EXECUTION COPY

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



                          AGREEMENT AND PLAN OF MERGER

                                  BY AND AMONG

                               AGL RESOURCES INC.,

                               COUGAR CORPORATION

                                       AND

                                 NUI CORPORATION

                            Dated as of July 14, 2004




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


<PAGE>



                                TABLE OF CONTENTS

<TABLE>
<CAPTION>

                                                                                                                 Page

<S>                        <C>                                                                                  <C>

ARTICLE I                  DEFINITIONS............................................................................1

         Section 1.1.      Definitions............................................................................1
         Section 1.2.      Construction..........................................................................10
         Section 1.3.      Knowledge.............................................................................10

ARTICLE II                 THE MERGER............................................................................10

         Section 2.1.      The Merger............................................................................10
         Section 2.2.      Certificate of Incorporation of the Surviving Corporation.............................11
         Section 2.3.      By-laws of the Surviving Corporation..................................................11
         Section 2.4.      Directors and Officers of the Surviving Corporation...................................11
         Section 2.5.      Conversion of Stock...................................................................11
         Section 2.6.      Paying Agent; Surrender of Certificates...............................................12
         Section 2.7.      Payment...............................................................................12
         Section 2.8.      No Further Rights of Transfers........................................................13
         Section 2.9.      Stock Options and Restricted Stock....................................................13
         Section 2.10.     Section 16 Matters....................................................................14
         Section 2.11.     Closing...............................................................................14
         Section 2.12.     Withholding Rights; Transfer Taxes....................................................14

ARTICLE III                REPRESENTATIONS AND WARRANTIES OF THE COMPANY.........................................15

         Section 3.1.      Due Organization, Good Standing and Corporate Power...................................15
         Section 3.2.      Authorization; Noncontravention.......................................................15
         Section 3.3.      Capitalization........................................................................16
         Section 3.4.      Consents and Approvals................................................................17
         Section 3.5.      Company Reports and Financial Statements..............................................17
         Section 3.6.      Absence of Certain Changes or Events..................................................18
         Section 3.7.      Compliance with Laws; Compliance with Agreements......................................18
         Section 3.8.      Litigation............................................................................19
         Section 3.9.      Employee Benefit Plans................................................................19
         Section 3.10.     Labor Matters.........................................................................20
         Section 3.11.     Taxes.................................................................................21
         Section 3.12.     Intellectual Property.................................................................23
         Section 3.13.     Information...........................................................................24
         Section 3.14.     Broker's or Finder's Fee..............................................................24
         Section 3.15.     Certain Contracts and Arrangements....................................................24
         Section 3.16.     Environmental Laws....................................................................25
         Section 3.17.     Opinion of Financial Advisors.........................................................26
         Section 3.18.     Board and Shareholder Approval........................................................26
         Section 3.19.     State Takeover Statutes...............................................................26
</TABLE>

<PAGE>
<TABLE>
<CAPTION>
<S>                        <C>                                                                                  <C>
         Section 3.20.     Rights Agreement......................................................................26
         Section 3.21.     Ownership of Parent Common Stock......................................................27
         Section 3.22.     Regulatory Matters....................................................................27

ARTICLE IV                 REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB......................................28

         Section 4.1.      Due Organization, Good Standing and Corporate Power...................................28
         Section 4.2.      Authorization; Noncontravention.......................................................28
         Section 4.3.      Consents and Approvals................................................................29
         Section 4.4.      Information...........................................................................29
         Section 4.5.      Broker's or Finder's Fee..............................................................29
         Section 4.6.      Sub's Operations......................................................................29
         Section 4.8.      Litigation............................................................................30
         Section 4.9.      Ownership of Shares...................................................................30

ARTICLE V                  ADDITIONAL AGREEMENTS.................................................................30

         Section 5.1.      Access to Information Concerning Properties and Records...............................30
         Section 5.2.      Confidentiality.......................................................................31
         Section 5.3.      Conduct of the Business of the Company Pending the Closing Date.......................31
         Section 5.4.      Preparation of Proxy Statement; Shareholders' Meeting.................................34
         Section 5.5.      Commercially Reasonable Efforts.......................................................35
         Section 5.6.      No Solicitation of Other Offers.......................................................36
         Section 5.7.      Antitrust Laws........................................................................37
         Section 5.8.      Regulatory Approvals; Other Consents..................................................37
         Section 5.9.      Employee Benefits.....................................................................39
         Section 5.10.     Indemnity; Directors' and Officers' Insurance; Fiduciary and Employee
                           Benefit Insurance.....................................................................40
         Section 5.11.     Public Announcements..................................................................42
         Section 5.12.     Cooperation and Notification of Certain Matters.......................................42
         Section 5.13.     Sub...................................................................................43
         Section 5.14.     Acquisition of Shares.................................................................43
         Section 5.15.     No Breach, Etc........................................................................43
         Section 5.16.     Transition Steering Team..............................................................43
         Section 5.17.     Credit Facilities.....................................................................44

ARTICLE VI                 CONDITIONS PRECEDENT..................................................................44

         Section 6.1.      Conditions to the Obligations of Each Party...........................................44
         Section 6.2.      Conditions to the Obligations of Parent and Sub.......................................45
         Section 6.3.      Conditions to the Obligations of the Company..........................................46

ARTICLE VII                TERMINATION AND ABANDONMENT...........................................................47

         Section 7.1.      Termination...........................................................................47
         Section 7.2.      Effect of Termination.................................................................49

</TABLE>

                                      -ii-
<PAGE>
<TABLE>
<CAPTION>
<S>                        <C>                                                                                  <C>
ARTICLE VIII               MISCELLANEOUS.........................................................................50

         Section 8.1.      Fees and Expenses.....................................................................50
         Section 8.2.      Non-Survival; Effect of Representations and Warranties................................50
         Section 8.3.      Extension; Waiver.....................................................................51
         Section 8.4.      Notices...............................................................................51
         Section 8.5.      Entire Agreement......................................................................52
         Section 8.6.      Incorporation of Disclosure Letters; Amendment of Disclosure Letters..................52
         Section 8.7.      Binding Effect; Benefit; Assignment...................................................53
         Section 8.8.      Amendment and Modification............................................................53
         Section 8.9.      Headings..............................................................................53
         Section 8.10.     Counterparts..........................................................................53
         Section 8.11.     Applicable Law........................................................................53
         Section 8.12.     Severability..........................................................................53
         Section 8.13.     Specific Enforcement..................................................................54
         Section 8.14.     WAIVER OF JURY TRIAL..................................................................54
         Section 8.15.     Rules of Construction.................................................................54
</TABLE>


                                     -iii-
<PAGE>

                          AGREEMENT AND PLAN OF MERGER


         This AGREEMENT AND PLAN OF MERGER is dated as of July 14, 2004 (this
"Agreement"), by and among AGL RESOURCES INC., a corporation organized under the
laws of Georgia ("Parent"), COUGAR CORPORATION, a corporation organized under
the laws of New Jersey and a wholly-owned subsidiary of Parent ("Sub"), and NUI
CORPORATION, a corporation organized under the laws of New Jersey (the
"Company").

                              W I T N E S S E T H:

         WHEREAS, the respective Boards of Directors of Parent, Sub and the
Company have approved and declared advisable this Agreement, which contemplates
the merger of Sub with and into the Company, as set forth below (the "Merger"),
in accordance with the New Jersey Business Corporation Act, N.J.S.A. 14A:1-1 et
seq. (the "NJBCA") and upon the terms and subject to the conditions set forth in
this Agreement;

         WHEREAS, upon the consummation of the Merger, each issued and
outstanding share of common stock, no par value per share, of the Company (each
a "Share" and, collectively, the "Shares") will be converted into the right to
receive $13.70 per Share in cash (without interest) (the "Merger Price"), upon
the terms and subject to the limitations and conditions of this Agreement;

         WHEREAS, the Board of Directors of the Company (the "Board") is
recommending that the Company's shareholders approve this Agreement and the
Merger; and

         WHEREAS, Parent, Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger and also to prescribe various conditions to the Merger;

         NOW, THEREFORE, in consideration of the premises and of the mutual
covenants, representations, warranties and agreements herein contained, the
Parties intending to be legally bound, agree as follows:

                                    ARTICLE I

                                   DEFINITIONS

          Section 1.1. Definitions. When used in this Agreement, the following
terms shall have the respective meanings specified therefor below.

         "1935 Act" shall have the meaning set forth in Section 3.22(a).

         "Acceptable Order" shall have the meaning set forth in Section 5.8(a).

         "Acquisition Proposal" shall mean any inquiry, offer or proposal
(whether or not in writing and whether or not delivered to the Company's
shareholders generally), from any Person to acquire, in a single transaction or
series of transactions, by merger, tender offer,



<PAGE>

exchange offer, stock acquisition, share exchange, asset acquisition,
consolidation, liquidation, business combination or otherwise, directly or
indirectly: (i) 15% or more of the Shares or any other class of equity
securities of the Company; (ii) 15% or more of any class of equity securities of
one or more of the Company's subsidiaries which in the aggregate constitutes 15%
or more of the net revenues, net income or assets (including equity securities)
of the Company and its Subsidiaries, taken as a whole, or (iii) assets of the
Company and/or one or more of its Subsidiaries which in the aggregate constitute
15% or more of the net revenues, net income or assets of the Company and its
Subsidiaries, taken as a whole, other than the transactions contemplated by this
Agreement.

         "Affiliate" of any Person shall mean any Person directly or indirectly
controlling, controlled by, or under common control with, such Person; provided
that, for the purposes of this definition, "control" (including, with
correlative meanings, the terms "controlled by" and "under common control
with"), as used with respect to any Person, shall mean the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of such Person, whether through the ownership of voting securities,
by contract or otherwise, and a Person shall be deemed to control another Person
if the controlling Person owns 25% or more of any class of voting securities (or
other ownership interests) of the controlled Person.

         "Agreement" shall have the meaning set forth in the preamble hereto.

         "Antitrust Authorities" shall mean the Federal Trade Commission, the
Antitrust Division of the United States Department of Justice, the attorneys
general of the several states of the United States and any other Governmental
Entity having jurisdiction with respect to the transactions contemplated hereby
pursuant to applicable Antitrust Laws.

         "Antitrust Laws" shall mean the Sherman Act, as amended, the Clayton
Act, as amended, the HSR Act, the Federal Trade Commission Act, as amended, and
all other federal, state and foreign statutes, rules, regulations, orders,
decrees, administrative and judicial doctrines, and other laws that are designed
or intended to prohibit, restrict or regulate actions having the purpose or
effect of monopolization or restraint of trade.

         "Applicable Law" means any Law applicable to the Company, each of its
Subsidiaries, Parent, Sub or any of their respective Affiliates, properties,
assets, officers, directors, employees or agents.

         "Audit" means any legal, administrative, arbitration or similar
proceeding, claim, suit, action or governmental or, to the extent communicated
or otherwise made known to the Company or any of its Subsidiaries, a regulatory
investigation of any nature, foreign or domestic, whether pending, proposed, or
threatened (but only to the extent communicated in writing to the Company or any
of its Subsidiaries) with respect to Taxes by a Governmental Entity.

         "Board" shall have the meaning set forth in the third recital hereto.

         "Bridge Facilities" shall have the meaning set forth in Section 5.17
hereof.

                                      -2-
<PAGE>

         "Business Day" shall mean any day except a Saturday, a Sunday or any
other day on which commercial banks are required or authorized to close in New
York, New York or Newark, New Jersey.

         "Capital Structure Date" shall have the meaning set forth in Section
3.3.

         "Cash Payment" shall have the meaning set forth in Section 2.9(a).

         "Certificate of Merger" shall have the meaning set forth in Section
2.1(a).

         "Certificates" shall have the meaning set forth in Section 2.6(a).

         "Closing" shall have the meaning set forth in Section 2.11.

         "Closing Agreement" means a written and legally binding agreement with
a Governmental Entity relating to Taxes.

         "Closing Date" shall have the meaning set forth in Section 2.11.

         "Code" shall mean the United States Internal Revenue Code of 1986, as
amended, and the regulations promulgated and the rulings issued thereunder.

         "Commission" shall mean the Securities and Exchange Commission.

         "Commission Filings" shall have the meaning set forth in Section
3.5(a).

         "Commitment Letter" shall have the meaning set forth in Section 5.17.

         "Company" shall have the meaning set forth in the preamble hereto.

         "Company Board Recommendation" shall have the meaning set forth in
Section 5.4(a).

         "Company Disclosure Letter" shall have the meaning set forth in Section
3.

         "Company Employees" shall have the meaning set forth in Section 5.9(a).

         "Company Material Adverse Effect" shall mean a material adverse effect
on the business, properties, financial condition or results of operations or
prospects of the Company and its Subsidiaries taken as a whole. Material Adverse
Effect shall exclude any effects, consequences or conditions attributable to (i)
the announcement of the transactions contemplated by this Agreement or other
communication by Parent or Sub of their plans or intentions with respect to any
of the businesses of the Company or any of its Subsidiaries, (ii) the
consummation of the transactions contemplated by this Agreement or any actions
by Parent, Sub or the Company taken pursuant to this Agreement, (iii) any change
in U.S. or global economic conditions or U.S. or global financial markets or
condition, or GAAP, (iv) any change relating to the industries in which the
Company or any of its Subsidiaries operates or in any generally applicable law,
regulation or order, in each case that does not specifically relate to the
Company


                                      -3-
<PAGE>

and that does not affect the Company in a materially disproportionate manner
relative to other participants in the industries in which the Company operates,
(v) any failure by the Company to meet any revenue or earnings predictions of
equity analysts for any period, (vi) any change in the market price or trading
volume of the Shares, (vii) any shareholder class action, derivative or similar
litigation arising primarily from allegations of breach of fiduciary duty
relating to this Agreement, (viii) the issuance of a "going concern"
qualification by the Company's auditors (but solely the issuance of such
qualification and not the effects or consequences thereof, bases for, or the
conditions attributable thereto), or (ix) any matter, the magnitude and
significance of which was reasonably discernable to Parent prior to the date
hereof based on disclosure made to Parent in this Agreement, the Company
Disclosure Letter or the Exchange Act Reports.

         "Company Group" shall have meaning set forth in Section 3.11(m).

         "Company Parent" shall have meaning set forth in Section 3.11(m).

         "Company Property" shall mean any real property and improvements
currently owned, leased or operated by the Company or its Subsidiaries.

         "Confidentiality Agreement" shall have the meaning set forth in Section
5.2.

         "Consents" shall have the meaning set forth in Section 5.8(a).

         "Contracts" shall have the meaning set forth in Section 3.15(a).

         "Credit Facilities" shall mean the credit facilities of the Company and
NUI Utilities, Inc. that expire on November 22, 2004.

         "DSPP" shall have the meaning set forth in Section 2.9(a).

         "Effective Time" shall have the meaning set forth in Section 2.1(a).

         "Employee Benefit Plans" shall have the meaning set forth in Section
3.9.

         "Environmental Law(s)" means any Applicable Law in effect as of the
date of this Agreement, or that may become effective between the date of this
Agreement and the Effective Date, and pertaining to protection of the
environment, including without limitation the manufacture, use, transport,
management, treatment, storage, distribution, disposal, release or threatened
release of petroleum products, asbestos, urea formaldehyde insulation,
polychlorinated biphenyls or any substance, pollutant, or contaminant, listed,
classified or regulated as hazardous or toxic under any Applicable Law.

         "Environmental Permit" shall have the meaning set forth in Section
3.16(a).

         "ERISA" shall have the meaning set forth in Section 3.9(a).

         "ESPP" shall have the meaning set forth in Section 2.9(a).

                                      -4-
<PAGE>

         "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.

         "Exchange Act Reports" shall mean each report, schedule and definitive
proxy statement filed by the Company with the Commission pursuant to the
Exchange Act, since September 30, 2003, and through the date hereof (as such
documents have since the time of their filing been amended prior to the date
hereof).

         "ff Schedules" shall mean the work papers and supporting schedules
relating to the U.S. federal income taxes of the Company and its Subsidiaries
that are referenced by the "ff" designation.

         "Final Order" shall mean action by the applicable Governmental Entity
relating to this Agreement or the transactions contemplated by this Agreement
which has not been reversed, stayed, enjoined, set aside, annulled or suspended,
with respect to which any waiting period prescribed by law before the
transactions contemplated by this Agreement may be consummated has expired, and
as to which all conditions to the consummation of such transactions prescribed
by law, regulation or order have been satisfied (but, in each case, without any
requirement for the expiration of any applicable rehearing or appeal periods).

         "FPSC" shall have the meaning set forth in Section 3.4.

         "GAAP" shall mean generally accepted accounting principles of the
United States of America consistently applied, as in effect from time to time.

         "Governmental Entity" shall mean any domestic or foreign court,
arbitral tribunal, administrative agency or commission or other governmental or
regulatory agency, authority, political subdivision, instrumentality, or any
securities exchange.

         "HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended, and the rules and regulations promulgated thereunder.

         "Indebtedness" shall mean (i) indebtedness for borrowed money or for
the deferred purchase price of property or services (other than current trade
liabilities incurred in the ordinary course of business and payable in
accordance with the terms thereof), including indebtedness evidenced by a note,
bond, debenture or similar instrument; (ii) guarantees, assurances or other
contractual contingent obligations which are or would be required to be accrued
or disclosed pursuant to GAAP or in the Exchange Act Reports (but not including
contingent obligations arising from pending or threatened litigation), (iii)
obligations required to be classified and accounted for as capital leases on a
balance sheet under GAAP; (iv) obligations under interest rate cap agreements,
interest rate swap agreements, foreign currency exchange agreements and other
hedging or similar agreements; and (v) to the extent not otherwise included in
the foregoing, any financing of accounts receivable or inventory.

         "Indemnified Parties" shall have the meaning set forth in Section
5.10(a).

                                      -5-
<PAGE>

         "Intellectual Property" shall mean any of the following (a) U.S. and
non-U.S. patents, and applications for either, (b) registered and unregistered
trademarks, trade names and service marks, pending trademark and service mark
registration applications, and intent-to-use registrations or similar
reservations of marks, (c) registered and unregistered copyrights and mask
works, and applications for registration of either, (d) internet domain names,
(e) computer programs, databases and industrial designs, and (f) trade secrets
and proprietary information not otherwise listed in (a) through (e) above.

         "IRS" means the Internal Revenue Service.

         "Law(s)" means any domestic or foreign federal, state or local
constitution, statute, law, code, administrative interpretation, regulation,
rule, injunction, judgment, order, writ, decree, ordinance, directive judgment,
policy, guideline or ruling of any Governmental Entity, including common law.

         "Material Contracts" shall have the meaning set forth in Section
3.15(a).

         "Merger" shall have the meaning set forth in the first recital hereto.

         "Merger Price" shall have the meaning set forth in the second recital
hereto.

         "Medium Term Notes" shall mean the outstanding $50 million 8.35% medium
term notes of NUI Utilities, Inc., which mature on February 1, 2005.

         "MPSC" shall have the meaning set forth in Section 3.4.

         "NJAG Settlement" shall mean the plea agreement between the Division of
Criminal Justice for the State of New Jersey and NUI Energy Brokers, Inc. dated
June 30, 2004 and the letter agreement between the Division of Criminal Justice
for the State of New Jersey and NUI Corporation dated June 30, 2004.

         "NJBCA" shall have the meaning set forth in the first recital hereto.

