party.

     Section 3.03  Enforceability.  This Agreement and the Notes have each been,
and each other Loan  Document  to which it will become a party will be, duly and
validly  executed and  delivered by the  Borrower and each  constitutes  or will
constitute a valid and legally binding agreement of the Borrower  enforceable in
accordance with its terms.

     Section  3.04 No  Restrictions;  No  Default.  Neither  the  execution  and
delivery of this  Agreement,  the Notes and the other Loan Documents to which it
is or  will  become  a  party,  the  consummation  of  the  transactions  herein
contemplated  nor  compliance  with the  terms and  provisions  hereof or of the
Notes, will conflict with or result in a breach of any of the terms,  conditions
or provisions of the certificate of incorporation or the by-laws of the Borrower
or of any law or of any  regulation,  order,  writ,  injunction or decree of any
court or governmental agency or of any agreement,  indenture or other instrument
to  which  the  Borrower  is a party  or by  which it is bound or to which it is
subject,  or  constitute  a default  thereunder  or result  in the  creation  or
imposition  of any Lien of any nature  whatsoever  upon any of the  property  or
assets of the  Borrower  pursuant to the terms of any  agreement,  indenture  or
other instrument,  except as would not, individually or in the aggregate, have a
Material  Adverse Effect upon the Borrower.  Except as would not have a Material
Adverse Effect,  the Borrower has good record and marketable title in fee simple
to, or a valid leasehold interest in, all its real property,  and good title to,
or a valid leasehold interest in, all of its other property, and

                                       29
<PAGE>

none of such  property  is subject to any Lien  except as  permitted  by Section
5.02.  No event has occurred and is continuing  and no condition  exists or will
exist after giving effect to the borrowings  hereunder to be made on the Closing
Date which constitutes a Default or Event of Default.

     Section  3.05  Financial  Statements.  The  Borrower  has  furnished to the
Lenders  and  the  Agent  the  consolidated   balance  sheets  and  the  related
consolidated statements of income, shareholders' equity and changes in financial
position of the  Borrower for the Fiscal  Years  ending  September  30, 2001 and
September  30, 2002 and for the Fiscal  Quarters  ending March 31, 2003 and June
30, 2003. All such financial statements,  including the related notes, have been
prepared in accordance with GAAP,  except as expressly noted therein and, in the
case of the aforementioned  quarterly financial  statements,  subject to changes
resulting from year-end  adjustments,  and fairly present the financial position
and consolidated financial positions of the Borrower as at the dates thereof and
the results and  consolidated  results of its  operations and the changes in its
financial  position and in its consolidated  financial  position for the periods
ended  on such  dates.  There  were no  material  liabilities  of the  Borrower,
contingent or otherwise,  not reflected in such financial statements.  Except as
has  otherwise  been fully  disclosed  in NUI's Form 10-K filed on December  31,
2002,  its Form 10-Q's filed on February  14, 2003,  May 15, 2003 and August 14,
2003 and its Form 8-K's filed on July 22, 2003,  July 31, 2003 and September 26,
2003 with the  Securities  and Exchange  Commission,  there has been no Material
Adverse Change in the business, condition or operations (financial or otherwise)
of the Borrower.

     Section 3.06 Litigation and Environmental Matters.

          (a)  There  are  no  actions,  suits,  investigations,  litigation  or
governmental  proceedings  pending or, to the Borrower's  knowledge,  threatened
against  the  Borrower  or any of its  properties,  which  would have a Material
Adverse  Effect  on the  Borrower,  or which  purport  to affect  the  legality,
validity or enforceability of this Agreement or the Notes.

          (b) Except to the extent  described in NUI's most recently  filed Form
10-K,  its Form 10-Q's filed on February  14, 2003,  May 15, 2003 and August 14,
2003 and its Form 8-K's filed on July 22, 2003,  July 31, 2003 and September 26,
2003, the Borrower (i) has not failed to comply with any Environmental Law or to
obtain,  maintain or comply with any Environmental Permit, (ii) has not received
notice of any  Environmental  Claim and (iii) does not know of any basis for any
Environmental  Liability,  in each case except for matters that, individually or
in the  aggregate,  could not  reasonably  be  expected  to result in a Material
Adverse Effect on the Borrower.

     Section 3.07 Tax Returns and Payments.  As of the date hereof, the Borrower
has filed all Federal and other material tax returns required by law to be filed
and has paid  all  material  taxes,  material  assessments  and  other  material
governmental charges levied upon the Borrower, or any of its properties, assets,
income or  franchises  of the  Borrower,  which are due and payable,  other than
those currently payable or deferrable without penalty or interest or those which
are being  contested  in good faith and by

                                       30
<PAGE>

appropriate  proceedings  diligently conducted for which reserves in accord with
GAAP have been  provided.  As of the date  hereof,  the  charges,  accruals  and
reserves on the books of the  Borrower  in respect of  Federal,  state and local
income taxes for all fiscal  periods are adequate,  and the Borrower knows of no
unpaid assessments for additional  Federal,  state or local income taxes for any
such fiscal period or any basis therefor.

     Section 3.08 ERISA.  No ERISA Event has occurred or is reasonably  expected
to occur that,  when taken  together  with all other such ERISA Events for which
liability  is  reasonably  expected to occur,  could  reasonably  be expected to
result in a  Material  Adverse  Effect.  The  present  value of all  accumulated
benefit  obligations under each Plan (based on the assumptions used for purposes
of Statement of Financial  Accounting  Standards No. 87) did not, as of the date
of the most recent financial statements reflecting such amounts, exceed the fair
market  value of the assets of such Plan by an amount that could  reasonably  be
expected to result in a Material  Adverse  Effect,  and the present value of all
accumulated   benefit  obligations  of  all  underfunded  Plans  (based  on  the
assumptions used for purposes of Statement of Financial Accounting Standards No.
87) did not, as of the date of the most recent financial  statements  reflecting
such amounts, exceed the fair market value of the assets of all such underfunded
Plans by an amount that  reasonably be expected to result in a Material  Adverse
Effect.  Neither the Borrower nor any of its ERISA Affiliates has engaged in any
transaction within the last five (5) years relating to any plan subject to Title
IV of ERISA that could  reasonably  be expected  to result in a liability  under
Section 4069 of ERISA that would have a Material Adverse Effect.

     Section 3.09 Compliance  with  Applicable  Laws. The Borrower (i) is not in
default with respect to any order, writ, injunction or decree of any court or of
any  Federal,  state,  municipal  or other  Governmental  Authority  and (ii) is
substantially  complying  with all applicable  statutes and  regulations of each
Governmental Authority having jurisdiction over its activities; except for those
orders, writs, injunctions,  decrees,  statutes and regulations,  non-compliance
with which would not have a Material Adverse Effect upon the Borrower.

     Section  3.10  Governmental  Approval.  No order,  authorization,  consent,
license,  validation  or  approval  of,  or notice  to,  filing,  recording,  or
registration with, any Governmental  Authority, or exemption by any Governmental
Authority,  is required to authorize, or is required in connection with, (i) the
execution, delivery and performance by the Borrower of this Agreement, the Notes
or the other Loan Documents to which it is a party or (ii) the legality, binding
effect or enforceability  of this Agreement upon the Borrower,  the Notes or the
other Loan Documents to which it is a party.

     Section  3.11  Regulations  T, U and X. The  Borrower is not engaged in the
business of purchasing or selling Margin Stock or extending credit to others for
the purpose of purchasing  or carrying  Margin Stock and no part of the proceeds
of the Loans will be used to purchase or carry any Margin Stock or for any other
purpose which would violate or be inconsistent with Regulations T, U or X.

                                       31
<PAGE>

     Section 3.12  Investment  Company  Act. The Borrower is not an  "investment
company",  or a company  "controlled"  by an  "investment  company",  within the
meaning of the Investment Company Act of 1940, as amended.

     Section  3.13 Public  Utility  Holding  Company Act. The Borrower is a "gas
utility company" within the meaning of the Public Utility Holding Company Act of
1935,  as  amended  ("PUHCA")  and a  "subsidiary  company"  of NUI,  which is a
"holding company" that is exempt from all regulation under PUHCA (except Section
(9)(a)(2) thereof) under Section 3(a)(1) thereof pursuant to Rule 2.

     Section 3.14  Disclosure.  The  Borrower  has  disclosed to the Lenders all
agreements,  instruments  and  corporate  or other  restrictions  to which it is
subject,  and all  other  matters  known  to it,  that,  individually  or in the
aggregate,  could reasonably be expected to result in a Material Adverse Effect.
Neither  this  Agreement  nor  any  other  document,  certificate  or  statement
furnished to the Lenders or the Agent by or on behalf of the  Borrower  pursuant
to this Agreement  contains any untrue  statement of a material fact or omits to
state any material fact  necessary to make the  statements  therein,  taken as a
whole and in the light of the  circumstances  under  which they were  made,  not
misleading.  As of the  Effective  Date,  there is no fact known to the Borrower
which  materially  and  adversely  affects  or in the  future may (so far as the
Borrower now foresees) have a Material Adverse Effect on the Borrower, which has
not been set forth in this Agreement or in the other documents, certificates and
statements  (financial  or  otherwise)  furnished to the Lenders or the Agent or
otherwise  disclosed  in writing to the  Lenders or the Agent by or on behalf of
the Borrower prior to or on the date hereof.

     Section 3.15 No Subsidiaries. The Borrower has no Subsidiaries.

     Section  3.16  Labor  Matters.  Except  as,  in the  aggregate,  could  not
reasonably be expected to have a Material  Adverse Effect,  there are no strikes
or other labor disputes against the Borrower pending or, to the knowledge of the
Borrower, threatened.

     Section 3.17  Options.  There are no  outstanding  subscriptions,  options,
warrants,  calls, rights or other agreements or commitments other than customary
shareholders  rights plans in effect from time to time of any nature relating to
any capital stock or other Equity Interests of the Borrower.

     Section 3.18 Insurance.  The Borrower has insurance from financially  sound
and reputable  insurers or maintains  with such insurers  valid  insurance  with
respect  to its assets and  businesses  which is  required  to be  obtained  and
maintained by it pursuant to Section 4.07 hereof.

     Section 3.19 Letters of Credit.  There are no letters of credit  issued and
outstanding,  or  reimbursement  obligations  of the  Borrower  with respect to,
letters of credit under or pursuant to the Existing Revolver.

     Section  3.20  Guarantees.  The  Borrower is not liable  under,  and has no
obligations under, any Guarantee.

                                       32
<PAGE>

     Section 3.21 Liens. No Liens, assignments of any right to receive income or
other types of preferential  arrangement,  in each case to secure or provide for
the payment of any Indebtedness of any Person, exist upon or with respect to any
of the Borrower's properties, other than Permitted Encumbrances.

     Section  3.22  Separation  of  Cash  Pools.  As of the  Closing  Date,  the
Borrower's  cash pool is  substantially  separate from the cash pools of each of
its Affiliates and the Borrower is diligently  pursuing  efforts to complete the
separation of its cash pools from the cash pools of each of its Affiliates.

                                   ARTICLE IV
                              Affirmative Covenants

     Until the Commitments  have expired or been terminated and the principal of
and interest on each Loan and all fees payable hereunder shall have been paid in
full, the Borrower  covenants and agrees with the Lenders that:

     Section 4.01 Use of  Proceeds.  The proceeds of the Loans will be used only
(i) to provide  additional  liquidity to fund near-term natural gas purchases by
the Borrower,  (ii) to fund other general corporate and working capital purposes
of the Borrower  until the Maturity  Date,  provided  that proceeds of the Loans
shall not be used for the  purpose  of  making  loans to or  investments  in NUI
(except with respect to Restricted Payments described in clause (iii)), (iii) to
make  Restricted  Payments to NUI in the ordinary course and in an amount not to
exceed  $4,000,000  in any fiscal  quarter,  provided  that if during any fiscal
quarter  the  Borrower  has  made  Restricted  Payments  to  NUI  or  any of its
Affiliates  in an amount  greater than or equal to  $4,000,000  in the aggregate
(either from cash on hand or draws  hereunder or under any other existing credit
facilities)  no  further  Borrowing  may be made under  this  Agreement  for the
purpose of making  Restricted  Payments to NUI or any of its  Affiliates  during
such fiscal  quarter,  or (iv) to pay fees and expenses in connection  with this
Agreement. No part of the proceeds of any Loan will be used, whether directly or
indirectly,  for any purpose that entails a violation of any of the  Regulations
of the Board, including Regulations U and X.

     Section 4.02 Furnishing Information. The Borrower shall:

          (a) deliver to the Agent (with  copies for each Lender which the Agent
shall distribute) within 55 days after the end of each of the first three Fiscal
Quarters in each Fiscal Year of the Borrower,  (A) balance  sheets as at the end
of such period for the  Borrower,  (B)  statements of income for such period for
the Borrower and, in the case of the second and third quarterly periods, for the
period  from  the  beginning  of the  current  Fiscal  Year  to the  end of such
quarterly  period,  and (C)  statements  of cash  flow for such  period  for the
Borrower  and, in the case of the second and third  quarterly  periods,  for the
period  from  the  beginning  of the  current  Fiscal  Year  to the  end of such
quarterly period;  and each such statement shall set forth, in comparative form,
corresponding  figures for the corresponding period in the immediately preceding
Fiscal Year and all such  statements  shall be prepared in reasonable  detail in
accordance with

                                       33
<PAGE>

GAAP and certified, subject to changes resulting from year-end adjustments, by a
Financial Officer;

          (b) deliver to the Agent (with  copies for each Lender which the Agent
shall distribute) within 55 days after the end of each of the first three Fiscal
Quarters in each Fiscal Year of NUI,  NUI's Form 10-Q filed with the  Securities
and Exchange Commission together with (A) consolidated and consolidating balance
sheets  as at  the  end of  such  period  for  NUI  and  its  Subsidiaries,  (B)
consolidated and consolidating  statements of income for such period for NUI and
its Subsidiaries and, in the case of the second and third quarterly periods, for
the period  from the  beginning  of the  current  Fiscal Year to the end of such
quarterly period, and (C) consolidated and consolidating statements of cash flow
for such period for NUI and its Subsidiaries  and, in the case of the second and
third quarterly periods, for the period from the beginning of the current Fiscal
Year to the end of such  quarterly  period;  and each such  statement  shall set
forth, in comparative form,  corresponding  figures for the corresponding period
in the  immediately  preceding  Fiscal  Year  and all such  statements  shall be
prepared in reasonable detail in accordance with GAAP and certified,  subject to
changes resulting from year-end  adjustments,  by the chief financial officer or
treasurer of NUI;

          (c) deliver to the Agent (with  copies for each Lender which the Agent
shall  distribute)  within  100 days  after the end of each  Fiscal  Year of the
Borrower,  (A) balance  sheets as at the end of such year for the Borrower,  (B)
statements  of income for such year for the Borrower and (C)  statements of cash
flow for such period for the Borrower;  and each such statement shall set forth,
in comparative form,  corresponding figures for the immediately preceding Fiscal
Year;  and all such  financial  statements  shall present fairly in all material
respects the financial  position of the Borrower,  as at the dates indicated and
the results of its  operations and its cash flow for the periods  indicated,  in
conformity with GAAP;

          (d) deliver to the Agent (with  copies for each Lender which the Agent
shall  distribute)  within  100 days after the end of each  Fiscal  Year of NUI,
NUI's Form 10-K filed with the Securities and Exchange  Commission together with
(A) consolidated and consolidating balance sheets as at the end of such year for
NUI and its  Subsidiaries,  (B)  consolidated  and  consolidating  statements of
income  for  such  year  for NUI  and its  Subsidiaries,  (C)  consolidated  and
consolidating   statements   of  cash  flow  for  such  year  for  NUI  and  its
Subsidiaries,  and (D) consolidated and consolidating statements of shareholders
equity for such year for NUI and its Subsidiaries; and each such statement shall
set forth,  in  comparative  form,  corresponding  figures  for the  immediately
preceding Fiscal Year; and all such financial statements shall present fairly in
all  material  respects  the  financial  position  of NUI and  its  consolidated
Subsidiaries,  as at the dates  indicated and the results of its  operations and
its cash flow for the  periods  indicated,  in  conformity  with  GAAP;  and the
Borrower  shall  cause,  or shall cause NUI to cause,  each of the  consolidated
financial  statements  described in the foregoing  clauses (A) through (D) to be
certified  without   limitation  as  to  scope  or  material   qualification  by
PricewaterhouseCoopers  LLP or other  independent  certified public  accountants
acceptable to the Agent;

                                       34
<PAGE>

          (e) deliver to the Agent (with  copies for each Lender which the Agent
shall distribute),  together with each delivery of financial statements pursuant
to  items  (a)  and  (c)  above,  a  Compliance   Certificate  of  the  Borrower
substantially in the form of Exhibit E hereto,  properly completed and signed by
an  Authorized  Officer of the  Borrower,  (A) stating (1) that such officer has
reviewed  the terms of the Loan  Documents  and has  made,  or caused to be made
under  his  supervision,  a review  of the  transactions  and  condition  of the
Borrower during the accounting  period covered by such financial  statements and
that such  review has not  disclosed  any  failure by the  Borrower  during such
period to observe or perform all of its covenants and other agreements,  nor any
failure to satisfy every condition  contained in this  Agreement,  the Notes and
the other Loan Documents to which it is a party during such  accounting  period,
and (2) that the Borrower does not have  knowledge of the  existence,  as at the
date of such Compliance Certificate, of any condition or event which constitutes
a Default or an Event of Default,  or, if any such condition or event existed or
exists,  specifying  the nature and period of existence  thereof and what action
the Borrower  has taken or is taking or proposes to take with  respect  thereto,
and (B)  demonstrating  in  reasonable  detail  compliance as at the end of such
accounting  period with the covenants  contained in Sections 5.03(a) and 5.03(b)
hereof;

          (f) deliver to the Agent (with  copies for each Lender which the Agent
shall  distribute)  (1) on or prior to the third  Business Day of each  calendar
month a  certificate  of the  Borrower,  properly  completed  and  signed  by an
Authorized Officer of the Borrower, demonstrating in reasonable detail and as of
such date (A) the amount drawn and outstanding  under the Existing  Revolver and
(B)  total  cash  held at the  Borrower  (including  cash  on hand in  operating
accounts with banks and Permitted  Investments)  and (2) on or prior to the 20th
day of each calendar month a certificate of the Borrower, properly completed and
signed by an  Authorized  Officer of the Borrower,  demonstrating  in reasonable
detail (A) the outstanding and unpaid amount of the  Intercompany  Balance as of
the  last day of the  preceding  calendar  month  and (B)  cumulative  dividends
declared  or paid by the  Borrower  during  such  Fiscal  Quarter  to NUI or any
Affiliate as of the last day of the preceding calendar month.