         "NJBPU" shall have the meaning set forth in Section 3.4.

         "NJBPU Settlement Order" means the Order dated April 26, 2004 issued by
the NJBPU in respect of the proceeding captioned In the matter of Elizabethtown
Gas Company, NUI Utilities, Inc. and NUI Corporation, Docket No. GA 03030213, GA
02020099, GR 03050423, GR 02120945, GR 02040245 and GR 01110771.

         "NJLNA" shall have the meaning set forth in Section 3.22(g).

         "Options" shall have the meaning set forth in Section 2.9(a).

         "Other Filings" shall have the meaning set forth in Section 3.13.

         "Parent" shall have the meaning set forth in the preamble hereto.

                                      -6-
<PAGE>
         "Parent Disclosure Letter" shall have the meaning set forth in Section
1.3.

         "Parent Material Adverse Effect" shall mean a material adverse effect
on the business, properties, financial condition or results of operations or
prospects of Parent and its Subsidiaries taken as a whole. Material Adverse
Effect shall exclude any effects, consequences or conditions attributable to (i)
the announcement of the transactions contemplated by this Agreement or other
communication by Parent or Sub of their plans or intentions with respect to any
of the businesses of the Company or any of its Subsidiaries, (ii) the
consummation of the transactions contemplated by this Agreement or any actions
by Parent, Sub or the Company taken pursuant to this Agreement, (iii) any change
in U.S. or global economic conditions or U.S. or global financial markets or
condition, or GAAP, (iv) any change relating to the industries in which Parent
or any of its Subsidiaries operates or in any generally applicable law,
regulation or order, in each case that does not specifically relate to Parent
and that does not affect Parent in a materially disproportionate manner relative
to other participants in the industries in which Parent operates, (v) any
failure by Parent to meet any revenue or earnings predictions of equity analysts
for any period, (vi) any change in the market price or trading volume of
Parent's shares, (vii) any shareholder class action, derivative or similar
litigation arising primarily from allegations of breach of fiduciary duty
relating to this Agreement, or (viii) any matter, the magnitude and significance
of which was reasonably discernable to the Company prior to the date hereof
based on disclosure made to the Company in this Agreement or the Parent
Disclosure Letter.

         "Parties" shall mean the Company, Parent or Sub.

         "Paying Agent" shall have the meaning set forth in Section 2.6(a).

         "Payment Fund" shall have the meaning set forth in Section 2.7.

         "Permits" shall have the meaning set forth in Section 3.7(b).

         "Permitted Investments" shall have the meaning set forth in Section
2.7.

         "Person" shall mean and include an individual, a partnership, a limited
liability partnership, a joint venture, a corporation, a limited liability
company, a trust, an unincorporated organization, a group and a Governmental
Entity.

         "Proxy Statement" shall have the meaning set forth in Section 5.4(a).

          "Regulated Business" shall mean NUI Utilities, Inc., a New Jersey
corporation.

         "Regulated Business Material Adverse Effect" shall mean a material
adverse effect on the business, properties, financial condition or results of
operations or prospects of the Regulated Business. Material Adverse Effect shall
exclude any effects, consequences or conditions attributable to (i) the
announcement of the transactions contemplated by this Agreement or other
communication by Parent or Sub of their plans or intentions with respect to any
of the businesses of the Company or any of its Subsidiaries, (ii) the
consummation of the transactions contemplated by this Agreement or any actions
by Parent, Sub or the Company taken pursuant to this Agreement, (iii) any change
in U.S. or global economic conditions or U.S.


                                      -7-
<PAGE>

or global financial markets or condition, or GAAP, (iv) any change relating to
the industries in which the Company or any of its Subsidiaries operates or in
any generally applicable law, regulation or order, in each case that does not
specifically relate to the Company and that does not affect the Company in a
materially disproportionate manner relative to other participants in the
industries in which the Company operates, (v) any failure by the Company to meet
any revenue or earnings predictions of equity analysts for any period, (vi) any
change in the market price or trading volume of the Shares, (vii) any
shareholder class action, derivative or similar litigation arising primarily
from allegations of breach of fiduciary duty relating to this Agreement, (viii)
the issuance of a "going concern" qualification by the Company's auditors (but
solely the issuance of such qualification and not the effects or consequences
thereof, bases for, or the conditions attributable thereto), or (ix) any matter,
the magnitude and significance of which was reasonably discernable to Parent
prior to the date hereof based on disclosure made to Parent in this Agreement,
the Company Disclosure Letter or the Exchange Act Reports.

         "Required Consents" shall mean, collectively, the Consent of or to each
of the Governmental Entities (other than any Governmental Entities that are
Antitrust Authorities) specifically set forth in Section 3.4 (other than those
set forth in Section 3.4(b) and Section 3.4(c)), Section 4.3 (other than those
set forth in Section 4.3(b) and Section 4.3(c)) and Section 4.3 of the Parent
Disclosure Letter.

         "Rights Agreement" shall have the meaning set forth in Section 3.3.

         "Securities Act" shall mean the Securities Act of 1933, as amended.

         "Shares" shall have the meaning set forth in the second recital hereto.

         "Special Meeting" shall have the meaning set forth in Section 5.4(c).

         "Stier Anderson Report" shall mean the final report, dated April 21,
2004, delivered by Stier Anderson, L.L.C. to the Audit Committee of the Board of
Directors of the Company.

         "Stock Plans" shall have the meaning set forth in Section 2.9(a).

         "Sub" shall have the meaning set forth in the preamble hereto.

         "Subsidiary", with respect to any Person, shall mean any other Person
which is consolidated with such Person for financial reporting purposes.

         "Superior Proposal" shall mean an Acquisition Proposal on terms which
the Board, after consultation with its outside legal counsel and its independent
financial advisors of nationally recognized reputation (it being understood, for
all purposes of this Agreement, that Berenson & Co., LLC and Credit Suisse First
Boston LLC qualify as such), determines in good faith to be (x) reasonably
capable of being completed, taking into account all legal, financial (including
the ability to obtain financing), regulatory and other aspects of the proposal
and the Person making such proposal, and (y) more favorable to the Company's
shareholders from a financial point of view than the Merger and the other
transactions contemplated by this


                                      -8-
<PAGE>

Agreement (taking into account any changes to the terms of this Agreement
proposed by Parent or Sub in response to such proposal or otherwise).

         "Surviving Corporation" shall have the meaning set forth in Section
2.1(b).

         "Takeover Laws" shall have the meaning set forth in Section 3.19.

         "Tax" (or "Taxes" as the context may require) mean (i) all federal,
state, county, local, foreign and other taxes (including, without limitation,
income, profits, business and occupation, estimated, payroll, withholding,
disability, workers compensation, unemployment insurance, social security,
premium, stamp, customs, license, transfer, excise, sales, use, gross receipts,
franchise, ad valorem, environmental, production, severance, capital and
property taxes, duties, fees, levies or other governmental charges and
assessments), and including any interest, additions to tax and penalties (civil
or criminal) with respect thereto or in respect of a failure to comply with any
requirement relating to such taxes or any Tax Return and (ii) any liability for
the payment of amounts described in clause (i) above whether imposed (A)
directly on a Person, (B) as a transferee or successor or (C) as a result of
being a member of an affiliated, consolidated, combined or unitary group.

         "Tax Claim" shall mean any Audits or administrative or court
proceedings, or assessments with respect to Taxes.

         "Tax Return" means any return, report, claim, certificate, form,
statement, disclosure, declaration, election, information return, estimate or
other document (including any related or supporting information attached and any
amended materials provided with respect to any of the foregoing) supplied to, or
filed with, a Governmental Entity with respect to Taxes.

         "Tax Ruling" means a written ruling of a Governmental Entity relating
to Taxes.

         "Tax Sharing Agreement" means any written agreement, written
arrangement, written indemnity or other written obligation for the allocation or
payment of Tax liabilities or payment for Tax benefits that may exist as of the
Closing Date.

         "Termination Date" shall have the meaning set forth in Section 7.1(b).

         "Termination Fee" shall have the meaning set forth in Section 8.1(b).

         "Transfer Taxes" means any sales, use, stamp, documentary, filing,
recording, transfer, real estate, stock transfer, intangible property transfer,
personal property transfer, gross receipts, registration, duty, securities
transactions or similar fees or Taxes or governmental charges (together with any
interest or penalty, addition to Tax or additional amount imposed) as levied by
any Governmental Entity in connection with the transactions contemplated by this
Agreement.

         "Transition Steering Team" shall have the meaning set forth in Section
5.16.

         "VSCC" shall have the meaning set forth in Section 3.4.

                                      -9-
<PAGE>

          Section 1.2. Construction. In this Agreement, unless the context
otherwise requires:

          (a) any reference in this Agreement to "writing" or comparable
expressions includes a reference to facsimile transmission or comparable means
of communication;

          (b) words expressed in the singular number shall include the plural
and vice versa; words expressed in the masculine shall include the feminine and
neuter gender and vice versa;

          (c) references to Articles, Sections, Exhibits, Schedules, the
preamble and recitals are references to articles, sections, exhibits, schedules,
the preamble and recitals of this Agreement;

          (d) reference to "day" or "days" are to calendar days;

          (e) this "Agreement" or any other agreement or document shall be
construed as a reference to this Agreement or, as the case may be, such other
agreement or document as the same may have been, or may from time to time be,
amended, varied, novated or supplemented; and

          (f) "include," "includes," and "including" are deemed to be followed
by "without limitation" whether or not they are in fact followed by such words
or words of similar import.

          Section 1.3. Knowledge. When any representation, warranty, covenant or
agreement contained in this Agreement is expressly qualified by reference to the
"Knowledge of the Company" or words of similar import, it shall mean the actual
knowledge, after diligent inquiry by the individuals set forth in Section 1.3 of
the Company Disclosure Letter. When any representation, warranty, covenant or
agreement contained in this Agreement is expressly qualified by reference to the
"Knowledge of Parent and/or Sub" or words of similar import, it shall mean the
actual knowledge, after diligent inquiry by the individuals set forth in Section
1.3 of the disclosure letter delivered by Parent and Sub to the Company upon or
prior to entering into this Agreement (the "Parent Disclosure Letter").

                                   ARTICLE II

                                   THE MERGER

          Section 2.1. The Merger. (a) Upon the terms and subject to the
conditions of this Agreement, at the Closing, a certificate of merger (the
"Certificate of Merger") shall be duly prepared, executed and acknowledged by
Sub and the Company in accordance with the NJBCA and shall be filed with the
Division of Revenue of the Department of Treasury of the State of New Jersey in
accordance with the provisions of the NJBCA. The Merger shall become effective
upon the filing of the Certificate of Merger (or at such later time reflected in
such Certificate of Merger as shall be agreed to by Parent and the Company). The
date and time when the Merger shall become effective is hereinafter referred to
as the "Effective Time."

                                      -10-
<PAGE>

          (b) On the terms and subject to the conditions set forth in this
Agreement and in accordance with the NJBCA, at the Effective Time, Sub shall be
merged with and into the Company, and the separate corporate existence of Sub
shall cease, and the Company shall continue as the surviving corporation under
the laws of the State of New Jersey (the "Surviving Corporation").

          (c) From and after the Effective Time, the Merger shall have the
effects set forth in N.J.S.A. 14A:10-6 of the NJBCA. Without limiting the
generality of the foregoing, and subject thereto, at the Effective Time, all the
properties, rights, privileges and powers of the Company and Sub shall vest in
the Surviving Corporation, and all debts, liabilities and duties of the Company
and Sub shall become debts, liabilities and duties of the Surviving Corporation.

          Section 2.2. Certificate of Incorporation of the Surviving
Corporation. The Amended and Restated Certificate of Incorporation of the
Company, as in effect immediately prior to the Effective Time, shall be the
Certificate of Incorporation of the Surviving Corporation.

          Section 2.3. By-laws of the Surviving Corporation. The Amended and
Restated By-laws of the Company, as in effect immediately prior to the Effective
Time, shall be the By-laws of the Surviving Corporation.

          Section 2.4. Directors and Officers of the Surviving Corporation.
At the Effective Time, the directors of Sub immediately prior to the Effective
Time shall be the directors of the Surviving Corporation, each of such directors
to hold office, subject to the applicable provisions of the Certificate of
Incorporation and By-laws of the Surviving Corporation, until their respective
successors shall be duly elected or appointed and qualified. At the Effective
Time, the officers of the Company immediately prior to the Effective Time,
together with such other persons as Parent shall designate, shall, subject to
the applicable provisions of the Certificate of Incorporation and By-laws of the
Surviving Corporation, be the officers of the Surviving Corporation until their
respective successors shall be duly elected or appointed and qualified.

          Section 2.5. Conversion of Stock. At the Effective Time:

          (a) Each Share issued and outstanding immediately prior to the
Effective Time (other than any Shares which are held by any wholly-owned
Subsidiary of the Company or in the treasury of the Company, or which are held,
directly or indirectly, by Parent or any Subsidiary of Parent (including Sub),
all of which shall cease to be outstanding and be canceled and none of which
shall receive any payment with respect thereto) and all rights in respect of
such Shares shall, by virtue of the Merger and without any action on the part of
the holder thereof, forthwith cease to exist and be converted into and represent
the right to receive an amount in cash, without interest, equal to the Merger
Price; and

          (b) Each share of common stock, par value $0.01 per share, of Sub,
then issued and outstanding, shall, by virtue of the Merger and without any
action on the part of the holder thereof, be converted into one fully paid and
nonassessable share of common stock, no par value per share, of the Surviving
Corporation.

                                      -11-
<PAGE>

          Section 2.6. Paying Agent; Surrender of Certificates. (a) Prior to the
Effective Time, Parent shall designate a bank or trust company located in the
United States to act as paying agent (the "Paying Agent") to receive funds in
trust in order to make the payments contemplated by Section 2.5(a). Prior to the
Effective Time, Parent shall enter into a paying agent agreement with the Paying
Agent in form and substance reasonably acceptable to the Company. As soon as
practicable after the Effective Time, Parent shall cause the Paying Agent to
mail and/or make available to each holder of a certificate which, prior to the
Effective Time, represented Shares or any portion of a Share (other than those
which are held by any wholly-owned Subsidiary of the Company or in the treasury
of the Company, or which are held directly or indirectly by Parent or any direct
or indirect Subsidiary of Parent (including Sub)) a notice and letter of
transmittal advising such holder of the effectiveness of the Merger and the
procedure for surrendering to the Paying Agent such certificate or certificates
which immediately prior to the Effective Time represented outstanding Shares or
any portion of a Share (the "Certificates") in exchange for the aggregate Merger
Price deliverable in respect thereof pursuant to this Article II. Upon the
surrender for cancellation to the Paying Agent of such Certificates, together
with a letter of transmittal, duly executed and completed in accordance with the
instructions thereon, and any other items specified by the letter of
transmittal, the Paying Agent shall promptly pay to the Person entitled thereto
the product of the Merger Price and the number of Shares and any portion of a
Share represented by such Certificates. Until so surrendered, each Certificate
shall be deemed, for all corporate purposes, to evidence only the right to
receive upon such surrender the aggregate Merger Price deliverable in respect
thereof to which such Person is entitled pursuant to this Article II. No
interest shall be paid or accrued in respect of such cash payments.

          (b) If the aggregate Merger Price (or any portion thereof) is to be
delivered to a Person other than the Person in whose name the Certificates
surrendered in exchange therefor are registered, it shall be a condition to the
payment of such Merger Price that the Certificates so surrendered shall be
properly endorsed or accompanied by appropriate stock powers and otherwise in
proper form for transfer, and that the Person requesting such transfer pay to
the Paying Agent any transfer or other Taxes payable by reason of the foregoing
or establish to the satisfaction of the Paying Agent that such Taxes have been
paid or are not required to be paid.

          (c) If any Certificate shall have been lost, stolen or destroyed, upon
the making of an affidavit of that fact by the Person claiming such Certificate
to be lost, stolen or destroyed and, if required by Parent or the Surviving
Corporation, the posting by such Person of a bond, in such reasonable amount as
Parent or the Surviving Corporation may direct, as indemnity against any claim
that may be made against it with respect to the alleged loss, theft or
destruction of such Certificate, the Paying Agent shall issue in exchange for
such lost, stolen or destroyed Certificate the aggregate Merger Price
deliverable in respect thereof as determined in accordance with this Article II.

          Section 2.7. Payment. Concurrently with or immediately prior to the
Effective Time, Parent shall deposit or cause to be deposited in trust with the
Paying Agent cash in United States dollars in an aggregate amount equal to the
product of (a) the number of Shares outstanding immediately prior to the
Effective Time (other than Shares which are held by any wholly-owned Subsidiary
of the Company or in the treasury of the Company, or which are held directly or
indirectly by Parent or any direct or indirect Subsidiary of Parent (including
Sub)) and


                                      -12-
<PAGE>

(b) the Merger Price (such amount being hereinafter referred to as the "Payment
Fund"). The Payment Fund shall be invested by the Paying Agent as directed by
Sub (i) in direct obligations of the United States, obligations for which the
full faith and credit of the United States is pledged to provide for the payment
of principal and interest, commercial paper of an issuer organized under the
laws of a state of the United States rated of the highest quality by Moody's
Investors Service, Inc. or Standard & Poor's Ratings Group, or certificates of
deposit, bank repurchase agreements or bankers' acceptances of a United States
commercial bank having at least $1,000,000,000 in assets (collectively,
"Permitted Investments") or (ii) in money market funds which are invested in
Permitted Investments, and any net earnings with respect thereto shall be paid
to Sub as and when requested by Sub. The Paying Agent shall, pursuant to
irrevocable instructions, make the payments referred to in Section 2.5(a) out of
the Payment Fund. The Payment Fund shall not be used for any other purpose.
Promptly following the date which is one (1) year after the Effective Time, the
Paying Agent shall return to the Surviving Corporation all cash, certificates
and other instruments in its possession that constitute any portion of the
Payment Fund, and the Paying Agent's duties shall terminate. Thereafter, each
holder of a Certificate may surrender such Certificate to the Surviving
Corporation and (subject to applicable abandoned property, escheat and similar
laws) receive in exchange therefor the aggregate Merger Price deliverable in
respect thereof pursuant to this Article II, without interest, but shall have no
greater rights against the Surviving Corporation than may be accorded to general
creditors of the Surviving Corporation under Applicable Law. Notwithstanding the
foregoing, neither the Paying Agent nor any Party shall be liable to a holder of
Shares for any Merger Price with respect to such Shares delivered to a public
official pursuant to applicable abandoned property, escheat and similar laws.

          Section 2.8. No Further Rights of Transfers. At and after the
Effective Time, each holder of Shares shall cease to have any rights as a
shareholder of the Company, except as otherwise required by Applicable Law and
except for, in the case of a holder of a Certificate (other than Shares to be
canceled pursuant to Section 2.5(a)), the right to surrender his or her
Certificate in exchange for payment of the applicable aggregate Merger Price,
and no transfer of Shares shall be made on the stock transfer books of the
Surviving Corporation. Certificates presented to the Surviving Corporation after
the Effective Time shall be canceled and exchanged for cash as provided in this
Article II. At the close of business on the day of the Effective Time the stock
ledger of the Company with respect to the Shares shall be closed.

          Section 2.9. Stock Options and Restricted Stock. (a) Prior to the
Effective Time, each outstanding stock option and other right to purchase or
otherwise acquire Shares (each, an "Option" and, collectively, the "Options")
heretofore granted under any stock option or stock-based compensation plan of
the Company or otherwise (the "Stock Plans"), whether or not then vested or
exercisable shall become 100% vested and exercisable and shall no longer be
exercisable for the purchase of Shares but shall entitle each holder thereof, in
cancellation and settlement therefor, to payments in cash (the "Cash Payment"),
at the Effective Time, equal to the product of (i) the total number of Shares
subject to such Option, whether or not then vested or exercisable and (ii) the
amount, if any, by which the Merger Price exceeds the exercise price per Share
subject to such Option; each such Cash Payment to be paid to each holder of an
outstanding Option at the Effective Time. Section 2.9 of the Company Disclosure
Letter lists each Stock Plan and the outstanding Options. The Company shall
terminate, as of the Effective

                                      -13-
<PAGE>

Time, the Stock Plans and amend, as of the Effective Time, the provisions of any
other Employee Benefit Plans providing for the issuance, transfer or grant of
any capital stock of the Company, or any interest in respect of any capital
stock of the Company, to provide no continuing rights to acquire, hold, transfer
or grant any capital stock of the Company or any interest in the capital stock
of the Company. Upon the execution by Parent and Sub of this Agreement, the
Company shall suspend the NUI Corporation Employee Stock Purchase Plan ("ESPP")
and the NUI Corporation 1996 Director Stock Purchase Plan ("DSPP") so that, as
of the Effective Time, no options shall be outstanding under either such plan.
The Company shall (i) cause each such suspension to continue until the earlier
of (A) the Effective Time and (B) the termination of this Agreement pursuant to
Article VII hereof, and (ii) terminate the ESPP and the DSPP effective as of the
Effective Time. At the Effective Time, each outstanding participant account
balance under the NUI Corporation Deferred Compensation Plan that is denominated
in Shares shall be converted into a right to receive an amount, in cash, at the
Effective Time, equal to the Merger Price multiplied by the number of Shares
subject to such account. At the Effective Time, each outstanding deferred
restricted stock credit under the NUI Corporation 1996 Stock Option, Stock Award
and Incentive Plan shall be converted into a right to receive an amount, in
cash, at the Effective Time, equal to the Merger Price multiplied by the number
of Shares subject to such deferred restricted stock credit.

          (b) Immediately prior to the Effective Time, each Share in the form of
restricted stock outstanding under the Stock Plans shall become, subject to
applicable securities laws, fully and immediately transferable and the
restrictions thereon shall lapse.

          Section 2.10. Section 16 Matters. Prior to the Effective Time, the
Company and Parent shall take all such steps as may be required and permitted to
cause the transactions contemplated by this Agreement, including any
dispositions of equity securities (including derivative securities) of the
Company by each individual who is or will be subject to the reporting
requirements of Section 16(a) of the Exchange Act with respect to the Company,
to be exempt under Rule 16b-3 promulgated under the Exchange Act.

          Section 2.11. Closing. Unless this Agreement shall have been
terminated and the transactions contemplated hereby shall have been abandoned
pursuant to Article VII, and subject to the satisfaction or waiver of all of the
conditions set forth in Article VI, the closing of the Merger (the "Closing")
shall take place at 10:00 A.M. at the offices of White & Case LLP, 1155 Avenue
of the Americas, New York, New York 10036, as soon as practicable, but in any
event within three (3) Business Days after the last of the conditions set forth
in Article VI is satisfied or waived, other than those conditions that by their
nature are to be satisfied at the Closing, but subject to the fulfillment or
waiver of those conditions, or at such other date, time or place as the Parties
shall agree in writing. Such date is herein referred to as the "Closing Date".

          Section 2.12. Withholding Rights; Transfer Taxes. (a) The Company or
the Surviving Corporation shall be entitled to and will deduct and withhold, or
cause to be deducted or withheld, from any payment made pursuant to this Article
II, such amounts as are required to be deducted and withheld with respect to the
making of such payment under the Code, or any provision of applicable state,
local or foreign Tax law. Notwithstanding any provision to the contrary, the
Company and Parent shall cooperate with each other and take all reasonable and


                                      -14-
<PAGE>

necessary steps between the date hereof and the Effective Time to determine if
any amounts should be withheld or deducted pursuant to Section 1445 of the Code
from any payments made pursuant to this Article II and the Company agrees that
it will withhold or deduct any such amounts as may be required under Applicable
Law. To the extent that amounts are so deducted and withheld, such deducted and
withheld amounts shall be treated for all purposes of this Agreement as having
been paid to such holders in respect of which such deduction and withholding was
made.

          (b) From the date of this Agreement to the Effective Time, the Company
and Parent shall reasonably cooperate in the preparation, execution and filing
of all Tax Returns, questionnaires, applications or other documents regarding
any Transfer Taxes and take all reasonable steps necessary to obtain any
exemptions from such Transfer Taxes.

                                  ARTICLE III

                  REPRESENTATIONS AND WARRANTIES OF THE COMPANY

         Section 3. The Company hereby represents and warrants to Parent and
Sub, except as set forth in the disclosure letter delivered by the Company to
Parent and Sub upon or prior to entering into this Agreement (the "Company
Disclosure Letter"); provided, that, any such exception shall be contained in
the section of the Company Disclosure Letter corresponding to the representation
or warranty to which such exception is being taken, provided, further, that any
such exception shall not be required to be contained in other sections of the
Company Disclosure Letter if the magnitude and significance of the item excepted
and its relationship to a particular representation or warranty shall be
reasonably discernable to Parent:

          Section 3.1. Due Organization, Good Standing and Corporate Power. Each
of the Company and its Subsidiaries is a corporation duly incorporated (or, if
not a corporation, duly organized), validly existing and in good standing under
the laws of the jurisdiction of its incorporation (or, if not a corporation,
organization) and each such Person has all requisite power (corporate or
otherwise) and authority, and has been duly authorized by all necessary
approvals and orders, to own, lease and operate its assets and properties and to
carry on its business as now being conducted. The Company and each of its
Subsidiaries is duly qualified or licensed to do business and is in good
standing in each jurisdiction in which the property owned, leased or operated by
it, or the nature of the business conducted by it makes such qualification
necessary, except in such jurisdictions where the failure to be so qualified or
licensed and in good standing would not, when taken together with all other such
failures, reasonably be expected to have, individually or in the aggregate, a
Company Material Adverse Effect. The Company has made available to Parent
complete and correct copies of the Company's Certificate of Incorporation and
the Company's By-laws and the comparable governing documents of each of its
Subsidiaries, in each case, as amended and in full force and effect as of the
date of this Agreement.

          Section 3.2. Authorization; Noncontravention. The Company has the
requisite corporate power and authority to execute and deliver this Agreement,
to perform its obligations hereunder and (subject to the approval of the
shareholders of the Company as required by the


                                      -15-
<PAGE>

NJBCA) to consummate the transactions contemplated hereby. The execution,
delivery and performance of this Agreement by the Company, and the consummation
by it of the transactions contemplated hereby, have been duly authorized and
approved by the Board, and no other corporate action on the part of the Company
is necessary to authorize the execution, delivery and performance of this
Agreement by the Company and the consummation of the transactions contemplated
hereby (other than, in each case, as required by the NJBCA, the adoption of this
Agreement by the shareholders of the Company and the filing of appropriate
merger documents with the Division of Revenue of the Department of Treasury of
the State of New Jersey). This Agreement has been duly executed and delivered by
the Company and, assuming that this Agreement constitutes a valid and binding
obligation of Parent and Sub, constitutes a valid and binding obligation of the
Company enforceable against the Company in accordance with its terms, except to
the extent that its enforceability may be subject to applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and by general equitable principles.
The execution and delivery of this Agreement do not, and the consummation of the
transactions contemplated by this Agreement will not, (a) conflict with any of
the provisions of the Certificate of Incorporation or By-laws or other
equivalent charter documents, as applicable, of the Company or any of its
Subsidiaries, in each case, as amended to the date of this Agreement, (b)
conflict with or result in a breach of, or default under, any Material Contract
to which the Company or any of its Subsidiaries is a party or by which the
Company, any of its Subsidiaries or any of their respective assets are bound or
subject or (c) subject to the consents, approvals, authorizations, declarations,
filings and notices referred to in Section 3.4, contravene any domestic or
foreign law, rule or regulation or any order, writ, judgment, injunction,
decree, determination or award currently in effect, which, in the case of
clauses (b) and (c) above, would reasonably be expected to have, individually or
in the aggregate, a Company Material Adverse Effect.

          Section 3.3. Capitalization. The authorized capital stock of the
Company consists of (a) 30,000,000 Shares and (b) 5,000,000 shares of preferred
stock, no par value per share, of which 100,000 shares of such preferred stock
are designated as Series A Junior Participating Preferred Stock. At the close of
business on July 12, 2004 (the "Capital Structure Date") (i) 16,188,867 Shares
were issued and outstanding, (ii) no shares of preferred stock were issued and
outstanding, (iii) 218,706 Shares were held by the Company in its treasury, (iv)
331,198 shares were subject to issuance upon exercise of outstanding Options
granted under the Stock Plans and Section 3.3(i) of the Company Disclosure
Letter sets forth the number of shares subject to issuance pursuant to each
Stock Plan, and (v) no shares of Series A Junior Participating Preferred Stock
were subject to issuance pursuant to the Company's Rights Agreement, dated as of
March 2, 2001, by and between the Company and American Stock Transfer & Trust
Company, as Rights Agent (the "Rights Agreement"). Section 3.3(ii) of the
Company Disclosure Letter sets forth all of the subsidiaries of the Company and
all partnerships, joint ventures and similar entities of which the Company or
any of its Subsidiaries is a partner, member or participant as the case may be.
All issued and outstanding shares of capital stock of the Company and each of
its Subsidiaries have been duly authorized and validly issued and are fully paid
and nonassessable, and are not subject to any preemptive rights. Except as set
forth in this Section 3.3, at the close of business on the Capital Structure
Date, no shares of capital stock or other equity securities of the Company or
its Subsidiaries were issued, reserved for issuance or outstanding. Since the
close of business on the Capital Structure Date, no shares of capital stock


                                      -16-
<PAGE>

or other equity securities of the Company have been issued or reserved for
issuance or become outstanding, other than Shares described in clause (iv) of
the second sentence of this Section 3.3 that have been issued upon the exercise
of outstanding Options granted under the Stock Plans, as the case may be. Except
as described in this Section 3.3, there are no outstanding options, warrants,
calls, subscriptions, contracts or other rights (including any preemptive
right), agreements or commitments (whether written or oral) which (x) obligate
the Company or any of its Subsidiaries to issue, deliver, sell or transfer, or
repurchase, redeem or otherwise acquire, or cause to be issued, delivered, sold
or transferred, or repurchased, redeemed or otherwise acquired, any shares of
the capital stock of the Company or any subsidiary, (y) restricts the transfer
of any shares of capital stock of the Company or (z) relates to the voting of
any shares of capital stock of the Company.

          Section 3.4. Consents and Approvals. Assuming all filings required
under the Antitrust Laws are made and any waiting periods thereunder have been
terminated or expired, no Consent of or to any Governmental Entity or any other
third party, which has not been received or made, is necessary or required with
respect to the Company in connection with the execution and delivery of this
Agreement by the Company or the consummation by the Company of the transactions
contemplated by this Agreement, except for (a) the Consent of each of the New
Jersey Board of Public Utilities (the "NJBPU"), the Florida Public Service
Commission (the "FPSC"), the Maryland Public Service Commission (the "MPSC") and
the Virginia State Corporation Commission (the "VSCC"), (b) compliance with any
applicable requirements of the Exchange Act and any applicable state securities
or blue sky laws, (c) the filing of the Certificate of Merger, (d) the Consent
of the Federal Communications Commission, and (e) any other Consents which, if
not made or obtained, would not reasonably be expected to have, individually or
in the aggregate, a Company Material Adverse Effect.

          Section 3.5. Company Reports and Financial Statements. (a) Since
September 30, 2003, the Company has filed all material forms, reports,
schedules, statements and other documents with the Commission relating to
periods commencing on or after such date required to be filed by it pursuant to
the federal securities laws and the Commission rules and regulations thereunder
(such forms, reports, schedules, statements and other documents, in each case,
as amended, being hereinafter referred to as the "Commission Filings"), and, as
of their respective dates, the Commission Filings complied in all material
respects with all applicable requirements of the federal securities laws and the
Commission rules and regulations promulgated thereunder.

          (b) Each of the consolidated financial statements of the Company
contained in the Commission Filings has been prepared in accordance with GAAP
(except (i) as may be indicated therein or in the notes or schedules thereto and
(ii) in the case of unaudited quarterly financial statements, as permitted by
Form 10-Q of the Commission) and presents fairly, in all material respects, the
consolidated financial position of the Company as of the dates thereof and the
consolidated results of their operations and changes in cash flows for the
periods then ended (subject, in the case of unaudited quarterly statements, to
normal year-end audit adjustment).

          (c) Except as reflected, reserved against or otherwise disclosed in
the financial statements of the Company included in the Exchange Act Reports
filed and publicly


                                      -17-
<PAGE>

available prior to the date of this Agreement, to the Knowledge of the Company,
neither the Company nor any of its Subsidiaries has any liabilities or
obligations (absolute, accrued, fixed, contingent or otherwise) required to be
set forth in the Company's consolidated balance sheet under GAAP, other than
liabilities incurred in the ordinary course of business since September 30, 2002
or which would not reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect.

          (d) Except as disclosed in the Exchange Act Reports, the Company has
maintained systems of internal accounting controls sufficient to provide
reasonable assurances that (i) all transactions are executed in accordance with
management's general or specific authorization, and (ii) all transactions are
recorded as necessary to permit the preparation of annual and interim financial
statements in conformity with GAAP and to maintain proper accountability for
items. Except as disclosed in the Exchange Act Reports, the Company management's
report and assessment of internal controls, and management's report and the
Company's independent auditors' reports identify no material weakness or control
deficiency in accordance with or as defined by PCAOB Standard No. 2 or Section
302 of the Sarbanes-Oxley Act of 2002.

          Section 3.6. Absence of Certain Changes or Events. Except as disclosed
in the Exchange Act Reports filed prior to the date hereof since September 30,
2003, the Company and each of its Subsidiaries has not: (a) suffered any change,
including any casualty, to its assets, in its business, operations or financial
position, except such changes which, in the aggregate, are not reasonably likely
to have a Company Material Adverse Effect, (b) conducted its business in any
material respect not in the ordinary course of business consistent with past
practice or (c) except as is not reasonably likely, in the aggregate, to have a
Company Material Adverse Effect (i) incurred any indebtedness or issued any debt
securities or assumed or guaranteed the obligations of any other Person, (ii)
declared, set aside for payment or paid any dividend or other distribution
(whether in cash, stock, property or any combination thereof) in respect of the
equity of the Company or redeemed or otherwise acquired any interests of equity
of the Company, (iii) sold, transferred or otherwise disposed of any of its
material property or assets, (iv) increased in any manner the rate or terms of
compensation of any of its directors or officers, (v) paid or agreed to pay any
pension, retirement allowance or other employee benefit not required by law or
any existing plan or other agreement or arrangement to any such director,
officer or employee, whether past or present, (vi) entered into or amended any
employment, bonus, severance or retirement contract for employees of the
Company, (vii) suffered any work stoppage or labor dispute, or (viii) acquired
or agreed to acquire any interest in any corporation, partnership, limited
liability company or other entity. To the Company's Knowledge, the Company and
its Subsidiaries have not incurred any material liabilities in connection with
the items set forth in Section 3.6(b) of the Company Disclosure Letter, and the
representation set forth in this sentence shall not be qualified by any matter
set forth in the Company Disclosure Letter.

          Section 3.7. Compliance with Laws; Compliance with Agreements. (a) The
operations of the Company and its Subsidiaries are not being conducted in
violation of any law and neither the Company nor any of its Subsidiaries has
been given notice of any purported


                                      -18-
<PAGE>

violation of any Law, except, in either case, for violations that would not
reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect.

          (b) The Company and its Subsidiaries hold all federal, state, local
and foreign permits, approvals, licenses, authorizations, certificates, rights,
exemptions and orders from Governmental Entities (the "Permits") that are
required pursuant to any Laws or are otherwise necessary for the operation of
the business of the Company and/or its Subsidiaries as now conducted, except to
the extent that any such failure to hold Permits or any such default would not
reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect.

          (c) The Company and each of its Subsidiaries are not in breach or
violation of or in default in the performance or observance of any term or
provision of (nor to the Knowledge of the Company does there exist any condition
which upon the passage of time, the giving of notice or the failure to obtain a
waiver would case such a default under) (i) its Certificate of Incorporation or
By-laws or (ii) any contract, commitment, agreement, indenture, mortgage, loan
agreement, note, lease, bond, license, approval or other instrument to which it
is a party or by which it is bound or to which any of its property is subject,
except, in the case of clause (ii), for violations that would not reasonably be
expected to have, individually or in the aggregate, a Company Material Adverse
Effect.

          (d) Section 3.7(d) of the Company Disclosure Letter sets forth the
amount outstanding and maturity date of all outstanding Indebtedness where the
amount outstanding is greater than $1,000,000.

          Section 3.8. Litigation. As of the date of this Agreement, (i) there
is no action, suit, proceeding at law or in equity, or any arbitration or any
administrative or other proceeding by or before any Governmental Entity,
pending, or, to the Knowledge of the Company, threatened, against or affecting
the Company or any of its Subsidiaries, or any of their respective properties or
rights, and, (ii) there are no judgments, decrees, injunctions, rules or orders
of any court, governmental department, commission, agency, instrumentality or
authority or any arbitrator applicable to the Company or any of its
Subsidiaries, except for any of the foregoing under clauses (i) and (ii) that,
individually or in the aggregate, would not reasonably be expected to have a
Company Material Adverse Effect. With respect to each matter listed therein,
Section 3.8 of the Company Disclosure Letter sets forth the Company's insurance
coverage (including policy limits) applicable to such matter.

          Section 3.9. Employee Benefit Plans. (a) Each employee benefit plan
within the meaning of Section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), or other plan or arrangement that provides
stock purchase, restricted stock, incentives, bonuses, stock options and
deferred compensation or other benefit plan, program or arrangement, and all
employment, termination, severance, change of control, indemnification or other
employee contract or agreement maintained, contributed to, by the Company and/or
any of its Subsidiaries, or as to which the Company or any of its Subsidiaries
would reasonably be expected to have any liability (collectively, the "Employee
Benefit Plans") is set forth in Section 3.9 of the Company Disclosure Letter.
Each Employee Benefit Plan is in substantial


                                      -19-
<PAGE>

compliance with Applicable Law and has been administered and operated in all
material respects in accordance with its terms. Each Employee Benefit Plan which
is intended to be "qualified" within the meaning of Section 401(a) of the Code
has received a favorable determination letter from the Internal Revenue Service
or has submitted, or is within the remedial amendment period for submitting, an
application for a determination letter with the Internal Revenue Service and is
awaiting a response and, to the Knowledge of the Company, no event has occurred
and no condition exists which would result in the revocation of any such
determination.