          (g) promptly  give  written  notice to the Agent of any pending or, to
the knowledge of the Borrower,  overtly threatened claim in writing,  litigation
or threat of litigation which arises between the Borrower and any other party or
parties  (including,  without  limitation,  any Governmental  Authority),  which
claim, litigation or threat of litigation,  individually or in the aggregate, is
reasonably  likely to cause a Material  Adverse  Change,  any such  notice to be
given not later than five Business Days after the Borrower  becomes aware of the
occurrence of any such claim, litigation or threat of litigation;

          (h) deliver to the Agent (with  copies for each Lender which the Agent
shall  distribute)  promptly  upon  their  becoming  available,  copies  of  all
financial statements,  reports,  notices and information statements sent or made
available generally by the Borrower to its security holders (including,  without
limitation,  proxy  materials)  and  copies of all other  regular  and  periodic
reports  (including,  without  limitation,  Form  8-K)  filed  by NUI  with  the
Securities and Exchange Commission or any Governmental


                                       35

<PAGE>

Authority  succeeding  to any of its  functions,  and of all press  releases and
other  statements  made  available  generally  by the  Borrower  to  the  public
concerning material developments in the business of the Borrower;

          (i)  promptly   after  receipt   thereof,   by  the  Borrower  or  the
administrator of any Plan,  deliver to the Lenders a copy of any notice from the
PBGC that the PBGC is instituting  Termination  Proceedings or seeking to impose
any  material  liability  on the  Borrower or its ERISA  Affiliates  pursuant to
Section 4069 of ERISA;

          (j) deliver to the Agent within two Business Days after S&P or Moody's
announces a change in the Borrower's  Senior  Ratings,  or the withdrawal of any
Senior Ratings, notice of such change or withdrawal, together with a copy of any
written notification which Borrower received from the applicable rating agencies
regarding such change or withdrawal of Senior Ratings;

          (k) promptly and in any event within 30 days after the Borrower or the
administrator  of any Plan knows or has reason to know that any ERISA  Event has
occurred which would cause the PBGC to institute  Termination  Proceedings  give
notice thereof to the Agent;

          (l) promptly, but not later than five Business Days, after any officer
obtains knowledge of the happening of any event having a Material Adverse Effect
or which  constitutes  a Default or an Event of  Default,  give  written  notice
thereof to the Agent;

          (m)  promptly,  but no later than  fifteen  days after the end of each
month,  deliver to the Agent a statement  reflecting actual capital expenditures
of the  Borrower  both  during the  preceding  month and  cumulatively  from the
beginning  of the  current  Fiscal  Year,  as well as a  comparison  against the
projected amounts as set forth in the capital expenditures budget referred to in
Section 5.08;

          (n) (1) promptly, but no later than one Business Day after the receipt
thereof by the  Borrower,  deliver  to the Agent any  material  written  report,
notice or order issued by the NJBPU,  as defined in NJSA 48:2-1,  or the Liberty
Consulting  Group in connection  with the Focused Audit,  or, if the Borrower is
prohibited by the NJBPU from delivering any report or draft order, shall conduct
a conference call or other meeting with the Agent no later than one Business Day
following  the receipt of such report or order to discuss the  contents  thereof
with the  Agent,  except  to the  extent  such  disclosure  would  be  expressly
prohibited by applicable laws, statutes,  rules,  regulations or orders, and (2)
promptly, but no later than the next following Business Day, notify the Agent of
the substance of any material  comments made by the NJBPU,  except to the extent
disclosure of such comments  would be expressly  prohibited by applicable  laws,
statutes,  rules,  regulations  or orders,  and provide to the Agent (as soon as
reasonably  practicable)  a transcript of the  proceedings  of such meeting,  if
available; and

                                       36

<PAGE>


          (o) promptly,  deliver to the Lenders such other  information and data
with respect to the Borrower as from time to time may be reasonably requested by
any Lender.

     Section 4.03  Visitation.  The Borrower will keep complete and proper books
of records and accounts in accordance with GAAP and the Borrower will permit the
Lenders and each Lender's  designated  employees and agents to have access, from
time to time,  upon  reasonable  notice (except no such notice shall be required
after the  occurrence  and during the  continuance  of an Event of Default)  and
during  normal  business  hours at any  reasonable  time,  to  visit  any of the
properties  of the  Borrower,  to examine and make copies of any of its books of
record and account and such  reports and returns as the  Borrower  may file with
any Governmental Authority and discuss the Borrower's affairs and accounts with,
and be advised about them, by any Authorized Officer.

     Section 4.04 Preservation of Existence;  Qualification. At its own cost and
expense,  the Borrower  will  continue to engage in business of the same general
type as now  conducted  by it and will do all things  necessary  to preserve and
keep in full force and effect its corporate  existence and  qualification  under
the laws of its states of incorporation  and each state where, due to the nature
of its  activities  or the  ownership  of its  properties,  qualification  to do
business is required  except where the failure to be so qualified would not have
a Material Adverse Effect upon the Borrower.

     Section 4.05 Compliance with Governmental  Rules. The Borrower shall comply
with  all  applicable  Governmental  Rules  (including,   but  not  limited  to,
Environmental  Laws),  except where  failure to comply would not have a Material
Adverse Effect on the Borrower.

     Section 4.06  Payment of Taxes and Other  Liabilities.  The Borrower  shall
promptly pay and discharge all obligations, accounts and liabilities to which it
is subject or which are asserted against it at or before maturity or before they
become  delinquent,  as the case may be,  and which  obligations,  accounts  and
liabilities  are, to the  Borrower,  material,  including but not limited to all
taxes,  assessments and  governmental  charges and levies upon it or upon any of
its income,  profits,  or property prior to the date on which  penalties  attach
thereto to the extent that the  non-payment of which would in the aggregate have
a  Material  Adverse  Effect  upon the  Borrower;  provided,  however,  that for
purposes of this  Agreement,  the Borrower shall not be required to pay any item
(i) the payment of which is being  contested  in good faith by  appropriate  and
lawful proceedings  diligently conducted and (ii) as to which the Borrower shall
have set aside on its books  reserves  for such claims as are  determined  to be
adequate pursuant to the accounting procedures employed by the Borrower.

     Section 4.07 Insurance.  The Borrower will keep and maintain insurance with
financially sound and reputable  insurance  companies on each of its properties,
in  such  amounts  and  against  such  risks,   including   without   limitation
Environmental  Liabilities,  as is customarily  maintained by similar businesses
similarly  situated and owning,  leasing or operating  similar  properties.  The
Borrower  may satisfy  the  requirements  of the  preceding  sentence  with self
insurance  and  deductibles  consistent

                                       37

<PAGE>

with customary and prudent industry standards.  The Borrower will furnish to the
Agent at the Closing and together with the annual reports delivered  pursuant to
Section 4.02(c) hereof,  a certificate of an Authorized  Officer of the Borrower
certifying that such insurance is in force,  provides  coverage  consistent with
the preceding  sentence and complies with the Borrower's  obligations under this
Section 4.07.

     Section  4.08  Maintenance  of  Properties.  The Borrower  shall  maintain,
preserve,  protect and keep its  properties  in good repair,  working  order and
condition  (ordinary wear and tear excepted),  and make all necessary and proper
repairs, renewals and replacements so that its business carried on in connection
therewith  may be properly and  advantageously  conducted  at all times,  except
where the failure to maintain,  preserve,  protect or keep such properties would
not have a Material Adverse Effect upon the Borrower.

     Section 4.09 Plans and Benefit  Arrangement.  The Borrower shall, and shall
cause  each  ERISA  Affiliate  to,  comply  with  ERISA,  the Code and all other
applicable  laws which are  applicable to Plans,  except where the failure to do
so, alone or in  conjunction  with any other  failure to do so, would not have a
Material Adverse Effect upon the Borrower.

     Section 4.10 Senior Debt Status.  The  Indebtedness  of the Borrower  under
this  Agreement  will rank at least pari passu in priority  of payment  with all
other  Indebtedness  of the Borrower,  including but not limited to the Material
Indebtedness described in clause (i) of the definition thereof and reimbursement
obligations  under  any  bond  insurance  policies  in  connection  with the Gas
Facilities  Revenue  Bonds,  except  Indebtedness  of the Borrower  which may be
secured by Liens permitted pursuant to Section 5.02.

     Section 4.11  Ownership.  The  Borrower  shall at all times during the term
hereof be a direct 100% wholly owned Subsidiary of NUI.

     Section 4.12 Cash Management.  On or before November 12, 2003, the Borrower
shall  cause all of its  receivables  and other  revenues  to be  collected  and
deposited  into and  maintained  in a  segregated  account  or  accounts  of the
Borrower (the "New Collection  System") and the proceeds of such receivables and
other  revenues  shall  not be  commingled  with  funds  of  NUI  or  its  other
Subsidiaries  and  shall  only be used to pay out of such  account  or  accounts
obligations  of the  Borrower  and to make  dividends  and for other uses to the
extent expressly permitted hereunder; provided that the Borrower may continue to
pay the expenses and other payables of Appliance Plumbing  Services,  a division
of NUI Capital Corp., a direct,  wholly-owned subsidiary of NUI, in an aggregate
amount not to exceed  $1,000,000 in any Fiscal Year. At all times until such New
Collection System is in place, the Agency Services  Agreement is and will remain
in full force and effect and the Borrower's receivables and other revenues shall
be collected  by NUI, but title  thereto  shall  remain with the  Borrower,  and
expenses and other payables of or on behalf of the Borrower shall be paid by NUI
on behalf of the Borrower,  all in accordance  with the provisions of the Agency
Services  Agreement and  Governmental


                                       38

<PAGE>


Rules.  The Borrower shall ensure that the use of such  receivables and revenues
by NUI at all times complies with this Agreement.

     Section 4.13 Environmental Laws. Except as could not reasonably be expected
to have a Material Adverse Effect,  the Borrower will (a) comply in all material
respects with, and ensure compliance in all material respects by all tenants and
subtenants,  if any,  with, all  applicable  Environmental  Laws, and obtain and
comply in all material  respects with and maintain,  and ensure that all tenants
and subtenants obtain and comply in all material respects with and maintain, any
and all licenses, approvals, notifications, registrations or permits required by
applicable  Environmental Laws and (b) conduct and complete all  investigations,
studies,  sampling  and testing,  and all  remedial,  removal and other  actions
required under  Environmental  Laws and promptly comply in all material respects
with all lawful orders and directives of the Governmental  Authorities regarding
Environmental Laws.

     Section  4.14  Additional  Directors.  If the  number of  directors  of the
Borrower  increases  after the Closing Date,  the Borrower  shall cause any such
additional director to be an individual who is not, and for the five-year period
prior to such  individual's  appointment  as director  shall not have been,  and
during the  continuation of his or her service as a director will not be: (a) an
employee,  stockholder  or officer of the Borrower or any of its Affiliates or a
director  of any of  the  Borrower's  Affiliates;  (b)  an  employee,  director,
stockholder, partner or officer of a customer or supplier that derives more than
ten (10%) percent of its revenue from the Borrower or any of its Affiliates; (c)
a  person  or  entity   controlling  or  under  common  control  with  any  such
stockholder,  customer or supplier, or (d) any member of the immediate family of
a person described in (a), (b) or (c) above;  provided that the appointment of a
member of the advisory board of the Elizabethtown Gas Company, a division of the
Borrower,  as an  additional  director  shall not be  prohibited by this Section
4.14.

                                   ARTICLE V
                               Negative Covenants
                               ------------------

     Until the  Commitments  have expired or terminated and the principal of and
interest on each Loan and all fees payable  hereunder have been paid in full the
Borrower  covenants and agrees with the Lenders that:

     Section 5.01 Indebtedness.  The Borrower will not create,  incur, assume or
permit to exist any Indebtedness, except:

          (a) Indebtedness existing on the date hereof and set forth in Schedule
5.01;

          (b) Indebtedness in respect of the Loans and the other  obligations of
the Borrower under this Agreement;

                                       39

<PAGE>


          (c)  Indebtedness  incurred in  connection  with Hedging  Obligations,
provided that such Hedging  Obligations  are in the ordinary  course of business
consistent with past practices;

          (d)  Indebtedness  incurred  from  time to  time  under  the  Existing
Revolver; and

          (e)  Indebtedness of the Borrower  incurred solely in order to finance
the  purchase  of new fixed or capital  assets  (including  pursuant  to capital
leases) in an aggregate  principal  amount not exceeding  $5,000,000 at any time
outstanding.

     Section  5.02 Liens.  The  Borrower  will not create or suffer to exist any
Liens or any other type of preferential arrangement, upon or with respect to any
of its properties,  whether now owned or hereafter acquired, or assign any right
to  receive  income,  in each case to secure or provide  for the  payment of any
Indebtedness  of any Person,  other than  Permitted  Encumbrances.

     Section 5.03 Financial Covenants.  (a) Leverage Ratio. At no time shall the
Borrower's ratio of Consolidated  Total  Indebtedness to its Consolidated  Total
Capitalization  exceed the amount set forth below for each  relevant  period set
forth below:

          Period                                            Ratio

          March 1 of each year to and
          including August 31 of such year:                 .65:1.00

          September 1 of each year to and
          including February 28 (or 29, if applicable)
          of the following year:                            .70:1.00


          (b) Fixed Charge Coverage Ratio. At no time shall the Borrower permit,
for any period of four consecutive  fiscal quarters of the Borrower ending on or
after December 31, 2003, the ratio of (i) the sum of (A) Consolidated Net Income
for such period plus (B) income taxes  deducted in  determining  such Net Income
plus (C) Consolidated  Fixed Charges for such period; to (ii) Consolidated Fixed
Charges for such period, to be less than 1.75 to 1.00.


     Section 5.04 [Intentionally omitted.]

     Section 5.05  Regulation T, U and X Compliance.  The Borrower shall not use
the proceeds of a Loan to purchase or carry Margin Stock or otherwise  act so as
to cause any Lender,  in extending credit  hereunder,  to be in contravention of
Regulations T, U or X.

     Section 5.06 ERISA.  The Borrower  shall not and shall not permit any ERISA
Affiliate to:

                                       40

<PAGE>


          (a) permit any Plan to engage in any "prohibited transaction", as such
term is defined in Section 406 of ERISA and Section 4975 of the Code;

          (b) permit any Plan to incur any "accumulated funding deficiency",  as
such term is defined in Section 302 of ERISA or Section 412 of the Code, whether
or not waived;

          (c) permit any Plan to be terminated in a manner which could result in
liability to the PBGC under Title IV of ERISA or the imposition of a lien on the
property of the  Borrower  or any ERISA  Affiliate  pursuant to Section  4068 of
ERISA; or

          (d) partially or  completely  withdraw  from any  Multiemployer  Plan,
which withdrawal shall subject the Borrower or any ERISA Affiliate to withdrawal
liability pursuant to Section 4201 of ERISA.

     Section 5.07  Subsidiaries.  The Borrower  shall not create,  nor permit to
exist, any Subsidiary of the Borrower.

     Section 5.08  Limitation on Capital  Expenditures.  The Borrower  shall not
make or commit to make (by way of the  acquisition  of securities of a Person or
otherwise) any  expenditure  in respect of the purchase or other  acquisition of
fixed  or  capital  assets,   except  for  expenditures,   when  added  to  such
expenditures  made by NUI and its other  Subsidiaries,  not exceeding during any
Fiscal  Years  ending  after the Closing  Date an amount  equal to  $75,000,000;
provided,  that such  expenditures  are incurred in accordance  with the capital
expenditures  budget  included in the  operating  projections  delivered  by the
Borrower to the Agent in satisfaction of Section 6.01(l).