          (b) Section 3.9(b) of the Company Disclosure Letter lists all
multiemployer plans (within the meaning of Section 3(37) or 4001(a) of ERISA)
contributed to, or participated in, by the Company or any of its Subsidiaries or
with respect to which the Company has incurred or could incur liability under
Title IV of ERISA. The Company has not incurred any liability which has not been
satisfied in full in connection with the Company's or any of its Subsidiary's
withdrawal from or the termination or reorganization of any multiemployer plan
and no fact or event exists which is reasonably expected to give rise to any
such liability.

          (c) No Employee Benefit Plan subject to Code Section 412 has any
accumulated funding deficiency, as such term is defined therein.

          (d) There has been no "prohibited transaction" (within the meaning of
Section 406 of ERISA or Code Section 4975) with respect to any Employee Benefit
Plan.

          (e) Section 3.9(e) of the Company Disclosure Letter lists all Employee
Benefit Plans which provide any welfare benefit beyond termination of employment
other than pursuant to COBRA.

          (f) All contributions premiums or payments required to be made in
connection with any Employee Benefit Plan have been made on or before their due
dates.

          (g) Except as set forth in Section 3.9(g) of the Company Disclosure
Letter, (i) since September 30, 2003 no payment or benefit paid or granted by
the Company or any of its Subsidiaries has been or will be considered an "excess
parachute payment" within the meaning of Section 280G of the Code and (ii)
neither the Company nor any of its Subsidiaries is a party to any agreement or
arrangement that would result, separately or in the aggregate, in the payment of
any amount or benefit that will be considered an "excess parachute payment"
within the meaning of Section 280G in connection with the transactions
contemplated by this Agreement.

          Section 3.10. Labor Matters. As of the date of this Agreement, except
for employees not in excess of 400 in the aggregate, represented by (i) Utility
Workers Union of America, Local 424, (ii) the Communications Workers of America,
Local 1023, and (iii) the Teamsters, Locals 385 and 769, no employee of the
Company or any of its Subsidiaries is represented by any union or any collective
bargaining agreement. As of the date of this Agreement, no labor organization or
group of employees of the Company or any of its Subsidiaries has made a pending
demand for recognition or certification, and there are no representation or
certification proceedings or petitions seeking a representation proceeding
presently pending or, to the Knowledge of the Company, threatened to be brought
or filed, with the National Labor Relations Board or any other labor relations
tribunal or authority.


                                      -20-
<PAGE>

          Section 3.11. Taxes.

          (a) The Company and each of its Subsidiaries have filed or caused to
be filed, or shall file or cause to be filed within the time and in the manner
prescribed by Applicable Law all material Tax Returns that are required to be
filed by, or with respect to, the Company and each of its Subsidiaries for
periods ending on or prior to the Effective Time (taking into account any
applicable valid extension of time within which to file), and each such Tax
Return was and continues to be true, correct and complete in all material
respects.

          (b) All material amounts of Taxes of the Company and each of its
Subsidiaries that were or are due and payable as of or prior to the Effective
Time have been (or will be) paid on or prior to the Effective Time within the
manner and no later than the time prescribed by Applicable Law and with respect
to material amounts of Taxes that have accrued but are not yet payable as of the
Effective Time that relate to any periods or portions thereof for which an
Exchange Act Report 10-Q or 10-K has been filed, the Company and its
Subsidiaries have or will have prior to the Effective Time established adequate
reserves for the payment of such Taxes (or otherwise reflected such Taxes as
paid) on such Exchange Act Reports in accordance with GAAP.

          (c) Neither the Company nor any of its Subsidiaries (i) is presently
the subject of a Tax Claim by any Governmental Entity that could materially
affect the Taxes of the Company or any of its Subsidiaries and neither the
Company nor any of its Subsidiaries is aware of any written notice of a proposed
commencement of any Tax Claim for the assessment or collection of additional
material amounts of Taxes or (ii) has granted, has requested or has been
requested to grant any unexpired waiver or extension of any statute of
limitations in connection with or in respect of the examination of any Tax
Return filed by, or with respect to, the Company or any of its Subsidiaries
(including with respect to (i) any consolidated Tax Returns or (ii) the
assessment of any material amounts of Tax or assertion of any material amounts
of Tax deficiency).

          (d) The Company and each of its Subsidiaries has delivered to or made
available for review by Parent for the four (4) year period prior to the
Effective Time correct and complete copies of: (i) all filed Tax Returns
relating to the Company and each of its Subsidiaries (other than any Tax Returns
relating to sales and use tax filed by NUI TeleCom), copies of all "ff
Schedules" relating to the federal income Tax Returns of the Company and each of
its Subsidiaries and copies of all schedules and workpapers relating to all
income, gross receipts and franchise Tax Returns (other than the federal income
Tax Returns) of the Company and each of its Subsidiaries, (ii) reports,
statements or other written information relating to any Tax Claim that could
result in the assessment of an amount of Tax equal to or greater than $100,000
received by the Company or any of its Subsidiaries from any Governmental Entity
and all written materials provided by the Company or any of its Subsidiaries to
any Governmental Entity in connection with such Tax Claim, and (iii) statements
of deficiencies assessed against or agreed to by the Company or any of its
Subsidiaries with respect to an amount of Tax equal to or greater than $100,000.


                                      -21-
<PAGE>

          (e) The Company and/or each of its Subsidiaries has delivered or made
available to the Parent (i) a schedule listing all of the states for which the
Company or any of its Subsidiaries, for any taxable period commencing after
September 30, 1999, reported an amount of net income or net loss equal to or
greater than $200,000 or Taxes greater than or equal to $100,000; and (ii) a
schedule that sets forth the amount of any net operating loss carryovers for
federal income tax purposes of the Company and its Subsidiaries.

          (f) In the four (4) years prior to the date of this Agreement, neither
the Company nor any of its Subsidiaries has received a written claim, that has
not been resolved as of the date hereof, by a Governmental Entity in a
jurisdiction where the Company or any such Subsidiary does not file Tax Returns
that the Company or any such Subsidiary is subject to a material amount of Tax
in that jurisdiction.

          (g) Except as required by Applicable Law, since December 31, 2003,
neither the Company nor any of its Subsidiaries has: (i) made or changed any
election concerning any Taxes, (ii) changed an annual accounting period or
adopted or changed any accounting method, (iii) settled any Tax Claim or
assessment or (iv) surrendered any right to claim a refund of any Taxes, in each
case of (i) through (iv), to the extent such action relates to a material amount
of Taxes and would affect the Taxes of the Surviving Company or any of its
Subsidiaries following the Effective Time.

          (h) Neither the Company nor any of its Subsidiaries has participated,
within the meaning of Treasury Regulation Section 1.6011-4, in any "listed
transaction" within the meaning of Treasury Regulation Section 1.6011-4(b)(2).

          (i) Neither the Company nor any of its Subsidiaries has received a Tax
Ruling or entered into a Closing Agreement with any Governmental Entity that
could affect the Taxes of Parent, the Surviving Company, or any Subsidiary of
Parent or the Surviving Company in a material manner after the Effective Time.

          (j) The Company, the Surviving Company, and each of the Company's
Subsidiaries is not and will not be required to make any adjustment under
Section 481(a) of the Code (or any corresponding provision of Foreign, state or
local Tax law) by reason of any change or any requested or proposed change in a
Tax accounting method or otherwise that could materially affect the Taxes of
Parent, the Surviving Company or any Subsidiary of Parent or the Surviving
Company.

          (k) Neither the Company nor any of its Subsidiaries: (i) entered into
or engaged in an installment sale transaction (within the meaning of Section 453
of the Code) for which an amount of Tax liability equal to or greater than
$100,000 will remain outstanding after the Effective Time; (ii) entered into a
"gain recognition agreement" within the meaning of Section 367 of the Code and
the Treasury Regulations promulgated thereunder; (iii) has, within the
twenty-four month period preceding the date hereof, constituted either a
"distributing corporation" or a "controlled corporation" (within the meaning of
Section 355(a) of the Code) in a distribution of stock that was intended to
qualify for tax-free treatment under Section 355 of the Code; or (iv) has
entered into any transaction during any taxable period commencing after
September 30, 1999 for which a "deferred intercompany gain" (within the meaning
of Treasury


                                      -22-
<PAGE>

Regulation Section 1.1502-13) equal to or greater than $200,000 will remain
outstanding after the Effective Time.

          (l) No power of attorney has been or will be granted with respect to
any matter relating to the Taxes of the Company or any Subsidiary that will have
any force or effect as of or after the Effective Time.

          (m) The Company and each of its corporate Subsidiaries are members of
the same affiliated group of which the Company is the common parent (the
"Company Parent"), within the meaning of Code Section 1504(a) (the "Company
Group"). Neither the Company nor any if its corporate Subsidiaries has been a
member of any affiliated group which had a common parent other than the Company.
Except with respect to any liability under Treasury Regulation Section 1.1502-6
(or any similar provision of state, local or foreign law) that directly results
from the Company or any of its Subsidiaries being a member of the Company Group,
neither the Company, the Surviving Company nor any Subsidiary thereof will have
as of the Effective Time any liability for a material amount of Taxes of any
other Person (i) as a transferee or successor, (ii) by contract (including any
Tax Sharing Agreements) or (iii) otherwise.

          (n) To the extent not already listed on Section 3.3 of the Disclosure
Schedules, neither the Company nor any of its Subsidiaries has at any time owned
an equity interest in any partnership or joint venture or been the holder of a
beneficial interest in any trust for any period for which the Company or any
such Subsidiary reported an amount of net income or net loss relating to such
equity interest or beneficial interest equal to or greater than $200,000 and
further, for which the statute of limitations for any Tax has not expired.

          Provided, however that solely for purposes of this Section 3.11 the
term Subsidiary with respect to the Company shall also include any former
Subsidiary of the Company for which the Company or any Subsidiary of the Company
(as determined as of the date hereof) may be liable for Taxes relating to or
imposed with respect to such former Subsidiary, but only with respect to those
periods prior to or during which such former Subsidiary was a Subsidiary of the
Company.

          Section 3.12. Intellectual Property. (a) To the Knowledge of the
Company, the Company or its Subsidiaries own or have the right to use, free and
clear of all liens, security interests, charges or encumbrances of any kind or
nature, all proprietary Intellectual Property necessary to conduct the
businesses of the Company and its Subsidiaries substantially as presently
conducted except where the failure to so own or have such right, or the presence
of such liens, would not reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect.

          (b) Since September 30, 2003, the Company has not received written
notice and, to the Knowledge of the Company, no claim has been threatened by any
person, challenging the use or ownership by the Company or its Subsidiaries of
any Intellectual Property, except for claims that would not reasonably be
expected to have, individually or in the aggregate, a Company Material Adverse
Effect.

                                      -23-
<PAGE>

          (c) To the Knowledge of the Company, the use of the Intellectual
Property by the Company or any of its Subsidiaries does not infringe upon,
violate or constitute a misappropriation of any right, title or interest in any
Intellectual Property right.

          (d) Since September 30, 2003, to the Knowledge of the Company, the
proprietary Intellectual Property owned by the Company has not been used or
enforced or has failed to be used or enforced in a manner that would reasonably
be expected to result in the abandonment, cancellation or unenforceability of
any such Intellectual Property, except for such conflicts, infringements,
violations, interferences, claims, invalidity, abandonments, cancellations or
unenforceability that could not, individually or in the aggregate, reasonably be
expected to have a Company Material Adverse Effect.

          Section 3.13. Information. None of the information supplied by or
on behalf of the Company specifically for inclusion or incorporation by
reference in (i) the Proxy Statement or (ii) any other document filed or to be
filed with the Commission in connection with the transactions contemplated by
this Agreement (the "Other Filings") will, at the respective times filed with
the Commission and, in addition, in the case of the Proxy Statement, at the date
it or any amendment or supplement thereto is mailed to shareholders of the
Company, and at the time of the Special Meeting, contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading, provided that no
representation is made by the Company with respect to information furnished by
Parent or Sub specifically for inclusion therein. The Proxy Statement and the
Other Filings made by the Company will, at the respective times filed with the
Commission, comply as to form in all material respects with the provisions of
the Exchange Act and the rules and regulations thereunder, if applicable, except
that no representation is made by the Company with respect to statements made
therein based on information supplied by Parent or Sub in writing specifically
for inclusion in the Proxy Statement.

          Section 3.14. Broker's or Finder's Fee. Except for the fees of
Berenson & Company, LLC and Credit Suisse First Boston LLC (whose fees and
expenses shall be paid by the Company in accordance with the Company's agreement
with such firms), no agent, broker, Person or firm acting on behalf of the
Company is, or shall be, entitled to any broker's fees, finder's fees or
commissions from the Company in connection with this Agreement or any of the
transactions contemplated hereby from any of the Parties.

          Section 3.15. Certain Contracts and Arrangements. (a) As of the
date hereof, other than those Contracts that are filed as exhibits to the
Commission Filings filed and publicly available prior to the date of this
Agreement, neither the Company nor any of its Subsidiaries is a party to or
bound by any written contracts, agreements or instruments ("Contracts") of the
following nature (collectively, the "Material Contracts"): (i) Contracts that
are required to be filed as an exhibit to a Commission Filing and (ii) Contracts
that contain a minimum annual purchase requirement of $1,000,000 or more which
have a term of more than one (1) year and that cannot be cancelled on less than
ninety (90) days notice. Except as would not reasonably be expected to have,
either individually or in the aggregate, a Company Material Adverse Effect,
neither the Company nor any of its Subsidiaries is in default under any Material
Contract. All


                                      -24-
<PAGE>

collective bargaining agreements to which the Company or any of its Subsidiaries
is a party are set forth on Section 3.15(a) of the Company Disclosure Letter.

          (b) To the Company's Knowledge, the execution of this Agreement by the
Company and the consummation of the transactions contemplated hereby do not and
will not result, directly or indirectly, in the grant of any material rights to
any Person under any Material Contract (other than the agreements disclosed in
Section 3.15(b) of the Company Disclosure Letter) to which it or any of its
subsidiaries is a party.

          Section 3.16. Environmental Laws. Except as listed or described in
Section 3.16 of the Company Disclosure Letter or the Exchange Act Reports, or
except as would not reasonably be expected to have a Company Material Adverse
Effect, to the Knowledge of the Company:

          (a) (i) the Company and its Subsidiaries have obtained and presently
hold all federal, state, local and foreign Permits as required under any
Environmental Laws ("Environmental Permits") that are necessary for the
operation of the business of the Company and/or its Subsidiaries as now
conducted; (ii) each Environmental Permit is in full force and effect and the
Company and its Subsidiaries, and their operations, are in compliance with all
of their obligations with respect thereto; (iii) no event has occurred that
would reasonably be expected to cause, upon the giving of notice or the lapse of
time, revocation or termination of any Environmental Permit; (iv) neither the
Company nor its Subsidiaries has received any notice of, and no proceeding is
pending or threatened with respect to, any alleged failure by the Company or any
of its Subsidiaries to have any Environmental Permit or not to be in compliance
therewith; and (v) there is no reason why any Environmental Permit that has been
applied for, but not yet granted, will not be obtained in form and substance
sufficient to permit the continued lawful operation of the Company, its
Subsidiaries, and their respective operations;

          (b) the Company and its Subsidiaries (i) are in compliance with, and
not in violation of, any and all applicable Environmental Laws; and (ii) are not
subject to any investigation or response action obligations or other liabilities
under any Environmental Laws;

          (c) the Company and its Subsidiaries, individually or collectively,
(i) are not subject to any consent decree, compliance order or administrative
order issued pursuant to Environmental Laws or any written request for
information, notice of violation, demand letter, administrative inquiry,
complaint or claim from any Governmental Entity pursuant to Environmental Laws;
(ii) have not in the last five (5) years received written notice under the
citizen suit provision of any Environmental Law; (iii) there are no claims
pending, or otherwise threatened, against the Company or its Subsidiaries or
otherwise relating to any Company Property under any Environmental Laws; and
(iv) there are no facts, circumstances or conditions relating to the past or
present business or operations of the Company or its Subsidiaries or any of
their respective predecessors, or to any properties currently or formerly owned,
leased or operated by the Company or its Subsidiaries or any of their respective
predecessors, that would reasonably be expected to give rise to any claim under
any Environmental Law;

          (d) the Company and its Subsidiaries have disclosed all material
environmental reports, studies, assessments, sampling data, and other
environmental information


                                      -25-
<PAGE>

in their possession relating to the environmental conditions associated with the
properties currently or formerly owned, leased or operated by the Company or its
Subsidiaries or any of their respective predecessors (including the presence of
contamination associated with the manufacturing of gas from coal and/or
petroleum) and the current or former operations of the Company or its
Subsidiaries or any of their respective predecessors;

          (e) the representations and warranties in this Section 3.16 are the
sole and exclusive representations and warranties of the Company concerning
environmental matters.

          Section 3.17. Opinion of Financial Advisors. The Board has received
the opinion of each of Berenson & Company, LLC and Credit Suisse First Boston
LLC, to the effect that, as of the date of this Agreement, the Merger Price is
fair, from a financial point of view, to the holders of Shares. A copy of the
written opinion delivered by each of Berenson & Company, LLC and Credit Suisse
First Boston LLC shall be delivered to Parent following the execution of this
Agreement by the Parties.

          Section 3.18. Board and Shareholder Approval. The Board, at a meeting
duly called and held, has (a) duly and validly approved and taken all corporate
action required to be taken by the Board to authorize this Agreement and the
consummation of the transactions contemplated hereby, (b) resolved that the
transactions contemplated by this Agreement are advisable and in the best
interests of the shareholders of the Company and that the consideration to be
paid for each Share in connection with the Merger is fair to the holders of the
Shares and (c) subject to the other terms and conditions of this Agreement,
resolved to recommend that the shareholders of the Company approve and adopt
this Agreement and each of the transactions contemplated hereby, and none of the
aforesaid actions by the Board has been amended, rescinded or modified. The
approval of the Merger by the affirmative vote of a majority of the votes cast
by the holders of Shares entitled to vote thereon is the only vote of the
holders of any class or series of the capital stock of the Company or any of its
subsidiaries required to approve this Agreement, the Merger and the other
transactions contemplated hereby.

          Section 3.19. State Takeover Statutes. The Board has approved the
transactions contemplated by this Agreement such that the provisions of the New
Jersey Shareholders Protection Act, N.J.S.A. 14A:10A-1 et seq., will not,
assuming the accuracy of the representations contained in Section 4.9, apply to
this Agreement or any of the transactions contemplated hereby. The Company has
taken (and will take) all action required to be taken by it in order to exempt
this Agreement and the transactions contemplated hereby from, and this Agreement
and, assuming the accuracy of the representations contained in Section 4.9, the
transactions contemplated hereby are exempt from, (i) the requirements of any
"moratorium," "control share," "fair price" or other anti-takeover laws and
regulations of the State of New Jersey (collectively, "Takeover Laws"), other
than Section 48:2-13, Section 48:2-51.1, Section 48:3-7 and Section 48:3-10 of
the New Jersey Public Utilities Act, N.J.S.A. Title 48, as amended.

          Section 3.20. Rights Agreement. The Company has made available to
Parent a true and complete copy of the Rights Agreement as in effect on the date
of this Agreement. The Company has taken all action necessary so that the
entering into of this Agreement and the


                                      -26-
<PAGE>

consummation of the transactions contemplated hereby (including the Merger) do
not and will not result in the ability of any Person to exercise any Rights
under the Rights Agreement or enable or require the Company Rights to separate
from the shares of common stock, no par value per share, of the Company to which
they are attached or to be triggered or become exercisable.

          Section 3.21. Ownership of Parent Common Stock. The Company does not
"beneficially own" (as such term is defined for purposes of Section 13(d) of the
Exchange Act) any shares of common stock, par value $5.00 per share, of Parent.

          Section 3.22. Regulatory Matters. (a) Neither the Company nor (in the
case of clauses (ii), (iii), and (iv)) any "associate company," "subsidiary
company" or "affiliate" (as such terms are defined in the Public Utility Holding
Company Act of 1935, as amended (the "1935 Act")) of the Company is (i)
registered, or required to be registered, under the 1935 Act, (ii) subject to
regulation as a "public utility" under the Federal Power Act, as amended, (iii)
subject to regulation as a "natural-gas company" under the Natural Gas Act of
1938, as amended, or (iv) subject to regulation as a public utility or public
service company (or similar designation) by any state in the United States other
than New Jersey, Florida, Maryland and Virginia or by any foreign country.

          (b) As of the date hereof, the NJBPU Settlement Order is final and is
in full force and effect and there are no agreements or understandings with the
NJBPU or its staff concerning the matters that are the subject of the NJBPU
Settlement Order that are not disclosed in the NJBPU Settlement Order.

          (c) To the best of the Company's Knowledge, the Company has disclosed
to Parent all material information with respect to any investigations of the
FPSC and the Commission relating to the matters addressed by the NJBPU
Settlement Order and the Stipulation and Agreement referred to therein, by the
Stier Anderson Report, or by the NJAG Settlement.

          (d) The Company has made available to Parent the final Stier Anderson
Report and as of the date hereof, such report has not been amended, modified or
supplemented in any way, and no portions of, annexes or exhibits to, or
documents otherwise constituting a part of such report have been omitted from
the final Stier Anderson Report made available to Parent.

          (e) The Company has made available to Parent the NJAG Settlement and
as of the date hereof, such agreements have not been amended, modified or
supplemented in any way, and no portions of, annexes or exhibits to, or
documents otherwise constituting a part of such agreements have been omitted
from the NJAG Settlement made available to Parent.

          (f) To the best of the Company's Knowledge, the Company has disclosed
to Parent all material information relating to the ongoing investigation of the
Company by the Commission and the investigation of the Company by the New Jersey
Attorney General.

          (g) The Company has made available to Parent the Letter of
Non-Applicability, dated July 6, 2004, issued by the Department of Environmental
Protection of the


                                      -27-
<PAGE>

State of New Jersey (the "NJLNA") relating to the transactions contemplated by
this Agreement and as of the date hereof, the NJLNA is in full force and effect.

                                   ARTICLE IV

                REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB

         Section 4. Each of Parent and Sub hereby represents and warrants to the
Company as follows:

          Section 4.1. Due Organization, Good Standing and Corporate Power. Each
of Parent and Sub is a corporation duly incorporated (or, if not a corporation,
duly organized), validly existing and in good standing under the laws of the
jurisdiction in which it is incorporated (or, if not a corporation,
organization) and has the requisite corporate power and authority to carry on
its business as now being conducted. Each of Parent and Sub is duly qualified or
licensed to do business and is in good standing in each jurisdiction in which
the nature of its business or the ownership or leasing of its properties makes
such qualification or licensing necessary, other than in such jurisdictions
where the failure to be so qualified or licensed and in good standing would not
reasonably be expected to have, individually or in the aggregate, a Parent
Material Adverse Effect. Each of Parent and Sub has delivered to the Company
complete and correct copies of its Certificate of Incorporation and By-laws, in
each case, as amended and in full force and effect as of the date of this
Agreement. Neither Parent nor Sub is in violation of any of the provisions of
its Certificate of Incorporation or By-laws.

          Section 4.2. Authorization; Noncontravention. Each of Parent and Sub
has the requisite corporate power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution, delivery and performance of
this Agreement by Parent and Sub and the consummation by each of them of the
transactions contemplated hereby have been duly authorized and approved by the
Board of Directors of each of Parent and Sub and have been duly approved by
Parent as sole shareholder of Sub. No other corporate action on the part of
either of Parent or Sub is necessary to authorize the execution, delivery and
performance of this Agreement by each of Parent and Sub and the consummation of
the transactions contemplated hereby (other than the filing of the appropriate
merger documents as required by the NJBCA). This Agreement has been duly
executed and delivered by each of Parent and Sub and, assuming that this
Agreement constitutes a valid and binding obligation of the Company, constitutes
a valid and binding obligation of each of Parent and Sub, enforceable against
each of Parent and Sub in accordance with its terms, except that such
enforcement may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors' rights
generally, and by general equitable principles. The execution and delivery of
this Agreement do not, and the consummation of the transactions contemplated by
this Agreement will not, (a) conflict with any of the provisions of the
certificate or articles of incorporation or by-laws (or comparable documents) of
Parent or Sub, in each case as amended to the date of this Agreement, (b)
conflict with, result in a breach of or default under (with or without notice or
lapse of time, or both) any material contract, agreement, indenture, mortgage,
deed of trust, lease or other instrument to which Parent or Sub is a party or by
which Parent or Sub or any of their respective


                                      -28-
<PAGE>

assets is bound or subject or (c) subject to the consents, approvals,
authorizations, declarations, filings and notices referred to in Section 4.3,
contravene any domestic or foreign law, rule or regulation or any order, writ,
judgment, injunction, decree, determination or award currently in effect, which,
in the case of clauses (b) and (c) above, would reasonably be expected to have,
individually or in the aggregate, a Parent Material Adverse Effect.

          Section 4.3. Consents and Approvals. Except as set forth in Section
4.3 of the Parent Disclosure Letter, assuming all filings required under the
Antitrust Laws are made and any waiting periods thereunder have been terminated
or expired, no Consent of or to any Governmental Entity or any other third party
which has not been received or made, is necessary or required with respect to
Parent or Sub in connection with the execution and delivery of this Agreement by
Parent or Sub or the consummation by Parent or Sub, as the case may be, of any
of the transactions contemplated by this Agreement, except for (a) the Consent
of each of the NJBPU, the FPSC, the MPSC and the VSCC and the Consents set forth
in Section 3.4(d), (b) compliance with any applicable requirements of the
Exchange Act and any applicable state securities or blue sky laws, (c) the
filing of the Certificate of Merger and (d) any other consents, approvals,
authorizations, filings or notices which, if not made or obtained, would not
reasonably be expected to have, individually or in the aggregate, a Parent
Material Adverse Effect.

          Section 4.4. Information. None of the information supplied or to be
supplied by or on behalf of Parent or Sub in writing specifically for inclusion
or incorporation by reference in (i) the Proxy Statement or (ii) the Other
Filings will, at the respective times filed with the Commission and, in
addition, in the case of the Proxy Statement, at the date it or any amendment or
supplement thereto is mailed to shareholders, and at the time of the Special
Meeting, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements made therein, in light of the circumstances under which they we made,
not misleading. The Other Filings made by Parent or Sub will, at the respective
times filed with the Commission, comply as to form in all material respects with
the provisions of the Exchange Act and the rules and regulations thereunder, if
applicable, except that no representation is made by Parent or Sub with respect
to statements made therein based on information supplied by the Company in
writing specifically for inclusion in the Other Filings.

          Section 4.5. Broker's or Finder's Fee. Except for Morgan Stanley & Co.
Incorporated (whose fees and expenses as financial advisor to Parent and Sub
shall be paid by Parent or Sub), no agent, broker, Person or firm acting on
behalf of Parent or Sub is or shall be entitled to any fee, commission or
broker's or finder's fees in connection with this Agreement or any of the
transactions contemplated hereby from any of the parties hereto or from any
Affiliate of the Parties.

          Section 4.6. Sub's Operations. Sub was formed solely for the purpose
of engaging in the transactions contemplated by this Agreement and has not
engaged in any business activities or conducted any operations other than in
connection with such transactions.

          Section 4.7. Funds. Parent and Sub collectively have and, at the
Effective Time, Parent will cause Sub to have, cash on hand in an aggregate
amount sufficient to enable (a) Parent and Sub to timely perform their
obligations hereunder, including to pay in full (i) an


                                      -29-
<PAGE>

amount equal to the Payment Fund, (ii) the aggregate Cash Payment, and (iii) all
fees and expenses payable by Parent and Sub in connection with this Agreement
and the transactions contemplated hereby and, (b) the Company and its
subsidiaries to pay in full (i) any outstanding balance in respect of the $28
million and any interest accrued thereon that the Company is required to return
to its ratepayers and the $2 million penalty and any interest accrued thereon,
in each case as required by the NJBPU Settlement Order upon a sale of the
Company and (ii) all Indebtedness of the Company or any of its Subsidiaries
required to be repaid as a result of the consummation of the transactions
contemplated by this Agreement.

          Section 4.8. Litigation. There is no action, suit, proceeding at law
or in equity, or any arbitration or any administrative or other proceeding by or
before any Governmental Entity pending or, to the Knowledge of Parent,
threatened, against or affecting Parent or Sub, or any of their respective
properties or rights which would prohibit the consummation of the transactions
contemplated by this Agreement.

          Section 4.9. Ownership of Shares. (a) Other than as contemplated by
this Agreement, neither Parent nor any of its affiliates or associates (as such
terms are defined under the Exchange Act) beneficially owns, directly or
indirectly, or is a party to any agreement, arrangement or understanding for the
purpose of acquiring, holding, voting or disposing of, any shares of capital
stock of the Company.

          (b) Neither Parent nor Sub is an "Interested Stockholder" of the
Company under N.J.S.A. 14A:10A-3 of the New Jersey Shareholders Protection Act.

                                   ARTICLE V

                              ADDITIONAL AGREEMENTS

          Section 5.1. Access to Information Concerning Properties and Records.
(a) During the period commencing on the date hereof and ending on the earlier of
(i) the date on which the Effective Time occurs and (ii) the date on which this
Agreement is terminated pursuant to Section 7.1, the Company shall, and shall
cause each of its Subsidiaries to, upon reasonable notice, afford Parent and Sub
and their respective employees, counsel, accountants, consultants and other
authorized representatives, reasonable access during normal business hours to
the officers, directors, employees, accountants, properties, books and records
(including without limitation, any and all materials relating to financial
records and to Taxes) of the Company and its Subsidiaries and, during such
period, the Company shall furnish promptly to Parent and Sub all information
concerning its or its Subsidiaries' business, properties and personnel as Parent
and Sub may reasonably request; provided, however, that the Company may restrict
the foregoing access to the extent that in the reasonable judgment of the
Company, any law, treaty, rule or regulation of any Governmental Entity
applicable to the Company requires it or its Subsidiaries to restrict access to
any of its business, properties, information or personnel; and provided,
further, that such access shall not unreasonably disrupt the operations of the
Company or its Subsidiaries. Notwithstanding anything to the contrary contained
in this Agreement, the Company shall not be required to provide any information
or access that it


                                      -30-
<PAGE>

reasonably believes could violate Applicable Law, including Antitrust Laws,
rules or regulations or the terms of any confidentiality agreement or cause
forfeiture of attorney/client privilege.

          (b) Nothing contained in this Agreement shall give to Parent or Sub,
directly or indirectly, rights to control or direct the Company's or its
Subsidiaries' operations prior to the Effective Time. Prior to the Effective
Time, the Company shall exercise, consistent with the terms and conditions of
this Agreement, complete control and supervision of its and its Subsidiaries'
operations.

          Section 5.2. Confidentiality. Information obtained by Parent, Sub and
their respective employees, counsel, accountants, consultants and other
authorized representatives pursuant to Section 5.1 shall be subject to the
provisions of the Confidentiality Agreement by and between Berenson & Company,
LLC, as agent for the Company, and Parent, dated November 25, 2003 (the
"Confidentiality Agreement"). The terms of the Confidentiality Agreement shall
survive the termination of this Agreement and continue in full force and effect
thereafter and the Confidentiality Agreement shall not be modified, waived or
amended without the written consent of the Company.

          Section 5.3. Conduct of the Business of the Company Pending the
Closing Date. The Company agrees that, except as expressly permitted or required
by this Agreement, during the period commencing on the date hereof and ending at
the earlier of (x) the Effective Time and (y) termination of this Agreement
pursuant to Section 7.1:

          (a) the Company and each of its Subsidiaries shall conduct their
respective operations in all material respects only in the ordinary course of
business consistent with past practice and, to the extent consistent therewith,
use their commercially reasonable efforts to preserve intact their respective
business organization, keep available the services of their current key officers
and employees as a group and maintain satisfactory relationships with any Person
having significant business relationships with the Company or any of such
Subsidiaries; and

          (b) the Company shall and each of its Subsidiaries shall use their
respective commercially reasonable efforts to maintain their existing third
party insurance coverage, provided that any losses that are not so insured shall
be taken into account in determining whether there has been a Company Material
Adverse Effect. For the avoidance of doubt, (i) the Parties agree that any
losses that are self-insured by the Company shall be taken into account in
determining whether there has been a Company Material Adverse Effect and (ii)
the maintenance of existing third party insurance coverage shall not include the
purchase of "run-off" coverage as contemplated by Section 5.10(b).

          (c) the Company shall and each of its Subsidiaries shall use their
respective commercially reasonable efforts to maintain in effect all existing
governmental permits pursuant to which the Company or any of its subsidiaries
operate except for those permits the expiration or termination of which would
not reasonably be expected to have a Company Material Adverse Effect.

          (d) the Company shall use its commercially reasonable efforts to
ensure that the execution of this Agreement and the consummation of the
transactions contemplated hereby


                                      -31-
<PAGE>

do not and will not result, directly or indirectly, in the grant of any material
rights to any Person under any Material Contract to which it or any of its
subsidiaries is a party including the contracts set forth in Section 3.15(b) of
the Company Disclosure Letter.

          (e) neither the Company nor any of its Subsidiaries shall do any of
the following without the prior written consent of Parent (such consent not to
be unreasonably withheld, conditioned or delayed):

          (i) make any change in or amendment to its Certificate of
     Incorporation or its By-laws (or comparable governing documents) that would
     reasonably be expected to materially delay, impede or interfere with the
     Company's ability to consummate the Merger;

          (ii) issue or sell, or authorize to issue or sell, any shares of its
     capital stock or any other ownership interests, or issue or sell, or
     authorize to issue or sell, any securities convertible into or exchangeable
     for, or options, warrants or rights to purchase or subscribe for, or enter
     into any arrangement or contract with respect to the issuance or sale of,
     any shares of its capital stock or any other ownership interests, except
     for the issuance by the Company of Shares pursuant to the terms of any
     Options or the acquisition of Shares from holders of Options in full or
     partial payment of the exercise price payable by such holder upon exercise
     of Options;

          (iii) declare, pay or set aside any dividend or other distribution or
     payment with respect to (other than among the Company and its wholly owned
     subsidiaries, provided that such dividends, distributions or payments are
     not prohibited by Applicable Law or by any Material Contract), or split,
     combine, redeem or reclassify, or purchase or otherwise acquire, any shares
     of its capital stock or its other securities except for the acquisition of
     Shares from holders of Options in full or partial payment of the exercise
     price payable by such holder upon exercise of Options;

          (iv) make or incur capital expenditures in each of the Company's
     fiscal year 2004 and fiscal year 2005 that, individually or in the
     aggregate, are more than 110% of the aggregate capital expenditures as
     itemized on Section 5.3(e)(iv) of the Company Disclosure Letter for such
     fiscal year;

          (v) acquire, make any investment in, or make any capital contributions
     to, any Person or entity other than in the ordinary course of business,
     except pursuant to capital expenditures set forth on Section 5.3(e)(v) of
     the Company Disclosure Letter;

          (vi) sell, lease, share or otherwise dispose of any of its properties
     or assets that are material to its business, other than natural gas sold in
     the ordinary course of business and except as set forth on Section
     5.3(e)(vi) of the Company Disclosure Letter, provided that the Company
     shall not incur material liabilities in connection with the items set forth
     on Section 5.3(e)(vi) of the Company Disclosure Letter;

          (vii) other than as necessary to arrange for: (a) the Bridge
     Facilities, (b) extending the Credit Facilities or (c) financing the
     repayment of the Medium Term Notes,


                                      -32-
<PAGE>

     enter into, modify (in any material way) or terminate any Material Contract
     other than a gas purchase or sale contract in the ordinary course of
     business;

          (viii) except as set forth in Section 5.3(e)(viii) of the Company
     Disclosure Letter, (x) incur any indebtedness for borrowed money or
     guarantee any such indebtedness of another Person, other than borrowings
     under facilities existing on the date hereof and described in the Exchange
     Act Reports or (y) make any loans or advances to any other person or entity
     (other than among the Company and its wholly owned subsidiaries) that, in
     each case, has a value greater than $1,000,000; provided, however, that the
     Company and its Subsidiaries may take any commercially reasonable measures
     necessary to incur trade credit obligations in connection with gas supply,
     transportation or storage in the ordinary course of business;

          (ix) grant or agree to grant to any officer or employee of the Company
     or any of its Subsidiaries any increase in wages or bonus, severance,
     profit sharing, retirement, deferred compensation, indemnification,
     insurance or other compensation or benefits, or establish any new
     compensation or benefit plans or arrangements, or amend or agree to amend
     any existing Benefit Plans, except (w) as may be required under Applicable
     Law, (x) as expressly required by the Employee Benefit Plans or collective
     bargaining agreements of the Company in effect on the date hereof, (y) as
     expressly required by employment, retention, change-of-control or similar
     type agreements existing as of the date hereof and (z) routine annual
     salary and wage increases for employees that are not subject to collective
     bargaining agreements and routine salary and wage increases in connection
     with promotions of employees not subject to collective bargaining
     agreements, in each case in the ordinary course of business consistent with
     past practice, provided that such increases pursuant to this clause (z)
     shall not exceed 5% of the annualized gross compensation costs for all
     employees of the Company and its Subsidiaries not subject to collective
     bargaining agreements as of the date hereof.

          (x) (A) make or rescind any express or deemed material election
     relating to Taxes other than as mandated by Applicable Law; (B) make a
     request for a Tax Ruling or enter into a Closing Agreement, in each case,
     that could materially affect the Company or any such Subsidiary; (C) settle
     or compromise any Tax Claim or other controversy relating to Taxes, to the
     extent the amount of such settlement is equal to or greater than $100,000;
     (D) except as otherwise mandated by Applicable Law, file any amendments to
     any previously filed Tax Returns that could materially affect the Taxes of
     Parent, the Surviving Company, or any Subsidiaries of Parent or the
     Company, or surrender any right to claim a material amount of refund of any
     Taxes; (E) except as mandated by Applicable Law, change any of its methods
     of reporting income or deductions for Tax purposes in a material manner
     from those employed in the preparation of the most recently filed Tax
     Return that has been previously delivered to Parent on which such item of
     income or deduction was previously reported income or deductions that has
     been previously delivered to Parent, or (F) file any Tax Return in a manner
     that could be materially inconsistent with past custom and practice, except
     as may be required by Applicable Law;

                                      -33-
<PAGE>

          (xi) waive any rights of substantial value or (y) cancel or forgive
     any material indebtedness for borrowed money owed to the Company or any of
     its Subsidiaries other than indebtedness of the Company to a wholly-owned
     Subsidiary of the Company;

          (xii) except as may be required by the Commission or any Governmental
     Entity or under GAAP, make any change in its methods, principles and
     practices of accounting, including Tax accounting policies and procedures;

          (xiii) enter into any agreement that materially restrains, limits or
     impedes the Company's or its Subsidiaries' ability to compete with or
     conduct any business or line of business or take any action (or fail to
     take any action necessary) that violates any order or regulation of any
     Governmental Entity (in the Company's good faith interpretation) governing
     the Company's or its Subsidiaries' operations and obligations to provide
     safe and reliable service to customers;

          (xiv) commence construction of any additional gas transmission, gas
     delivery or gas storage capacity or obligate itself to purchase or
     otherwise acquire any additional transmission, delivery or storage
     facilities, in each case, except as permitted by Section 5.3(e)(iv) or as
     set forth in Section 5.3(e)(xiv) of the Company Disclosure Letter;

          (xv) amend, modify or waive any provision of any confidentiality or
     standstill agreement to which it is a party relating to the acquisition of
     securities or assets of the Company, other than in connection with any
     action permitted by Section 5.6 prior to the time the Company's
     shareholders have voted to approve the Merger;

          (xvi) amend, modify or waive any provision of the Rights Agreement,
     other than in connection with any action permitted by Section 5.6 prior to
     the time the Company's shareholders have voted to approve the Merger; or

          (xvii) authorize any of, or commit or agree to take any of, the
     foregoing actions in respect of which it is restricted by the provisions of
     this Section.