     Section 5.09 Limitation on Contingent  Obligations.  The Borrower shall not
create,     incur,    assume    or    suffer    to    exist    any    Guarantee.


     Section 5.10  Limitation on Investments,  Loans and Advances.  The Borrower
shall not purchase,  hold or acquire beneficially any stock, other securities or
evidences of Indebtedness  of, make or permit to exist any loans or advances to,
or make or permit to exist any investment or acquire any interest whatsoever in,
any other Person (other than NUI), except:

          (a) extensions of trade credit to customers in the ordinary  course of
business;

          (b) Permitted Investments;

          (c) loans and  advances  to  employees  of the  Borrower  for  travel,
entertainment and relocation expenses in the ordinary course of business; and

          (d)  securities  acquired in  connection  with the  bankruptcy  of any
supplier or customer in the ordinary course of business and consistent with past
practices or in connection  with the  settlement  of delinquent  accounts of any
such supplier or customer.

                                       41

<PAGE>


     Section  5.11  Payments  and  Modifications  of Certain  Debt  Instruments;
Modification  to  Certificate  of  Incorporation,  By-Laws  and Agency  Services
Agreement.  The Borrower will not, directly or indirectly,  (a) make or offer to
make any optional payment, prepayment,  repurchase or redemption of or otherwise
optionally  defease  or  segregate  funds with  respect  to any of its  Material
Indebtedness  (other than (1) with respect to the Existing  Revolver and only in
the event no Loans are outstanding hereunder, repayments of outstanding balances
thereunder in the ordinary course that do not result in a permanent reduction in
the  commitments  thereunder and (2) with respect to the Gas Facilities  Revenue
Bonds and Medium Term Notes,  interest payments  expressly required by the terms
thereof);  (b) amend,  modify, waive or otherwise change, or consent or agree to
any amendment,  modification, waiver or other change to, any of the terms of any
of its Material  Indebtedness  (as set forth in clause (i) of the definition for
such term); or (c) amend, modify, waive or otherwise change, or consent or agree
to any  amendment,  modification,  waiver or other change to its  certificate of
incorporation  or by-laws  or the  Agency  Services  Agreement;  provided,  that
nothing in this Section 5.11 shall prohibit a refinancing by the Borrower of its
$39,000,000  of variable rate gas  facilities  revenue bonds due 2026 so long as
the final maturity date of such  refinanced  bonds shall be no earlier than five
(5) years from the date such refinancing is completed.

     Section 5.12  Transactions  with  Affiliates.  The Borrower shall not enter
into any transaction,  including,  without limitation, any purchase, sale, lease
or exchange of property or the  rendering  of any  service,  with any  Affiliate
unless such  transaction  (a) is  permitted  under this  Agreement  or is in the
ordinary  course of the Borrower's  business and (b) is upon fair and reasonable
terms no less  favorable  to the  Borrower  than it would obtain in a comparable
arm's  length  transaction  with a Person  which is not an  Affiliate,  it being
understood that the payment of the Intercompany  Balance and activities  between
the  Borrower  and NUI pursuant to and in  accordance  with the Agency  Services
Agreement or otherwise  pertaining only to administrative  services shall not be
deemed a breach of this Section 5.12.

     Section 5.13 Sales and  Leasebacks.  The Borrower  shall not enter into any
arrangement with any Person providing for the leasing by the Borrower of real or
personal property which has been or is to be sold or transferred by the Borrower
to such Person.

     Section  5.14  Fundamental  Changes.  The  Borrower  will not merge into or
consolidate  with any other Person,  or permit any other Person to merge into or
consolidate with it, or sell,  transfer,  lease or otherwise  dispose of (in one
transaction  or in a series of  transactions)  all or  substantially  all of its
assets or liquidate or dissolve,  it being  understood  that the sale of NUI (or
all or  substantially  all of its  assets)  shall not be deemed a breach of this
Section 5.14.

     Section  5.15  Use of  Proceeds.  The  Borrower  shall  not  use any of the
proceeds of any  Borrowing of Loans  hereunder to provide  collateral to support
any of the  Borrower's  or its  Affiliates'  obligations  under any  letters  of
credit.

                                       42

<PAGE>


     Section  5.16  Letter of  Credit  Facility  under  Existing  Revolver.  The
Borrower shall not request or submit an application  under the Existing Revolver
for the issuance of any letters of credit thereunder.

                                   ARTICLE VI
                                   Conditions
                                   ----------

     Section 6.01  Conditions to Closing Date. The obligations of the Lenders to
make Loans to the Borrower  hereunder shall not become  effective until the date
on which each of the following conditions is satisfied:

          (a) Each Lender (or counsel to the Lenders)  shall have  received from
the Borrower (i) a counterpart of this Agreement signed by an Authorized Officer
of the Borrower,  (ii) to the extent  requested by such Lender,  its  respective
Note, substantially in the form of Exhibit A, made payable to such Lender in the
amount of such Lender's Commitment and otherwise properly completed and executed
by the Borrower and (iii) the NUI Refinancing Letter Agreement, substantially in
the form of Exhibit C, signed by an Authorized Officer of NUI.

          (b) The  Agent  shall  have  received  a  favorable  written  opinions
(addressed  to the Agent and the Lenders and dated the Closing  Date) of each of
(i) White & Case LLP,  special counsel for the Borrower and (ii) James Van Horn,
General Counsel for the Borrower,  in each case dated as of the Closing Date and
in form and  substance  reasonably  satisfactory  to the  Agent,  covering  such
matters  relating to the  Borrower,  this  Agreement or the Credit Events as the
Agent shall reasonably request. Borrower hereby requests each of such counsel to
deliver such opinion.

          (c) The Agent shall have received such documents and  certificates  as
the Agent or its counsel may reasonably  request  relating to the  organization,
existence  and good standing of the Borrower,  the  authorization  of the Credit
Events and any other legal matters  relating to the Borrower,  this Agreement or
the Credit  Events,  all in form and substance  reasonably  satisfactory  to the
Agent and its counsel, including a certificate, duly certified as of the Closing
Date by the secretary or assistant secretary of the Borrower,  which certificate
shall  include or have  attached to it (i) a certified  copy  (certified  by the
appropriate   governmental   official)   of  the   Borrower's   Certificate   of
Incorporation,  or other like constituent document, which certification is dated
not more than 30 days prior to the Closing Date,  (ii) the By-Laws or other like
constituent document of the Borrower in effect as of the Closing Date, (iii) the
resolutions  of the  Borrower's  Board of Directors  authorizing  the borrowings
hereunder and the execution and delivery of this Agreement,  the Notes,  and all
documents supplemental hereto and (iv) the names of the officers of the Borrower
authorized to sign the Loan Documents and all  supplemental  documentation,  and
which contains a true signature of each such officer.

          (d) All fees  payable to the  Lenders and the Agent on or prior to the
Closing Date shall have been paid by or on behalf of the Borrower.

                                       43

<PAGE>

          (e)  Receipt  by the  Agent  of a good  standing  certificate  for the
Borrower from the  Secretary of State of the State of New Jersey,  together with
certificates  issued by the secretary of state in each other  jurisdiction where
the Borrower is  qualified to do business,  in each case (i) dated not more than
30 days prior to the Closing  Date and (ii)  certifying  that the Borrower is in
good  standing and is  qualified  to do business in, and has paid all  franchise
taxes or similar taxes due to, such states.

          (f) Receipt by the Agent of the  certificate of the Borrower  required
pursuant to Section 4.07 of this  Agreement  and a Solvency  Certificate  in the
form of Exhibit D hereto.

          (g) The  representations  and warranties of the Borrower  contained in
Article  III and in the other  Loan  Documents  executed  and  delivered  by the
Borrower  in  connection  with the  Closing  shall be true  and  correct  in all
material  respects on and as of the Closing  Date with the same effect as though
such representations and warranties had been made on and as of such date (except
representations  and warranties  which relate solely to an earlier date or time,
which  representations  and warranties shall be true and correct in all material
respects on and as of the specific date or times referred to therein),  and, the
Borrower shall have  performed,  observed and complied with all covenants in all
material  respects and met the conditions hereof and contained in the other Loan
Documents;  no  Default  or Event of Default  under  this  Agreement  shall have
occurred and be  continuing  or shall  exist;  except as disclosed in NUI's Form
10-K filed on December 31, 2002, its Form 10-Q's filed on February 14, 2003, May
15, 2003 and August 14, 2003 and its Form 8-K's filed on July 22, 2003, July 31,
2003 and  September 26, 2003 with the  Securities  and Exchange  Commission,  no
Material Adverse Change shall have occurred; and there shall be delivered to the
Agent,  for the  benefit  of each  Lender and the Agent,  a  certificate  of the
Borrower,  dated the  Closing  Date and signed by an  Authorized  Officer of the
Borrower, to each such effect.

          (h) The NUI  Credit  Agreement  shall  be in full  force  and  effect,
providing for a "Total Commitment" thereunder of not less than $38,076,923.10.

          (i) All governmental  and material third party approvals  necessary in
connection with the continuing  operations of the Borrower or, in the reasonable
discretion  of  the  Agent,  advisable,  in  connection  with  the  transactions
contemplated  hereby  shall have been  obtained and be in full force and effect,
and all applicable  waiting  periods shall have expired without any action being
taken or threatened by any competent  authority that would restrain,  prevent or
otherwise impose adverse conditions on the financing contemplated hereby.

          (j) The reasonable  costs and expenses of the Agent and the Lenders in
connection  with the  preparation  of the Loan  Documents  payable  pursuant  to
Section 9.03 and for which invoices have been presented shall have been paid.

          (k)  The  Agent  shall  have   received,   in  each  case   reasonably
satisfactory  to the  Agent,  a  projected  operating  model  for  the  Borrower
(including,


                                       44

<PAGE>


without limitation,  a balance sheet,  statement of income and statement of cash
flows)  presented on a quarterly basis for the Fiscal Year ending  September 30,
2004.

          (l)  The  Agent  shall  have   received,   in  each  case   reasonably
satisfactory  to the  Agent,  a  projected  operating  model  for  NUI  and  its
Subsidiaries  on a  consolidated  basis  including,  without  limitation,  (i) a
balance  sheet,  statement of income and statement of cash flows  presented on a
quarterly basis for the Fiscal Year ending  September 30, 2004 and (ii) a budget
for capital expenditures presented on a monthly basis for the Fiscal Year ending
September 30, 2004.

          (m)  As of  the  Closing  Date  and  after  taking  into  account  any
Borrowings made on the Closing Date, the sum of (i) the unused commitments under
the Existing Revolver and (ii) the unused Commitments under this Agreement after
the payment of fees and expenses due as of the Closing  Date,  shall be not less
than $50,000,000.

          (n) The Agent  shall have  received a  certificate,  dated the Closing
Date with respect to the Borrower and signed by the President,  a Vice President
or  a  Financial  Officer  of  the  Borrower,  confirming  compliance  with  the
conditions set forth in this Section 6.01.

     Section 6.02 Conditions to each Credit Event. The obligation of each Lender
to make a Loan on the occasion of any  Borrowing is subject to the  satisfaction
of the following conditions:

          (a)  Receipt  by the  Agent  of a  written  request  for a  Borrowing,
prepared in accordance  with Section 2.03 and executed by an Authorized  Officer
of the Borrower.

          (b) The  representations  and  warranties of the Borrower set forth in
this Agreement shall be true and correct in all material  respects (i) when made
and  (ii)  on  and  as  of  the  date  of  such   Borrowing,   except  for  such
representations  and warranties which relate solely to an earlier date (in which
case such representations and warranties shall have been true and correct in all
material respects as of such date).

          (c) At the  time  of and  immediately  after  giving  effect  to  such
Borrowing no Default or Event of Default shall have occurred and be continuing.

          (d) Since the Closing Date, and after giving effect to such Borrowing,
no events or circumstances shall exist, including without limitation any actions
by any Governmental Authority,  that could reasonably be expected to result in a
Material Adverse Effect.

          (e) The aggregate  principal  amount drawn and  outstanding  under the
Existing  Revolver  as of the date of the  making of any Loan  shall be equal to
$141,923,076.80.

                                       45

<PAGE>


          (f)  Receipt by the Agent of a  statement  of the amount of total cash
held at the Borrower  (including  cash on hand in operating  accounts with banks
and Permitted Investments),  which amount shall not exceed $10,000,000 as of the
date of the making of any Loan.

          (g) If the request for Borrowing submitted by the Borrower pursuant to
Section 2.03 occurs after (A) the Borrower  becomes  aware of the results of the
Focused Audit during a meeting of the NJBPU,  as defined in NJSA 48:2-1,  or (B)
the NJBPU or the  Liberty  Consulting  Group  shall have issued a draft or final
order or report with respect to the Focused  Audit,  then (i) the proposed  date
for the requested  Borrowing shall not be earlier than three Business Days after
the Agent has either, in case of clause (A), received the minutes, transcript or
statement  resulting  from such  NJBPU  meeting  or, in the case of clause  (B),
received  such order or report,  or if the Borrower is  prohibited  by the NJBPU
from  delivering  such order or report has fully  discussed the contents of such
order or report with the Borrower, except to the extent such disclosure would be
expressly prohibited by applicable laws, statutes, rules, regulations or orders,
and (ii) such NJBPU order or report or the results of such NJBPU  meeting  could
not  reasonably  be  expected  to result  in a  Material  Adverse  Effect on the
Borrower; provided that if this Section 6.02(g) has applied to any request for a
Borrowing,  and  following  its  application  the  Lenders  elect to make a Loan
pursuant to such request for Borrowing  (except where such Loan is made pursuant
to a waiver  of this  section),  this  Section  6.02(g)  shall  not apply to any
request for Borrowing  thereafter  unless a new and separate event  described in
either clause (A) or (B) above has occurred  following  the most recent  request
for a Borrowing to which this Section 6.02(g) applies.

Each Borrowing  shall be deemed to constitute a  representation  and warranty by
the  Borrower on the date  thereof as to the matters  specified  in this Section
6.02.

     Section 6.03  Additional  Conditions to Borrowings on or After December 31,
2003. The obligations of the Lenders to make Loans to the Borrower  hereunder on
and after  December 31, 2003 are subject to the  satisfaction  of the  following
conditions:

          (a) If the  Borrower  has  applied to any  Governmental  Authority  to
receive  permission to grant to a third party lender a security  interest in its
Equity  Interests or assets as part of the  refinancing  of all or a part of its
Material  Indebtedness  (as set forth in clause  (i) of the  definition  of such
term),  then prior to December 31, 2003 all required  final  approvals  therefor
shall have been  irrevocably  issued by each  relevant  Governmental  Authority,
including  without  limitation the NJBPU, the Florida Public Service  Commission
and the Maryland Public Service Commission.

          (b)  The  Borrower   shall  have   delivered  to  the  Agent  evidence
satisfactory  to the  Agent  that the  outstanding  amount  of the  Intercompany
Balance  has been  reduced to an amount that is not  greater  than  $90,000,000;
provided  that no more than  $15,000,000  of the  reduction of the  Intercompany
Balance from $112,000,000, its value as of June 30, 2003, may have been effected
through non-cash adjustments.

                                       46

<PAGE>

                                  ARTICLE VII
                                Events of Default
                                -----------------

     Each  of the  events  or  occurrences  described  in  Sections  7.01 to and
including  7.11  shall  constitute  an event of  default  ("Event  of  Default")
hereunder.

     Section 7.01 Payment Default.

          (a) The Borrower  shall fail to pay any principal of any Loan when and
as the same shall become due and payable,  whether at the due date thereof or at
a date fixed for prepayment thereof or otherwise.

          (b) The Borrower shall fail to pay any interest on any Loan or any fee
or any other amount  (other than an amount  referred to in Section 7.01) payable
under this  Agreement,  when and as the same shall become due and  payable,  and
such failure shall continue unremedied for a period of five Business Days.

     Section 7.02 Nonpayment of Other  Indebtedness.  The Borrower shall fail to
pay any  Indebtedness of the Borrower,  other than  Indebtedness  under the Loan
Documents,  in an aggregate amount as to the Borrower of $10,000,000 or more, as
and when the same shall become due, or the  occurrence  of any default under any
agreement or instrument under or pursuant to which such Indebtedness is incurred
or issued and  continuance of such default  beyond the period of grace,  if any,
allowed with respect thereto, if such default permits or causes the acceleration
of such  Indebtedness  or the termination of any commitment to lend with respect
thereto.

     Section 7.03 Bankruptcy; Insolvency.


          (a) An  involuntary  proceeding  shall be commenced or an  involuntary
petition shall be filed seeking (i) liquidation,  reorganization or other relief
in respect of the Borrower or its debts, or of a substantial part of its assets,
under any Federal,  state or foreign  bankruptcy,  insolvency,  receivership  or
similar law now or  hereafter in effect or (ii) the  appointment  of a receiver,
trustee,  custodian,  sequestrator,  conservator  or  similar  official  for the
Borrower or for a substantial  part of its assets,  and, in any such case,  such
proceeding or petition  shall  continue  undismissed  for 60 days or an order or
decree approving or ordering any of the foregoing shall be entered.