          (f) The Company shall request as soon as practicable following the
date hereof a written estimate of its (and its Subsidiaries') maximum withdrawal
liability with respect to all multiemployer plans listed in Section 3.9(b) of
the Company Disclosure Letter as of such date, to be delivered to Parent as soon
as practicable following the receipt thereof.

          (g) The Company shall, and shall cause its Subsidiaries to, cooperate
fully with the State of New Jersey as required by, and comply in all material
respects with the provisions of, the NJAG Settlement.

          Section 5.4. Preparation of Proxy Statement; Shareholders' Meeting.
(a) As soon as reasonably practicable following the date of this Agreement, but
not later than sixty (60) days after the date hereof, the Company shall prepare
a preliminary proxy statement relating to the meeting of the Company's
shareholders to be held in connection with the Merger (together with any
amendments thereof or supplements thereto, in each case in the form or forms
mailed to the Company's shareholders, the "Proxy Statement") and file the Proxy
Statement with the


                                      -34-
<PAGE>

Commission. The Proxy Statement shall include a recommendation of the Board (the
"Company Board Recommendation") that its shareholders vote in favor of the
Merger and this Agreement (subject to Section 5.6). Subject to Section 5.4(c),
the Company shall use its commercially reasonable efforts to have the Proxy
Statement cleared by the Commission as promptly as practicable after such
filing. Subject to Section 5.4(c), the Company shall use its commercially
reasonable efforts to cause the Proxy Statement to be mailed to the Company's
shareholders as promptly as practicable and, in any event, within five (5)
Business Days after the Proxy Statement is cleared by the Commission.

          (b) If at any time prior to the Effective Time any event shall occur
that should be set forth in an amendment of or a supplement to the Proxy
Statement, the Company shall prepare and file with the Commission such amendment
or supplement as soon thereafter as is reasonably practicable. Parent, Sub and
the Company shall cooperate with each other in the preparation of the Proxy
Statement, and the Company shall notify Parent of the receipt of any comments of
the Commission with respect to the Proxy Statement and of any requests by the
Commission for any amendment or supplement thereto or of additional requests by
the Commission for any amendment or supplement thereto or for additional
information, and shall provide to Parent promptly copies of all correspondence
between the Company or any representative of the Company and the Commission with
respect to the Proxy Statement. The Company shall give Parent and its counsel
the opportunity to review the Proxy Statement and all responses to requests for
additional information by, and replies to comments of, the Commission before
their being filed with, or sent to, the Commission. Each of the Company, Parent
and Sub shall use its commercially reasonable efforts after consultation with
the other Parties, to respond promptly to all such comments of and requests by
the Commission.

          (c) Subject to the last sentence of this Section 5.4(c), the Company
shall, as soon as reasonably practicable after the date hereof (i) take all
steps necessary to duly call, give notice of, convene and hold a special meeting
of its shareholders (the "Special Meeting") to consider and vote upon the
adoption and approval of this Agreement and the Merger, (ii) distribute to its
shareholders the Proxy Statement in accordance with applicable federal and state
law and with its Certificate of Incorporation and By-laws, (iii) subject to the
fiduciary duties of its Board, recommend to its shareholders the approval of
this Agreement and the transactions contemplated hereby and (iv) cooperate and
consult with Parent with respect to each of the foregoing matters. The Special
Meeting shall be held not later than thirty (30) Business Days after the Proxy
Statement is cleared by the Commission. Notwithstanding anything herein to the
contrary, if the Board withdraws, modifies or changes its recommendation of this
Agreement or the Merger in a manner adverse to Parent or resolves to do any of
the foregoing, (i) the Company shall not be obligated to call, give notice of,
convene and hold the Special Meeting and (ii) the Company shall not be required
to take any of the other actions set forth in Sections 5.4(a), 5.4(b) and
5.4(c).

          Section 5.5. Commercially Reasonable Efforts. (a) Except as otherwise
set forth in Section 5.7, Section 5.8 and Section 7.1(b)(i), subject to the
terms and conditions provided herein, and to applicable legal requirements each
of the Company, Parent and Sub shall cooperate and use their commercially
reasonable efforts to take, or cause to be taken, and not fail to take, all
appropriate action, and do, or cause to be done, consistent with the fiduciary
duties of


                                      -35-
<PAGE>

the Board, and assist and cooperate with the other parties in doing, all things
necessary, proper or advisable to consummate and make effective, in the most
expeditious manner practicable, the Merger and the other transactions
contemplated hereby, including the satisfaction of the respective conditions set
forth in Article VI. Notwithstanding the foregoing, each party hereto shall use
its commercially reasonable efforts to resolve such objections, if any, as may
be asserted with respect to the transactions contemplated by this Agreement
under any Antitrust Law.

          (b) If at any time prior to the Effective Time any event or
circumstance relating to either the Company or its Subsidiaries, or Parent or
Sub or any of their Subsidiaries, is discovered by the Company or Parent, as the
case may be, and which should be set forth in an amendment to the Proxy
Statement, the discovering Party will promptly inform the other Party of such
event or circumstance. Each party will, and will cause its Subsidiaries to,
execute such further documents and instruments and take such further actions as
may reasonably be requested by any other Party in order to consummate the Merger
in accordance with the terms hereof.

          Section 5.6. No Solicitation of Other Offers. (a) The Company shall,
and shall cause its Subsidiaries and shall use its commercially reasonable
efforts to cause its officers, directors, representatives and agents to,
immediately cease and cause to be terminated any existing activities,
discussions or negotiations with any parties conducted prior to the date of this
Agreement with respect to any Acquisition Proposal.

          (b) The Company (i) shall not take, and shall cause its Subsidiaries
not to take, and the Company and its Subsidiaries shall use commercially
reasonable efforts to cause their respective officers, directors,
representatives and agents (including, without limitation, any investment
banker, attorney or accountant retained by the Company or any of its
subsidiaries or any of the foregoing) not to take, directly or indirectly, any
action to knowingly encourage, initiate or solicit (including by way of
furnishing information) or knowingly take any other action designed to
facilitate any inquiries or the making of any proposal or offer (including,
without limitation, any proposal or offer to the Company's shareholders) which
constitutes or may reasonably be expected to lead to an Acquisition Proposal
from any Person or engage in any discussion or negotiations concerning, or
provide any non-public information or data to assist any third party in making
or facilitating an Acquisition Proposal, (ii) will notify Parent orally and in
writing of the receipt of any such inquiry, offer or proposals within
twenty-four (24) hours of receipt of any such inquiry, offer or proposal and
(iii) shall keep Parent informed orally and in writing in reasonable detail of
the status of any such inquiry, offer or proposal; provided, however, that the
Company, in response to a bona fide unsolicited proposal that constitutes an
Acquisition Proposal, may, at any time prior to the time the Company's
shareholders shall have voted to approve the Merger, participate in discussions
or negotiations with, or furnish or disclose any non-public information or data
to, any Person (other than Parent or Sub) who, without solicitation in violation
of the terms hereof, makes such Acquisition Proposal if and only to the extent
that (A)(x) the Person has first made an Acquisition Proposal that, in the good
faith judgment of the Board (after consultation with its financial advisors), is
or may reasonably be expected to lead to a Superior Proposal and (y) the Board
shall conclude in good faith, after consultation with outside counsel, and such
other matters as the Board deems relevant, that such actions are necessary for
the Board to act in a manner consistent with its fiduciary duties to


                                      -36-
<PAGE>

shareholders under Applicable Law, and (B) prior to furnishing such information
to, or entering into discussions or negotiations with, such Person, the Company
(x) provides prompt written notice to Parent to the effect that it intends to
furnish information to, or intends to enter into discussions or negotiations
with, such Person, and of the identity of the Person making the Acquisition
Proposal and the material terms thereof and (y) receives from such Person an
executed confidentiality agreement in reasonably customary form on terms not in
the aggregate materially more favorable to such Person than the terms contained
in the Confidentiality Agreement. Notwithstanding the foregoing, nothing in this
Section 5.6 or any other provision of this Agreement shall prohibit the Company
or the Board from (i) taking and disclosing to the Company's shareholders a
position with respect to an Acquisition Proposal by a third party to the extent
required under Rule 14d-9 and Rule 14e-2 of the Exchange Act, (ii) subject to
clause (iv) below, making any disclosure to the shareholders of the Company as,
in the good faith judgment of the Board (after consultation with its outside
counsel), is required under Applicable Law or pursuant to the Board's fiduciary
duties, (iii) prior to the time the Company's shareholders have voted to approve
the Merger, accepting a Superior Proposal from a third party, provided the
Company terminates this Agreement pursuant to Section 7.1(c)(i) or (iv) prior to
the time the Company's shareholders have voted to approve the Merger,
withdrawing or modifying the Board's approval, adoption or recommendation, as
the case may be, of the Merger, or this Agreement, as contemplated by Section
7.1(d)(ii)(x), provided that such withdrawal or modification entitles Parent to
terminate this Agreement pursuant to Section 7.1(d)(ii).

          Section 5.7. Antitrust Laws. (a) Each Party shall file or cause to be
filed with the United States Federal Trade Commission and the Antitrust Division
of the United States Department of Justice any notifications required to be
filed by their respective "ultimate parent" companies under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), and the rules and regulations promulgated thereunder with respect to the
Merger. Such parties will use commercially reasonable efforts to make such
filings promptly and shall respond promptly to any requests for additional
information made by either of such agencies. Parent and the Company shall each
consult with the other with respect to the preparation, filing and response to
any request for additional information with respect to the notifications
required to be filed under the HSR Act and shall keep each other informed of the
status thereof.

          (b) Parent and the Company shall share the payment of all filing fees
under the HSR Act equally.

          (c) Each Party shall promptly inform the other Parties of any material
communication made to, or received by such Party from, any Antitrust Authority
or any other Governmental Entity regarding any of the transactions contemplated
hereby.

          Section 5.8. Regulatory Approvals; Other Consents. (a) Except as
otherwise set forth in Section 5.7, each of Parent and the Company shall, and
shall cause their respective Subsidiaries to, cooperate and use their respective
commercially reasonable efforts to obtain as promptly as practicable all
consents, waivers, approvals, authorizations, orders, decrees, licenses, or
permit of, or registration or filing with or notification to (any of the
foregoing, a "Consent") of any Governmental Entity, including the NJBPU, the
FPSC, the MPSC and the VSCC, or any other third party required in connection
with, and any waivers of any breaches or violations of


                                      -37-
<PAGE>

any Contracts, permits, licenses or other agreements that may be caused by the
consummation of, the transactions contemplated by this Agreement, including by
(i) promptly making all required filings or submissions to Governmental Entities
provided that the Company and Parent shall make all such filings and submissions
available to the other Party for review and comment prior to such filing or
submission, (ii) cooperating with one another in (A) determining whether any
other filings are required to be made with, or Consents are required to be
obtained from any Governmental Entity or any other third party in connection
with the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby and (B) timely making all such filings and
timely seeking all such Consents and (iii) seeking to avoid the entry of, or
seeking to have vacated or terminated, any decree, order or judgment that would
restrain, prevent or delay the Closing, including, by defending through
litigation on the merits any claim asserted in court by any Person. In addition,
each of Parent and the Company shall, and shall cause their respective
Subsidiaries to, cooperate and use their respective commercially reasonable
efforts to obtain Acceptable Orders from the NJBPU, the FPSC, the MPSC and the
VSCC approving the transactions contemplated by this Agreement. An "Acceptable
Order" shall mean a Final Order (or other written communication reasonably
satisfactory to Parent) that includes all of the items set forth in Section 5.8
of the Parent Disclosure Letter, except to the extent that the failure to
include any such items or the inclusion of any additional terms or conditions
would not reasonably be expected to have, individually or in the aggregate, a
Parent Material Adverse Effect, a Company Material Adverse Effect or a Regulated
Business Material Adverse Effect, in each case after giving effect to the items
set forth in Section 5.8 of the Parent Disclosure Letter. For the avoidance of
doubt, the Parties agree that in determining whether a Company Material Adverse
Effect or a Regulated Business Material Adverse Effect has occurred for the
purposes of this Section 5.8, the standard from which such determinations shall
be made will be the state of the Company or the Regulated Businesses, as the
case may be, as it would be if all of the items set forth in Section 5.8 of the
Parent Disclosure Letter were implemented and in effect. Any additional terms
and conditions contained in an Acceptable Order, other than the terms and
conditions set forth in Section 5.8 of the Parent Disclosure Letter, shall not
necessarily preclude such order from being an Acceptable Order but shall be
considered in the determination as to whether the condition set forth in Section
6.2(c) has been satisfied.

          (b) The Company and Parent shall each promptly notify the other Party
hereto and shall promptly furnish copies of any notices or other communications
relating to: (a) any written notice from any Person alleging that the consent of
such Person is or may be required in connection with the transactions
contemplated by this Agreement; (b) any written notice from any Governmental
Entity in connection with the transactions contemplated by this Agreement; (c)
any claim commenced or, to its Knowledge, threatened against, relating to, or
involving or otherwise affecting such Party that, if pending on the date of this
Agreement, would have been required to be disclosed pursuant to any provision of
this Agreement, or that relate to the consummation of the transactions
contemplated by this Agreement; and (d) any of the following: (i) the discovery
by such Party that any representation or warranty of any Party contained in this
Agreement is untrue or inaccurate in any material respect, or (ii) the
occurrence or failure to occur of any event which occurrence or failure to occur
would reasonably be likely to cause any of the representations or warranties in
this Agreement to be untrue or incorrect in any material respect as of the date
made or as of the Closing Date, (iii) the occurrence or failure to occur of any
event which occurrence or failure to occur would reasonably be likely to cause a
Company


                                      -38-
<PAGE>

Material Adverse Effect and (iv) any material failure on its part to comply with
or satisfy any covenant, condition or agreement to be complied with or satisfied
by it hereunder; provided, however, that no such notification, nor the
obligation to make such notification, shall affect the representations,
warranties or covenants of any Party or the conditions to the obligations of any
Party to this Agreement. To the extent such efforts do not unreasonably
interfere with the day-to-day operations of the Company, each of the Company and
Parent shall use reasonable efforts to consult with each other in advance of any
telephone calls, meetings or conferences with, any Governmental Entity in
connection with obtaining the Required Consents and the transactions
contemplated by this Agreement and, to the extent permitted and practicable,
give the other Party the opportunity to attend and participate in such telephone
calls, meetings and conferences.

          Section 5.9. Employee Benefits. (a) For at least one (1) year
following the Effective Time, Parent shall provide or cause to be provided to
all current and former employees of the Company and its Subsidiaries (other than
any such employees subject to collective bargaining agreements, the "Company
Employees") (i) a salary or wage level and bonus opportunity at least equal to
the salary or wage level and bonus opportunity to which they were entitled
immediately prior to the Effective Time and (ii) benefits, perquisites and other
terms and conditions of employment that, taken as a whole, are substantially
equivalent to the benefits, perquisites and other terms and conditions that they
were entitled to receive immediately prior to the Effective Time (including
benefits pursuant to qualified and non-qualified retirement and savings plans,
medical, dental and pharmaceutical plans and programs, severance plans and
policies, deferred compensation arrangements and equity-based and incentive
compensation plans). Notwithstanding the foregoing sentence (but not in
limitation thereof), following the Effective Time, Parent may terminate or cause
to be terminated the employment of any Company Employee subject to the payment
and satisfaction of severance benefits, and other entitlements of such Company
Employee in connection with such termination and/or under any applicable
employment agreement.

          (b) Without limiting the generality of the foregoing, (i) Parent and
its Affiliates shall keep in effect for at least one (1) year following the
Effective Time severance and retention plans, practices and policies applicable
to Company Employees on the date hereof that are not less favorable than such
plans, practices and policies in effect immediately prior to the date hereof
with respect to such Company Employees, (ii) Parent shall, or shall cause its
Affiliates to, ensure that all Company Employees who were notified of their
target bonus opportunity for the current fiscal year shall be eligible to
receive annual bonuses at least equal to the bonuses for which such employees
would be eligible under the applicable bonus arrangements of the Company or the
applicable Subsidiary as of the date hereof subject to attainment of financial
performance criteria and goals substantially similar to those under the
Company's current bonus program, and (iii) following the Effective Time, Parent
shall, or shall cause its Affiliates to, ensure that the deferred compensation
plans of the Company are not amended or terminated in any manner that would
adversely affect any participant in such plan as of the date hereof.

          (c) Following the Effective Time, (i) Parent shall ensure that no
limitations or exclusions as to pre-existing conditions, evidence of
insurability or good health, waiting periods or actively-at-work exclusions or
other limitations or restrictions on coverage are applicable to


                                      -39-
<PAGE>

any Company Employees or their dependents or beneficiaries under any welfare
benefit plans in which such employees may be eligible to participate (other than
such limitations or waiting periods applicable to such Company Employees under
the Employee Benefit Plans), and (ii) Parent shall provide or cause to be
provided that any costs or expenses incurred by Company Employees (and their
dependents or beneficiaries) up to (and including) the Effective Time (during
the calendar year the Effective Time occurs) shall be taken into account for
purposes of satisfying applicable deducible, co-payment, coinsurance, maximum
out-of-pocket provisions and like adjustments or limitations on coverage under
any such welfare benefit plans.

          (d) With respect to each employee benefit plan, policy or practice,
including severance, vacation and paid time off plans, policies or practices,
sponsored or maintained by Parent or its Affiliates, Parent shall grant, or
cause to be granted to, all Company Employees from and after the Effective Time
credit for all service with the Company and the Subsidiaries, and their
respective predecessors, prior to the Effective Time, for purposes of
eligibility to participate, vesting credit, eligibility to commence benefits,
early retirement subsidies and severance (but not for other purposes, including
but not limited to benefit accrual under a defined benefit plan of Parent or any
of its Affiliates), to the extent similarly situated Parent employees receive
such credit.