          (b) The Borrower shall (i) voluntarily commence any proceeding or file
any  petition  seeking  liquidation,  reorganization  or other  relief under any
Federal,  state or foreign bankruptcy,  insolvency,  receivership or similar law
now or  hereafter  in effect,  (ii)  consent to the  institution  of, or fail to
contest in a timely and appropriate manner, any proceeding or petition described
in Section 7.03(a), (iii) apply for or consent to the appointment of a receiver,
trustee,  custodian,  sequestrator,  conservator  or  similar  official  for the
Borrower or for a substantial part of its assets,  (iv) file an answer admitting
the material  allegations of a petition filed against it in any such proceeding,
(v) make a general  assignment  for the  benefit of  creditors  or (vi) take any
action for the purpose of effecting any of the foregoing.


                                       47

<PAGE>


          (c) The Borrower shall become  unable,  admit in writing its inability
or fail generally to pay its debts as they become due.

     Section 7.04  Termination of Existence.  The Borrower  shall  terminate its
existence or cease to exist.

     Section 7.05 Failure to Comply with Covenants.

          (a) The  Borrower  shall  fail to observe  or  perform  any  covenant,
condition  or  agreement  contained  in Sections  4.01 (Use of  Proceeds),  4.03
(Visitation), 4.04 (Preservation of Existence; Qualification), 4.10 (Senior Debt
Status), 4.11 (Ownership),  4.12 (Cash Management), or any covenant in Article V
(Negative Covenants).

          (b) The  Borrower  shall  fail to observe  or  perform  any  covenant,
condition  or  provision  contained in this  Agreement  and such  failure  shall
continue  unremedied  (i) with  respect  to a  failure  to comply  with  Section
4.02(l),  for a period of 10 days,  and (ii)  with  respect  to any  other  such
default  for a  period  of 30 days  after  such  default  is  known,  or  should
reasonably  have been known,  by any officer of the  Borrower or notice  thereof
from the Agent to the Borrower  (such grace to be  applicable  only in the event
such default can be remedied by corrective  action of the Borrower as determined
by the Agent in its sole discretion).

     Section 7.06 Misrepresentation.  Any representation or warranty made by the
Borrower  herein  proves to have been untrue in any  material  respect as of the
date when made, or any  certificate or other document  furnished by the Borrower
to the Agent or any Lender pursuant to the provisions hereof proves to have been
untrue  in any  material  respect  on the date as of which  the  facts set forth
therein are stated or certified.

     Section 7.07 Adverse  Judgments,  Etc. Any one or more judgments,  writs or
warrants of attachment or of any similar process has been entered of filed in an
aggregate  amount of $2,500,000 or more in excess of any  third-party  insurance
protecting  against such liability against the Borrower or any of its properties
and failure of the Borrower to vacate,  pay, bond, stay or contest in good faith
such judgments,  writs,  warrants of attachment or other process within a period
of 30 days.

     Section 7.08 Invalidity or Unenforceability.  This Agreement,  the Notes or
any other Loan  Document  ceases to be valid and  binding on the  Borrower or is
declared null and void, or the validity or  enforceability  thereof is contested
by the Borrower or the  Borrower  denies it has any or further  liability  under
this Agreement, any Note or any other Loan Document to which it is a party.

     Section  7.09  ERISA.  (i) A  trustee  shall  be  appointed  by a court  of
competent  jurisdiction  to  administer  any Plan of the  Borrower  or any ERISA
Affiliate;  (ii) the PBGC shall  terminate any Plan of the Borrower or any ERISA
Affiliate  or  appoint a  trustee  to  administer  any such  Plan;  or (iii) the
Borrower  or any  ERISA  Affiliate  shall  incur  any  liability  to a  Plan,  a
Multiemployer  Plan,  a plan  subject to Title IV of ERISA with respect to which
the Borrower or any of its ERISA Affiliates is treated as an

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<PAGE>

"employer"  (within the  meaning of Section  3(5) of ERISA) by reason of Section
4069 of  ERISA,  or the PBGC,  which,  in any such  case,  likely  would  have a
Material Adverse Effect on the Borrower.

     Section 7.10 Change of Control;  Change of  Beneficial  Ownership or Board.
Any Person or group of Persons  (within  the meaning of Sections 13 or 14 of the
Securities  and Exchange Act of 1934),  other than the then current  officers or
directors of the Borrower or an  underwriter  which obtains such  ownership as a
result of effecting a firm committed underwriting of a secondary offering of the
Borrower's  voting  stock on behalf of such  officers or  directors,  shall have
acquired  beneficial  ownership  of (within  the meaning of Rule 13d-3 and 13d-5
promulgated  by  the  Securities  and  Exchange   Commission   under  said  Act)
twenty-five percent (25%) or more of the voting stock of the Borrower on a fully
diluted  basis with  respect to which such  Persons are  entitled to vote on the
election of  directors  or,  during any period of up to 24  consecutive  months,
Persons who at the  beginning  of such  24-month  period were  directors  of the
Borrower (or were appointed, nominated or elected by such Persons) cease for any
reason to  constitute  a majority  of the  directors  of the  Borrowers  then in
office. For purposes of calculating the acquisition of beneficial ownership, any
transfer of voting  stock of the Borrower by any Person or group of Persons to a
Permitted  Transferee  shall  be  deemed  not to  constitute  a  conveyance  and
acquisition  of  such  stock.  A  "Permitted  Transferee"  includes  any  of the
following with respect to any then current  officer or director of the Borrower:
(i)  spouse;  (ii) lineal  descendants  of all  generations  and spouses of such
lineal descendants;  (iii) a charitable corporation or trust established by such
then  current  officer  or  director  or by a  person  described  in (i) or (ii)
preceding;  (iv) a trust (or in the case of a minor, a custodial account under a
Uniform Gifts or Transfers to Minors Act) of which the  beneficiary(ies) are one
or more Persons  described in the preceding  clauses (i), (ii) or (iii), and (v)
an  executor or  administrator  upon the death of such then  current  officer or
director or any Person  described in the preceding  clauses (i) or (ii). For the
avoidance of doubt, the sale of NUI (or all or substantially  all of its assets)
will not constitute a Change of Control for purposes of this Section 7.10.

     Section 7.11 Regulatory  Decisions.  Any Governmental  Authority shall have
issued a  decision  that  could  reasonably  be likely  to result in a  Material
Adverse Effect on the Borrower.

     Section  7.12  Consequences  of an Event of Default.  If one or more of the
Events  of  Default  occur  then (a) if such  Event of  Default  is set forth in
Sections 7.03 (Bankruptcy;  Insolvency) or 7.04 (Termination of Existence),  the
Commitments shall automatically terminate and the Notes then outstanding and all
other  amounts  owing under this  Agreement  shall  become  immediately  due and
payable, without necessity of demand, presentation,  protest, notice of dishonor
or notice of  default or (b) if such Event of Default is set forth in any of the
remaining  Sections of this Article VII, then the Agent, to the extent requested
by the Required  Lenders,  and upon notice to the  Borrower,  shall  declare the
Borrower in default hereunder,  and upon such declaration,  shall, to the extent
requested by the Required  Lenders,  terminate the Commitment and/or declare the
Notes  then  outstanding  and all  other  amounts  owing  under  this  Agreement
immediately  due  and  payable,   without   necessity  of  any  further  demand,
presentation, protest, notice of

                                       49

<PAGE>


dishonor or further  notice of default,  whereupon the same shall be immediately
due and payable.

     Section 7.13 Remedies Upon Default. Upon the termination of the Commitments
and  acceleration  of the Notes following the occurrence of an Event of Default,
the Lenders shall,  unless such termination and acceleration  subsequently  have
been  rescinded,  have the full panoply of rights and  remedies  granted to them
under  this  Agreement  and all those  rights  and  remedies  granted  by law to
creditors,  and the Agent,  at the  direction  of the  Required  Lenders,  shall
proceed to protect and enforce the Lenders'  rights by an action at law, suit in
equity or other appropriate proceeding,  whether for the specific performance of
any  agreement  contained  herein,  in the  Notes  or in any of the  other  Loan
Documents,  or for an injunction  against a violation of any of the terms hereof
or thereof,  or in aid of the exercise of any power granted hereby or thereby or
by law. No right, power or remedy conferred by this Agreement,  in the Notes, or
by any other Loan Document,  upon the Agent or the Lenders shall be exclusive of
any other  right,  power or remedy  referred  to  herein  or  therein  or now or
hereafter  available at law, in equity, by statute or otherwise.  No exercise of
any one right or remedy  shall be deemed a waiver of other  rights or  remedies.
The rights and  remedies of the Agent and the Lenders  specified  herein are for
the sole and exclusive benefit, use and protection of the Agent and the Lenders,
and the Agent  and the  Lenders  shall be  entitled,  but shall  have no duty or
obligation,  to  exercise  or to  refrain  from  exercising  any right or remedy
reserved to the Agent or the Lenders hereunder.

                                  ARTICLE VIII
                                    The Agent
                                    ---------

     Each of the Lenders hereby irrevocably  appoints the Agent as its agent and
authorizes  the Agent to take such  actions on its behalf and to  exercise  such
powers as are  delegated to the Agent by the terms  hereof,  together  with such
actions and powers as are reasonably incidental thereto.

     The Agent  hereunder  shall have the same rights and powers in its capacity
as a Lender as any other  Lender and may exercise the same as though it were not
the Agent, and the Agent and its Affiliates may accept deposits from, lend money
to and  generally  engage  in any  kind of  business  with the  Borrower  or any
Affiliate thereof as if it were not the Agent hereunder.

     The Agent shall not have any duties or obligations  except those  expressly
set forth herein.  Without  limiting the  generality of the  foregoing,  (a) the
Agent shall not be subject to any fiduciary or other implied duties,  regardless
of whether a Default has  occurred  and is  continuing,  (b) the Agent shall not
have any duty to take any  discretionary  action or exercise  any  discretionary
powers,  except  discretionary  rights and powers expressly  contemplated hereby
that the Agent is required to  exercise in writing by the  Required  Lenders (or
such other number or percentage  of the Lenders as shall be necessary  under the
circumstances  as provided in Section  9.02),  and (c) except as  expressly  set
forth  herein,  the Agent shall not have any duty to disclose,  and shall not be
liable for the failure to  disclose,  any  information  relating to the Borrower
that is

                                       50

<PAGE>


communicated  to or  obtained  by the  Agent  or any  of its  Affiliates  in any
capacity.  The Agent shall not be liable for any action taken or not taken by it
with the consent or at the request of the Required Lenders (or such other number
or percentage of the Lenders as shall be necessary  under the  circumstances  as
provided  in  Section  9.02) or in the  absence of its own gross  negligence  or
willful  misconduct.  The Agent  shall be deemed  not to have  knowledge  of any
Default  unless and until  written  notice  thereof is given to the Agent by the
Borrower  or a Lender,  and the Agent shall not be  responsible  for or have any
duty to ascertain or inquire into (i) any statement,  warranty or representation
made  in or in  connection  with  this  Agreement,  (ii)  the  contents  of  any
certificate,  report or other  document  delivered  hereunder  or in  connection
herewith,  (iii)  the  performance  or  observance  of  any  of  the  covenants,
agreements  or other terms or conditions  set forth  herein,  (iv) the validity,
enforceability,  effectiveness  or  genuineness  of this  Agreement or any other
agreement,  instrument or document, or (v) the satisfaction of any condition set
forth in Article VI or elsewhere herein,  other than to confirm receipt of items
expressly  required to be delivered to the Agent.

     The Agent shall be entitled to rely upon, and shall not incur any liability
for  relying  upon,  any  notice,  request,  certificate,   consent,  statement,
instrument,  document or other writing  believed by it to be genuine and to have
been  signed or sent by the  proper  Person.  The  Agent  also may rely upon any
statement made to it orally or by telephone and believed by it to be made by the
proper Person, and shall not incur any liability for relying thereon.  The Agent
may  consult  with  legal  counsel  (who  may  be  counsel  for  the  Borrower),
independent  accountants  and other  experts  selected  by it,  and shall not be
liable for any action taken or not taken by it in accordance  with the advice of
any such counsel, accountants or experts.

     The Agent may  perform any and all its duties and  exercise  its rights and
powers by or through  any one or more  sub-agents  appointed  by the Agent.  The
Agent and any such sub-agent may perform any and all its duties and exercise its
rights and powers through their  respective  Related  Parties.  The  exculpatory
provisions of the preceding  paragraphs shall apply to any such sub-agent and to
the  Related  Parties of the Agent and any such  sub-agent,  and shall  apply to
their  respective  activities in connection  with the  syndication of the credit
facilities provided for herein as well as activities as the Agent.

     Subject to the  appointment and acceptance of a successor Agent as provided
in this paragraph, the Agent may resign at any time by notifying the Lenders and
the Borrower.  Upon any such  resignation,  the Required  Lenders shall have the
right to  appoint a  successor  reasonably  acceptable  to the  Borrower.  If no
successor  shall have been so appointed  by the Required  Lenders and shall have
accepted such  appointment  within 30 days after the retiring Agent gives notice
of its  resignation,  then the  retiring  Agent may,  on behalf of the  Lenders,
appoint a  successor  Agent  reasonably  acceptable  to the  Borrower.  Upon the
acceptance of its appointment as Agent hereunder by a successor,  such successor
shall succeed to and become vested with all the rights,  powers,  privileges and
duties of the retiring  Agent,  and the retiring Agent shall be discharged  from
its duties and obligations  hereunder.  The ongoing fees payable by the Borrower
to a  successor  Agent  shall be the same as those  payable  to its  predecessor
unless otherwise


                                       51

<PAGE>


agreed between the Borrower and such  successor.  After the Agent's  resignation
hereunder,  the  provisions  of this Article and Section 9.03 shall  continue in
effect  for the  benefit  of such  retiring  Agent,  its  sub-agents  and  their
respective  Related  Parties in respect  of any  actions  taken or omitted to be
taken by any of them while it was acting as the Agent. Each Lender  acknowledges
that it has,  independently  and  without  reliance  upon any Agent or any other
Lender and based on such documents and information as it has deemed appropriate,
made its own credit analysis and decision to enter into this Agreement.

Each Lender also acknowledges  that it will,  independently and without reliance
upon the Agent or any other Lender and based on such  documents and  information
as it  shall  from  time to time  deem  appropriate,  continue  to make  its own
decisions in taking or not taking action under or based upon this Agreement, any
related agreement or any document furnished hereunder or thereunder.

                                  ARTICLE IX
                                 Miscellaneous

     Section 9.01 Notices;  Payment Instructions.  Except as otherwise expressly
provided herein, (i) all notices and other  communications  provided for herein,
other than notices and other  communications  expressly permitted to be given by
telephone,  shall be in  writing  and shall be  delivered  by hand or  overnight
courier service,  mailed by certified or registered mail or sent by telecopy, to
the  address  or  addresses  indicated  below and (ii) all  payments  to be made
hereunder to the Agent shall be wired in dollars in immediately  available funds
to the account or accounts indicated below:

                    (a)  If to the Borrower at:

                         1085 Morris Avenue
                         Union, New Jersey 07083
                         Attention: M. Patricia Keefe

                    (b)  if to the Agent, to:

                         Drawbridge Special Opportunities Fund LP
                         c/o Fortress Investment Group
                         1251 Avenue of the Americas, 16th Floor
                         New York, NY 10020
                         Attention: Robert Fraley

                         Payment Instructions:

                         Pay to:                   Chase Manhattan Bank, NY
                         ABA Number:
                         F/A/O:                    Goldman Sachs & Co., NY
                         Account Number:
                         For Further Credit to: Drawbridge Special Opportunities



                                       52

<PAGE>


                                    Fund LP
                                    Account Number:
                                    Reference:       NUI

          (c) if to any other Lender,  to it at its address (or telecopy number)
set forth in its Administrative Questionnaire.

          (d) Notices and other  communications  to the Lenders hereunder may be
delivered or  furnished  by  electronic  communications  pursuant to  procedures
approved by the Agent;  provided that the  foregoing  shall not apply to notices
pursuant to Article II unless  otherwise  agreed by the Agent and the applicable
Lender.  The  Agent or the  Borrower  may,  in its  discretion,  agree to accept
notices and other  communications  to it hereunder by electronic  communications
pursuant to procedures approved by it; provided that approval of such procedures
may be limited to particular notices or communications.

          (e) Any party  hereto may change its  address or  telecopy  number for
notices  and other  communications  hereunder  by  notice  to the other  parties
hereto.  All  notices  and other  communications  given to any  party  hereto in
accordance  with the provisions of this  Agreement  shall be deemed to have been
given on the date of receipt.

     Section 9.02 Waivers; Amendments.

          (a) No failure or delay by the Agent or any Lender in  exercising  any
right or power hereunder shall operate as a waiver thereof, nor shall any single
or  partial  exercise  of  any  such  right  or  power,  or any  abandonment  or
discontinuance of steps to enforce such a right or power,  preclude any other or
further exercise thereof or the exercise of any other right or power. The rights
and remedies of the Agent and the Lenders  hereunder are  cumulative and are not
exclusive of any rights or remedies that they would otherwise have. No waiver of
any  provision  of this  Agreement  or consent to any  departure by the Borrower
therefrom shall in any event be effective  unless the same shall be permitted by
paragraph  (b) of this  Section,  and  then  such  waiver  or  consent  shall be
effective  only in the  specific  instance  and for the purpose for which given.
Without limiting the generality of the foregoing, the making of a Loan shall not
be construed as a waiver of any Default,  regardless of whether the Agent or any
Lender may have had notice or knowledge of such Default at the time.

          (b) Neither this  Agreement  nor any  provision  hereof may be waived,
amended or modified  except  pursuant to an agreement or  agreements  in writing
entered into by the Borrower and the Required Lenders or by the Borrower and the
Agent with the consent of the Required Lenders;  provided that no such agreement
shall (i) increase the Commitment of any Lender  without the written  consent of
such Lender, (ii) postpone the scheduled date of payment of the principal amount
of any Loan or any interest thereon,  or any fees payable  hereunder,  or reduce
the amount of, waive or excuse any such payment,  or postpone the scheduled date
of  expiration  of any  Commitment,  without the written  consent of each Lender
affected  thereby,  (iii) change  Section  2.12(b) or (c) in a manner that would
alter the pro rata  sharing of payments  required  thereby,


                                       53

<PAGE>


without the written consent of each Lender, or (iv) change any of the provisions
of this Section or the definition of "Required  Lenders" or any other  provision
hereof  specifying the number or percentage of Lenders required to waive,  amend
or modify any rights  hereunder or make any  determination  or grant any consent
hereunder,  without the written consent of each Lender; provided further that no
such agreement shall amend,  modify or otherwise  affect the rights or duties of
the Agent hereunder without the prior written consent of the Agent.

     Section 9.03 Expenses; Indemnity; Damage Waiver.

          (a) The Borrower shall pay (i) all reasonable  out-of-pocket  expenses
incurred by the Agent and its Affiliates, including the reasonable fees, charges
and  disbursements  of counsel for the Agent, in connection with the syndication
of the credit facilities provided for herein, the preparation and administration
of this Agreement or any amendments,  modifications or waivers of the provisions
hereof (whether or not the transactions  contemplated hereby or thereby shall be
consummated)  and (ii) all  reasonable  out-of-pocket  expenses  incurred by the
Agent or any Lender, including the reasonable fees, charges and disbursements of
any counsel for the Agent or any Lender,  in  connection  with the  enforcement,
protection  or  exercise  of its  rights  in  connection  with  this  Agreement,
including its rights under this Section and Section 4.03, or in connection  with
the Loans made hereunder,  including all such  out-of-pocket  expenses  incurred
during any workout, restructuring or negotiations in respect of such Loans.

          (b) The Borrower shall  indemnify the Agent and each Lender,  and each
Related Party of any of the foregoing  Persons (each such Person being called an
"Indemnitee")  against,  and hold each  Indemnitee  harmless  from,  any and all
losses,  claims,  damages,  liabilities  and  related  expenses,  including  the
reasonable  fees,  charges and  disbursements of any counsel for any Indemnitee,
incurred by or asserted  against any  Indemnitee  arising out of, in  connection
with, or as a result of (i) the  execution or delivery of this  Agreement or any
agreement or instrument  contemplated  hereby,  the  performance  by the parties
hereto of their  respective  obligations  hereunder or the  consummation  of the
Credit Events or any other transactions  contemplated  hereby,  (ii) any Loan or
the use of the  proceeds  therefrom,  (iii) any  Environmental  Liability of the
Borrower,  asserted against the Borrower,  or incurred by or asserted against an
Indemnitee  as  a  result,   directly  or  indirectly,   of  said   Indemnitee's
relationship to the Borrower or the business or assets of the Borrower,  or (iv)
any  actual  or  prospective  claim,  litigation,  investigation  or  proceeding
relating to any of the foregoing,  whether based on contract,  tort or any other
theory and  regardless of whether any  Indemnitee is a party  thereto;  provided
that such indemnity shall not, as to any Indemnitee,  be available to the extent
that  such  losses,  claims,  damages,   liabilities  or  related  expenses  are
determined  by a court of  competent  jurisdiction  by final  and  nonappealable
judgment to have  resulted from the gross  negligence  or willful  misconduct of
such Indemnitee.

          (c) To the extent that the Borrower  fails to pay any amount  required
to be paid by it to the Agent under  paragraph (a) or (b) of this Section,  each
Lender severally agrees to pay to the Agent such Lender's Applicable  Percentage
(determined as of the time that the applicable unreimbursed expense or indemnity

                                       54

<PAGE>


payment is sought) of such unpaid amount; provided that the unreimbursed expense
or indemnified loss, claim,  damage,  liability or related expense,  as the case
may be, was incurred by or asserted against the Agent in its capacity as such.

          (d) To the extent  permitted by applicable law, the Borrower shall not
assert,  and hereby waives,  any claim against any Indemnitee,  on any theory of
liability, for special, indirect,  consequential or punitive damages (as opposed
to direct or actual damages)  arising out of, in connection with, or as a result
of, this  Agreement or any  agreement or  instrument  contemplated  hereby,  the
Credit Events, any Loan or the use of the proceeds thereof.

          (e) All amounts due under this Section shall be payable promptly after
written demand therefor.

     Section 9.04 Syndication.

          (a) The Agent may in its discretion syndicate the Commitments to other
lenders (as described below, the "Additional  Lenders").  The Agent will consult
with the Borrower in connection with such syndication, including with respect to
the  timing  of any  offer of a  Commitment  provided  to  potential  Additional
Lenders,  the acceptance of commitments from such Additional Lenders, the amount
of any Commitment to be offered to an Additional  Lender,  and the compensation,
if any, provided to any Additional Lender. The Agent shall select any Additional
Lender with the approval of the Borrower,  such approval not to be  unreasonably
withheld  or  delayed.   The  Agent  will  determine  the  final  allocation  of
Commitments to any Additional  Lender in consultation with the Borrower and will
notify the Borrower of such final allocation.

          (b) In connection with syndication of the Loans and  Commitments,  the
Borrower agrees to cooperate,  and use its commercially  reasonable best efforts
to cause NUI to cooperate,  in the  syndication of the Loans and  Commitments in
all respects, as reasonably requested by the Agent,  including  participation in
bank  meetings  held in  connection  with such  syndication,  and to provide all
information  which such Persons may request from it or which such Persons or the
Borrower  may  consider  material to a lender or  participant,  or  necessary or
appropriate for accurate and complete disclosure. Upon request of the Agent, the
Borrower shall represent to such Persons,  and indemnify such Persons for claims
relating  to, the  accuracy  and  completeness  of such  disclosure,  upon terms
acceptable to such Persons.

     Section 9.05 Successors and Assigns.

          (a) The provisions of this  Agreement  shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and assigns
permitted  hereby  except  that,  (i) the  Borrower  may not assign or otherwise
transfer any of its rights or  obligations  hereunder  without the prior written
consent of each Lender (and any attempted assignment or transfer by the Borrower
without  such  consent  shall be null and void) and (ii) no Lender may assign or
otherwise transfer its rights or obligations hereunder except in accordance with
this  Section.  Nothing  in this  Agreement,  expressed

                                       55

<PAGE>

or implied, shall be construed to confer upon any Person (other than the parties
hereto,  their  respective  successors and assigns  permitted hereby and, to the
extent expressly  contemplated  hereby, the Related Parties of each of the Agent
and the  Lenders)  any legal or  equitable  right,  remedy or claim  under or by
reason of this Agreement.

          (b) Any Lender may assign to one or more assignees all or a portion of
its rights and obligations  under this Agreement  (including all or a portion of
its Commitment and the Loans at the time owing to it);  provided that (i) except
in the case of an  assignment  to a  Lender,  an  Affiliate  of a  Lender  or an
Approved Fund,  each of the Borrower and the Agent must give their prior written
consent to such assignment  (which consent shall in any case not be unreasonably
withheld;  it being  understood that it is not  unreasonable to withhold consent
with respect to any proposed assignment to any financial  institution having net
capital and surplus of less than $1,000,000,000 or senior, unsecured,  long-term
indebtedness  for  borrowed  money with a credit  rating of less than A-),  (ii)
except in the case of an assignment to a Lender,  an Affiliate of a Lender or an
Approved Fund or an assignment of the entire  remaining  amount of the assigning
Lender's  Commitment,  the  amount of the  Commitment  of the  assigning  Lender
subject to each such  assignment  (determined  as of the date the Assignment and
Assumption  with respect to such assignment is delivered to the Agent) shall not
be less than  $5,000,000 and after giving effect thereto,  the assigning  Lender
must have Commitments and Loans aggregating at least $5,000,000,  unless each of
the  Borrower and the Agent  otherwise  consent,  (iii) each partial  assignment
shall be made as an  assignment  of a  proportionate  part of all the  assigning
Lender's rights and obligations  under this Agreement,  (iv) the parties to each
assignment  shall execute and deliver to the Agent an Assignment and Assumption,
together with a processing and recordation fee of $3,500,  and (v) the assignee,
if it shall  not be a  Lender,  shall  deliver  to the  Agent an  Administrative
Questionnaire;  and provided further that any consent of the Borrower  otherwise
required under this  paragraph  shall not be required if an Event of Default has
occurred and is continuing. Subject to acceptance and recording thereof pursuant
to paragraph (d) of this Section, from and after the effective date specified in
each Assignment and Assumption the assignee  thereunder  shall be a party hereto
and, to the extent of the interest  assigned by such  Assignment and Assumption,
have the rights  and  obligations  of a Lender  under  this  Agreement,  and the
assigning  Lender  thereunder  shall, to the extent of the interest  assigned by
such  Assignment and  Assumption,  be released from its  obligations  under this
Agreement (and, in the case of an Assignment and Assumption  covering all of the
assigning  Lender's  rights and obligations  under this  Agreement,  such Lender
shall  cease to be a party  hereto  but shall  continue  to be  entitled  to the
benefits of Sections 2.09, 2.10, 2.11 and 9.03). Any assignment or transfer by a
Lender of rights or  obligations  under this Agreement that does not comply with
this paragraph shall be treated for purposes of this Agreement as a sale by such
Lender of a  participation  in such rights and  obligations  in accordance  with
paragraph (e) of this Section.  By executing  and  delivering an Assignment  and
Assumption, the assigning Lender thereunder and the assignee thereunder shall be
deemed to confirm to and agree with each other and the other  parties  hereto as
follows:  (1) such assigning Lender warrants that it is the legal and beneficial
owner of the interest being assigned thereby free and clear of any adverse claim
and that its Commitment, and the outstanding balances of its Loans, in each case
without  giving effect to assignments  thereof which have not become  effective,
are as set forth in such

                                       56

<PAGE>


Assignment and Assumption,  (2) except as set forth in (1) above, 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,   or  the  execution,   legality,   validity,
enforceability,  genuineness,  sufficiency or value of this Agreement, any other
Loan Document or any other instrument or document  furnished pursuant hereto, or
the financial  condition of the Borrower or the performance or observance by the
Borrower of any of its obligations  under this  Agreement,  any Loan Document or
any other instrument or document  furnished  pursuant hereto,  (3) such assignee
represents  and  warrants  that it is  legally  authorized  to enter  into  such
Assignment  and  Assumption,  (4) such assignee  confirms that it has received a
copy of this  Agreement,  together  with  copies  of the most  recent  financial
statements referred to in Section 3.05 or delivered pursuant to Section 4.02 and
such other documents and  information as it has been deemed  appropriate to make
its own  credit  analysis  and  decision  to  enter  into  such  Assignment  and
Assumption,  (5) such assignee will  independently and without reliance upon any
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,  (6) such
assignee  appoints and  authorizes the Agent to take such action as agent on its
behalf and to exercise such powers under this  Agreement as are delegated to the
Agent  by the  terms  hereof,  together  with  such  powers  as  are  reasonably
incidental  thereto,  and (7)  such  assignee  agrees  that it will  perform  in
accordance  with  their  terms  all the  obligations  which by the terms of this
Agreement are required to be performed by it as a Lender.

          (c) The Agent,  acting for this  purpose as an agent of the  Borrower,
shall  maintain  at one of its  offices  in The  City of New York a copy of each
Assignment and Assumption  delivered to it and a register for the recordation of
the names and  addresses of the Lenders,  and the  Commitment  of, and principal
amount of the Loans owing to, each Lender pursuant to the terms hereof from time
to time (the "Register"). The Agent, on behalf of the Borrower, agrees to record
each Loan on the Register.  The Loan  recorded on the Register (the  "Registered
Loan") may not be evidenced by promissory notes other than a Registered Note (as
defined below). Upon the registration of a Loan, any promissory note (other than
a  Registered  Note)  evidencing  the same  shall be null and void and  shall be
returned to the Borrower.  The Borrower agrees, at the request of any Lender, to
execute and  deliver to such  Lender a  promissory  note in  registered  form to
evidence such  Registered Loan (i.e.,  containing  registered note language) and
registered as provided in Section 9.05(d) hereof (a "Registered Note"),  payable
to the order of such Lender and otherwise duly  completed.  Once recorded on the
Register,  the obligations  evidenced by such Registered Note may not be removed
from the Register so long as it remains  outstanding,  and a Registered Note may
not be  exchanged  for a  promissory  note that is not a  Registered  Note.  The
entries in the Register shall be conclusive, and the Borrower, the Agent and the
Lenders may treat each Person whose name is recorded in the Register pursuant to
the terms  hereof as a Lender  hereunder  for all  purposes  of this  Agreement,
notwithstanding  notice to the  contrary.  The Register  shall be available  for
inspection by the Borrower and any Lender,  at any reasonable time and from time
to time upon reasonable prior notice.


                                       57

<PAGE>


          (d) Upon its receipt of a duly  completed  Assignment  and  Assumption
executed  by an  assigning  Lender and an  assignee,  the  assignee's  completed
Administrative  Questionnaire  (unless the  assignee  shall  already be a Lender
hereunder),  the processing and  recordation fee referred to in paragraph (b) of
this Section and any written  consent to such  assignment  required by paragraph
(b) of this Section,  the Agent shall accept such  Assignment and Assumption and
record the information contained therein in the Register. A Registered Loan (and
the  Registered  Note, if any,  evidencing  the same) may be assigned or sold in
whole or in part only by registration of such assignment or sale on the Register
(and each Registered Note shall expressly so provide). Any assignment or sale of
all or part of such Registered Loan (and the Registered Note, if any, evidencing
the same) may be effected only by registration of such assignment or sale on the
Register, together with the surrender of the Registered Note, if any, evidencing
the same duly endorsed by (or accompanied by a written  instrument of assignment
or sale duly executed by) the holder of such Registered Note, whereupon,  at the
request  of  the  designated  assignee(s)  or  transferee(s),  one or  more  new
Registered  Notes in the same aggregate  principal amount shall be issued to the
designated  assignee(s) or  transferee(s).  No assignment shall be effective for
purposes  of this  Agreement  unless it has been  recorded  in the  Register  as
provided in this  paragraph;  provided  that in the case of an  assignment  by a
Lender  to any of its  Approved  Funds  that  is not  reflected  in the  Agent's
Register, the assigning Lender shall maintain a comparable register on behalf of
the Agent.

          (e) Any Lender may,  without the consent of the  Borrower or the Agent
sell  participations to one or more banks or other entities (a "Participant") in
all or a portion of such Lender's  rights and  obligations  under this Agreement
(including  all or a  portion  of its  Commitment  and the  Loans  owing to it);
provided that (i) such Lender's  obligations  under this Agreement  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 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.  In the event that any Lender  sells  participations  in a Registered
Loan,  such Lender shall  maintain a register on which it enters the name of all
participants in such Registered Loan (the "Participant  Register"). A Registered
Loan (and the Registered Note, if any,  evidencing the same) may be participated
in  whole  or in  part  only  by  registration  of  such  participation  on  the
Participant Register (and each Registered Note shall expressly so provide).  Any
participation  of  such  Registered  Loan  (and  the  Registered  Note,  if any,
evidencing  the  same)  may  be  effected  only  by  the  registration  of  such
participation on the Participant Register.  Any agreement or instrument pursuant
to which a Lender  sells such a  participation  shall  provide  that such Lender
shall  retain the sole  right to  enforce  this  Agreement  and to  approve  any
amendment,  modification or waiver of any provision of this Agreement;  provided
that such agreement or instrument may provide that such Lender will not, without
the consent of the Participant,  agree to any amendment,  modification or waiver
described in the first proviso to Section 9.02(b) that affects such Participant.
Subject  to  paragraph  (f) of this  Section,  the  Borrower  agrees  that  each
Participant shall be entitled to the benefits of Sections 2.09, 2.10 and 2.11 to
the  same  extent  as if it were a  Lender  and had  acquired  its  interest  by
assignment pursuant to paragraph (b) of this Section. To the extent permitted by
law, each  Participant also shall


                                       58

<PAGE>



be entitled to the benefits of Section 9.09 as though it were a Lender, provided
such  Participant  agrees to be subject  to Section  2.12(c) as though it were a
Lender.