          Section 5.10. Indemnity; Directors' and Officers' Insurance; Fiduciary
and Employee Benefit Insurance. (a) Parent agrees that all rights to
indemnification now existing in favor of any individual who at or prior to the
Effective Time was a director, officer, employee or agent of the Company of any
of its Subsidiaries or who, at the request of the Company or any of its
Subsidiaries, served as a director, officer, member, trustee or fiduciary of
another corporation, partnership, joint venture, trust, pension or other
employee benefit plan or enterprise (collectively, with such individual's heirs,
executors or administrators, the "Indemnified Parties") as provided in their
respective charters, by-laws and indemnification agreements, shall survive the
Merger and shall continue in full force and effect, to the extent permitted by
the applicable law of the jurisdiction of organization of the Company or the
relevant Subsidiary, for a period of not less than six (6) years from the
Effective Time and indemnification agreements shall not be amended, repealed or
otherwise modified; provided, that in the event any claim or claims are asserted
or made within such six (6) year period, all rights to indemnification in
respect of any such claim or claims shall continue until final disposition of
any and all such claims.

          (b) At the Effective Time, Parent shall cause the Surviving
Corporation to purchase and maintain in effect for a period of six (6) years
thereafter, "run-off" coverage as provided (i) by the Company's directors' and
officers' liability insurance policies and (ii) by the Company's fiduciary and
employee benefit policies, in each case, covering those Persons who are covered
on the date of this Agreement by such policies, subject to the limitations set
forth in Section 5.10(b) of the Company Disclosure Letter; and provided, further
that, if Parent or the Surviving Corporation is unable to obtain such "run-off"
coverage in accordance with, and subject to the limitations in, this Section
5.10(b), at the Effective Time, Parent shall cause the Surviving Corporation to
maintain in effect for a period of six (6) years thereafter, the policies
referred to in clauses (i) and (ii) above (provided, that the Surviving
Corporation, shall not be required to pay an annual premium with respect to each
such policy in excess of a maximum of


                                      -40-
<PAGE>

100% of the last annual premium paid by the Company prior to the Closing Date
with respect to each such policy as set forth in Section 5.10(a) of the Company
Disclosure Letter and, if the Surviving Corporation is unable to obtain such
insurance required by this Section 5.10(b), it shall obtain as much comparable
insurance as possible for an annual premium (or an aggregate premium, as the
case may be) with respect to such policies equal to such maximum amount).

          (c) From and after the Effective Time, the Surviving Corporation shall
indemnify all Indemnified Parties to the extent permitted by the applicable law
of the jurisdiction of organization of the Company or the relevant Subsidiary
with respect to all acts and omissions arising out of such individuals' services
as officers, directors, employees or agents of the Company or any of its
Subsidiaries or as trustees or fiduciaries of any plan for the benefit of
employees of the Company or any of its Subsidiaries, occurring prior to the
Effective Time, including the execution of, and the transactions contemplated
by, this Agreement. Without limitation of the foregoing, in the event any such
Indemnified Party is or becomes involved, in any capacity, in any action,
proceeding or investigation in connection with any matter, including the
transactions contemplated by this Agreement, occurring prior to and including
the Effective Time, the Surviving Corporation, from and after the Effective
Time, shall pay, to the extent required by the relevant charter, bylaws and
indemnification agreement and permitted by the applicable law of the
jurisdiction of organization of the Company or the relevant Subsidiary, such
Indemnified Party's reasonable expenses, including the cost of any investigation
and preparation and including the reasonable fees and expenses of counsel
selected by the Indemnified Party, which counsel shall be reasonably acceptable
to the Surviving Corporation, promptly after statements therefor are received
and otherwise advance to such Indemnified Party upon request reimbursement of
documented expenses reasonably incurred in connection therewith. The Surviving
Corporation shall pay all reasonable expenses, including attorneys' fees, that
may be incurred by any Indemnified Party in enforcing this Section 5.10 or any
action involving an Indemnified Party resulting from the transactions
contemplated by this Agreement. The Surviving Corporation shall not be liable
for any settlement effected without its written consent (which consent shall not
be unreasonably withheld).

          (d) Notwithstanding any other provisions hereof, the obligations of
Parent and the Surviving Corporation contained in this Section 5.10 shall be
binding upon the successors and assigns of Parent and the Surviving Corporation,
respectively. In the event Parent or the Surviving Corporation, or any of their
respective successors or assigns, (i) consolidates with or merges into any other
Person or (ii) transfers all or substantially all of its properties or assets to
any Person, then, and in each case, proper provision shall be made so that the
successors and assigns of Parent or the Surviving Corporation, as the case may
be, honor the indemnification obligations set forth in this Section 5.10.

          (e) The obligations of Parent and the Surviving Corporation under this
Section 5.10 shall survive the Closing and shall not be terminated or modified
in such a manner as to affect adversely any Indemnified Party to whom this
Section 5.10 applies without the consent of such affected Indemnified Party (it
being expressly agreed that the Indemnified Parties to whom this Section 5.10
applies shall be third-party beneficiaries of this Section 5.10, each of whom
may enforce the provisions of this Section).


                                      -41-
<PAGE>

          Section 5.11. Public Announcements. Subject to each Party's disclosure
obligations imposed by law or the rules of any applicable securities exchange or
any Governmental Entity, the Company and Parent will cooperate with each other
in the development and distribution of all press releases and other public
information disclosures with respect to this Agreement or any of the
transactions contemplated hereby, shall provide to the other Party for review a
copy of any such press release or public information disclosure and shall not
issue any public announcement or statement with respect hereto without the
consent of the other Party (which consent shall not be unreasonably withheld).

          Section 5.12. Cooperation and Notification of Certain Matters. (a)
Subject to Applicable Law and except for non-material filings with Governmental
Entities in the ordinary course of business consistent with past practice, the
Company shall consult with Parent prior to making any filing with any
Governmental Entity with respect to, or implementing any changes in its rates or
charges (other than pass-through or tracking rate charges under existing tariffs
or rate schedules), tariffs, standards of service or regulatory accounting or
effecting any regulatory agreement, commitment, arrangement or consent, whether
written or oral, formal or informal with respect thereto, whether or not
otherwise permitted under this Agreement and shall deliver to Parent a copy of
each such filing or agreement at least three (3) Business Days prior to the
filing or execution thereof so that Parent may comment thereon;

          (b) The Company shall promptly inform Parent with respect to all
material developments and all material communications relating to (i) any
subsequent proceedings relating to the NJBPU Settlement Order, (ii) the
investigation of the Company by the New Jersey Attorney General, (iii) the
ongoing investigation of the Company by the Commission, (iv) any proceedings by
any Governmental Entity relating to the matters that are the subject of the
NJBPU Settlement Order and the Stipulation and Agreement referred to therein or
the NJAG Settlement and (v) any amendment, modification or supplementation of
the NJBPU Settlement Order, the Stier Anderson Report, the NJLNA or the NJAG
Settlement. Neither Parent nor Sub shall contact any Governmental Entity with
respect to the foregoing items without the consent of the Company, provided,
that, if Parent reasonably determines (after consultation with the Company) that
convening a meeting, phone call or similar interaction that includes
representatives of Parent, the Company and a Governmental Entity with respect to
any of the foregoing items is advisable under the circumstances, the Company
shall use its good faith efforts to convene such a meeting, phone call or
similar interaction as promptly as practicable, as requested by Parent. In
addition, the Company shall permit representatives of Parent to accompany
representatives of the Company in any meetings, phone calls or similar
interaction with the NJBPU, the FPSC, the MPSC, the VSCC, the Commission or the
New Jersey Attorney General or their representatives relating to the foregoing
items, to the extent permitted and practicable, and the Company shall provide
sufficient advance notice to Parent of such meetings, phone calls or similar
interactions to permit meaningful participation by representatives of Parent, to
the extent practicable, provided, that the Company shall not be required to
permit representatives of Parent to accompany Company representatives if, and to
the extent that, the Company reasonably determines (after consultation with
Parent) that the participation of representatives of Parent would have an
adverse effect on the resolution of the matter being discussed. The Company
shall promptly inform Parent of all discussions conducted at meetings or on
phone calls at which or on which a representative of Parent was not present.


                                      -42-
<PAGE>

          (c) The Company shall notify Parent orally and in writing if there
shall occur or be continuing under any indebtedness for borrowed money of the
Company or NUI Utilities, Inc. any payment default, acceleration of indebtedness
or other material default (including any cross defaults) which, if asserted,
would entitle the lender to accelerate the repayment of the amount(s) borrowed,
within the time period set forth in the following sentence. Such notice shall be
given no later than 24 hours following the earlier of (i) the Company becoming
aware of the occurrence of such acceleration or default or (ii) the time that in
the reasonable belief of the Company such acceleration or default becomes
reasonably likely to occur. The Company shall promptly inform Parent with
respect to all material developments and all material communications relating to
the Commitment Letter and the arrangements contemplated by Section 5.17 and
shall provide to Parent copies of all correspondence relating thereto.

          (d) The Company shall, and shall cause its Subsidiaries to, cause
audited financial statements of the Company and NUI Utilities, Inc. to be
prepared within the time periods required by Applicable Law and as required by
any covenants contained in the agreements relating to any indebtedness for
borrowed money of the Company or NUI Utilities, Inc.

          Section 5.13. Sub. Parent will take all action necessary to cause Sub
to perform its obligations under this Agreement and to consummate the Merger on
the terms and conditions set forth in this Agreement.

          Section 5.14. Acquisition of Shares. Neither Parent nor any of its
affiliates or associates (as such terms are defined under the Exchange Act)
shall acquire beneficial ownership of any Shares prior to the Effective Time.

          Section 5.15. No Breach, Etc. No Party shall, nor shall any Party
permit any of its subsidiaries to, willfully take any action that would or is
reasonably likely to result in a material breach of any provision of this
Agreement or in any of its representations and warranties set forth in this
Agreement being untrue on and as of the Closing Date.

          Section 5.16. Transition Steering Team. As soon as reasonably
practicable after the date hereof, Parent and the Company shall create a special
transition steering team, with representation from Parent and the Company (the
"Transition Steering Team"). The Transition Steering Team will be jointly
chaired by the Chief Executive Officers of Parent and the Company, or their
respective designees, and the members of the Transition Steering Team shall be
appointed by the co-chairs. The Transition Steering Team shall consist of two
(2) representatives of Parent and two (2) representatives of the Company (in
addition to the co-chairs). Parent and the Company shall provide the other Party
notice of their respective representatives on the Transition Steering Team
within ten (10) days of the date hereof. The Transition Steering Team shall (i)
direct the exchange of information and documents between the Parties and their
respective Affiliates as contemplated by Section 5.1, (ii) monitor the Company's
compliance with Section 5.3 and the Parties' compliance with Section 5.8, (iii)
supervise the development of regulatory plans and proposals for the operation of
the Company after the Effective Time, monitor corporate spending, develop
corporate organizational and management plans for the operation of the Company
after the Effective Time, develop workforce


                                      -43-
<PAGE>

combination proposals (provided that such proposals are maintained as
confidential by the Transition Steering Team until after the Effective Time),
and (iv) review the monthly operational and financial performance of the Company
and undertake such other matters as the co-chairs mutually agree.

          Section 5.17. Credit Facilities. The Company shall consult with Parent
in making arrangements for (a) bridge credit facilities ("Bridge Facilities")
for the Company in an amount no greater than $20 million and for NUI Utilities,
Inc. for the purpose of procuring gas for the winter 2004-2005 heating season
and general corporate and working capital purposes in an amount no greater than
$75 million, on the terms and conditions set forth in Section 5.17 of the
Company Disclosure Letter (the "Commitment Letter"), (b) extending the Credit
Facilities and (c) financing the repayment of the Medium Term Notes. The Company
shall (x) use commercially reasonable efforts to enter into the Bridge
Facilities on the terms and conditions contained in the Commitment Letter, and
(y) use its good faith efforts to extend the Credit Facilities and finance the
repayment of the Medium Term Notes on terms and conditions substantially similar
to those of the Company's and the Subsidiaries' currently existing credit
facilities of a similar type, or make other arrangements that provide
substantially similar benefits to the Company and NUI Utilities, Inc.

                                   ARTICLE VI

                              CONDITIONS PRECEDENT

          Section 6.1. Conditions to the Obligations of Each Party. The
respective obligations of Parent, Sub and the Company to consummate the Merger
are subject to the satisfaction, at or before the Closing Date, of each of the
following conditions:

          (a) Shareholder Approval. The shareholders of the Company shall have
duly adopted this Agreement, pursuant to the requirements of the Company's
Certificate of Incorporation and By-laws and Applicable Law.

          (b) Injunctions; Illegality. The consummation of the Merger shall not
be restrained, enjoined or prohibited by any order, judgment, decree, injunction
or ruling of a court of competent jurisdiction or any Governmental Entity and
there shall not have been any statute, rule or regulation enacted, promulgated
or deemed applicable to the Merger by any Governmental Entity which prevents the
consummation of the Merger or has the effect of making the Merger illegal.

          (c) Antitrust Laws; Similar Laws. Any applicable waiting period (or
any extension thereof), filings or approvals under the Antitrust Laws or
regulations identified in Section 6.1(c) of Company Disclosure Letter required
to consummate the Merger under Applicable Law shall have expired, been
terminated, been made or been obtained.

          (d) Required Consents. The Required Consents shall have been obtained
at or prior to the Effective Time and such approvals shall have become Final
Orders.


                                      -44-
<PAGE>

          Section 6.2. Conditions to the Obligations of Parent and Sub. The
obligations of Parent and Sub to consummate the Merger are subject to the
satisfaction or waiver by Parent on or prior to the Closing Date of the
following further conditions:

          (a) Performance. The Company shall have performed in all material
respects its covenants and obligations under this Agreement required to be
performed by it at or prior to the Closing Date.

          (b) Representations and Warranties. The representations and warranties
of the Company contained in this Agreement, disregarding all qualifications
contained in such representations and warranties relating to materiality or
Company Material Adverse Effect, shall be true and correct at and as of the
Effective Time and the Closing Date as if made at and as of such times (except
to the extent those representations and warranties expressly relate to an
earlier date, in which case as if made at and as of such date); provided, that
the condition set forth in this Section 6.2(b) shall only be deemed to not have
been satisfied if the failure of any such representation(s) or warranty(ies) to
be so true and correct would reasonably be expected to have, individually or in
the aggregate, a Company Material Adverse Effect. Parent shall have received a
certificate of the Company, executed by the Chief Executive Officer and Chief
Financial Officer of the Company, as to the satisfaction of the conditions set
forth in Section 6.2(a) and this Section 6.2(b).

          (c) Required Consents. The Required Consents shall have been obtained
at or prior to the Effective Time, such approvals shall have become Final Orders
and no such Final Orders, individually, or in the aggregate, shall impose terms
or conditions that would have, or would be reasonably likely to have, either a
Company Material Adverse Effect or a Parent Material Adverse Effect.

          (d) Acceptable Orders. Acceptable Orders from the NJBPU, the FPSC, the
MPSC and the VSCC shall have been obtained at or prior to the Effective Time.

          (e) No Company Material Adverse Effect. Except to the extent that the
significance and magnitude of a matter is expressly specified in Section 3.6 of
the Company Disclosure Letter on the date of this Agreement, no Company Material
Adverse Effect shall have occurred and there shall exist no fact or circumstance
(it being understood that in determining whether a Company Material Adverse
Effect shall have occurred the following shall be taken into account: (i) the
discovery of, any deterioration in, or any worsening of, any change, effect,
event, occurrence or state of facts existing or known as of the date of this
Agreement (including with respect to any deterioration in, or any worsening of
the matters set forth on Section 3.6 of the Company Disclosure Letter or set
forth in any amendment, modification or supplementation of the NJBPU Settlement
Order or the Stier Anderson Report), (ii) the effect of obtaining the Bridge
Facilities, to the extent that the terms and conditions of the Bridge Facilities
vary from those set forth in the Commitment Letter (without giving effect to any
modifications to the terms and conditions permitted under the Commitment
Letter), (iii) the effect of extending the Credit Facilities, drawing the
Delayed Draw Term Loan, and obtaining the waivers and amendments set forth in
the Commitment Letter, as contemplated by Sections 7.1(d)(iii)(w),
7.1(d)(iii)(x) and 7.1(d)(iii)(y), to the extent that such extension or such
drawing is made, or such waivers or


                                      -45-
<PAGE>

amendments are obtained, on terms and conditions that vary from those set forth
in the Commitment Letter (without giving effect to any modifications to the
terms and conditions permitted under the Commitment Letter), (iv) any breaches
of representations and warranties or covenants identified in the certificate
specified in Section 6.2 (b) above and (v) any consequences of, bases for or
conditions attributable to any "going concern" qualification that the Company's
auditors may issue) that would have, or would be reasonably likely to have,
individually or in the aggregate, a Company Material Adverse Effect.

          (f) Criminal Charges. Neither the Company nor any of its Subsidiaries
(i) shall have been indicted or criminally charged for a felony criminal offense
by any Governmental Entity (other than the Company and NUI Energy Brokers, Inc.
with respect to the matters specified in the NJAG Settlement as of the date
hereof) relating to the matters that are the subject of the NJBPU Settlement
Order and the Stipulation and Agreement referred to therein, the NJAG Settlement
or the Stier Anderson Report, or (ii) shall have received any notice of
non-compliance in any material respect with the NJAG Settlement, and there shall
have been no revocation of or material changes to the terms of the NJAG
Settlement.

          (g) Investigations. Neither the Company nor any of its Subsidiaries
shall be the subject of an active investigation by a Governmental Entity
relating to the matters that are the subject of the NJBPU Settlement Order and
the Stipulation and Agreement referred to therein, the NJAG Settlement or the
Stier Anderson Report, which investigation(s), individually or in the aggregate,
would reasonably be expected to have, or result in, a Company Material Adverse
Effect or a Regulated Business Material Adverse Effect.

          Section 6.3. Conditions to the Obligations of the Company. The
obligations of the Company to consummate the Merger are subject to the
satisfaction or waiver by the Company on or prior to the Closing Date of the
following further conditions:

          (a) Performance. Each of Parent and Sub shall have performed in all
material respects its covenants and obligations under this Agreement required to
be performed by it at or prior to the Closing Date.

          (b) Representations and Warranties. The representations and warranties
of Parent and Sub contained in this Agreement, disregarding all qualifications
contained in such representations and warranties relating to materiality or
Parent Material Adverse Effect, shall be true and correct at and as of the
Effective Time and the Closing Date as if made at and as of such times (except
to the extent those representations and warranties expressly relate to an
earlier date, in which case as if made at and as of such date); provided, that
the condition set forth in this Section 6.3(b) shall only be deemed to not have
been satisfied if the failure of any such representation(s) or warranty(ies) to
be so true and correct would reasonably be expected to have, individually or in
the aggregate, a Parent Material Adverse Effect. The Company shall have received
certificates of each of Parent and Sub, executed by their respective Chief
Executive Officer and Chief Financial Officer, as to the satisfaction of the
conditions set forth in Section 6.3(a) and this Section 6.3(b).