          (f) A Participant shall not be entitled to receive any greater payment
under Section 2.09 or 2.11 than the  applicable  Lender would have been entitled
to receive with respect to the participation  sold to such  Participant,  unless
the sale of the  participation  to such  Participant is made with the Borrower's
prior written consent. A Participant that would be a Foreign Lender if it were a
Lender shall not be entitled to the benefits of Section 2.11 unless the Borrower
is notified of the  participation  sold to such Participant and such Participant
agrees,  for the  benefit of the  Borrower,  to comply with  Section  2.11(e) as
though it were a Lender.

          (g) Any Lender may at any time pledge or assign a security interest in
all or any portion of its rights under this  Agreement to secure  obligations of
such Lender,  including  any pledge or  assignment  to secure  obligations  to a
Federal  Reserve  Bank,  and this Section  shall not apply to any such pledge or
assignment of a security interest; provided that no such pledge or assignment of
a security interest shall release a Lender from any of its obligations hereunder
or substitute any such pledgee or assignee for such Lender as a party hereto.

     Section 9.06  Survival.  All  covenants,  agreements,  representations  and
warranties  made  by  the  Borrower  herein  and in the  certificates  or  other
instruments  delivered in connection with or pursuant to this Agreement shall be
considered  to have been  relied  upon by the  other  parties  hereto  and shall
survive  the  execution  and  delivery of this  Agreement  and the making of any
Loans,  regardless of any  investigation  made by any such other party or on its
behalf and,  except in the  instance of a waiver or other  modification  to this
Agreement agreed to by the Required Lenders,  notwithstanding  that the Agent or
any  Lender  may have had  notice  or  knowledge  of any  Default  or  incorrect
representation  or warranty at the time any credit is  extended  hereunder,  and
shall  continue  in full  force and  effect as long as the  principal  of or any
accrued  interest on any Loan or any fee or any other amount  payable under this
Agreement is outstanding and unpaid so long as the Commitments  have not expired
or terminated.  The provisions of Sections 2.09, 2.10, 2.11 and 9.03 and Article
VIII  shall  survive  and  remain in full  force and  effect  regardless  of the
consummation of the transactions contemplated hereby, the repayment of the Loans
and the  Commitments  or the  termination  of this  Agreement  or any  provision
hereof.

     Section 9.07 Counterparts;  Integration;  Effectiveness. This Agreement may
be  executed in  counterparts  (and by  different  parties  hereto on  different
counterparts), each of which shall constitute an original, but all of which when
taken  together  shall  constitute a single  contract.  This  Agreement  and any
separate letter  agreements with respect to fees payable to the Agent constitute
the entire contract among the parties  relating to the subject matter hereof and
supersede any and all previous agreements and  understandings,  oral or written,
relating to the subject matter hereof.  Except as provided in Section 6.01, this
Agreement  shall become  effective when it shall have been executed by the Agent
and when the Agent shall have received  counterparts  hereof  which,  when taken
together,  bear  the  signatures  of  each  of the  other  parties  hereto,

                                       59

<PAGE>


and  thereafter  shall be binding  upon and inure to the  benefit of the parties
hereto and their  respective  successors  and  assigns.  Delivery of an executed
counterpart of a signature page of this Agreement by telecopy shall be effective
as delivery of a manually executed counterpart of this Agreement.

     Section  9.08  Severability.  Any  provision of this  Agreement  held to be
invalid,  illegal  or  unenforceable  in  any  jurisdiction  shall,  as to  such
jurisdiction,  be  ineffective to the extent of such  invalidity,  illegality or
unenforceability without affecting the validity,  legality and enforceability of
the remaining provisions hereof; and the invalidity of a particular provision in
a  particular  jurisdiction  shall not  invalidate  such  provision in any other
jurisdiction.

     Section 9.09 Right of Setoff.  If an Event of Default  shall have  occurred
and be continuing,  each Lender and each of its Affiliates 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  obligations at any time owing
by such Lender or  Affiliate to or for the credit or the account of the Borrower
against any of and all the obligations of the Borrower now or hereafter existing
under this  Agreement held by such Lender,  irrespective  of whether or not such
Lender  shall  have made any demand  under  this  Agreement  and  although  such
obligations  may be unmatured.  The rights of each Lender under this Section are
in addition to other  rights and  remedies  (including  other  rights of setoff)
which such Lender may have.

     Section 9.10  Governing Law;  Jurisdiction;  Consent to Service of Process.


          (a) This Agreement  shall be construed in accordance with and governed
by the law of the State of New York without reference to the principles  thereof
regarding conflicts of law.

          (b) The Borrower hereby irrevocably and unconditionally  submits,  for
itself and its property,  to the nonexclusive  jurisdiction of the Supreme Court
of the State of New York  sitting in New York  County  and of the United  States
District  Court of the Southern  District of New York,  and any appellate  court
from any thereof, in any action or proceeding arising out of or relating to this
Agreement,  or for  recognition or enforcement of any judgment,  and each of the
parties hereto hereby irrevocably and unconditionally  agrees that all claims in
respect of any such action or proceeding may be heard and determined in such New
York State or, to the extent  permitted by law, in such Federal  court.  Each of
the parties hereto agrees that a final judgment in any such action or proceeding
shall be conclusive  and may be enforced in other  jurisdictions  by suit on the
judgment or in any other manner provided by law. Nothing in this Agreement shall
affect any right that the Agent or any  Lender may  otherwise  have to bring any
action or  proceeding  relating to this  Agreement  against the  Borrower or its
properties in the courts of any jurisdiction.


                                       60

<PAGE>


          (c) The Borrower hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and  effectively do so, any objection which it may
now or hereafter  have to the laying of venue of any suit,  action or proceeding
arising  out of or  relating  to this  Agreement  in any  court  referred  to in
paragraph (b) of this  Section.  Each of the parties  hereto hereby  irrevocably
waives,  to the fullest extent  permitted by law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court.

          (d) Each party to this  Agreement  irrevocably  consents to service of
process in the manner  provided  for  notices in Section  9.01.  Nothing in this
Agreement  will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.

          Section 9.11 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL
BY JURY  IN ANY  LEGAL  PROCEEDING  DIRECTLY  OR  INDIRECTLY  ARISING  OUT OF OR
RELATING TO THIS  AGREEMENT OR THE CREDIT EVENTS  CONTEMPLATED  HEREBY  (WHETHER
BASED ON CONTRACT,  TORT OR ANY OTHER  THEORY).  EACH PARTY HERETO (A) CERTIFIES
THAT NO  REPRESENTATIVE,  AGENT OR ATTORNEY OF ANY OTHER PARTY HAS  REPRESENTED,
EXPRESSLY  OR  OTHERWISE,  THAT SUCH  OTHER  PARTY  WOULD  NOT,  IN THE EVENT OF
LITIGATION,  SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)  ACKNOWLEDGES  THAT IT
AND THE OTHER PARTIES  HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

          Section 9.12 Headings.  Article and Section  headings and the Table of
Contents used herein are for convenience of reference only, are not part of this
Agreement  and  shall  not  affect  the   construction  of,  or  be  taken  into
consideration in interpreting, this Agreement.

     Section 9.13  Confidentiality.  Each of the Agent and the Lenders agrees to
maintain the confidentiality of the Information (as defined below),  except that
Information may be disclosed (a) 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 agree to keep such
Information  confidential),  (b)  to the  extent  requested  by  any  regulatory
authority,  (c) to the extent  required by applicable  laws or regulations or by
any subpoena or similar legal process, (d) to any other party to this Agreement,
(e) 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,  (f) subject to an agreement containing provisions  substantially the
same as those of this Section,  to (i) any assignee of or Participant in, or any
prospective  assignee  of or  Participant  in, any of its rights or  obligations
under this  Agreement  or (ii) any actual or  prospective  counterparty  (or its
advisors) to any swap or derivative transaction relating to the Borrower and its
obligations (g) with the prior written consent of the Borrower or


                                       61

<PAGE>


(h) to the extent such Information (i) becomes publicly  available other than as
a result of a breach of this Section or (ii)  becomes  available to the Agent or
any Lender on a nonconfidential  basis from a source other than the Borrower not
in violation of a confidentiality agreement to which such source is subject. For
the purposes of this Section,  "Information" means all information received from
the  Borrower  relating  to the  Borrower or its  business,  other than any such
information  that is available  to the Agent or any Lender on a  nonconfidential
basis prior to disclosure by the Borrower.  Any Person  required to maintain the
confidentiality  of  Information as provided in this Section shall be considered
to have complied  with its  obligation to do so if such Person has exercised the
same degree of care as financial  institutions,  using  commercially  reasonable
practices,  customarily  employ to maintain the  confidentiality of confidential
information.

     Notwithstanding  anything  herein or in any other  document,  agreement  or
understanding relating to the transactions contemplated by this Agreement to the
contrary,  "Information"  shall not include,  and the  Borrower,  Agent and each
Lender  and each  employee,  representative  or other  agent of such  party  may
disclose to any and all  persons  beginning  immediately  upon  commencement  of
discussions  regarding the  transactions  contemplated  by this  Agreement,  and
without limitation of any kind, any information with respect to the U.S. federal
income 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  Borrower,  Agent,  such Lender,  or any
employee  representative or any other agent of such party,  relating to such tax
treatment and tax structure.


     Section 9.14 Interest Rate Limitation.  Notwithstanding  anything herein to
the contrary,  if at any time the interest rate applicable to any Loan, together
with all fees,  charges and other  amounts which are treated as interest on such
Loan under applicable law (collectively the "Charges"), shall exceed the maximum
lawful rate (the "Maximum  Rate") which may be contracted for,  charged,  taken,
received  or  reserved  by the  Lender  holding  such  Loan in  accordance  with
applicable law, the rate of interest  payable in respect of such Loan hereunder,
together with all Charges  payable in respect  thereof,  shall be limited to the
Maximum Rate and, to the extent lawful, the interest and Charges that would have
been  payable in  respect  of such Loan but were not  payable as a result of the
operation  of this  Section  shall be  cumulated  and the  interest  and Charges
payable to such Lender in respect of other Loans or periods  shall be  increased
(but not above the Maximum Rate therefor) until such cumulated amount,  together
with  interest  thereon  at the  Federal  Funds  Effective  Rate to the  date of
repayment, shall have been received by such Lender.


                                       62

<PAGE>

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

                                       NUI UTILITIES, INC.



                                       By:  /s/ Victor A. Fortkiewicz
                                          -----------------------------------
                                          Name:  Victor A. Fortkiewicz
                                          Title: President


                                      S-1

<PAGE>


LENDERS:
                                       DRAWBRIDGE SPECIAL OPPORTUNITIES FUND LP


                                       By:  /s/ Marc K. Furstein
                                          -----------------------------------
                                          Name:  Marc K. Furstein
                                          Title: Chief Operating Officer


                                      S-2
<PAGE>



                                       MADELEINE L.L.C.


                                       By:  /s/ Mark Neporent
                                          -----------------------------------
                                          Name:  Mark Neporent
                                          Title: Vice President


                                      S-3
<PAGE>
                                                                   Schedule 2.01


                                   Commitments



Lender                                                   Commitment


Drawbridge Special Opportunities Fund LP                 $30,000,000
Madeleine L.L.C.                                         $20,000,000

                                              Total      $50,000,000




<PAGE>
                                                                   Schedule 5.01


                      Existing Indebtedness of the Borrower


        1. Existing Long-Term Debt Gas facilities revenue bonds:
                 6.35% due October 1, 2022                   $ 46,500,000
                 6.40% due October 1, 2024                   $ 20,000,000
                 Variable rate due June 1, 2026              $ 39,000,000
                 5.70% due June 1, 2032                      $ 54,600,000
                 5.25% due November 1, 2033                  $ 40,000,000

        Medium-term notes
                 8.35% due February 1, 2005                  $ 50,000,000


        Total Existing Long-Term Debt:                       $250,100,000

        2.       Other Existing Debt



          o    Existing purchase money Indebtedness and capital leases under gas
               meter leases and certain other capital  leases and purchase money
               Indebtedness  in an  aggregate  principal  amount  not to  exceed
               $11,073,062, but no refinancing thereof.


          o    Indebtedness under the Existing Revolver.

<PAGE>
                                                                   Schedule 5.02


                         Existing Liens of the Borrower

UCC Liens

1.   Debtor: NUI Corporation n/k/a NUI Utilities, Inc.
     Secured Party:  Fleet National Bank, successor-by-merger to Summit Bank
     Jurisdiction:  Secretary of State, New Jersey
     File No:  2004751
     File Date:  October 23, 2000
     Lien: Equipment pursuant to lease.

2.   Debtor:  NUI Utilities, Inc.
     Secured Party:  Fleet Capital Corporation
     Jurisdiction:  Secretary of State, New Jersey
     File No:  2115170-5
     File Date:  July 26, 2002
     Lien: Gas equipment pursuant to a lease, together with proceeds in the
     form of goods, accounts, chattel paper, documents, instruments, general
     intangible, investment property, deposit accounts, letter of credit
     rights and supporting obligations.

3.   Debtor:  NUI Corporation
     Secured Party: First Union National Bank, as successor trustee under a
     Trust Indenture dated as of July 15, 1994, between Brevard County, Florida
     and First Fidelity Bank, National Association, as trustee
     Jurisdiction:  Secretary of State, New Jersey
     File No:  1980884
     File Date:  June 15, 2000
     Lien:  Right, title and interest including proceeds and products.

4.   Debtor:  NUI Corporation
     Secured Party:  Canon Financial Services, Inc.
     Jurisdiction:  Secretary of State, New Jersey
     File No:  1950655
     File Date:  November 12, 1999
     Lien:  Business machinery/equipment and proceeds; assets and proceeds.

<PAGE>
                                                                       EXHIBIT A



                                  FORM OF NOTE

$___________                                              Bedminster, New Jersey
                                                                          [Date]

     This Note is executed and delivered under and pursuant to the terms of that
certain  Revolving  Credit  Agreement,  dated as of October 10, 2003 (the Credit
Agreement,  together with the exhibits and schedules thereto and all amendments,
modifications,  extensions,  renewals or restatements  thereof and thereto,  the
"Agreement") by and among NUI UTILITIES,  INC.  ("Borrower"),  the Lenders party
thereto from time to time,  and  DRAWBRIDGE  SPECIAL  OPPORTUNITIES  FUND LP, as
Agent ("Agent").

     FOR  VALUE  RECEIVED,  the  Borrower  promises  to  pay  to  the  order  of
_________________________   (the   "Lender"),   its   successors  and  permitted
assignees,  at the office of the Agent at 1251 Avenue of the Americas, New York,
NY on the  Termination  Date the lesser of (i) the  principal  sum of __________
MILLION AND ____/100  DOLLARS or (ii) the aggregate  unpaid  principal amount of
all  outstanding  Loans made by the Lender to the  Borrower  pursuant to Section
2.01 of the Agreement  together with  interest on the unpaid  principal  balance
thereof  from  time  to  time  outstanding,  all as  reflected  in the  accounts
maintained by the Agent and the Lenders  pursuant to Section 2.05(b) and Section
2.05(c) of the Agreement.

     Interest on the unpaid principal balance hereof shall be due and payable at
the rates and at the times specified in the Agreement  during the term hereof to
and including the Maturity Date or, if earlier, the date Agreement is terminated
in accordance with the terms thereof, and shall be calculated and adjusted, when
necessary and if  appropriate,  in accordance  with the terms of the  Agreement.
Interest  shall accrue at the interest rate or rates per annum  specified in the
Agreement until paid in full,  regardless of whether judgment is entered on this
Note.  Interest  payments  shall be made at the  office  of the  Agent set forth
above.

     This Note is one of the Notes  referred to in the Agreement and evidences a
portion of the Loans.  Reference is made to the Agreement for provisions for the
extension of the credit  hereunder,  the payment hereof,  the termination of the
Commitment and the reduction and cancellation  thereof, and for the acceleration
of the maturity hereof. All of the terms, conditions, covenants, representations
and warranties of the Agreement are incorporated  herein by reference as if same
were fully set forth  herein.  All  capitalized  terms  which are used herein as
defined  terms but not  defined  herein and which are  defined in the  Agreement
shall have the meanings given them in the Agreement.

     This Note is a registered Note and, as provided in and subject to the terms
of the  Credit  Agreement,  this  Note  and the  Loan  evidenced  hereby  may be
transferred in whole or in

<PAGE>

part only  upon  surrender  of this Note to the  Borrower  for  registration  of
transfer  or  exchange  (and in the  case of a  surrender  for  registration  of
transfer, duly endorsed or accompanied by a written instrument of transfer, duly
executed by the registered  holder of this Note or its attorney duly  authorized
in writing), at which time a new Note for a like principal amount will be issued
to, and  registered  in the name of, the  permitted  transferee  as  provided in
Section 9.05 of the Credit Agreement. Reference in this Note to a "holder" shall
mean the person or entity in whose name this Note is at the time  registered  in
the  register  maintained  by the  Borrower as  provided in Section  9.05 of the
Credit Agreement and, prior to due presentment for registration of transfer, the
Borrower  may  treat  such  person  or  entity as the owner of this Note for the
purpose of receiving  payment and all other purposes,  and the Borrower will not
be affected by any notice to the contrary.