                                      -46-
<PAGE>

                                  ARTICLE VII

                           TERMINATION AND ABANDONMENT

          Section 7.1. Termination. This Agreement may be terminated and the
Merger and other transactions contemplated hereby may be abandoned, at any time
prior to the Effective Time, whether before or after approval of the Merger by
the Company's shareholders:

          (a) by mutual written consent of the Boards of Directors of the
Company and Parent;

          (b) by either Parent, on the one hand, or the Company, on the other
hand, if:

          (i) any state or federal law, order, rule or regulation is adopted or
     issued which has the effect of prohibiting the Merger, or if any court or
     other Governmental Entity shall have issued, enacted, entered, promulgated
     or enforced any law, order, judgment, decree, injunction or ruling or taken
     any other action (that has not been vacated, withdrawn or overturned)
     restraining, enjoining or otherwise prohibiting the Merger and such law,
     order, judgment, decree, injunction, ruling or other action shall have
     become final and nonappealable; provided that the Party seeking to
     terminate pursuant to this Section 7.1(b)(i) shall have used its reasonable
     best efforts to challenge such law, order, judgment, decree, injunction or
     ruling in accordance with Section 5.8; or

          (ii) the Effective Time shall not have occurred on or prior to April
     13, 2005 (such date, as it may be extended pursuant to this Section
     7.1(b)(ii), the "Termination Date"); provided, however, that the
     Termination Date shall be automatically extended for an additional ninety
     (90) day period if the conditions set forth in Section 6.1(d) shall not
     have been satisfied but all other conditions to the Closing shall be
     satisfied or shall be capable of being satisfied and all Required Consents
     that have not yet been obtained are being pursued with diligence; and
     provided, further, that the right to terminate this Agreement pursuant to
     this Section 7.1(b)(ii) shall not be available to any Party whose action or
     failure to fulfill any covenant, agreement or obligation under this
     Agreement has been the cause of, or resulted, directly or indirectly, in
     the failure of the Merger to be consummated by the Termination Date; or

          (iii) the requisite shareholder approval referred to in Section 6.1(a)
     shall not have been obtained by reason of the failure to obtain the
     requisite vote at a duly held Special Meeting or at any adjournment or
     postponement thereof; or

          (iv) any condition to the obligation of such Party to consummate the
     Merger set forth in Section 6.2 (in the case of Parent) or 6.3 (in the case
     of the Company) becomes incapable of satisfaction prior to the Termination
     Date; provided, however, that the failure of such condition to be met is
     not the result of a material breach of this Agreement by the Party seeking
     to terminate this Agreement.

          (c) by the Company, upon five (5) days' prior written notice to Parent
if:


                                      -47-
<PAGE>

          (i) the Board determines in good faith, that termination of this
     Agreement is necessary for the Board to act in a manner consistent with its
     fiduciary duties to shareholders under Applicable Law by reason of a
     Superior Proposal having been made; provided that

               (A)  the Board shall determine after consultation with outside
                    counsel with respect to the Board's fiduciary duties that
                    notwithstanding this Agreement, and notwithstanding all
                    concessions which may be offered by Parent in negotiation
                    entered into pursuant to clause (B) below, that such
                    proposal remains a Superior Proposal and that it is
                    necessary pursuant to such fiduciary duties that the
                    directors reconsider such commitment as a result of such
                    Proposal;

               (B)  prior to any such termination, the Company shall, and shall
                    cause its respective financial and legal advisors to, give
                    Parent a reasonable opportunity during the five (5) day
                    period specified in the lead-in to this Section 7.1(c)
                    following receipt by Parent of such written notice to
                    propose adjustments in the terms and conditions of this
                    Agreement as would enable the Company to proceed with the
                    Merger or other transactions contemplated hereby on such
                    adjusted terms; and

               (C)  the Company's ability to terminate this Agreement pursuant
                    to this section is conditioned upon the payment by the
                    Company to Parent of any amounts owed by it pursuant to
                    Section 7.3.

          (ii) (x) there exist material breaches of the representations and
     warranties of Parent made herein as of the date hereof which breaches,
     individually or in the aggregate, would or would reasonably be expected to
     result in a Parent Material Adverse Effect, and such breaches shall not
     have been remedied within twenty (20) days after receipt by Parent of
     notice in writing from the Company, specifying the nature of such breaches
     and requesting that they be remedied, or (y) there shall have been a
     material breach of any agreement or covenant of Parent hereunder, and such
     failure to perform or comply shall not have been remedied within twenty
     (20) days after receipt by Parent of notice in writing from the Company,
     specifying the nature of such failure and requesting that it be remedied;
     or

          (d) by Parent, by written notice to Company, if:

          (i) (x) there exist material breaches of the representations and
     warranties of the Company made herein as of the date hereof which breaches,
     individually or in the aggregate, would or would reasonably be expected to
     result in a Company Material Adverse Effect, and such breaches shall not
     have been remedied within twenty (20) days after receipt by the Company of
     notice in writing from Parent, specifying the nature of such breaches and
     requesting that they be remedied, (y) there shall have been a material
     breach of any agreement or covenant of the Company hereunder, and such
     failure to perform or comply shall not have been remedied within twenty
     (20) days after receipt by


                                      -48-
<PAGE>
     the Company of notice in writing from Parent, specifying the nature of such
     failure and requesting that it be remedied; or

          (ii) (x) the Board shall have withdrawn or modified in any manner
     adverse to Parent the approval, adoption or recommendation, as the case may
     be, of the Merger, or this Agreement (it being understood and agreed that
     any public statement that the Company has received an Acquisition Proposal
     or has entered into discussions or negotiations with, or furnished or
     disclosed any information to, any Person regarding an Acquisition Proposal
     or that otherwise only describes the operation of Section 5.6 or this
     Section 7.1, shall be deemed not to be a withdrawal of the approval,
     adoption or recommendation, as the case may be, of the Merger or this
     Agreement), (y) the Board shall approve to recommend a Superior Proposal or
     (z) the Company shall resolve to take any of the actions specified in
     clause (x) or (y).

          (iii) (v) the Company and NUI Utilities, Inc. shall not have in place
     the Bridge Facilities on or before September 30, 2004 on terms and
     conditions substantially similar to those referenced in the Commitment
     Letter, (w) on or before September 30, 2004, the Company and NUI Utilities,
     Inc. shall not have extended the Credit Facilities as provided in Section
     2.6 of the Credit Facilities and on terms and conditions substantially
     similar to those referenced in the Commitment Letter, (x) on or before the
     date that the Company and NUI Utilities, Inc. extend the Credit Facilities
     as described in clause (w), NUI Utilities, Inc. shall not have drawn the
     Delayed Draw Term Loan (as such term is defined in the Credit Facilities)
     pursuant to the Credit Facilities for the purpose of repaying the Medium
     Term Notes, (y) on or before September 30, 2004, the Company and NUI
     Utilities shall not have obtained (1) all required approvals and consents
     from third parties (including but not limited to the NJBPU and existing
     debtholders) relating to the transactions contemplated by clauses (v)-(x)
     above, and (2) the waivers and amendments set forth in the Commitment
     Letter, on terms and conditions substantially similar to those referenced
     in the Commitment Letter or (z) there shall occur or be continuing under
     the terms of any indebtedness for borrowed money that would be required to
     be set forth in Section 3.7(d) of the Company Disclosure Letter of the
     Company or NUI Utilities, Inc. any payment default (after giving effect to
     any applicable cure or notice period) or acceleration of indebtedness;
     provided that Parent shall not have the right to terminate this Agreement
     pursuant to clauses (v), (w), (x) or (y) above after October 15, 2004;
     provided, further, that if an escrow is established in respect of the
     proceeds of any borrowing under the Bridge Facilities, Parent shall have
     the right to terminate this Agreement if the Company shall not have
     received the benefit of such funds out of escrow by October 25, 2004.

          Section 7.2. Effect of Termination. In the event of a valid
termination of this Agreement pursuant to Section 7.1, this Agreement shall
forthwith become void and have no effect, and there shall be no liability
hereunder on the part of Parent, Sub or the Company or their respective officers
or directors hereunder, except that Section 5.2, Article VIII and this Section
7.2 shall survive any termination of this Agreement. Nothing in this Section 7.2
shall relieve any party to this Agreement of liability for fraud or intentional
breach of this Agreement.


                                      -49-
<PAGE>


                                  ARTICLE VIII

                                  MISCELLANEOUS

          Section 8.1. Fees and Expenses. (a) Except as provided in paragraph
(b) below and except as set forth in Section 5.7(b), all costs and expenses
incurred in connection with this Agreement and the consummation of the
transactions contemplated hereby shall be paid by the Party incurring such costs
and expenses.

          (b) In the event that (1) this Agreement is terminated by a Party
pursuant to Section 7.1(c)(i) or Section 7.1(d)(ii) or (2) any Person shall have
made an Acquisition Proposal that has not been withdrawn and this Agreement is
terminated (A) by a Party pursuant to Section 7.1(b)(ii), (B) by a Party
pursuant to Section 7.1(b)(iii) or (C) by Parent pursuant to Section 7.1(d)(i),
the Company, in any such case, shall (provided that neither Parent nor Sub is
then in material breach of this Agreement) simultaneous with such termination
pay to Parent by wire transfer of immediately available funds an amount equal to
$7,500,000 (the "Termination Fee"); provided, however, that if the Agreement is
terminated pursuant to clause (2) above, then no payment of a Termination Fee by
the Company to Parent shall be required unless and until a definitive agreement
with respect to the applicable Acquisition Proposal is executed within twelve
(12) months after such termination and, in such event, a Termination Fee shall
be payable upon the execution of such definitive agreement.

          (c) In the event this Agreement is terminated in accordance with its
terms by either the Company or Parent and Parent receives the Termination Fee,
neither Parent nor Sub shall assert or pursue in any manner, directly or
indirectly, (i) any claim or cause of action based in whole or in part upon
alleged tortious or other interference with its rights under this Agreement
against any entity or person submitting an Acquisition Proposal, (ii) any claim
or cause of action against the Company, its affiliates or any of their
respective officers, directors, employees, shareholders, agents or
representatives based in whole or in part upon a breach of any representation,
warranty or covenant in this Agreement or (iii) any claim or cause of action
against the Company, its affiliates or any of their respective officers,
directors, employees, shareholders, agents or representatives based in whole or
in part upon its or their receipt, consideration, recommendation or approval of
an Acquisition Proposal for the Company's exercise or its right of termination.

          (d) Notwithstanding anything to the contrary contained in this Section
8.1, if one party fails to promptly pay to the other any fee or expense due
under this Section 8.1, in addition to any amounts paid or payable pursuant to
this Section 8.1, the defaulting party shall pay the costs and expenses
(including legal fees and expenses) in connection with any action, including the
filing of any lawsuit or other legal action, taken to collect payment, together
with interest on the amount of any unpaid fee at the publicly announced prime
rate of Citibank, N.A. from the date such fee was required to be paid.

          Section 8.2. Non-Survival; Effect of Representations and Warranties.
The respective representations, warranties and agreements of the Company, on the
one hand, and each of Parent and Sub, on the other hand, contained herein or in
any certificates or other


                                      -50-
<PAGE>

documents delivered prior to or at the Closing shall expire with, and be
terminated and extinguished by, the Closing, and thereafter none of the Company,
Parent or Sub shall be under any liability whatsoever with respect to any such
representation, warranty or agreement, except as otherwise provided in this
Agreement and except for the agreements contained in this Section 8.2, in
Article II and in Sections 5.9, 5.10, 8.1, 8.13 and 8.14.

          Section 8.3. Extension; Waiver. At any time prior to the Effective
Time, the parties hereto, by action taken by or on behalf of the Boards of
Directors of the Company, Parent or Sub, may (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties contained
herein by any other applicable party or in any document, certificate or writing
delivered pursuant hereto by any other applicable party or (iii) waive
compliance with any of the agreements or conditions contained herein. Any
agreement on the part of any party to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
party. No wavier by any party of any term or condition of this Agreement, in any
one or more instances, shall be deemed to be or construed as a waiver of the
same or any other term or condition of this Agreement on any future occasion.

          Section 8.4. Notices. All notices, consents, requests, demands,
waivers and other communications required or permitted to be given under this
Agreement shall be in writing and shall be deemed to have been duly given if
delivered in person or mailed, certified or registered mail with postage
prepaid, or sent by facsimile (upon confirmation of receipt), as follows:

          (a) if to the Company, to it at:

                           NUI Corporation
                           550 Route 202-206
                           P.O. Box 760
                           Bedminster, NJ  07921
                           Attention:  Steven D. Overly, General Counsel
                           Fax:  (908) 781-0718

                           with a copy (which shall not constitute notice) to:

                           White & Case LLP
                           1155 Avenue of the Americas
                           New York, NY  10036
                           Attention:   John M. Reiss, Esq.
                                        Mark L. Mandel, Esq.
                           Fax:  (212) 354-8113

          (b) if to either Parent or Sub, to it at:

                           AGL Resources Inc.
                           Ten Peachtree Place
                           Atlanta, GA  30309
                           Attention:   Richard T. O'Brien


                                      -51-
<PAGE>

                                        Paul R. Shlanta
                           Fax:  (404) 584-3419

                           with a copy (which shall not constitute notice) to:

                           LeBoeuf, Lamb, Greene & MacRae L.L.P.
                           125 W. 55th Street
                           New York, NY  10019
                           Attention:   William S. Lamb
                                        Benjamin G. Clark
                           Fax:  (212) 424-8500


or to such other Person or address as any party shall specify by notice in
writing to each of the other parties. All such notices, requests, demands,
waivers and communications shall be deemed to have been received on the date of
delivery unless if mailed, in which case on the third Business Day after the
mailing thereof, except for a notice of a change of address, which shall be
effective only upon receipt thereof.

          Section 8.5. Entire Agreement. This Agreement contains the entire
understanding of the parties hereto with respect to the subject matter contained
herein and supersedes all prior agreements and understandings, oral and written,
with respect thereto, other than the Confidentiality Agreement.

          Section 8.6. Incorporation of Disclosure Letters; Amendment of
Disclosure Letters. The Company Disclosure Letter and the Parent Disclosure
Letter attached to this Agreement are incorporated by this reference into and
form an integral part of the Agreement for all purposes. Each of Parent and the
Company will (a) prior to the Closing Date, update, amend and supplement the
respective disclosure letter provided by such Party promptly upon becoming aware
of any material fact, matter, circumstance or event, which fact, matter,
circumstance or event arose either (i) on or prior to the date hereof or (ii)
after the date hereof but prior to the Closing, in any case, requiring
supplementation or amendment of such disclosure letters to reflect any fact,
matter, circumstance or event, which, if existing, occurring or known on the
date of this Agreement, would have been required to be set forth or described in
such disclosure letters which were or have been rendered inaccurate thereby, and
(b) promptly deliver such updated, amended or supplemented disclosure letter to
the other Party. An updated draft of each Party's disclosure letter shall be
delivered to the other Party not later than ten (10) Business Days prior to the
anticipated Closing Date, and such updated draft shall be prepared as of a date
not earlier than fifteen (15) Business Days prior to such anticipated Closing
Date. Notwithstanding the delivery of such updated draft disclosure letter, each
Party shall continue to supplement and amend such Party's disclosure letter
until the Closing Date as described above, and shall deliver a final disclosure
letter, updated as of the Closing Date, to the other Party at the Closing. No
amendment or supplement of any disclosure letter pursuant to this Section 8.6
shall be deemed to cure (or affect the rights of any Party with respect to) any
breach of any representations and warranties or have any effect for the purpose
of determining satisfaction of the conditions set forth in Section 6.1, Section
6.2 or Section 6.3.


                                      -52-
<PAGE>

          Section 8.7. Binding Effect; Benefit; Assignment. This Agreement shall
inure to the benefit of and be binding upon the Parties and, with respect to the
provisions of Section 5.10, shall inure to the benefit of the Persons benefiting
from the provisions thereof all of whom are intended to be third-party
beneficiaries thereof. Except as set forth above, nothing in this Agreement,
express or implied, is intended to confer on any other Person any legal or
equitable right, remedy or claim under or with respect to this Agreement, or any
provision of this Agreement. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the Parties
without the prior written consent of each of the other Parties.

          Section 8.8. Amendment and Modification. This Agreement may be amended
by the Company, Parent and Sub at any time before or after any approval of this
Agreement by the shareholders of the Company, but, after any such approval, no
amendment shall be made which decreases the Merger Price or which adversely
affects the rights of the Company's shareholders hereunder without the approval
of such shareholders. This Agreement may not be amended except by a written
instrument executed by all parties to this Agreement.

          Section 8.9. Headings. The descriptive headings of the several
Articles and Sections of this Agreement are inserted for convenience only, do
not constitute a part of this Agreement and shall not affect in any way the
meaning or interpretation of this Agreement.

          Section 8.10. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original, and all of which
together shall be deemed to be one and the same instrument.

          Section 8.11. Applicable Law. This agreement and the legal relations
between the parties hereto shall be governed by and construed in accordance with
the laws of the State of New York, without regard to the conflict of laws rules
thereof, except that the NJBCA shall apply to the extent required in connection
with the Special Meeting, if any, and the merger. The state or federal courts
located within the State of New York shall have jurisdiction over any and all
disputes between the parties hereto, whether in law or equity, arising out of or
relating to this agreement and the agreements, instruments and documents
contemplated hereby and the parties consent to and agree to submit to the
jurisdiction of such courts. Each of the parties hereby waives and agrees not to
assert in any such dispute, to the fullest extent permitted by Applicable Law,
any claim that (i) such party is not personally subject to the jurisdiction of
such courts, (ii) such party and such party's property is immune from any legal
process issued by such courts or (iii) any litigation or other proceeding
commenced in such courts is brought in an inconvenient forum. The parties hereby
agree that mailing of process or other papers in connection with any such action
or proceeding in the manner provided in Section 8.4, or in such other manner as
may be permitted by law, shall be valid and sufficient service thereof and
hereby waive any objections to service accomplished in the manner herein
provided.

          Section 8.12. Severability. If any term, provision, covenant or
restriction contained in this Agreement is held by a court of competent
jurisdiction or other authority to be invalid, void, unenforceable or against
its regulatory policy, the remainder of the terms, provisions, covenants and
restrictions contained in this Agreement shall remain in full force and effect
and shall in no way be affected, impaired or invalidated, and this Agreement
shall be


                                      -53-
<PAGE>

reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable term, provision, covenant or restriction or any portion
thereof had never been contained herein.

          Section 8.13. Specific Enforcement. The parties agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. Accordingly, the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement, this being in addition to any other
remedy to which they are entitled at law or in equity, except as otherwise
provided in Section 8.1(c).

          Section 8.14. 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 TRANSACTION CONTEMPLATED HEREBY (WHETHER BASED
ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HEREBY (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 8.15. Rules of Construction. The parties hereto agree that
they have been represented by counsel during the negotiation and execution of
this Agreement and, therefore, waive the application of any law, regulation,
holding or rule of construction providing that ambiguities in an agreement or
other document will be construed against the party drafting such agreement or
document.

                                    * * * * *

                                      -54-
<PAGE>

                  IN WITNESS WHEREOF, each of Parent, Sub and the Company have
caused this Agreement to be executed by their respective officers thereunto duly
authorized, all as of the date first above written.

                             AGL RESOURCES INC.


                             By /s/ Paula G. Rosput
                               -----------------------------
                                 Name:  Paula G. Rosput
                                 Title: Chairman, President and
                                        Chief Executive Officer


                             COUGAR CORPORATION


                             By /s/ Paula G. Rosput
                               -----------------------------
                                 Name:  Paula G. Rosput
                                 Title: President


                             NUI CORPORATION


                             By /s/ Craig G. Matthews
                               -----------------------------
                                 Name:  Craig G. Matthews
                                 Title: President and Chief Executive Officer