     Demand, presentation, protest, notice of dishonor and notice of default are
hereby waived.

     All  agreements  between the Borrower  and the Lender are hereby  expressly
limited  so that in no  contingency  or event  whatsoever,  whether by reason of
acceleration of maturity of the indebtedness or otherwise, shall the amount paid
or agreed to be paid for the use or  forbearance of the  indebtedness  evidenced
hereby exceed the maximum  amount which the Lender is permitted to receive under
applicable  law.  If,  from any  circumstances  whatsoever,  fulfillment  of any
provision hereof or of the Agreement,  at the time performance of such provision
shall be due,  shall involve  exceeding  such amount,  then the obligation to be
fulfilled shall  automatically  be reduced to the limit of such validity and if,
from any  circumstances  the Lender  should  ever  receive as interest an amount
which would  exceed such  maximum  amount,  such amount which would be excessive
interest  shall be applied to the reduction of the principal  balance  evidenced
hereby and not to the payment of interest.  As used herein, the term "applicable
law" shall mean the law in effect as of the date hereof, provided, however, that
in the event there is a change in the law which results in a higher  permissible
rate of  interest,  then this Note shall be  governed  by such new law as of its
effective  date.  This  provision  shall  control  every other  provision of all
agreements between the Borrower and the Lender.

     THIS NOTE SHALL BE  GOVERNED  BY THE LAWS OF THE STATE OF NEW YORK  WITHOUT
REFERENCE TO THE PRINCIPLES THEREOF REGARDING CONFLICTS OF LAW.

     THE BORROWER HEREBY  KNOWINGLY,  VOLUNTARILY AND  INTENTIONALLY  WAIVES THE
RIGHT TO A TRIAL BY JURY IN RESPECT  OF ANY CLAIM  BASED ON THIS NOTE OR ARISING
OUT OF, UNDER OR IN CONNECTION  WITH THIS NOTE OR ANY RELATED LOAN  DOCUMENTS OR
OUT OF ANY COURSE OF CONDUCT,  COURSE OF DEALING,  STATEMENTS  (WHETHER  ORAL OR
WRITTEN) OR ACTIONS OF THE LENDER RELATING TO THE ADMINISTRATION OF THE LOANS OR
ENFORCEMENT OF THE RELATED LOAN DOCUMENTS, AND AGREES THAT THE BORROWER WILL NOT
SEEK TO CONSOLIDATE  ANY SUCH ACTION WITH ANY OTHER ACTION IN WHICH A JURY TRIAL
CANNOT BE OR HAS NOT BEEN  WAIVED.  EXCEPT AS  PROHIBITED

<PAGE>

BY LAW, THE BORROWER  HEREBY WAIVES ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN
ANY LITIGATION ANY SPECIAL, EXEMPLARY,  PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY
DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL  DAMAGES.  THE BORROWER  CERTIFIES
THAT NO  REPRESENTATIVE,  AGENT  OR  ATTORNEY  OF THE  LENDER  HAS  REPRESENTED,
EXPRESSLY OR OTHERWISE,  THAT THE LENDER WOULD NOT, IN THE EVENT OF  LITIGATION,
SEEK TO  ENFORCE  THE  FOREGOING  WAIVER.  THIS  WAIVER  CONSTITUTES  A MATERIAL
INDUCEMENT  FOR THE  LENDER  TO  ACCEPT  THIS  NOTE  AND TO MAKE  THE  LOANS  AS
CONTEMPLATED IN THE AGREEMENT.


<PAGE>

     WITNESS  the due  execution  hereof  with the  intent to be  legally  bound
hereby.


                        NUI UTILITIES, INC., a New Jersey
                        corporation

                        By:
                           -----------------------------------------------------
                        Name:
                             ---------------------------------------------------
                        Title:
                              --------------------------------------------------



                        By:
                           -----------------------------------------------------
                        Name:
                             ---------------------------------------------------
                        Title:
                              --------------------------------------------------



                        By:
                           -----------------------------------------------------
                        Name:
                             ---------------------------------------------------
                        Title:
                              --------------------------------------------------


<PAGE>
                                                                       EXHIBIT B



                                     FORM OF
                       ASSIGNMENT AND ASSUMPTION AGREEMENT


     THIS ASSIGNMENT AND ASSUMPTION  AGREEMENT dated as of  _________________  ,
200_   by   and   among   _____________________   (the   "Transferor   Lender"),
__________________________  (the "Purchasing  Lender"),  and DRAWBRIDGE  SPECIAL
OPPORTUNITIES  FUND LP, as the Agent for the Lenders under the Revolving  Credit
Agreement  described  below (in such capacity the "Agent") [and consented to and
accepted by NUI UTILITIES, INC. (the "Borrower")].

                                   WITNESSETH:
                                   ----------

     WHEREAS,  this  Assignment and  Assumption  Agreement is being executed and
delivered in  accordance  with Section  9.05 of that  certain  Revolving  Credit
Agreement dated as of October 10, 2003 (the Revolving Credit Agreement, together
with the  exhibits  and  schedules  thereto and all  amendments,  modifications,
extensions,  renewals or restatements  thereof and thereto,  the "Agreement") by
and among NUI UTILITIES, INC. ("Borrower"),  the Lenders party thereto from time
to time, and DRAWBRIDGE SPECIAL OPPORTUNITIES FUND LP, as Agent ("Agent");

     WHEREAS,  the Purchasing Lender (if it is not already a Lender party to the
Agreement)  wishes to become a Lender  party to the  Agreement  and  assume  the
rights, obligations and Commitments of a Lender thereunder, and

     WHEREAS,  the Transferor Lender wishes to sell and assign to the Purchasing
Lender  [all]  [a  portion]  of the  Transferor  Lender's  rights,  obligations,
Commitments and Loans under the Agreement.

     NOW,  THEREFORE,  in consideration of mutual promises  contained herein and
other valuable consideration and with the intent to be legally bound hereby, the
parties hereto agree as follows:

     1. All capitalized terms used herein as defined terms which are not defined
herein but which are  defined  in the  Agreement  shall  have the same  meanings
herein as given to them in the Agreement  unless the context  clearly  indicates
otherwise.

     2. Upon receipt by the Agent of four  counterparts  of this  Assignment and
Assumption  Agreement  which have been executed by the  Transferor  Lender,  the
Purchasing  Lender and the Agent [and  consented to by the Borrower] and to each
of which is  attached a fully  completed  Schedule  I, the Agent will  complete,
execute and deliver to the  Borrower,  the  Transferor  Lender,  the  Purchasing
Lender and the remaining Lenders,  a Transfer Effective Notice  substantially in
the  form of  Schedule  II to this  Assignment  and  Assumption  Agreement

<PAGE>

(the "Transfer  Effective  Notice").  Such Transfer  Effective  Notice shall set
forth,  inter alia, the date on which the transfer  effected by this  Assignment
and Assumption Agreement shall become effective (the "Transfer Effective Date"),
which date shall be the third  Business Day  following the date of such Transfer
Effective Notice.

     3.  Effective  upon the opening of  business  of the Agent on the  Transfer
Effective  Date,  the  Transferor  Lender hereby sells,  assigns,  delegates and
transfers  to  the  Purchasing   Lender,   without   recourse  and  without  any
representations or warranties except as set forth in paragraph 9 hereof, and the
Purchasing  Lender  hereby buys,  assumes and accepts,  [all] [a portion] of the
Transferor  Lender's rights,  as set forth in item 2 of Schedule I hereto in (i)
the Transferor Lender's  Commitment,  (ii) the principal of, and all accrued and
unpaid interest on, all outstanding  Loans of the Transferor  Lender,  (iii) all
accrued but unpaid fees owing under  Section 2.07 of the  Agreement  ("Fees") to
the Transferor  Lender under the Agreement and the other Loan Documents and (iv)
all  of  the  Transferor   Lender's  other  rights  (including  voting  rights),
interests, duties, liabilities and obligations under the Agreement and the other
Loan Documents.

     4. On the Transfer  Effective Date, the Purchasing  Lender shall pay to the
Agent at or before 12:00 Noon (Eastern time), in immediately available funds, an
amount  equal  to the  principal  of all  outstanding  Loans  being  sold by the
Transferor Lender to the Purchasing  Lender.  The Agent shall pay such amount to
the Transferor Lender, in immediately available funds, on the Transfer Effective
Date.  The  principal  amount  paid by the  Purchasing  Lender  to the  Agent is
referred  to  hereinafter  as the  "Purchase  Price." On and after the  Transfer
Effective Date, the Agent shall calculate  interest on the outstanding Loans and
all Fees under the Agreement and the other Loan Documents  which are owed to the
Transferor Lender and the Purchasing  Lender,  based on the Transferor  Lender's
and the Purchasing Lender's Applicable Percentages set forth in items 3 and 4 of
Schedule I hereto.

     5. From and after the Transfer  Effective  Date, (i) the Purchasing  Lender
(A) shall be a Lender party to the Agreement,  (B) subject to the terms thereof,
and to the extent  provided in this Assignment and Assumption  Agreement,  shall
have  the  rights,  interests,   liabilities,  duties  and  obligations  of  the
Transferor  Lender  thereunder and under the Loan Documents and (C) shall have a
Commitment  and  Applicable  Percentage  as set forth  opposite  the  Purchasing
Lender's name in item 3 of Schedule I hereto and (ii) the Transferor  Lender (A)
shall,  to the extent  provided in this  Assignment  and  Assumption  Agreement,
relinquish  such rights and  interests  and be released  from such  liabilities,
duties and obligations under the Agreement and the other Loan Documents as shall
have been  assigned to the  Purchasing  Lender  hereunder and (B) shall have the
reduced  Commitment  and  Applicable   Percentage  as  set  forth  opposite  the
Transferor Lender's name in item 4 of Schedule I hereto.

     6. The Transferor  Lender has made  arrangements with the Purchasing Lender
with  respect to (i) the amount,  if any, to be paid,  and the date or dates for
payment,  by the  Transferor  Lender  to  such  Purchasing  Lender  of any  Fees
heretofore  received by the Transferor  Lender  pursuant to the Agreement or any
other Loan Document prior to the Transfer Effective Date and (ii) the amount, if
any, to be paid, and the date or dates for payment, by such Purchasing Lender to
the Transferor  Lender of Fees or interest  received by

<PAGE>

such Purchasing Lender pursuant to the Agreement or any other Loan Document from
and after the  Transfer  Effective  Date.  Any such amount is in addition to the
Purchase Price.

     7.   (i)  All principal  payments that would  otherwise be payable from and
after the Transfer Effective Date to or for the account of the Transferor Lender
pursuant to the Agreement and the Notes payable to the  Transferor  Lender shall
instead  be  payable  to or for the  account  of the  Transferor  Lender and the
Purchasing Lender in accordance with their respective  interests as reflected in
this Assignment and Assumption Agreement and on Schedule I hereto.

          (ii)  All interest, Fees and other amounts that would otherwise accrue
for the account of the Transferor  Lender from and after the Transfer  Effective
Date pursuant to the Agreement,  the Notes payable to the  Transferor  Lender or
the other Loan Documents shall instead accrue for the account of, and be payable
to, the  Transferor  Lender and the Purchasing  Lender in accordance  with their
respective  interests as reflected in this  Assignment and Assumption  Agreement
and on Schedule I hereto.

     8. To the  extent  requested  by the  Transferor  Lender or the  Purchasing
Lender,  as soon as possible  after the Agent has received  from the  Transferor
Lender  the  existing  Notes  payable  to the  Transferor  Lender  and after the
Borrower  has executed  and  delivered  to the Agent new Notes,  the Agent shall
deliver  to  the  Transferor  Lender  new  Notes  payable  to the  order  of the
Transferor  Lender in a principal amount equal to the revised  Commitment of the
Transferor Lender or the Loans retained by it as set forth in item 4 of Schedule
I hereto and shall deliver to the  Purchasing  Lender Notes payable to the order
of the  Purchasing  Lender in a principal  amount equal to the Commitment of the
Purchasing  Lender or the Loans assumed by it as set forth in item 3 of Schedule
I hereto.

     9. Each of the Transferor  Lender and the Purchasing  Lender represents and
warrants  to the other that (i) it has full power and legal right to execute and
deliver this  Assignment and Assumption  Agreement and to perform the provisions
of this Assignment and Assumption  Agreement,  (ii) the execution,  delivery and
performance of this Assignment and Assumption  Agreement have been authorized by
all  necessary  corporate  action  and  (iii)  this  Assignment  and  Assumption
Agreement  constitutes  its legal,  valid and  binding  obligation,  enforceable
against it in accordance with its terms.

     10. By executing and delivering this  Assignment and Assumption  Agreement,
the Transferor  Lender and the Purchasing  Lender confirm to and agree with each
other,  the Agent and the other  Lenders as follows:  (i) except as set forth in
paragraph 9 immediately  above, the Transferor Lender makes no representation or
warranty  and  assumes  no  responsibility   with  respect  to  any  statements,
warranties or representations made in or in connection with the Agreement or any
other  Loan  Document  or the  execution,  legality,  validity,  enforceability,
genuineness,  sufficiency or value of the Agreement,  any other Loan Document or
any other instrument or document furnished pursuant thereto; (ii) the Transferor
Lender makes no representation  or warranty and assumes no  responsibility  with
respect to the financial  condition of the Borrower or any of the Lenders or the
performance  or observance by the Borrower or any of the Lenders of any of their
respective  obligations  under the  Agreement,

<PAGE>

the other Loan Documents or any other instrument or document  furnished pursuant
thereto; (iii) the Purchasing Lender confirms that it has received a copy of the
Agreement,  together  with copies of the financial  statements  delivered to the
Agent  pursuant  to  the  Agreement,  if  any,  and  such  other  documents  and
information  as it has deemed  appropriate  to make its own credit  analysis and
decision  to enter  into this  Assignment  and  Assumption  Agreement;  (iv) the
Purchasing  Lender has not relied  upon,  and will  continue  independently  and
without reliance upon, the Agent, the Transferor  Lender or any other Lender and
based on such  documents and  information  as it shall deem  appropriate  at the
time,  make its own credit  decision  in taking or not taking  action  under the
Agreement and the other Loan Documents;  (v) the Purchasing  Lender appoints and
authorizes  the Agent to take such  action on its  behalf and to  exercise  such
powers under the Agreement and the other Loan  Documents as are delegated to the
Agent by the terms of the Agreement and the other Loan Documents,  together with
such powers as are reasonably incidental thereto, all in accordance with Article
VIII of the Agreement and certain other Loan Documents;  and (vi) the Purchasing
Lender  agrees that it will  perform in  accordance  with their terms all of the
obligations which by the terms of the Agreement and the other Loan Documents are
required to be performed by it as a Lender.

     11. Each of the parties to this Assignment and Assumption  Agreement agrees
that,  at any time and from time to time upon the  written  request of any other
party,  it will execute and deliver such further  documents  and do such further
acts and things as such other  party may  reasonably  request in order to effect
the purposes of this Assignment and Assumption Agreement.

     12. As of the Transfer  Effective Date, the Agreement shall be deemed to be
amended  (i) to make the  Purchasing  Lender a Lender  for all  purposes  of the
Agreement  and the other Loan  Documents and (ii) to adjust the  Commitment  and
Applicable  Percentage of the Transferor Lender, and to provide for a Commitment
and  Applicable  Percentage  for the  Purchasing  Lender,  all as set  forth  on
Schedule I hereto.

     13.  Schedule I hereto sets forth in items 3 and 4 thereof  the  Commitment
and Applicable  Percentage of the Purchasing  Lender and the revised  Commitment
and  Applicable  Percentage of the Transferor  Lender,  and sets forth in item 2
certain administrative information with respect to the Purchasing Lender.

     14.  THIS  ASSIGNMENT  AND  ASSUMPTION  AGREEMENT  SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE
TO THE PROVISIONS THEREOF REGARDING CONFLICTS OF LAW.

     15. This  Assignment  and  Assumption  Agreement may be executed in as many
counterparts  as  shall be  convenient,  each of  which,  when  executed  by the
Transferor  Lender,  the Purchasing  Lender or the Agent shall be regarded as an
original.

<PAGE>

     IN WITNESS  WHEREOF,  the parties  hereto have caused this  Assignment  and
Assumption Agreement to be executed as of the date first above written.

                                         TRANSFEROR LENDER:

                                         By:
                                            ------------------------------------
                                         Name:
                                              ----------------------------------
                                         Title:
                                               ---------------------------------


                                          PURCHASING LENDER:

                                         By:
                                            -----------------------------------
                                         Name:
                                              ---------------------------------
                                         Title:
                                               --------------------------------


                                         DRAWBRIDGE SPECIAL OPPORTUNITIES
                                          FUND LP, as the Agent for the Lenders

                                         By:
                                            ------------------------------------
                                         Name:
                                              ----------------------------------
                                         Title:
                                               ---------------------------------


[Consented to this ______day
of __________, 200_

NUI UTILITIES, INC.

By:
   ---------------------------------
Name:
     -------------------------------
Title:
      ------------------------------


By:
   ---------------------------------
Name:
     -------------------------------
Title:
      ------------------------------


Note that Borrower  consent is not required upon the
occurrence and during the continuance of an Event of Default]


<PAGE>


                                 SCHEDULE I TO
                       ASSIGNMENT AND ASSUMPTION AGREEMENT

1. [Name of Transferor Lender]                   Existing Commitment: $_________

                                                 Existing Applicable
                                                 Percentage           _________%

2.[Name of Purchasing Lender]                    Amount of
                                                 Commitment Being $_________
                                                 Purchased

Address of Purchasing Lender for notice
purposes:

If by United States Mail:                        If by other means:

--------------------------                       -------------------------------
--------------------------                       -------------------------------

Attention:______________                         Attention:__________________
                                                 Telephone:__________________
                                                 Telecopier:__________________
                                                 Telex:__________________


3. [Name of Purchasing Lender]                   Commitment: $___________

                                                 Applicable Percentage ________%

4. [Name of Transferor Lender]                   Revised Commitment: $__________

                                                 Revised Applicable
                                                 Percentage _____________%

<PAGE>


                                 SCHEDULE II TO
                       ASSIGNMENT AND ASSUMPTION AGREEMENT


                            Transfer Effective Notice



TO:   The Borrower, the Transferor Lender,
      the Purchasing Lender and each other Lender

     The  undersigned,  the Agent pursuant to the Credit  Agreement  dated as of
October 10, 2003 (the Credit Agreement, together with the exhibits and schedules
thereto and all amendments, modifications,  extensions, renewals or restatements
thereof  and  thereto,  the  "Agreement")  by  and  among  NUI  UTILITIES,  INC.
("Borrower"),  the  Lenders  party  thereto  from time to time,  and  DRAWBRIDGE
SPECIAL OPPORTUNITIES FUND LP, as Agent ("Agent"), acknowledges receipt of fully
executed counterparts of an Assignment and Assumption Agreement, as described in
Schedule  I  attached  hereto.   Pursuant  to  such  Assignment  and  Assumption
Agreement, you are advised that the Transfer Effective Date will be [insert date
which is three  Business  Days  following  the  date of the  Transfer  Effective
Notice].

     Capitalized  terms used in this Transfer  Effective Notice as defined terms
shall  have the  meanings  given  them in the  above-referenced  Assignment  and
Assumption Agreement.

     Dated as of ___________________, 200_.


                                       DRAWBRIDGE SPECIAL OPPORTUNITIES FUND LP,
                                        as Agent for the Lenders


                                       By:
                                          --------------------------------------
                                       Name:
                                            ------------------------------------
                                       Title:
                                             -----------------------------------

<PAGE>
                                                                       EXHIBIT C


                    Form of NUI Refinancing Letter Agreement

              [Drawbridge Special Opportunities Fund LP Letterhead]



October 10, 2003

Mr. A. Mark Abramovic
Acting President
NUI Corporation
550 Route 202-206
Bedminster, NJ 07921-0760


Gentlemen:

Reference is made to the Revolving Credit Agreement, dated as of the date hereof
(as amended,  amended and  restated,  supplemented  or otherwise  modified,  the
"Credit Agreement"),  among NUI Utilities, Inc. ("Borrower"),  the Lenders party
thereto from time to time, and  Drawbridge  Special  Opportunities  Fund, LP, as
Agent  ("Agent").  Capitalized  terms used but not defined herein shall have the
meanings set forth in the Credit Agreement.

The parties  hereto each  acknowledge  (i) that NUI  Corporation  ("NUI")  shall
benefit from the Borrower and the Agent  entering into the Credit  Agreement and
(ii) that execution and delivery of this letter is a condition  precedent to the
Effective Date of the Credit Agreement, as set forth in Section 6.01(a) thereof.
The parties hereto hereby expressly agree to the following provisions.

          1.    Right of First Refusal. NUI covenants that if it enters into any
letter of intent,  commitment letter or other loan document in connection with a
refinancing of any of its Material  Indebtedness ("NUI Refinancing") on or prior
to  August  11,  2004 it shall  fulfill  the  obligations  set  forth in  either
Paragraph (a) or (b) below.

               (a) NUI  shall  provide  to the  Agent  all  proposals,  offering
memoranda,  term sheets, letters of intent, commitment letters, drafts of credit
documents or other documentation evidencing a bona fide offer made in good faith
by a financial institution for the NUI Refinancing (an "Offer"). NUI shall offer
to the Agent the right to  provide  at least  thirty-five  percent  (35%) of the
aggregate  principal  amount  of the  NUI  Refinancing  on the  same  terms  and
conditions  provided  in the  Offer,  including  the right to receive a pro rata
share of any  fees or  other  compensation  payable  to the  lead  agent or lead
arranger providing such NUI Refinancing (excluding any fees (i) payable to

<PAGE>

Fleet Securities, Inc. pursuant to that certain letter agreement with NUI, dated
as of August 8, 2003 and (ii) fees  payable to  Berenson & Company  pursuant  to
that certain letter agreement dated as of March 15, 2003). Upon receipt from NUI
of an  executed  commitment  letter in  connection  with the  Offer and  written
evidence  that the  financial  institution  providing  the  Offer  has  received
approval from its  investment or credit  committee (a "Qualifying  Offer"),  the
Agent may, in its sole discretion,  exercise its rights under this Paragraph (a)
by delivering to NUI a written notice stating that it is exercising  such rights
(an   "Exercise   Notice")   within  10  calendar  days  after  receipt  of  the
documentation  evidencing the Qualifying Offer (the "Exercise  Period").  If the
Agent notifies NUI that it does not wish to exercise such rights with respect to
such  Qualifying  Offer or fails to  deliver  the  Exercise  Notice  within  the
Exercise Period,  NUI may proceed to consummate the NUI  Refinancing;  provided,
that such refinancing must be completed and fully funded within 60 days from the
expiration of the Exercise  Period and  consummated  on  substantially  the same
terms and conditions as set forth in the Qualifying Offer. In the event that the
NUI  Refinancing  does not  close  within  60 days  from the  expiration  of the
Exercise  Period,  the  Qualifying  Offer shall be deemed,  for purposes of this
letter agreement, to have terminated and the Agent shall have the right to elect
to participate in any subsequent Offers in accordance with this Paragraph (a).

               (b) If NUI elects not to comply with the  provisions of Paragraph
(a)  above,  it shall  pay to the  Agent an  amount  equal to 1.00% of the Total
Commitment  (the  "Termination  Fee"),  which  Termination  Fee shall be due and
payable upon NUI's  acceptance,  by any means, of an Offer.  Upon payment of the
Termination  Fee as described in this  Paragraph  (b), NUI shall have no further
obligation to the Agent under this Paragraph 1 of this Letter Agreement.

          2.   Cash  Management.  NUI covenants that at all times  until the New
Collection System is in place, the Agency Services  Agreement is and will remain
in full force and effect and the Borrower's receivables and other revenues shall
be collected  by NUI, but title  thereto  shall  remain with the  Borrower,  and
expenses and other payables of or on behalf of the Borrower shall be paid by NUI
on behalf of the Borrower,  all in accordance  with the provisions of the Agency
Services Agreement and Governmental Rules.

          3.   Representations and  Warranties.  NUI  represents and warrants to
the Agent that:

               (a) NUI has all  requisite  power and  authority  to (i) execute,
deliver and perform  this letter  agreement  and (ii) take each action as may be
necessary to consummate the transactions contemplated hereby.

               (b) NUI has duly  authorized,  executed and delivered this letter
agreement and this letter agreement is a legal,  valid and binding obligation of
NUI enforceable  against it in accordance  with its terms,  except to the extent
that  enforceability  may  be  limited  by  applicable  bankruptcy,  insolvency,
moratorium,  reorganization  or other similar laws affecting the  enforcement of
creditors' rights or by the effect of general

<PAGE>

equitable principles (regardless of whether such enforceability is considered in
a proceeding in equity or at law).

               (c) Neither NUI's execution and delivery of this letter agreement
nor its consummation of the transactions  contemplated hereby nor its compliance
with the terms hereof (i) does or will contravene its organizational  documents,
any  Governmental  Rule applicable to NUI or its  properties,  (ii) does or will
contravene or result in any material  breach of or constitute any default under,
or result in or  require  the  creation  of any Lien upon any of its  properties
under, any agreement or instrument to which NUI is a party or by which it or any
of its  properties  may be bound or affected  or (iii) does or will  require the
consent  or  approval  of any  Person,  and  with  respect  to any  Governmental
Authority,  does or will  require any  registration  with,  or notice to, or any
other action of, with or by any applicable Governmental Authority.

          4.   Miscellaneous.

               (a) This letter  agreement shall be governed by, and construed in
accordance  with,  the law of the  State of New York  without  reference  to the
principles thereof regarding conflicts of law.

               (b) This letter  agreement may be executed by the parties  hereto
in several  counterparts  hereof and by the different parties hereto on separate
counterparts hereof, all of which counterparts shall together constitute one and
the same  agreement.  Delivery  of an  executed  signature  page of this  letter
agreement by facsimile transmission shall be effective as an in-hand delivery of
an original executed counterpart hereof.

                      SIGNATURES FOLLOW ON SUBSEQUENT PAGES


<PAGE>


Very truly yours,



DRAWBRIDGE SPECIAL OPPORTUNITIES FUND LP



Sign Name:   _______________________

Print Name:  _______________________

Print Title: _______________________


<PAGE>


Accepted on this ___ day of October, 2003:


NUI CORPORATION



Sign Name:   _______________________

Print Name:  _______________________

Print Title: _______________________




<PAGE>
                                                                       EXHIBIT D


                              SOLVENCY CERTIFICATE


     THIS CERTIFICATE is furnished  pursuant to Section 6.01(f) of the Revolving
Credit  Agreement dated as of October 10, 2003 (the Credit  Agreement,  together
with the  exhibits  and  schedules  thereto and all  amendments,  modifications,
extensions,  renewals or restatements  thereof and thereto,  the "Agreement") by
and among NUI UTILITIES, INC. ("Borrower"),  the Lenders party thereto from time
to time, and DRAWBRIDGE SPECIAL OPPORTUNITIES FUND LP, as Agent ("Agent").

     I, the undersigned, on behalf of, and in my capacity as a senior officer of
the Borrower and not in my individual capacity, DO HEREBY CERTIFY as of the date
hereof that:

     (a) I am, and at all pertinent  times mentioned  herein,  have been, a duly
qualified and acting senior officer of the Borrower, and have responsibility for
the  overall  management  of the  financial  affairs  of the  Borrower  and  the
preparation of the financial statements of the Borrower.

     (b) I have  carefully  reviewed the contents of this Solvency  Certificate,
and I have  conferred  with counsel for the purpose of discussing the meaning of
this Solvency Certificate.

     (c) I have received all financial  statements  heretofore  furnished to the
Agent and the Lenders and hereby  confirm  that, to the best of my knowledge and
based upon financial projections and underlying assumptions that I believe to be
fair and  reasonable  and  accurately  computed,  I believe that the Borrower is
solvent  (as  interpreted  below) at the date  hereof and will be solvent (as so
interpreted)  after giving effect to the execution and delivery of the Agreement
and other Loan Documents, and the transactions contemplated thereby, the initial
Loans under the Agreement (if any) and the other transactions contemplated under
the Agreement.

     (d) To the best of my knowledge and based upon  financial  projections  and
underlying  assumptions  that I believe to be fair and reasonable and accurately
computed,  I believe  that the  Borrower  has  adequate  capital to conduct  the
business  in  which it is  engaged  and all  businesses  in which it is about to
engage.

     For this purpose I use the word  "solvent"  with respect to the Borrower as
meaning  that (i) the  aggregate  amount by which the value of all of the assets
(both  tangible  and  intangible)  of the Borrower at its fair salable and going
concern value exceeds the amount  required to pay the probable  liability on its
debts  (whether  matured or  unmatured,  liquidated  or  unliquidated,  fixed or
contingent), (ii) the Borrower has access to adequate capital for the conduct of
its business for the foreseeable  future and the discharge of its

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debts  incurred in  connection  therewith  as such debts  mature,  and (iii) the
Borrower does and will have  sufficient  cash flow to enable it to pay its debts
as they mature.

     IN  WITNESS  WHEREOF,  I  have  hereunto  set  my  hand  to  this  Solvency
Certificate as of October __, 2003.


                                            By: ________________________________
                                                Name:
                                                Title:


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                                                                       EXHIBIT E



                         FORM OF COMPLIANCE CERTIFICATE


For the Fiscal Year Ended ___________________, 200_
                                    or
For the Fiscal Quarter Ended _________________, 200_

     Reference is made to that certain  Revolving  Credit  Agreement dated as of
October 10, 2003 (the Credit Agreement, together with the exhibits and schedules
thereto and all amendments, modifications,  extensions, renewals or restatements
thereof  and  thereto,  the  "Agreement")  by  and  among  NUI  UTILITIES,  INC.
("Borrower"),  the  Lenders  party  thereto  from time to time,  and  DRAWBRIDGE
SPECIAL OPPORTUNITIES FUND LP, as Agent ("Agent"). All capitalized terms used as
defined terms in this Compliance  Certificate which are defined in the Agreement
shall have the same meanings  herein as in the  Agreement.  This  Certificate is
being  delivered  pursuant  to the  requirements  of  Subsection  4.02(e) of the
Agreement.

     The undersigned,  an Authorized  Officer of the Borrower,  hereby certifies
that:

CHECK ONE:

______ 1. The annual audited  financial  statements being delivered to the Agent
with this Compliance  Certificate are true, complete and correct in all material
respects.

OR

______ 1. The quarterly  financial  statements being delivered to the Agent with
this  Compliance  Certificate  are true,  complete  and correct in all  material
respects and present fairly the consolidated  financial position of the Borrower
and the results of its  operations and its cash flows for the fiscal quarter set
forth above in conformity with GAAP consistently applied.

     2. The undersigned  has reviewed the terms of the Agreement,  the Notes and
each of the other Loan Documents and has made, or caused to be made under his or
her  supervision,  a review of the  transactions  and  condition of the Borrower
during the  accounting  period  covered by the  financial  statements  delivered
herewith  and that such  review has not  disclosed  the  existence  during  such
accounting  period,  and that the  undersigned  does not have  knowledge  of the
existence as at the date of this  Compliance  Certificate,  of any  condition or
event that constitutes a Default or Event of Default.

     [Note:  If such a  Default  or  Event of  Default  exists,  set  forth on a
separate  sheet the nature  thereof and the action which the Borrower has taken,
is taking or proposes to take with respect thereto.]

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     3. The  Borrower's  compliance  with the  financial  covenants set forth in
Sections 5.03 and 5.08 of the Agreement is as follows:
<TABLE>
<CAPTION>
                                  Ratio Components                        Required Ratio                  Actual Ratio
<S>                          <C>                                     <C>                                    <C>
a.   Leverage Ratio         Consolidated Total Indebtedness:         March 1 through and including          ____:1.00
     Section 5.03(a)        $____________                            August 31: .65:1.00

                            Consolidated Total Capitalization:       September 1 through and
                            $____________                            including February 28 or 29
                                                                     if applicable): .70:1.00

b.   Fixed Charge           Consolidated Net Income:                     1.75:1.00                          ____:1.00
     Coverage Ratio         $____________
     Section 5.03(b)
                            Income taxes deducted in
                            determining Net Income:
                            $____________

                            Consolidated Fixed Charges:
                            $____________

c.  Capital Expenditures    Actual Capital Expenditures               Maximum Permitted Amount              Actual Amount during
    (Section 5.08)          made during the fiscal [quarter]          during any Fiscal Years               any Fiscal Years after
                            [year] ended __________:                  after the Closing Date                the Closing Date
                            $______________                                                                 after the Closing Date
                                                                          $75,000,000                       $
                                                                                                             ----------

</TABLE>

     4. The detailed  calculations  used in connection  with the above financial
covenants are attached to this Compliance Certificate.

     5.  The  Borrower  has  in  force  insurance  (or  has  self-insurance  and
deductibles) that complies with the obligations  pursuant to Section 4.07 of the
Agreement.

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     Dated the ____ day of _________,  200_.

                                                  NUI UTILITIES, INC.


                                                  By:___________________________
                                                  Name:_________________________
                                                  Title:________________________


                                                  By:___________________________
                                                  Name:_________________________
                                                  Title:________________________

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                                                                       EXHIBIT F


                     Form of Section 2.11(e)(ii) Certificate

     Reference is hereby made to the  Revolving  Credit  Agreement,  dated as of
October 10, 2003,  between NUI  UTILITIES,  INC., the lenders party thereto from
time to time and DRAWBRIDGE SPECIAL OPPORTUNITIES FUND LP, as Agent (as amended,
modified or supplemented  from time to time, the  "Agreement").  Pursuant to the
provisions of Section  2.11(e)(ii)  of the  Agreement,  the  undersigned  hereby
certifies  that it is not a "bank" as such term is used in Section  881(c)(3)(A)
of the Internal Revenue Code of 1986, as amended.


                                                  [NAME OF BANK]

                                                  By:___________________________
                                                     Name:
                                                     Title:

Date: