**NUI Corporation**

$5,000,0006.60% Senior Notes, Series A, due August 20, 2006$15,000,000 6.884% Senior Notes, Series B, due August 20, 2008$7,000,000 6.884% Senior Notes, Series C, due August 20, 2011and$33,000,000 7.29% Senior Notes, Series D, due August 20, 2011

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Note Purchase Agreement

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Datedas of August 20, 2001

NUICorporation

550 Route 202-206

Bedminster, New Jersey 07921-0760

6.60% Senior Notes, Series A, due August 20, 20066.884% Senior Notes, Series B, due August 20, 20086.884% Senior Notes, Series C, due August 20, 2011and7.29% Senior Notes, Series D, due August 20, 2011

 

Dated as ofAugust 20, 2001

 

To each of thePurchasers listed inthe attached Schedule A:

Ladies and Gentlemen:

NUI Corporation,a New Jersey corporation (the *"Company"*),agrees with the Purchasers listed  inthe attached Schedule A as follows:

Section 1.        Authorization of Notes.

The Company will authorize the issue and sale of(i) $5,000,000 aggregate principal amount of its 6.60% Senior Notes,Series A, due August 20, 2006 (the *"Series A Notes"*, such term to include any such notes issuedin substitution therefor pursuant to Section 13 of this Agreement;(ii) 15,000,000 aggregate principal amount of its 6.884% Senior Notes,Series B, due August 20, 2008 (the *"Series B Notes"*, such term to include any notes of such seriesissued in substitution therefor pursuant to Section 13 of this Agreement;(iii) $7,000,000 aggregate principal amount of its 6.884% Senior Notes,Series C, due August 20, 2011 (the *"Series C Notes"*, such term to include any notes of such seriesissued in substitution therefor pursuant to Section 13 of this Agreement;and (iv) $33,000,000 aggregate principal amount of its 7.29% Senior Notes,Series D, due August 20, 2011 (the *"SeriesD Notes"*, such term to include any notes of such series issued insubstitution therefor pursuant to Section 13 of this Agreement or theOther Agreements; the Series A Notes, Series B Notes, Series CNotes and Series D Notes are hereinafter collectively referred to as the *"Notes"*).  The Series A Notes shall be substantially in the form setout in Exhibit 1‐A, the Series B Notes shall be substantiallyin the form set out in Exhibit 1-B, the Series C Notes shall besubstantially in the form set out in Exhibit 1-C and the Series DNotes shall be substantially in the form set out in Exhibit 1-D, in eachcase, with such changes therefrom, if any, as may be approved by each Purchaserand the Company.

Certain capitalized terms used in this Agreement aredefined in Schedule B; references to a "Schedule" or an "Exhibit" are,unless otherwise specified, to a Schedule or an Exhibit attached to thisAgreement.

Section 2.        Sale and Purchase of Notes.

Subject to the terms and conditions of this Agreement, theCompany will issue and sell to each Purchaser and each Purchaser will purchasefrom the Company, at the Closing provided for in Section 3, Notes in theprincipal amount and of the series specified opposite such Purchaser's name inSchedule A at the purchase price of 100% of the principal amountthereof.  The obligations of eachPurchaser hereunder are several and not joint obligations, and each Purchasershall have no obligation and no liability to any Person for the performance ornonperformance by any other Purchaser hereunder.

Section 3*.*        Closing

The sale and purchase of the Notes to be purchased by eachPurchaser shall occur at the offices of Chapman and Cutler, 111 West MonroeStreet, Chicago, Illinois 60603, at 10:00 a.m. Chicago time, at a closing (the *"Closing"*) on August 20, 2001 or onsuch other Business Day thereafter on or prior to August 22, 2001 as maybe agreed upon by the Company and the Purchasers.  At the Closing the Company will deliver to each Purchaser theNotes of each series to be purchased by such Purchaser in the form of a singleNote of such series (or such greater number of Notes in denominations of atleast $100,000 as such Purchaser may request) dated the date of the Closing andregistered in such Purchaser's name (or in the name of such Purchaser'snominee), against delivery by such Purchaser to the Company or its order ofimmediately available funds in the amount of the purchase price therefor bywire transfer of immediately available funds for the account of the Company toaccount number 004-9200, account name: NUI Corporation at Mellon Bank N.A. (ABA Number 043 000 261) Pittsburgh,Pennsylvania.  If at the Closing theCompany shall fail to tender such Notes to any Purchaser as provided above inthis Section 3, or any of the conditions specified in Section 4 shallnot have been fulfilled to any Purchaser's satisfaction, such Purchaser shall,at such Purchaser's election, be relieved of all further obligations under thisAgreement, without thereby waiving any rights such Purchaser may have by reasonof such failure or such nonfulfillment.

Section 4.        Conditions to Closing.

The obligation of each Purchaser to purchase and pay forthe Notes to be sold to such Purchaser at the Closing is subject to thefulfillment to such Purchaser's satisfaction, prior to or at the Closing, ofthe following conditions:

     *Section 4.1.Representations and Warranties*.  The representations and warranties of theCompany in this Agreement shall be correct when made and at the time of theClosing.

     *Section 4.2.  Performance; No Default*.  The Company shall have performed andcomplied with all agreements and conditions contained in this Agreementrequired to be performed or complied with by it prior to or at the Closing, andafter giving effect to the issue and sale of the Notes (and the application ofthe proceeds thereof as contemplated by Schedule 5.14), no Default orEvent of Default shall have occurred and be continuing.  Neither the Company nor any Subsidiary shallhave entered into any transaction since the date of the Memorandum that wouldhave been prohibited by Section 10 hereof had such Section applied sincesuch date.

     *Section 4.3.     Compliance Certificates*.

           (a)  *Officer'sCertificate*.  The Company shall havedelivered to such Purchaser an Officer's Certificate, dated the date of theClosing, certifying that the conditions specified in Sections 4.1, 4.2 and4.9 have been fulfilled.

           (b) *Secretary'sCertificate*.  The Company shall havedelivered to such Purchaser a certificate certifying as to the resolutionsattached thereto and other corporate proceedings relating to the authorization,execution and delivery of the Notes and the Agreements.

           (c)     *ERISACertificate.*  If such Purchasershall have made the disclosures referred to in Section 6.2(b), (c) or (e),such Purchaser shall have received the certificate from the Company describedin the penultimate paragraph ofSection 6.2and such certificate shall state that(i) the Company is neither a "party in interest" nor a "disqualifiedperson" (as defined in Section 4975(e)(2) of the Code), with respect to anyplan identified pursuant to Section 6.2(b) or (e) or (ii) withrespect to any plan, identified pursuant to Section 6.2(c), neither theCompany nor any "affiliate" (as defined in Section V(c) of the QPAMExemption) has, at such time or during the immediately preceding one year,exercised the authority to appoint or terminate the QPAM as manager of theassets of any plan identified in writing pursuant to Section 6.2(c) or tonegotiate the terms of said QPAM's management agreement on behalf of any suchidentified plans.

     *Section 4.4.    Opinions of Counsel*.  Such Purchaser shall have received opinionsin form and substance satisfactory to such Purchaser, dated the date of the Closing(a) from Pitney, Hardin, Kipp & Szuch LLP, counsel for the Company,and from James R. Van Horn, Esq., counsel for the Company, collectivelycovering the matters set forth in Exhibit 4.4(a) and covering such othermatters incident to the transactions contemplated hereby as such Purchaser orsuch Purchaser's counsel may reasonably request (and the Company herebyinstructs its counsel to deliver such opinions to such Purchaser) and(b) from Chapman and Cutler, Purchasers' special counsel in connection withsuch transactions, substantially in the form set forth in Exhibit 4.4(b)and covering such other matters incident to such transactions as such Purchasermay reasonably request.

     *Section 4.5.         Purchase Permitted by Applicable Law, etc*.  On the date of the Closing each purchase ofNotes shall (i) be permitted by the laws and regulations of eachjurisdiction to which each Purchaser is subject, without recourse to provisions(such as Section 1405(a)(8) of the New York Insurance Law) permittinglimited investments by insurance companies without restriction as to thecharacter of the particular investment, (ii) not violate any applicablelaw or regulation (including, without limitation, Regulation T, U or X ofthe Board of Governors of the Federal Reserve System) and (iii) notsubject any Purchaser to any tax, penalty or liability under or pursuant to anyapplicable law or regulation, which law or regulation was not in effect on the datehereof.  If requested by any Purchaser,such Purchaser shall have received an Officer's Certificate certifying as tosuch matters of fact as such Purchaser may reasonably specify to enable suchPurchaser to determine whether such purchase is so permitted.

     *Section 4.6.            Related Transactions*.  The Company, contemporaneously herewith,shall have consummated the sale of the entire principal amount of the Notesscheduled to be sold on the date of the Closing pursuant to this Agreement.

     *Section 4.7.Payment of Special Counsel Fees.  *Withoutlimiting the provisions of Section 15.1, the Company shall have paid on orbefore the Closing the fees, charges and disbursements of the Purchasers'special counsel referred to in Section 4.4 to the extent reflected in astatement of such counsel rendered to the Company at least one Business Dayprior to the Closing.

     *Section 4.8.            Private Placement Number*.  A Private Placement Number issued byStandard & Poor's CUSIP Service Bureau (in cooperation with the SecuritiesValuation Office of the National Association of Insurance Commissioners) shallhave been obtained for each series of the Notes.

     *Section 4.9.Changes in Corporate Structure*.  Except as specified in Schedule 4.9,the Company shall not have changed its jurisdiction of incorporation or been aparty to any merger or consolidation and shall not have succeeded to all or anysubstantial part of the liabilities of any other entity, at any time followingthe date of the most recent financial statements referred to inSchedule 5.5.

*    Section 4.10***         ***Funding Instructions.* At least three Business Days prior to the date of the Closing, suchPurchaser shall have received written instructions executed by a ResponsibleOfficer of the Company directing the manner of the payment of funds and settingforth (i) the name and address of the transferee bank, (ii) suchtransferee bank's ABA number, (iii) the account name and number into whichthe purchase price for the Notes is to be deposited, and (iv) the name andtelephone number of the account representative responsible for verifyingreceipt of such funds.

   *Section 4.11.    Proceedings and Documents*.  All corporate and other proceedings inconnection with the transactions contemplated by this Agreement and alldocuments and instruments incident to such transactions shall be satisfactoryto such Purchaser and such Purchaser's special counsel, and such Purchaser andsuch Purchaser's special counsel shall have received all such counterpart originalsor certified or other copies of such documents as such Purchaser or specialcounsel may reasonably request.

Section 5*.*        Representationsand Warranties of the Company.

The Company represents and warrants to each Purchaser that:

     *Section 5.1.  Organization; Power and Authority*.  The Company is a corporation duly organized,validly existing and in good standing under the laws of its jurisdiction ofincorporation, and is duly qualified as a foreign corporation and is in goodstanding in each jurisdiction in which such qualification is required by law,other than those jurisdictions as to which the failure to be so qualified or ingood standing could not, individually or in the aggregate, reasonably beexpected to have a Material Adverse Effect. The Company has the corporate power and authority to own or hold underlease the properties it purports to own or hold under lease, to transact thebusiness it transacts and proposes to transact, to execute and deliver thisAgreement and the Notes and to perform the provisions hereof and thereof.

     *Section 5.2.Authorization, etc*.  This Agreement and the Notes have been dulyauthorized by all necessary corporate action on the part of the Company, andthis Agreement constitutes, and upon execution and delivery thereof each Notewill constitute, a legal, valid and binding obligation of the Company enforceableagainst the Company in accordance with its terms, except as such enforceabilitymay be limited by (i) applicable bankruptcy, insolvency, reorganization,moratorium or other similar laws affecting the enforcement of creditors' rightsgenerally and (ii) general principles of equity (regardless of whethersuch enforceability is considered in a proceeding in equity or at law).

     *Section 5.3.      Disclosure*.  The Company, through its agent, PNC CapitalMarkets, Inc., has delivered to each Purchaser a copy of a ConfidentialOffering Memorandum, dated June, 2001 (the *"Memorandum"*),relating to the transactions contemplated hereby.  The Memorandum fairly describes, in all material respects, thegeneral nature of the business and principal properties of the Company and itsSubsidiaries.  Except as disclosed inSchedule 5.3, this Agreement, the Memorandum, the documents, certificatesor other writings delivered to each Purchaser by or on behalf of the Company inconnection with the transactions contemplated hereby and the financialstatements listed in Schedule 5.5, taken as a whole, do not contain anyuntrue statement of a material fact or omit to state any material factnecessary to make the statements therein not misleading in light of thecircumstances under which they were made. Since September 30, 2000, there has been no change in the financialcondition, operations, business, properties or prospects of the Company or anySubsidiary except changes that individually or in the aggregate could notreasonably be expected to have a Material Adverse Effect.  There is no fact known to the Company thatcould reasonably be expected to have a Material Adverse Effect that has notbeen set forth herein or in the Memorandum or in the other documents,certificates and other writings delivered to each Purchaser by or on behalf ofthe Company specifically for use in connection with the transactionscontemplated hereby.

     *Section 5.4.   Organization and Ownership of Shares of Subsidiaries; Affiliates*.  (a) Schedule 5.4 contains (exceptas noted therein) complete and correct lists of (i) the Company'sSubsidiaries, showing, as to each Subsidiary, its status (whether a RestrictedSubsidiary or an Unrestricted Subsidiary), the correct name thereof, thejurisdiction of its organization, and the percentage of shares of each class ofits capital stock or similar equity interests outstanding owned by the Companyand each other Subsidiary, (ii) the Company's Affiliates, other thanSubsidiaries and (iii) the Company's directors and senior officers.

          (b)       All of the outstanding shares of capital stockor similar equity interests of each Subsidiary shown in Schedule 5.4 asbeing owned by the Company and its Subsidiaries have been validly issued, arefully paid and nonassessable and are owned by the Company or another Subsidiaryfree and clear of any Lien (except as otherwise disclosed inSchedule 5.4).

           (c)        Each Subsidiary identified inSchedule 5.4 is a corporation or other legal entity duly organized,validly existing and in good standing under the laws of its jurisdiction oforganization, and is duly qualified as a foreign corporation or other legalentity and is in good standing in each jurisdiction in which such qualificationis required by law, other than those jurisdictions as to which the failure tobe so qualified or in good standing could not, individually or in theaggregate, reasonably be expected to have a Material Adverse Effect.  Each such Subsidiary has the corporate orother power and authority to own or hold under lease the properties it purportsto own or hold under lease and to transact the business it transacts andproposes to transact.

          (d)      No Subsidiary is a party to, or otherwisesubject to, any legal restriction or any agreement (other than this Agreement,the agreements listed on Schedule 5.4 and customary limitations imposed bycorporate law statutes) restricting the ability of such Subsidiary to paydividends out of profits or make any other similar distributions of profits tothe Company or any of its Subsidiaries that owns outstanding shares of capitalstock or similar equity interests of such Subsidiary.

*     Section 5.5.         Financial Statements*.  The Company has delivered to each Purchasercopies of the consolidated financial statements of the Company and itsSubsidiaries listed on Schedule 5.5. All of said financial statements(including in each case the related schedules and notes) fairly present in allmaterial respects the consolidated financial position of the Company and itsSubsidiaries as of the respective dates specified in such Schedule and theconsolidated results of their operations and cash flows for the respectiveperiods so specified and have been prepared in accordance with GAAPconsistently applied throughout the periods involved except as set forth in thenotes thereto (subject, in the case of any interim financial statements, tonormal year-end adjustments).

     *Section 5.6.     Compliance with Laws, Other Instruments, etc*.  The execution, delivery and performance bythe Company of this Agreement and the Notes will not (i) contravene,result in any breach of, or constitute a default under, or result in thecreation of any Lien in respect of any property of the Company or anySubsidiary under, any indenture, mortgage, deed of trust, loan, purchase orcredit agreement, lease, corporate charter or by-laws, or any other agreementor instrument to which the Company or any Subsidiary is bound or by which theCompany or any Subsidiary or any of their respective properties may be bound oraffected, (ii) conflict with or result in a breach of any of the terms,conditions or provisions of any order, judgment, decree, or ruling of anycourt, arbitrator or Governmental Authority applicable to the Company or anySubsidiary or (iii) violate any provision of any statute or other rule orregulation of any Governmental Authority applicable to the Company or anySubsidiary.

     *Section 5.7.     Governmental Authorizations, etc*.  No consent, approval or authorization of, orregistration, filing or declaration with, any Governmental Authority(including, without limitation, the New Jersey Board of Public Utilities) isrequired in connection with the execution, delivery or performance by theCompany of this Agreement or the Notes.

     S*ection 5.8.       Litigation; Observance of Agreements, Statutes and Orders.* (a) Except as disclosed in Schedule 5.8, there are no actions,suits or proceedings pending or, to the knowledge of the Company, threatenedagainst or affecting the Company or any Subsidiary or any property of theCompany or any Subsidiary in any court or before any arbitrator of any kind orbefore or by any Governmental Authority that, individually or in the aggregate,could reasonably be expected to have a Material Adverse Effect.

          (b)       Neither the Company nor any Subsidiary is indefault under any term of any agreement or instrument to which it is a party orby which it is bound, or any order, judgment, decree or ruling of any court,arbitrator or Governmental Authority or is in violation of any applicable law,ordinance, rule or regulation (including without limitation Environmental Laws)of any Governmental Authority, which default or violation, individually or inthe aggregate, could reasonably be expected to have a Material Adverse Effect.

     *Section 5.9.      Taxes*.  The Company and its Subsidiaries have filedall tax returns that are required to have been filed in any jurisdiction, andhave paid all taxes shown to be due and payable on such returns and all othertaxes and assessments levied upon them or their properties, assets, income orfranchises, to the extent such taxes and assessments have become due andpayable and before they have become delinquent, except for any taxes andassessments (i) the amount of which is not individually or in theaggregate Material or (ii) the amount, applicability or validity of whichis currently being contested in good faith by appropriate proceedings and withrespect to which the Company or a Subsidiary, as the case may be, hasestablished adequate reserves in accordance with GAAP.  The Company knows of no basis for any othertax or assessment that could reasonably be expected to have a Material AdverseEffect.  The charges, accruals andreserves on the books of the Company and its Subsidiaries in respect offederal, state or other taxes for all fiscal periods are adequate.  The federal income tax liabilities of theCompany and its Subsidiaries have been determined by the Internal RevenueService and paid for all Fiscal Years up to and including the Fiscal Year endedSeptember 30, 1995.

   *Section 5.10.        Title to Property; Leases*.  The Company and its Subsidiaries have goodand sufficient title to their respective properties, including all suchproperties reflected in the most recent audited balance sheet referred to inSection 5.5 or purported to have been acquired by the Company or anySubsidiary after said date (except as sold or otherwise disposed of in theordinary course of business), in each case free and clear of Liens prohibitedby this Agreement.  All leases thatindividually or in the aggregate are Material are valid and subsisting and arein full force and effect in all material respects.

   *Section 5.11.         Licenses, Permits, etc*.  Except as disclosed in Schedule 5.11,

          (a)      the Company and its Subsidiaries own or possessall licenses, permits, franchises, authorizations, patents, copyrights, servicemarks, trademarks and trade names, or rights thereto, that individually or inthe aggregate are Material, without known conflict with the rights of others;

           (b)     to the best knowledge of the Company, no productof the Company or any of its Subsidiaries infringes in any Material respect anylicense, permit, franchise, authorization, patent, copyright, service mark,trademark, trade name or other right owned by any other Person; and

           (c)     to the best knowledge of the Company, thereis no Material violation by any Person of any right of the Company or any ofits Subsidiaries with respect to any patent, copyright, service mark,trademark, trade name or other right owned or used by the Company or any of itsSubsidiaries.

   *Section 5.12.     Compliance with ERISA*.  (a) The Company and each ERISAAffiliate have operated and administered each Plan in compliance with allapplicable laws except for such instances of noncompliance as have not resultedin and could not reasonably be expected to result in a Material AdverseEffect.  Neither the Company nor anyERISA Affiliate has incurred any liability pursuant to Title I or IV of ERISAor the penalty or excise tax provisions of the Code relating to employeebenefit plans (as defined in section 3 of ERISA), and no event,transaction or condition has occurred or exists that could reasonably beexpected to result in the incurrence of any such liability by the Company orany ERISA Affiliate, or in the imposition of any Lien on any of the rights,properties or assets of the Company or any ERISA Affiliate, in either casepursuant to Title I or IV of ERISA or to such penalty or excise taxprovisions or to section 401(a)(29) or 412 of the Code, other than suchliabilities or Liens as would not be individually or in the aggregate Material.

          (b)      The present value of the aggregate benefitliabilities under each of the Plans (other than Multiemployer Plans),determined as of the end of such Plan's most recently ended plan year on thebasis of the actuarial assumptions specified for funding purposes in suchPlan's most recent actuarial valuation report, did not exceed the aggregatecurrent value of the assets of such Plan allocable to such benefitliabilities.  The term *"benefit liabilities"* has the meaningspecified in section 4001 of ERISA and the terms *"current value"* and *"presentvalue"* have the meanings specified in section 3 of ERISA.

          (c)      The Company and its ERISA Affiliates have notincurred withdrawal liabilities (and are not subject to contingent withdrawalliabilities) under section 4201 or 4204 of ERISA in respect ofMultiemployer Plans that individually or in the aggregate are Material.

          (d)     The expected post-retirement benefit obligation(determined as of the last day of the Company's most recently ended Fiscal Yearin accordance with Financial Accounting Standards Board Statement No. 106,without regard to liabilities attributable to continuation coverage mandated bysection 4980B of the Code) of the Company and its Subsidiaries is notMaterial.

           (e)    The execution and delivery of this Agreementand the issuance and sale of the Notes hereunder will not involve anytransaction that is subject to the prohibitions of section 406 of ERISA orin connection with which a tax could be imposed pursuant tosection 4975(c)(1)(A)-(D) of the Code.  The representation by the Company in the first sentence of thisSection 5.12(e) is made in reliance upon and subject to the accuracy ofthe Purchasers' representations in Section 6.2 as to the sources of thefunds used to pay the purchase price of the Notes to be purchased by suchPurchaser.

   *Section 5.13.            Private Offering by the Company*.  Neither the Company nor anyone acting on itsbehalf has offered the Notes or any similar securities for sale to, orsolicited any offer to buy any of the same from, or otherwise approached ornegotiated in respect thereof with, any Person other than the Purchasers andnot more than twenty (20) other Institutional Investors, each of which has beenoffered the Notes at a private sale for investment.  Neither the Company nor anyone acting on its behalf has taken, orwill take, any action that would subject the issuance or sale of the Notes tothe registration requirements of Section 5 of the Securities Act.

   *Section 5.14.     Use of Proceeds; Margin Regulations*.  The Company will apply the proceeds of thesale of the Notes as set forth in Schedule 5.14.  No part of the proceeds from the sale of the Notes hereunder willbe used, directly or indirectly, for the purpose of buying or carrying anymargin stock within the meaning of Regulation U of the Board of Governorsof the Federal Reserve System (12 CFR 221), or for the purpose ofbuying or carrying or trading in any securities under such circumstances as toinvolve the Company in a violation of Regulation X of said Board(12 CFR 224) or to involve any broker or dealer in a violation ofRegulation T of said Board (12 CFR 220).  Margin stock does not constitute more than 5% of the value of theconsolidated assets of the Company and its Subsidiaries and the Company doesnot have any present intention that margin stock will constitute more than 5%of the value of such assets.  As used inthis Section, the terms *"margin stock"*and *"purpose of buying or carrying"*shall have the meanings assigned to them in said Regulation U.

   *Section 5.15.           Existing Indebtedness; Future Liens*  (a) Schedule 5.15 sets forth acomplete and correct list of all outstanding Indebtedness of the Company andits Subsidiaries as of June 30, 2001, since which date there has been no Materialchange in the amounts, interest rates, sinking funds, installment payments ormaturities of the Indebtedness of the Company or its Subsidiaries.  Neither the Company nor any Subsidiary is indefault and no waiver of default is currently in effect, in the payment of anyprincipal or interest on any Indebtedness of the Company or such Subsidiary andno event or condition exists with respect to any Indebtedness of the Company orany Subsidiary that would permit (or that with notice or the lapse of time, orboth, would permit) one or more Persons to cause such Indebtedness to becomedue and payable before its stated maturity or before its regularly scheduleddates of payment.

          (b)     Except as disclosed in Schedule 5.15,neither the Company nor any Subsidiary has agreed or consented to cause orpermit in the future (upon the happening of a contingency or otherwise) any ofits property, whether now owned or hereafter acquired, to be subject to a Liennot permitted by Section 10.9.

   *Section 5.16.     Foreign Assets Control Regulations, etc*.  Neither the sale of the Notes by the Companyhereunder nor its use of the proceeds thereof will violate the Trading with theEnemy Act, as amended, or any of the foreign assets control regulations of theUnited States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended)or any enabling legislation or executive order relating thereto.

   *Section 5.17.     Status under Certain Statutes*.  Neither the Company nor any Subsidiary issubject to regulation under the Investment Company Act of 1940, as amended, thePublic Utility Holding Company Act of 1935, as amended, the ICC Termination Actof 1995, as amended, or the Federal Power Act, as amended.

   *Section 5.18.    Environmental Matters*.  Neither the Company nor any Subsidiary hasknowledge of any claim or has received any notice of any claim, and noproceeding has been instituted raising any claim against the Company or any ofits Subsidiaries or any of their respective real properties now or formerlyowned, leased or operated by any of them or other assets, alleging any damageto the environment or violation of any Environmental Laws, except, in eachcase, such as could not reasonably be expected to result in a Material AdverseEffect.  Except as otherwise disclosedto each Purchaser in writing:

        (a)  neither the Company nor any Subsidiary hasknowledge of any facts which would give rise to any claim, public or private,of violation of Environmental Laws or damage to the environment emanating from,occurring on or in any way related to real properties now or formerly owned,leased or operated by any of them or to other assets or their use, except, ineach case, such as could not reasonably be expected to result in a MaterialAdverse Effect;

       (b)  neither the Company nor any of itsSubsidiaries has stored any Hazardous Materials on real properties now orformerly owned, leased or operated by any of them or has disposed of anyHazardous Materials in a manner contrary to any Environmental Laws in each casein any manner that could reasonably be expected to result in a Material AdverseEffect; and

        (c)         all buildings on all real propertiesnow owned, leased or operated by the Company or any of its Subsidiaries are incompliance with applicable Environmental Laws, except where failure to complycould not reasonably be expected to result in a Material Adverse Effect.

Section 6.        Representations of the Purchasers.

     *Section 6.1.    Purchase for Investment*.  Each Purchaser represent that it ispurchasing the Notes for its own account or for one or more separate accountsmaintained by such Purchaser or for the account of one or more pension or trustfunds and not with a view to the distribution thereof, *provided* that the disposition of such Purchaser's or their propertyshall at all times be within such Purchasers or their control.  Each Purchaser understands that the Noteshave not been registered under the Securities Act and may be resold only ifregistered pursuant to the provisions of the Securities Act or if an exemptionfrom registration is available, except under circumstances where neither suchregistration nor such an exemption is required by law, and that the Company isnot required to register the Notes.

     *Section 6.2.     Source of Funds*.  Each Purchaser represents that at least oneof the following statements is an accurate representation as to each source offunds (a *"Source"*) to be used by suchPurchaser to pay the purchase price of the Notes to be purchased by ithereunder:

        (a)       the Source is an "insurance companygeneral account" within the meaning of Department of Labor ProhibitedTransaction Exemption (*"PTE"*) 95-60(issued July 12, 1995) and there is no employee benefit plan, treating asa single plan, all plans maintained by the same employer or employeeorganization, with respect to which the amount of the general account reservesand liabilities for all contracts held by or on behalf of such plan, exceed tenpercent (10%) of the total reserves and liabilities of such general account(exclusive of separate account liabilities) plus surplus, as set forth in theNAIC Annual Statement filed with such Purchaser's state of domicile; or

       (b)       the Source is either (i) aninsurance company pooled separate account, within the meaning of PTE 90‐1(issued January 29, 1990), or (ii) a bank collective investment fund,within the meaning of the PTE 91‐38 (issued July 12, 1991) and, except assuch Purchaser has disclosed to the Company in writing pursuant to thisparagraph (b), no employee benefit plan or group of plans maintained by thesame employer or employee organization beneficially owns more than 10% of allassets allocated to such pooled separate account or collective investment fund;or

        (c)       the Source constitutes assets of an"investment fund" (within the meaning of Part V of the QPAM Exemption) managedby a "qualified professional asset manager" or "QPAM" (within the meaning ofPart V of the QPAM Exemption), no employee benefit plan's assets that areincluded in such investment fund, when combined with the assets of all otheremployee benefit plans established or maintained by the same employer or by anaffiliate (within the meaning of Section V(c)(1) of the QPAM Exemption) ofsuch employer or by the same employee organization and managed by such QPAM,exceed 20% of the total client assets managed by such QPAM, the conditions ofPart I(c) and (g) of the QPAM Exemption are satisfied, neither the QPAMnor a person controlling or controlled by the QPAM (applying the definition of "control"in Section V(e) of the QPAM Exemption) owns a 5% or more interest in theCompany and (i) the identity of such QPAM and (ii) the names of allemployee benefit plans whose assets are included in such investment fund havebeen disclosed to the Company in writing pursuant to this paragraph (c); or

       (d)       the Source is a governmental plan; or

        (e)       the Source is one or more employeebenefit plans, or a separate account or trust fund comprised of one or moreemployee benefit plans, each of which has been identified to the Company inwriting pursuant to this paragraph (e); or

        (f)       the Source does not include assets of anyemployee benefit plan, other than a plan exempt from the coverage of ERISA.

If any Purchaser or any subsequent transferee of the Notesindicates that such Purchaser or such transferee are relying on anyrepresentation contained in paragraph (b), (c) or (e) above, the Companyshall deliver on the date of Closing and on the date of any applicable transfera certificate, which shall either state that (i) it is neither a party ininterest nor a "disqualified person" (as defined in section 4975(e)(2) ofthe Internal Revenue Code of 1986, as amended), with respect to any planidentified pursuant to paragraphs (b) or (e) above, or (ii) withrespect to any plan, identified pursuant to paragraph (c) above, neither it norany "affiliate" (as defined in Section V(c) of the QPAM Exemption) has atsuch time, and during the immediately preceding one year, exercised theauthority to appoint or terminate said QPAM as manager of any plan identifiedin writing pursuant to paragraph (c) above or to negotiate the terms of saidQPAM's management agreement on behalf of any such identified plan.

As used in this Section 6.2, the terms *"employee benefit plan"*, *"governmental plan"*, *"party in interest"* and *"separate account"* shall have therespective meanings assigned to such terms in section 3 of ERISA.

Section 7.        Information as to Company.

     *Section 7.1.    Financial and Business Information*.  The Company shall deliver to each holder ofNotes that is an Institutional Investor:

        (a)     *QuarterlyStatements* - promptly, and in any event within 60 days after the end ofeach Fiscal Quarter in each Fiscal Year of the Company (other than the lastquarterly fiscal period of each such Fiscal Year), two copies of the Company'sQuarterly Report on Form 10‐Q prepared in compliance with therequirements therefor and filed with the SEC, together with:

(i)  a consolidated balance sheet of the Company andits Subsidiaries as at the end of such Fiscal Quarter; and

(ii)  consolidated statements of income and cashflows of the Company and its Subsidiaries for such Fiscal Quarter and (in thecase of the second and third quarters) for the portion of the Fiscal Yearending with such Fiscal Quarter, setting forth in each case in comparative form thefigures for the corresponding periods in the previous Fiscal Year, all inreasonable detail, prepared in accordance with GAAP applicable to quarterlyfinancial statements generally, and certified by a Senior Financial Officer asfairly presenting, in all material respects, the financial position of thecompanies being reported on and their results of operations and cash flows,subject to changes resulting from year-end adjustments;

       (b)  *AnnualStatements* - promptly, and in any event within 120 days after the end ofeach Fiscal Year of the Company, two copies of the Company's Annual Report onForm 10-K for such Fiscal Year (together with the Company's annual reportto shareholders, if any, prepared pursuant to Rule 14a-3 under theExchange Act) prepared in accordance with the requirements therefor and filedwith the SEC, together with:

(i)  a consolidated and consolidating balancesheet of the Company and its Subsidiaries, as at the end of such Fiscal Year,and

(ii)  consolidated and consolidating statements ofincome, changes in shareholders' equity and cash flows of the Company and itsSubsidiaries, for such Fiscal Year, setting forth in each case in comparative form thefigures for the previous Fiscal Year, all in reasonable detail, prepared inaccordance with GAAP, and accompanied by an opinion thereon of independentcertified public accountants of recognized national standing, which opinionshall state that such financial statements present fairly, in all materialrespects, the financial position of the companies being reported upon and theirresults of operations and cash flows and have been prepared in conformity withGAAP, and that the examination of such accountants in connection with suchfinancial statements has been made in accordance with generally acceptedauditing standards, and that such audit provides a reasonable basis for suchopinion in the circumstances.

        (c)     *SECand Other Reports* - promptly upon their becoming available, one copy of(i) each financial statement, report, notice or information statement sentby the Company or any Subsidiary to public securities holders generally(including, without limitation, proxy materials), and (ii) each regular orperiodic report (including, without limitation, any report of the Company onForm 8-K), each registration statement (without exhibits except asexpressly requested by such holder), and each prospectus and all amendmentsthereto filed by the Company or any Subsidiary with the SEC and of all pressreleases and other statements made available generally by the Company or anySubsidiary to the public concerning developments that are Material;

       (d)    *Notice ofDefault or Event of Default* - promptly, and in any event within fiveBusiness Days, after a Responsible Officer becoming aware of the existence ofany Default or Event of Default or that any Person has given any notice ortaken any action with respect to a claimed default hereunder or that any Personhas given any  notice or taken anyaction with respect to a claimed default of the type referred to inSection 11(f), a written notice specifying the nature and period ofexistence thereof and what action the Company is taking or proposes to takewith respect thereto;

        (e)  *ERISAMatters* - promptly, and in any event within 30 days after a ResponsibleOfficer becoming aware of any of the following, a written notice setting forththe nature thereof and the action, if any, that the Company or an ERISAAffiliate proposes to take with respect thereto:

(i)  with respect to any Plan, any reportable event,as defined in section 4043(b) of ERISA and the regulations thereunder, forwhich notice thereof has not been waived pursuant to such regulations as ineffect on the date hereof; or

(ii)  the taking by the PBGC of steps to institute,or the threatening by the PBGC of the institution of, proceedings undersection 4042 of ERISA for the termination of, or the appointment of atrustee to administer, any Plan, or the receipt by the Company or any ERISAAffiliate of a notice from a Multiemployer Plan that such action has been takenby the PBGC with respect to such Multiemployer Plan (including a copy of anynotice thereof); or

(iii)  any event, transaction or condition that couldresult in the incurrence of any liability by the Company or any ERISA Affiliatepursuant to Title I or IV of ERISA or the penalty or excise tax provisions ofthe Code relating to employee benefit plans, or in the imposition of any Lienon any of the rights, properties or assets of the Company or any ERISAAffiliate pursuant to Title I or IV of ERISA or such penalty or excise taxprovisions, if such liability or Lien, taken together with any other suchliabilities or Liens then existing, could reasonably be expected to have aMaterial Adverse Effect;

        (f)  *Noticesfrom Governmental Authority*- promptly, and in any event within 30 days ofreceipt thereof, copies of any notice to the Company or any Subsidiary from anyFederal or state Governmental Authority relating to any order, ruling, statuteor other law or regulation that could reasonably be expected to have a MaterialAdverse Effect; 

        (g)  *Litigationor Other Proceedings*- promptly, and in any event within five BusinessDays, written notice of any pending or, to the knowledge of the Company,overtly threatened claim in writing of, any action, suit, proceeding (whetheradministrative, judicial or otherwise), governmental investigation orarbitration against or affecting the Company or any of its Subsidiaries or anyproperty of the Company or any of its Subsidiaries, that, individually or inthe aggregate, could reasonably be expected to have a Material Adverse Effect;and

        (h)  *RequestedInformation* - with reasonable promptness, such other data and informationrelating to the business, operations, affairs, financial condition, assets orproperties of the Company or any of its Subsidiaries or relating to the abilityof the Company to perform its obligations hereunder and under the Notes as fromtime to time may be reasonably requested by any such holder of Notes.

     *Section 7.2.          Officer's Certificate*.  Each set of financial statements deliveredto a holder of Notes pursuant to Section 7.1(a) or Section 7.1(b)hereof shall be accompanied by a certificate of a Senior Financial Officersetting forth:

        (a)  *CovenantCompliance* - the information (including detailed calculations) required inorder to establish whether the Company was in compliance with the requirementsof Section 10.2 through Section 10.5 hereof, inclusive, andSections 10.8 and 10.9 during the quarterly or annual period covered bythe statements then being furnished (including with respect to each suchSection, where applicable, the calculations of the maximum or minimum amount,ratio or percentage, as the case may be, permissible under the terms of suchSections, and the calculation of the amount, ratio or percentage then inexistence); and

       (b)  *Event ofDefault* - a statement that such officer has reviewed the relevant termshereof and has made, or caused to be made, under his or her supervision, areview of the transactions and conditions of the Company and its Subsidiariesfrom the beginning of the quarterly or annual period covered by the statementsthen being furnished to the date of the certificate and that such review shallnot have disclosed the existence during such period of any condition or eventthat constitutes a Default or an Event of Default or, if any such condition orevent existed or exists (including, without limitation, any such event orcondition resulting from the failure of the Company or any Subsidiary to complywith any Environmental Law), specifying the nature and period of existencethereof and what action the Company shall have taken or proposes to take withrespect thereto.

     *Section 7.3.      Inspection*.  The Company shall permit the representativesof each holder of Notes that is an Institutional Investor:

        (a)       *NoDefault* - if no Default or Event of Default then exists, at the expense ofsuch holder and upon reasonable prior notice to the Company, to visit theprincipal executive office of the Company, to discuss the affairs, finances andaccounts of the Company and its Subsidiaries with the Company's officers, and(with the consent of the Company, which consent will not be unreasonablywithheld) its independent public accountants, and (with the consent of theCompany, which consent will not be unreasonably withheld) to visit the otheroffices and properties of the Company and each Subsidiary, all at suchreasonable times and as often as may be reasonably requested in writing; and

       (b)  *Default*- if a Default or Event of Default then exists, at the expense of the Company,to visit and inspect any of the offices or properties of the Company or anySubsidiary, to examine all their respective books of account, records, reportsand other papers, to make copies and extracts therefrom, and to discuss theirrespective affairs, finances and accounts with their respective officers andindependent public accountants (and by this provision the Company authorizessaid accountants to discuss the affairs, finances and accounts of the Companyand its Subsidiaries), all at such times and as often as may be requested.

Section 8.        Prepayment of the Notes.

     *Section 8.1.          Required Prepayments*.  (a) The entire outstanding principalamount of the Series A Notes shall be due on August 20, 2006.  Except as set forth in Section 8.2, theSeries A Notes may not be prepaid prior to maturity at the option of theCompany.

           (b)  The entire outstanding principal amount of theSeries B Notes shall be due on August 20, 2008.  Except as set forth in Section 8.2, theSeries B Notes may not be prepaid prior to maturity at the option of theCompany.

           (c)  On the twentieth day of August, 2005 and oneach August 20 thereafter to and including August 20, 2010 theCompany will prepay $1,000,000 principal amount (or such lesser principalamount as shall then be outstanding) of the Series C Notes at par andwithout payment of the Make-Whole Amount or any premium, *provided* that upon any partial prepayment of the Series CNotes pursuant to Section 8.2 or Section 8.3 the principal amount ofeach required prepayment of the Notes becoming due under thisSection 8.1(c) on and after the date of such prepayment or purchase shallbe reduced in the same proportion as the aggregate unpaid principal amount ofthe Series C Notes is reduced as a result of such prepayment.  The entire remaining principal amount of theSeries C Notes shall be due on August 20, 2011.  Except as set forth in Section 8.2, the Series C Notesmay not be prepaid prior to maturity at the option of the Company.

           (d)  The entire outstanding principal amount of theSeries D Notes shall be due on August 20, 2011.  Except as set forth in Section 8.2, theSeries D Notes may not be prepaid prior to maturity at the option of theCompany.

     *Section 8.2.          Optional Prepayments with Make-Whole Amount*.  The Company may, at its option, upon noticeas provided below, prepay at any time all, or from time to time any part of,the Notes, in a minimum principal amount of $1,000,000 in the case of a partialprepayment, at 100% of the principal amount so prepaid, together with interestaccrued thereon to the date of such prepayment, plus the Make-Whole Amountdetermined for the prepayment date with respect to such principal amount.  The Company will give each holder of Noteswritten notice of each optional prepayment under this Section 8.2 not lessthan 30 days and not more than 60 days prior to the date fixed for suchprepayment.  Each such notice shallspecify such date, the aggregate principal amount of the Notes to be prepaid onsuch date, the principal amount of each Note held by such holder to be prepaid(determined in accordance with Section 8.4), and the interest to be paidon the prepayment date with respect to such principal amount being prepaid, andshall be accompanied by a certificate of a Senior Financial Officer as to theestimated Make‐Whole Amount due in connection with such prepayment (calculatedas if the date of such notice were the date of the prepayment), setting forththe details of such computation.  TwoBusiness Days prior to such prepayment, the Company shall deliver to eachholder of Notes a certificate of a Senior Financial Officer specifying thecalculation of such Make-Whole Amount as of the specified prepayment date.

     *Section 8.3.Prepayment of Notes upon Change of Control.*  (a) In the eventthat any Change of Control shall occur or the Company shall have knowledge ofany proposed Change of Control, the Company will give written notice (the *"Company Notice"*) of such fact in themanner provided in Section 18 hereof to the holders of the Notes.  The Company Notice shall be deliveredpromptly upon receipt of such knowledge by the Company and in any event nolater than three Business Days following the occurrence of any Change ofControl.  The Company Notice shall (i) describethe facts and circumstances of such Change of Control in reasonable detail,(ii) make reference to this Section 8.3 and the right of the holders ofthe Notes to require prepayment of the Notes on the terms and conditionsprovided for in this Section 8.3, (iii) offer in writing to prepay theoutstanding Notes, together with accrued interest to the date of prepayment,and without payment of the Make-Whole Amount or any premium, and(iv) specify a date for such prepayment (the *"Change of Control Prepayment Date"*), which Change of Control PrepaymentDate shall be not more than 90 days nor less than 30 days followingthe date of such Company Notice.  Eachholder of the then outstanding Notes shall have the right to accept such offerand require prepayment of the Notes held by such holder in full by writtennotice to the Company (a *"NoteholderNotice"*) given not later than 20 days after receipt of the CompanyNotice.  The Company shall on the Changeof Control Prepayment Date prepay in full all of the Notes held by holderswhich have so accepted such offer of prepayment.  The prepayment price of the Notes payable upon the occurrence ofany Change of Control shall be an amount equal to 100% of the outstandingprincipal amount of the Notes so to be prepaid and accrued interest thereon tothe date of such prepayment.

        (b) (i)  Without limiting the foregoing, notwithstandingany failure on the part of the Company to give the Company Notice hereinrequired by Section 8.3(a), as a result of the occurrence of a Change ofControl each holder of the Notes shall have the right by delivery of writtennotice to the Company to require the Company to prepay, and the Company willprepay, such holder's Notes in full, together with accrued interest thereon tothe date of prepayment, and without payment of the Make-Whole Amount orany premium.  Notice of any requiredprepayment pursuant to this Section 8.3(b)(i) shall be delivered by any holderof the Notes which was entitled to, but did not receive, such Company Notice tothe Company after such holder has actual knowledge of such Change ofControl.  On the date (the *"Change of Control Delayed Prepayment Date"*)designated in such holder's notice (which shall be not more than 90 daysnor less than 30 days following the date of such holder's notice), theCompany shall prepay in full all of the Notes held by such holder, togetherwith accrued interest thereon to the date of prepayment.  If the holder of any Note gives any noticepursuant to this Section 8.3(b)(i), the Company shall give a Company Noticewithin three Business Days of receipt of such notice and identify the Change ofControl Delayed Prepayment Date to all other holders of the Notes and each ofsuch other holders shall then and thereupon have the right to accept theCompany's offer to prepay the Notes held by such holder in full and requireprepayment of such Notes by delivery of a Noteholder Notice within 20 daysfollowing receipt of such Company Notice; *provided*only that any date for prepayment of such holder's Notes shall be the Change ofControl Delayed Prepayment Date.  On theChange of Control Delayed Prepayment Date, the Company shall prepay in full theNotes of each holder thereof which has accepted such offer of prepayment at aprepayment price equal to 100% of the outstanding principal amount of the Notesso to be prepaid and accrued interest thereon to the date of such prepayment.

            (ii)Compliance with the provisions of this Section8.3(b) shall not be deemed to constitute a waiver of, or consent to, anyDefault or Event of Default caused by any violation of the provisions ofSection 8.3(a).

           (c) *"Changeof Control"*means if any person (as such term is used in section 13(d) andsection 14(d)(2) of the Exchange Act as in effect on the date of theClosing) or related persons constituting a group (as such term is used in Rule13d-5 under the Exchange Act), become the "beneficial owners" (as such term isused in Rule 13d-3 under the Exchange Act as in effect on the date of theClosing), directly or indirectly, of more than 50% of the issued andoutstanding common stock of the Company.

     *Section 8.4.     Allocation of Partial Prepayments*.  In the case of each partial prepayment ofthe Notes (other than partial payment under Section 8.3), the principalamount of the Notes to be prepaid shall be allocated among all of the Notes atthe time outstanding in proportion, as nearly as practicable, to the respectiveunpaid principal amounts thereof.

     *Section 8.5.         Maturity; Surrender, etc*.  In the case of each prepayment of Notespursuant to this Section 8, the principal amount of each Note to beprepaid shall mature and become due and payable on the date fixed for suchprepayment, together with interest on such principal amount accrued to suchdate and the applicable Make-Whole Amount, if any.  From and after such date, unless the Company shall fail to paysuch principal amount when so due and payable, together with the interest andMake-Whole Amount, if any, as aforesaid, interest on such principal amountshall cease to accrue.  Any Note paid orprepaid in full shall be surrendered to the Company and cancelled and shall notbe reissued, and no Note shall be issued in lieu of any prepaid principalamount of any Note.

     *Section 8.6.    Purchase of Notes*.  The Company will not and will not permit anyAffiliate to purchase, redeem, prepay or otherwise acquire, directly orindirectly, any of the outstanding Notes except upon the payment or prepaymentof the Notes in accordance with the terms of this Agreement and the Notes.  The Company will promptly cancel all Notesacquired by it or any Affiliate pursuant to any payment, prepayment or purchaseof Notes pursuant to any provision of this Agreement and no Notes may be issuedin substitution or exchange for any such Notes.

     *Section 8.7.    Make-Whole Amount*.  The term *"Make-WholeAmount"* means, with respect to any Note, an amount equal to the excess, ifany, of the Discounted Value of the Remaining Scheduled Payments with respectto the Called Principal of such Note over the amount of such Called Principal, *provided* that the Make-Whole Amount mayin no event be less than zero.  For thepurposes of determining the Make-Whole Amount, the following terms have thefollowing meanings:

*"Called Principal"*means, with respect to any Note, the principal of such Note that is to beprepaid pursuant to Section 8.2 or has become or is declared to beimmediately due and payable pursuant to Section 12.1, as the contextrequires.

*"Discounted Value"*means, with respect to the Called Principal of any Note, the amount obtained bydiscounting all Remaining Scheduled Payments with respect to such CalledPrincipal from their respective scheduled due dates to the Settlement Date withrespect to such Called Principal, in accordance with accepted financialpractice and at a discount factor (applied on the same periodic basis as thaton which interest on the Notes is payable) based on the Reinvestment Yield withrespect to such Called Principal.

*"ReinvestmentYield"* means, with respect to the Called Principal of any Note, the 0.50%over the yield to maturity implied by (i) the yields reported, as of 10:00A.M. (New York City time) on the second Business Day preceding the SettlementDate with respect to such Called Principal, on the display designated as "Page678" on the Telerate Access Service (or such other display as may replace Page678 on the Telerate Access Service) for actively traded U.S. Treasurysecurities having a maturity equal to the Remaining Average Life of such CalledPrincipal as of such Settlement Date, or (ii) if such yields are notreported as of such time or the yields reported as of such time are not ascertainable,the Treasury Constant Maturity Series Yields reported, for the latest day forwhich such yields have been so reported as of the second Business Day precedingthe Settlement Date with respect to such Called Principal, in Federal ReserveStatistical Release H.15 (519) (or any comparable successor publication) foractively traded U.S. Treasury securities having a constant maturity equal tothe Remaining Average Life of such Called Principal as of such Settlement Date.  Such implied yield will be determined, ifnecessary, by (i) converting U.S. Treasury bill quotations tobond-equivalent yields in accordance with accepted financial practice and(ii) interpolating linearly between (A) the actively traded U.S.Treasury security with the maturity closest to and greater than the RemainingAverage Life and (B) the actively traded U.S. Treasury security with thematurity closest to and less than the Remaining Average Life.

*"Remaining AverageLife"* means, with respect to any Called Principal, the number of years(calculated to the nearest one-twelfth year) obtained by dividing (i) suchCalled Principal into (ii) the sum of the products obtained by multiplying(a) the principal component of each Remaining Scheduled Payment withrespect to such Called Principal by (b) the number of years (calculated tothe nearest one-twelfth year) that will elapse between the Settlement Date withrespect to such Called Principal and the scheduled due date of such RemainingScheduled Payment.

*"RemainingScheduled Payments"* means, with respect to the Called Principal of anyNote, all payments of such Called Principal and interest thereon that would bedue after the Settlement Date with respect to such Called Principal if nopayment of such Called Principal were made prior to its scheduled due date, *provided* that if such Settlement Date isnot a date on which interest payments are due to be made under the terms of theNotes, then the amount of the next succeeding scheduled interest payment willbe reduced by the amount of interest accrued to such Settlement Date andrequired to be paid on such Settlement Date pursuant to Section 8.2 or12.1.

*"Settlement Date"*means, with respect to the Called Principal of any Note, the date on which suchCalled Principal is to be prepaid pursuant to Section 8.2 or has become oris declared to be immediately due and payable pursuant to Section 12.1, asthe context requires.

Section 9.        Affirmative Covenants.

The Company covenants that so long as any of the Notes areoutstanding:

     *Section 9.1.     Compliance with Law*.  The Company will, and will cause each of itsSubsidiaries to, comply with all laws, ordinances or governmental rules orregulations to which each of them is subject, including, without limitation,all Environmental Laws, and will obtain and maintain in effect all licenses,certificates, permits, franchises and other governmental authorizationsnecessary to the ownership of their respective properties or to the conduct oftheir respective businesses, in each case to the extent necessary to ensurethat non-compliance with such laws, ordinances or governmental rules orregulations or failures to obtain or maintain in effect such licenses,certificates, permits, franchises and other governmental authorizations couldnot, individually or in the aggregate, reasonably be expected to have aMaterial Adverse Effect.

     *Section 9.2.       Insurance*.  The Company will, and will cause each of itsSubsidiaries to, maintain, with financially sound and reputable insurers,insurance with respect to their respective properties and businesses againstsuch casualties and contingencies, of such types, on such terms and in suchamounts (including deductibles, co‐insurance and self-insurance, ifadequate reserves are maintained with respect thereto) as is customary in thecase of entities of established reputations engaged in the same or a similarbusiness and similarly situated.

     *Section 9.3.   Maintenance of Properties*.  The Company will, and will cause each of itsSubsidiaries to, maintain and keep, or cause to be maintained and kept, theirrespective properties in good repair, working order and condition (other thanordinary wear and tear), so that the business carried on in connectiontherewith may be properly conducted at all times, *provided* that this Section shall not prevent the Company or anySubsidiary from discontinuing the operation and the maintenance of any of itsproperties if such discontinuance is desirable in the conduct of its businessand the Company has concluded that such discontinuance could not, individuallyor in the aggregate, reasonably be expected to have a Material Adverse Effect.

     *Section 9.4.     Payment of Taxes and Claims*.  The Company will, and will cause each of itsSubsidiaries to, file all tax returns required to be filed in any jurisdictionand to pay and discharge all taxes shown to be due and payable on such returnsand all other taxes, assessments, governmental charges, or levies imposed onthem or any of their properties, assets, income or franchises, to the extentsuch taxes and assessments have become due and payable and before they havebecome delinquent and all claims for which sums have become due and payablethat have or might become a Lien on properties or assets of the Company or anySubsidiary, *provided* that neither theCompany nor any Subsidiary need pay any such tax or assessment or claims if(i) the amount, applicability or validity thereof is contested by theCompany or such Subsidiary on a timely basis in good faith and in appropriateproceedings, and the Company or a Subsidiary has established adequate reservestherefor in accordance with GAAP on the books of the Company or such Subsidiaryor (ii) the nonpayment of all such taxes, assessments and claims in theaggregate could not reasonably be expected to have a Material Adverse Effect.

     *Section 9.5.       Corporate Existence, etc*.  The Company will at all times preserve andkeep in full force and effect its corporate existence.  Subject to Section 10.8, the Companywill at all times preserve and keep in full force and effect the corporateexistence of each of its Subsidiaries and all rights and franchises of theCompany and its Subsidiaries unless, in the good faith judgment of the Company,the termination of or failure to preserve and keep in full force and effect thecorporate existence of any Subsidiary or any right or franchise could not,individually or in the aggregate, have a Material Adverse Effect.

     *Section 9.6.   Notes to Rank Pari Passu*.  The Notes of the Company are and shall atall times rank at least *pari passu* asagainst the assets of the Company with all other present and future unsecuredDebt (actual or contingent) of the Company which is not expressed to besubordinate or junior in rank to any other unsecured Debt of the Company.

*Section 9.7.  Ownership of Certain Subsidiarie. *VirginiaGas Company, a Delaware corporation, shall at all times be a Wholly-OwnedRestricted Subsidiary of the Company. Each of Elizabethtown Gas Company and City Gas Company of Florida shallat all times be either a Wholly-Owned Restricted Subsidiary of theCompany or a division of a Wholly-Owned Restricted Subsidiary of theCompany.

     *Section 9.8.  Changes in Status of Subsidiaries*.  (a) So long as no Default or Event ofDefault shall have occurred and be continuing, the Board of Directors of theCompany may at any time and from time to time, upon not less than 30 days'prior written notice given to each holder of Notes, designate a previouslyUnrestricted Subsidiary as a Restricted Subsidiary, *provided* that immediately after such designation and after givingeffect thereto (i) no Default or Event of Default shall have occurred andbe continuing and (ii) the Company and its Restricted Subsidiaries wouldbe in compliance with the provisions of Sections 10.2, 10.3, 10.4, 10.5,10.6 and 10.9 hereof, assuming, for purposes of determining such compliance,that the date of such designation was the last day of a fiscal quarter of theCompany, and *provided, further,*thatthe status of such Subsidiary had not previously been changed more than once.

           (b)  So long as no Default or Event of Default shallhave occurred and be continuing, the Board of Directors of the Company may atany time and from time to time, upon not less than 30 days' prior writtennotice given to each holder of Notes, designate a previously RestrictedSubsidiary (other than Virginia Gas Company, Elizabethtown Gas Company and CityGas Company of Florida), or a new Subsidiary on the date of its formation, asan Unrestricted Subsidiary, *provided*that such designation is treated as a sale of assets subject to the provisionsof Section 10.8 and immediately after such designation and after givingeffect thereto (i) no Default or Event of Default shall have occurred andbe continuing, (ii) such previously Restricted Subsidiary does not own,directly or indirectly, any Debt, shares of capital stock or any otherSecurities of the Company or any Restricted Subsidiary and (iii) theCompany and its Restricted Subsidiaries would be in compliance with theprovisions of Sections 10.2, 10.3, 10.4, 10.5, 10.6 and 10.9 hereof,assuming, for purposes of determining such compliance, that the date of suchdesignation was the last day of a fiscal quarter of the Company, and *provided, further,*that the status ofsuch Subsidiary had not previously been changed more than once.

           (c)  Any notice of designation pursuant to thisSection 9.8 shall be accompanied by a certificate signed by a ResponsibleOfficer of the Company stating that the provisions of this Section 9.8have been complied with in connection with such designation and setting forththe name of each other Subsidiary (if any) which has or will become aRestricted Subsidiary or an Unrestricted Subsidiary as a result of suchdesignation.

Section 10.        Negative Covenants.

The Company covenants that so long as any of the Notes areoutstanding:

   *Section 10.1.   Transactions with Affiliates*.  The Company will not and will not permit anySubsidiary to enter into directly or indirectly any transaction or group ofrelated transactions (including without limitation the purchase, lease, sale orexchange of properties of any kind or the rendering of any service) with anyAffiliate (other than the Company or another Subsidiary), except in theordinary course and pursuant to the reasonable requirements of the Company's orsuch Subsidiary's business and upon fair and reasonable terms no less favorableto the Company or such Subsidiary than would be obtainable in a comparablearm's-length transaction with a Person not an Affiliate.

*Section 10.2.      FixedCharges Coverage Ratio*.* *The Company will not, atany time, permit the Fixed Charges Coverage Ratio to be less than 1.75 to 1.00.

*Section 10.3.         LeverageRatio*.  The Company will not at any time permit the ratio of ConsolidatedDebt to Consolidated Total Capitalization during any period specified below toexceed the ratio set forth opposite such period:

| Period                                                                                    | Ratio     |
|-------------------------------------------------------------------------------------------|-----------|
| From February 16 of each year to and including  August 15 of such year          | 0.65:1.00 |
| From August 16  of each year to and including February 15 of the following year | 0.70:1.00 |

   *Section 10.4.        Restricted Payments* (a) The Company will not, and will not permit any RestrictedSubsidiary to, except as hereinafter provided:

         (i)  Declare or pay any dividends, either in cash orproperty, on any shares of its capital stock of any class (except dividends orother distributions payable solely in shares of common stock of the Company); 

        (ii)  Directly or indirectly, or through anySubsidiary or Affiliate of the Company, purchase, redeem or retire any sharesof its capital stock of any class or any warrants, rights or options topurchase or acquire any shares of its capital stock (other than (i) inexchange for or out of the net cash proceeds to the Company from thesubstantially concurrent issue or sale of shares of common stock of the Companyor warrants, rights or options to purchase or acquire any shares of its commonstock or (ii) any of the foregoing with respect to capital stock,warrants, rights or options issued to employees, directors or agents of theCompany pursuant to a benefit or compensation plan or agreement of the Company);or

       (iii)   Make any other payment or distribution,either directly or indirectly or through any Subsidiary or Affiliate of theCompany, in respect of its capital stock;  (such declarations or payments of dividends, purchases,redemptions or retirements of capital stock and warrants, rights or options andall such other payments or distributions being herein collectively called *"Restricted Payments"*), if at the timeof such Restricted Payments and after giving effect thereto any Default orEvent of Default shall have occurred and be continuing or the aggregate amountof all Restricted Payments made, paid or declared by the Company or anyRestricted Subsidiary since the date of the Closing to and including the dateof the making of the Restricted Payment in question would exceed the sum of(A) $20,000,000 *plus*(B) 100% of Consolidated Net Income for such period, beginning with thefirst Fiscal Year after the date of the Closing to and including the date ofthe making of the Restricted Payment in question, computed on a cumulativebasis for said entire period (or if such Consolidated Net Income is a deficitfigure, then *minus* 100% of suchdeficit).  The Company will not declareany dividend which constitutes a Restricted Payment payable more than 60 daysafter the date of declaration thereof.

           (b)  For the purposes of this Section 10.4, theamount of any Restricted Payment declared, paid or distributed in propertyshall be deemed to be the greater of the book value or fair market value (asdetermined in good faith by the Board of Directors of the Company) of suchproperty at the time of the making of the Restricted Payment in question.

   *Section 10.5.    Investments.* The Company will not and will not permit any Restricted Subsidiary to,make or have outstanding any Investments, other than:

        (a)  Investments by the Company in and toSubsidiaries, including any Investment in a corporation which, after givingeffect to such Investment, will become a Subsidiary or a division of the Company;

       (b)  Investments of the Company and its RestrictedSubsidiaries existing as of the date of the Closing and described onSchedule 10.5 hereto;

        (c)  Investments in commercial paper maturing in270 days or less from the date of issuance which, at the time ofacquisition by the Company, is accorded a rating of *"A-1"* or better by S&P;

       (d)  Investments in direct obligations of the UnitedStates of America or any agency or instrumentality of the United States ofAmerica, the payment or guarantee of which constitutes a full faith and creditobligation of the United States of America, in either case, maturing withintwelve months from the date of acquisition thereof;

        (e)  Investments in mutual funds which invest onlyin either money market securities or direct obligations of the United States ofAmerica or any agency or instrumentality of the United States of America, thepayment or guarantee of which constitutes a full faith and credit obligation ofthe United States of America, in either case, maturing within twelve monthsfrom the date of acquisition thereof;

        (f)  Investments in negotiable certificates ofdeposit maturing within one year from the date of issuance thereof, issued by abank or trust company organized under the laws of the United States or anyState thereof, having capital, surplus and undivided profits aggregating atleast $100,000,000and whose long-termunsecured debt obligations (or the long-term unsecured debt obligationsof the bank holding company owning all of the capital stock of such bank ortrust company) shall have been given a rating of "A" or better by S&P, "A2"or better by Moody's or an equivalent rating by another credit rating agency ofrecognized national standing; 

        (g)  Investments in cash equivalent short terminvestments maturing within one year from the date of acquisition thereof;

        (h)  Investments in the same or Related Industries,including, without limitation, investments in vendors, customers andcompetitors in the same or Related Industries; and 

         (i)  Investments of the Company not described in theforegoing clauses (a) through (h); *provided*that the aggregate amount of all such Investments under this clause (i)shall not at any time exceed 10% of Consolidated Net Worth.

   *Section 10.6.     Guaranties.* The Company will not, and will not permit any Restricted Subsidiary to,become or be liable in respect of any Guaranty, except Guaranties by theCompany which constitute Guaranties of obligations incurred by any RestrictedSubsidiary in compliance with the provisions of this Agreement.

*   Section 10.7.      No Restrictions on Dividends of RestrictedSubsidiaries. *TheCompany will not, and will not permit any Restricted Subsidiary (includingwithout limitation, Virginia Gas Company, Elizabethtown Gas Company and CityGas Company of Florida) to, enter into any agreement which would restrict anyRestricted Subsidiary's ability or right to pay dividends to, or make advancesto or Investments in, the Company, except for this Agreement and any agreementsas may be required pursuant to regulatory statutes, regulations oradministrative orders.

   *Section 10.8.          Mergers, Consolidations and Sales of Assets. *(a) The Company willnot, and will not permit any Restricted Subsidiary to, consolidate with or be aparty to a merger with any other Person, or sell, lease or otherwise dispose ofall or substantially all of its assets; *provided*that:

         (i)       any Subsidiary may merge or consolidatewith or into, or transfer all or substantially all of its assets to, theCompany or any Restricted Subsidiary (other than Brokers) so long as in (1) anymerger or consolidation involving the Company, the Company shall be thesurviving or continuing corporation, (2) any merger or consolidation involvinga Restricted Subsidiary (other than Brokers) (other than a merger orconsolidation with the Company), a Restricted Subsidiary (other than Brokers)shall be the surviving or continuing corporation and (3) at the time of suchconsolidation or merger and immediately after giving effect thereto, no Defaultor Event of Default would exist;

        (ii)       the Company may consolidate or merge withor into, or transfer all or substantially all of its assets to, any othercorporation if (1) the corporation which results from such consolidationor merger (the *"surviving corporation"*)is organized under the laws of any state of the United States or the District ofColumbia or Canada, (2) if the Company is not the surviving corporation,the due and punctual performance and observation of all of the covenants inthis Agreement to be performed or observed by the Company are expressly assumedin writing by the surviving corporation and the surviving corporation shallfurnish to the holders of the Notes an opinion of counsel satisfactory to suchholders to the effect that the instrument of assumption has been dulyauthorized, executed and delivered and constitutes the legal, valid and bindingcontract and agreement of the surviving corporation enforceable in accordancewith its terms, except as enforcement of such terms may be limited bybankruptcy, insolvency, reorganization, moratorium and similar laws affectingthe enforcement of creditors' rights generally and by general equitableprinciples, (3) the surviving corporation shall have delivered to eachholder of the Notes financial rating letters evidencing that, at the time ofsuch consolidation or merger and immediately after giving effect thereto, therating of the long term unsecured debt obligations of the successor corporationshall be "BBB-" or better by S&P and "Baa2" or better by Moody's, and(4) at the time of such consolidation or merger and immediately aftergiving effect thereto, no Default or Event of Default would exist; and

       (iii)       the Company may sell or otherwise disposeof all or substantially all of its assets (other than as provided in thisSection 10.8(a) and Section 10.8(c)) to any Person for consideration whichrepresents the fair market value of such assets (as determined in good faith bythe Board of Directors of the Company) at the time of such sale or otherdisposition if (1) the acquiring Person is a corporation organized underthe laws of any state of the United States or the District of Columbia orCanada, (2) the due and punctual performance and observance of all of thecovenants in this Agreement to be performed or observed by the Company areexpressly assumed in writing by the acquiring corporation and the acquiringcorporation shall furnish to the holders of the Notes an opinion of counselsatisfactory to such holders to the effect that the instrument of assumptionhas been duly authorized, executed and delivered and constitutes the legal, validand binding contract and agreement of such acquiring corporation enforceable inaccordance with its terms, except as enforcement of such terms may be limitedby bankruptcy, insolvency, reorganization, moratorium and similar lawsaffecting the enforcement of creditors' rights generally and by generalequitable principles, (3) the acquiring corporation shall have deliveredto each holder of the Notes financial rating letters evidencing that, at thetime of such consolidation or merger and immediately after giving effectthereto, the rating of the long term unsecured debt obligations of theacquiring corporation shall be "BBB-" or better by S&P and "Baa2" or betterby Moody's and (4) at the time of such sale or disposition and immediatelyafter giving effect thereto, no Default or Event of Default would exist.

           (b)  The Company will not, and will not permit anyRestricted Subsidiary to, sell, lease, transfer, abandon or otherwise disposeof assets (except (x) Excluded Assets and (y) assets sold in theordinary course of business for fair market value, and except as provided inSection 10.8(a)(iii) and Section 10.8(c)); *provided*that the foregoing restrictions do not apply to:

         (i)       the sale, lease, transfer or otherdisposition of assets of a Restricted Subsidiary to the Company or a RestrictedSubsidiary (other than Brokers); or

        (ii)    the sale of assets (including Subsidiary Stockdisposed of pursuant to Section 10.8(c)) for cash or other property to a Personor Persons other than an Affiliate if all of the following conditions are met:

(1)  such assets (valued at net book value) do not,together with all other assets of the Company and its Restricted Subsidiariespreviously disposed of during the Fiscal Year in which such sale occurs (otherthan in the ordinary course of business and other than pursuant to Section10.8(b)(i)), exceed 15% of Consolidated Total Assets;

(2)  in the opinion of the Company's Board ofDirectors, the sale is for fair value and is in the best interests of theCompany; and

(3)  immediately after the consummation of thetransaction and after giving effect thereto no Default or Event of Defaultwould exist;

*provided, however,*that for purposes of the foregoing calculation, there shall not be included anyassets the proceeds of which were or are applied within twelve months after thedate of sale of such assets to either (A) the acquisition of assets usefuland intended to be used in the operation of the business of the Company and itsRestricted Subsidiaries and having a fair market value (as determined in goodfaith by the Board of Directors of the Company) at least equal to that of theassets so disposed of or (B) the prepayment at any applicable prepaymentpremium, on a *pro rata* basis, ofSenior Funded Debt of the Company, *provided*that the Company may prepay any secured Senior Funded Debt of the Company thenoutstanding prior to unsecured Senior Funded Debt of the Company.  It is understood and agreed by the Companythat any such proceeds paid and applied to the prepayment of the Notes ashereinabove provided shall be prepaid as and to the extent provided inSection 8.2; or

       (iii)       the sale, lease, transfer or otherdisposition of assets or Subsidiary Stock of Brokers if all assets of theCompany and its Restricted Subsidiaries disposed of during the Fiscal Year inwhich such sale occurs (other than in the ordinary course of business, otherthan assets or Subsidiary Stock of Brokers and other than pursuant to Section10.8(b)(i)), do not exceed 15% of Consolidated Total Assets after giving effectto such sale, lease, transfer or other disposition.

           (c)  The Company will not sell, transfer orotherwise dispose of any Restricted Subsidiary Stock (except to qualifydirectors or in connection with a merger or consolidation permitted underSection 10.8(a)(i), and except for Excluded Assets and, to the extent permittedunder Section 10.8(b)(iii), Subsidiary Stock of Brokers) or any Debt ofany Restricted Subsidiary, and will not permit any Restricted Subsidiary tosell, transfer or otherwise dispose of any Restricted Subsidiary Stock or Debtof any Restricted Subsidiary (other than to the Company), unless:

         (i)  simultaneously with such sale, transfer ordisposition, all shares of such Restricted Subsidiary Stock related to suchRestricted Subsidiary being disposed of and all Debt of such RestrictedSubsidiary at the time owned by the Company and by every other RestrictedSubsidiary shall be sold, transferred or disposed of as an entirety;

        (ii)       the Board of Directors of the Companyshall have determined, as evidenced by a resolution thereof, that the proposedsale, transfer or disposition of said shares of Restricted Subsidiary Stock andDebt is in the best interest of the Company;

       (iii)      said shares of Restricted Subsidiary Stockand Debt are sold, transferred or otherwise disposed of to a Person on termsreasonably deemed by the Board of Directors of the Company to be adequate andsatisfactory;

       (iv)       the Restricted Subsidiary being disposedof shall not have any continuing investment in the Company or any otherRestricted Subsidiary not being simultaneously disposed of; and

        (v)     such sale, transfer or other dispositionshall be treated as a disposition under and shall satisfy the requirements ofSection 10.8(b) hereof.

           (d)  The Company will not permit any RestrictedSubsidiary to issue any of its own stock (or any options or warrants topurchase stock or other Securities exchangeable for or convertible into suchstock) to any Person other than the Company except (i) to qualifydirectors or (ii) in connection with an issuance of such stock whereby theCompany maintains its same proportionate interest in such RestrictedSubsidiary.

   *Section 10.9.   Limitation on Liens.* The Company will not, and will not permit any Restricted Subsidiary to,create or incur, or suffer to be incurred or to exist, any Lien on its or theirproperty or assets, whether now owned or hereafter acquired, or upon any incomeor profits therefrom, or transfer any property for the purpose of subjectingthe same to the payment of obligations in priority to the payment of its ortheir general creditors, or acquire or agree to acquire, or permit anyRestricted Subsidiary to acquire or agree to acquire, any property or assetsupon conditional sales agreements or other title retention devices, except:

        (a)    Liens for property taxes and assessments orgovernmental charges or levies and Liens securing claims or demands ofmechanics and materialmen; *provided*that payment thereof is not at the time required by Section 9.4;

       (b)  Liens of or resulting from any judgment oraward, the time for the appeal or petition for rehearing of which shall nothave expired, or in respect of which the Company or a Restricted Subsidiaryshall at any time in good faith be prosecuting an appeal or proceeding for areview and in respect of which a stay of execution pending such appeal orproceeding for review shall have been secured;

        (c)    Liens incidental to the conduct of businessor the ownership of properties and assets (including Liens in connection withworker's compensation, unemployment insurance and other like laws, mechanics',carriers', warehousemen's and attorneys' liens and statutory landlords' liens)and Liens to secure the performance of bids, tenders or trade contracts, or tosecure statutory obligations, surety or appeal bonds or other Liens of likegeneral nature, in any such case incurred in the ordinary course of businessand not in connection with the borrowing of money; *provided* in each case, the obligation secured is not overdue or, ifoverdue, is being contested in good faith by appropriate actions or proceedingsand even if enforced would not cause a Material Adverse Effect on the Companyand its Subsidiaries, taken as a whole;

       (d)   minor survey exceptions or minorencumbrances, easements or reservations, or rights of others for rights-of-way,utilities and other similar purposes, or zoning or other restrictions as to theuse of real properties, which are necessary for the conduct of the activitiesof the Company and its Restricted Subsidiaries or which customarily exist onproperties of corporations engaged in similar activities and similarly situatedand which do not in any event materially impair their use in the operation ofthe business of the Company and its Restricted Subsidiaries;

        (e)    Liens created or incurred after the date ofthe Closing given to secure the payment of the purchase price incurred inconnection with the acquisition or purchase or the cost of construction ofproperty or of assets useful and intended to be used in carrying on thebusiness of the Company or a Restricted Subsidiary, including Liens existing onsuch property or assets at the time of acquisition thereof or at the time ofcompletion of construction, as the case may be, whether or not such existingLiens were given to secure the payment of the acquisition or purchase price orcost of construction, as the case may be, of the property or assets to whichthey attach; *provided* that (i) theLien shall attach solely to the property or assets acquired, purchased orconstructed, (ii) such Lien shall have been created or incurred within 180 daysof the date of acquisition or purchase or completion of construction, as thecase may be, (iii) at the time of acquisition or purchase or of completion ofconstruction of such property or assets, the aggregate amount remaining unpaidon all Debt secured by Liens on such property or assets, whether or not assumedby the Company or a Subsidiary, shall not exceed an amount equal to 100% of thelesser of the total purchase price or fair market value at the time ofacquisition or purchase (as determined in good faith by the Board of Directorsof the Company) or the cost of construction on the date of completion thereof,and (iv) at the time of creation, issuance, assumption, guarantee or incurrenceof the Debt secured by such Lien and after giving effect thereto and to theapplication of the proceeds thereof, no Default or Event of Default wouldexist;

        (f)       any such Lien existing on property orassets of a corporation at the time such corporation is consolidated with ormerged into the Company or a Restricted Subsidiary or its becoming a RestrictedSubsidiary, or any Lien existing on any property or assets acquired by theCompany or any Restricted Subsidiary at the time such property or assets are soacquired (whether or not the Debt secured thereby shall have been assumed), *provided* that (i) each such Lien shallextend solely to the property or assets so acquired, and (ii) at the time ofcreation, issuance, assumption, guarantee or incurrence of the Debt secured bysuch Lien and after giving effect thereto and to the application of theproceeds thereof, no Default or Event of Default would exist;

        (g)    Liens securing operating leases pursuant towhich the Company or a Restricted Subsidiary is the lessee (excluding financingleases, synthetic leases and similar arrangements), in each case incidental to,and not interfering with, the ordinary conduct of the business of the Companyor any of its Restricted Subsidiaries, *provided*that the Lien shall attach solely to the leased property or assets, and *provided, further,* that such Liens donot, in the aggregate, materially detract from the value of such property;

        (h)    Liens existing on the date of this Agreementand securing the Debt of the Company and its Subsidiaries referred to in items3, 4, 5, 6 and 7 of Schedule 5.15; and

         (i)       any extension, renewal or refunding ofany Lien permitted by the preceding clauses (e), (f), (g) and (h) of thisSection 10.9 in respect of the same property theretofore subject to suchLien in connection with the extension, renewal or refunding of the Debt securedthereby; *provided* that (i) suchextension, renewal or refunding of Debt shall be without increase in theprincipal amount remaining unpaid as of the date of such extension, renewal orrefunding, (ii) such Lien shall attach solely to the same such property, (iii)the principal amount remaining unpaid as of the date of such extension, renewalor refunding of Debt is less than or equal to the fair market value of theproperty (determined in good faith by the Board or Directors of the Company) towhich such Lien is attached, (iv) at the time of such extension, renewal orrefunding and after giving effect thereto, no Default or Event of Default wouldexist and (v) all Debt of the Company and its Restricted Subsidiaries securedby any Lien with respect to any property of the Company or any of itsRestricted Subsidiaries shall not exceed 15% of Consolidated Net Worth.

*Section 10.10.Limitation on Saleand Leaseback. *TheCompany will not, and will not permit any Restricted Subsidiary to, enter intoany arrangement whereby the Company or any Restricted Subsidiary shall sell ortransfer any property owned by the Company or any Restricted Subsidiary to anyPerson other than the Company or a Restricted Subsidiary (other than Brokers)and thereupon the Company or any Restricted Subsidiary shall rent or lease orintend to rent or  lease, as lessee, thesame property or any part thereof.

Section 11.        Events of Default.

An *"Event of Default"*shall exist if any of the following conditions or events shall occur and becontinuing:

        (a)       the Company defaults in the payment ofany principal or Make-Whole Amount, if any, on any Note when the same becomesdue and payable, whether at maturity or at a date fixed for prepayment or bydeclaration or otherwise; or

       (b)       the Company defaults in the payment ofany interest on any Note for more than five days after the same becomes due andpayable; or

        (c)       the Company defaults in the performanceof or compliance with any term contained in Sections 7.1(d), 10.2, 10.3,10.4, 10.6, 10.8, 10.9 or 10.10; or

       (d)       the Company defaults in the performanceof or compliance with any term contained herein (other than those referred toin paragraphs (a), (b) and (c) of this Section 11) and such default is notremedied within 30 days after the earlier of (i) a Responsible Officerobtaining actual knowledge of such default and (ii) the Company receivingwritten notice of such default from any holder of a Note (any such writtennotice to be identified as a "notice of default" and to refer specifically tothis paragraph (d) of Section 11); or

        (e)       any representation or warranty made inwriting by or on behalf of the Company or by any officer of the Company in thisAgreement or in any writing furnished in connection with the transactionscontemplated hereby proves to have been false or incorrect in any materialrespect on the date as of which made; or

        (f)   (i) the Company or any Subsidiary is indefault (as principal or as guarantor or other surety) in the payment of anyprincipal of or premium or make-whole amount or interest on any Indebtednessthat is outstanding in an aggregate principal amount exceeding $5,000,000beyond any period of grace provided with respect thereto, or (ii) theCompany or any Subsidiary is in default in the performance of or compliancewith any term of any evidence of any Indebtedness in an aggregate outstandingprincipal amount exceeding $5,000,000 or of any mortgage, indenture or otheragreement relating thereto or any other condition exists, and as a consequenceof such default or condition such Indebtedness has become, or has beendeclared, due and payable before its stated maturity or before its regularlyscheduled dates of payment, or (iii) as a consequence of the occurrence orcontinuation of any event or condition (other than the passage of time or theright of the holder of Indebtedness to convert such Indebtedness into equityinterests), the Company or any Subsidiary has become obligated to purchaseor repay Indebtedness before its regular maturity or before its regularlyscheduled dates of payment in an aggregate outstanding principal amountexceeding $5,000,000; or

        (g)       the Company or any Subsidiary (i) isgenerally not paying, or admits in writing its inability to pay, its debts asthey become due, (ii) files, or consents by answer or otherwise to thefiling against it of, a petition for relief or reorganization or arrangement orany other petition in bankruptcy, for liquidation or to take advantage of anybankruptcy, insolvency, reorganization, moratorium or other similar law of anyjurisdiction, (iii) makes an assignment for the benefit of its creditors,(iv) consents to the appointment of a custodian, receiver, trustee orother officer with similar powers with respect to it or with respect to anysubstantial part of its property, (v) is adjudicated as insolvent or to beliquidated, or (vi) takes corporate action for the purpose of any of theforegoing; or

        (h)  a court or governmental authority of competentjurisdiction enters an order appointing, without consent by the Company or anyof its Subsidiaries, a custodian, receiver, trustee or other officer withsimilar powers with respect to it or with respect to any substantial part ofits property, or constituting an order for relief or approving a petition forrelief or reorganization or any other petition in bankruptcy or for liquidationor to take advantage of any bankruptcy or insolvency law of any jurisdiction,or ordering the dissolution, winding-up or liquidation of the Company or any ofits Subsidiaries, or any such petition shall be filed against the Company orany of its Subsidiaries and such petition shall not be dismissed within 60days; or

         (i)  a final judgment or judgments for the paymentof money are rendered against one or more of the Company and its Subsidiariesand which judgments are not, within 60 days after entry thereof, bonded,discharged or stayed pending appeal; or

        (j)          if (i) any Plan shall fail tosatisfy the minimum funding standards of ERISA or the Code for any plan year orpart thereof or a waiver of such standards or extension of any amortizationperiod is sought or granted under section 412 of the Code, (ii) anotice of intent to terminate any Plan shall have been or is reasonablyexpected to be filed with the PBGC or the PBGC shall have instituted proceedingsunder ERISA section 4042 to terminate or appoint a trustee to administerany Plan or the PBGC shall have notified the Company or any ERISA Affiliatethat a Plan may become a subject of any such proceedings, (iii) theaggregate "amount of unfunded benefit liabilities" (within the meaning ofsection 4001(a)(18) of ERISA) under all Plans, determined in accordancewith Title IV of ERISA, shall exceed $10,000,000, (iv) the Company or anyERISA Affiliate shall have incurred or is reasonably expected to incur anyliability pursuant to Title I or IV of ERISA or the penalty or excise taxprovisions of the Code relating to employee benefit plans, (v) the Companyor any ERISA Affiliate withdraws from any Multiemployer Plan, or (vi) theCompany or any Subsidiary establishes or amends any employee welfare benefitplan that provides post-employment welfare benefits in a manner that wouldincrease the liability of the Company or any Subsidiary thereunder; and anysuch event or events described in clauses (i) through (vi) above, eitherindividually or together with any other such event or events, could reasonablybe expected to have a Material Adverse Effect.

As used in Section 11(j), the terms *"employee benefit plan"* and *"employee welfare benefit plan"* shallhave the respective meanings assigned to such terms in section 3 of ERISA.

Section 12.        Remedies on Default, etc.

   *Section 12.1.   Acceleration*.  (a) If an Event of Default with respectto the Company described in paragraph (g) or (h) of Section 11 (other thanan Event of Default described in clause (i) of paragraph (g) or described inclause (vi) of paragraph (g) by virtue of the fact that such clause encompassesclause (i) of paragraph (g)) has occurred, all the Notes then outstanding shallautomatically become immediately due and payable.

           (b)     If any other Event of Default has occurredand is continuing, any holder or holders of not less than 51% in principalamount of the Notes at the time outstanding may at any time at its or theiroption, by notice or notices to the Company, declare all the Notes thenoutstanding to be immediately due and payable.

           (c)     If any Event of Default described inparagraph (a) or (b) of Section 11 has occurred and is continuing, anyholder or holders of Notes at the time outstanding affected by such Event ofDefault may at any time, at its or their option, by notice or notices to theCompany, declare all the Notes held by it or them to be immediately due andpayable.

Upon any Note's becoming due and payable under thisSection 12.1, whether automatically or by declaration, such Note willforthwith mature and the entire unpaid principal amount of such Note, plus(i) all accrued and unpaid interest thereon and (ii) the Make-WholeAmount determined in respect of such principal amount (to the full extentpermitted by applicable law), shall all be immediately due and payable, in eachand every case without presentment, demand, protest or further notice, all ofwhich are hereby waived.  The Companyacknowledges, and the parties hereto agree, that each holder of a Note has theright to maintain its investment in the Notes free from repayment by theCompany (except as herein specifically provided for), and that the provision forpayment of a Make-Whole Amount by the Company in the event that the Notes areprepaid or are accelerated as a result of an Event of Default, is intended toprovide compensation for the deprivation of such right under suchcircumstances.

   *Section 12.2.               Other Remedies*.  If any Default or Event of Default hasoccurred and is continuing, and irrespective of whether any Notes have becomeor have been declared immediately due and payable under Section 12.1, theholder of any Note at the time outstanding may proceed to protect and enforcethe rights of such holder by an action at law, suit in equity or otherappropriate proceeding, whether for the specific performance of any agreementcontained herein or in any Note, or for an injunction against a violation ofany of the terms hereof or thereof, or in aid of the exercise of any powergranted hereby or thereby or by law or otherwise.

   *Section 12.3.      Rescission*.  At any time after any Notes have beendeclared due and payable pursuant to clause (b) or (c) ofSection 12.1, the holders of not less than 51% in principal amount of theNotes then outstanding, by written notice to the Company, may rescind and annulany such declaration and its consequences if (a) the Company has paid alloverdue interest on the Notes of each series, all principal of and Make-WholeAmount, if any, on any Notes that are due and payable and are unpaid other thanby reason of such declaration, and all interest on such overdue principal andMake-Whole Amount, if any, and (to the extent permitted by applicablelaw) any overdue interest in respect of the Notes of each series, at therespective Default Rates, (b) all Events of Default and Defaults, otherthan non-payment of amounts that have become due solely by reason of suchdeclaration, have been cured or have been waived pursuant to Section 17,and (c) no judgment or decree has been entered for the payment of anymonies due pursuant hereto or to the Notes. No rescission and annulment under this Section 12.3 will extend toor affect any subsequent Event of Default or Default or impair any rightconsequent thereon.

   *Section 12.4.No Waivers or Election of Remedies, Expenses, etc*.  No course of dealing and no delay on thepart of any holder of any Note in exercising any right, power or remedy shalloperate as a waiver thereof or otherwise prejudice such holder's rights, powersor remedies.  No right, power or remedyconferred by this Agreement or by any Note upon any holder thereof shall beexclusive of any other right, power or remedy referred to herein or therein ornow or hereafter available at law, in equity, by statute or otherwise.  Without limiting the obligations of theCompany under Section 15, the Company will pay to the holder of each Noteon demand such further amount as shall be sufficient to cover all costs andexpenses of such holder incurred in any enforcement or collection under thisSection 12, including, without limitation, reasonable attorneys' fees,expenses and disbursements.

Section 13.        Registration; Exchange; Substitution ofNotes.

   *Section 13.1.    Registration of Notes*.  The Company shall keep at its principalexecutive office a register for the registration and registration of transfersof Notes.  The name and address of eachholder of one or more Notes, each transfer thereof and the name and address ofeach transferee of one or more Notes shall be registered in such register.  Prior to due presentment for registration oftransfer, the Person in whose name any Note shall be registered shall be deemedand treated as the owner and holder thereof for all purposes hereof, and theCompany shall not be affected by any notice or knowledge to the contrary.  The Company shall give to any holder of aNote that is an Institutional Investor promptly upon request therefor, acomplete and correct copy of the names and addresses of all registered holdersof Notes.

   *Section 13.2.     Transfer and Exchange of Notes*  Upon surrender of any Note at the principalexecutive office of the Company for registration of transfer or exchange (andin the case of a surrender for registration of transfer, duly endorsed oraccompanied by a written instrument of transfer duly executed by the registeredholder of such Note or its attorney duly authorized in writing and accompaniedby the address for notices of each transferee of such Note or part thereof),the Company shall execute and deliver, at the Company's expense (except asprovided below), one or more new Notes of the same series (as requested by theholder thereof) in exchange therefor, in an aggregate principal amount equal tothe unpaid principal amount of the surrendered Note.  Each such new Note shall be payable to such Person as such holdermay request and shall be substantially in the form of Exhibit 1-A, 1-B,1-C or 1-D, as the case may be. Each such new Note shall be dated and bear interest from the date towhich interest shall have been paid on the surrendered Note or dated the dateof the surrendered Note if no interest shall have been paid thereon.  The Company may require payment of a sumsufficient to cover any stamp tax or governmental charge imposed in respect ofany such transfer of Notes.  Notes shallnot be transferred in denominations of less than $100,000, *provided* that if necessary to enable the registration of transferby a holder of its entire holding of Notes, one Note may be in a denominationof less than $100,000.  Any transfereeof a Note, or purchaser of a participation therein, shall, by its acceptance ofsuch Note be deemed to make the same representations to the Company regardingthe Note or participation as such holder made pursuant to Section 6.2, *provided* that such entity may (inreliance upon information provided by the Company, which shall not be unreasonablywithheld) make a representation to the effect that the purchase by such entityof any Note will not constitute a non-exempt prohibited transaction undersection 406(a) of ERISA.

   *Section 13.3.   Replacement of Notes*.  Upon receipt by the Company of evidencereasonably satisfactory to it of the ownership of and the loss, theft,destruction or mutilation of any Note (which evidence shall be, in the case ofan Institutional Investor, notice from such Institutional Investor of suchownership and such loss, theft, destruction or mutilation), and

        (a)  in the case of loss, theft or destruction, ofindemnity reasonably satisfactory to it (*provided*that if the holder of such Note is, or is a nominee for, an original Purchaseror another holder of a Note with a minimum net worth of at least $100,000,000,such Person's own unsecured agreement of indemnity shall be deemed to besatisfactory), or

       (b)  in the case of mutilation, upon surrender andcancellation thereof,

the Company at its own expense shall execute and deliverwithin five Business Days of receipt of said evidence, in lieu thereof, a newNote of the same series, dated and bearing interest from the date to whichinterest shall have been paid on such lost, stolen, destroyed or mutilated Noteor dated the date of such lost, stolen, destroyed or mutilated Note if nointerest shall have been paid thereon.

Section 14.        Payments on Notes.

   *Section 14.1.   Place of Payment*.  Subject to Section 14.2, payments ofprincipal, Make-Whole Amount, if any, and interest becoming due andpayable on the Notes shall be made in Bedminster, New Jersey at the principaloffice of the Company in such jurisdiction. The Company may at any time, by notice to each holder of a Note, changethe place of payment of the Notes so long as such place of payment shall beeither the principal office of the Company in such jurisdiction or theprincipal office of a bank or trust company in such jurisdiction.

   *Section 14.2.   Home Office Payment*.  So long as any Purchaser or any Purchaser'snominee shall be the holder of any Note, and notwithstanding anything containedin Section 14.1 or in such Note to the contrary, the Company will pay allsums becoming due on such Note for principal, Make-Whole Amount, if any, andinterest by the method and at the address specified for such purpose for suchPurchaser in Schedule A, or by such other method or at such other addressas such Purchaser shall have from time to time specified to the Company inwriting for such purpose, without the presentation or surrender of such Note orthe making of any notation thereon, except that upon written request of theCompany made concurrently with or reasonably promptly after payment orprepayment in full of any Note, such Purchaser shall surrender such Note forcancellation, reasonably promptly after any such request, to the Company at itsprincipal executive office or at the place of payment most recently designatedby the Company pursuant to Section 14.1. The Company will afford the benefits of this Section 14.2 to anyInstitutional Investor that is the direct or indirect transferee of any Notepurchased by any Purchaser under this Agreement and that has made the sameagreement relating to such Note as such Purchaser has made in thisSection 14.2.

Section 15.        Expenses, etc.

   *Section 15.1.     Transaction Expenses*.  Whether or not the transactions contemplatedhereby are consummated, the Company will pay all costs and expenses (includingreasonable attorneys' fees of a special counsel and, if reasonably required,local or other counsel) incurred by each Purchaser or holder of a Note inconnection with such transactions and in connection with any amendments,waivers or consents under or in respect of this Agreement or the Notes (whetheror not such amendment, waiver or consent becomes effective), including, withoutlimitation: (a) the costs and expenses incurred in enforcing or defending(or determining whether or how to enforce or defend) any rights under thisAgreement or the Notes or in responding to any subpoena or other legal processor informal investigative demand issued in connection with this Agreement orthe Notes, or by reason of being a holder of any Note, and (b) the costsand expenses, including financial advisors' fees, incurred in connection withthe insolvency or bankruptcy of the Company or any Subsidiary or in connectionwith any work-out or restructuring of the transactions contemplated hereby andby the Notes.  The Company will pay, andwill save each Purchaser and each other holder of a Note harmless from, allclaims in respect of any fees, costs or expenses, if any, of brokers andfinders (other than those retained by such Purchaser or holder).

   *Section 15.2.    Survival*.  The obligations of the Company under thisSection 15 will survive the payment or transfer of any Note, theenforcement, amendment or waiver of any provision of this Agreement or theNotes, and the termination of this Agreement.

Section 16.        Survival of Representations andWarranties; Entire Agreement.

All representations and warranties contained herein shallsurvive the execution and delivery of this Agreement and the Notes, thepurchase or transfer by any Purchaser of any Note or portion thereof orinterest therein and the payment of any Note, and may be relied upon by anysubsequent holder of a Note, regardless of any investigation made at any timeby or on behalf of such Purchaser or any other holder of a Note.  All statements contained in any certificateor other instrument delivered by or on behalf of the Company pursuant to thisAgreement shall be deemed representations and warranties of the Company underthis Agreement.  Subject to thepreceding sentence, this Agreement and the Notes embody the entire agreementand understanding between each Purchaser and the Company and supersede allprior agreements and understandings relating to the subject matter hereof.

Section 17.        Amendment and Waiver.

   *Section 17.1.   Requirements*.  This Agreement and the Notes may be amended,and the observance of any term hereof or of the Notes may be waived (eitherretroactively or prospectively), with (and only with) the written consent ofthe Company and the Required Holders, except that (a) no amendment orwaiver of any of the provisions of Section 1, 2, 3, 4, 5, 6 or 21 hereof,or any defined term (as it is used therein), will be effective as to anyPurchaser unless consented to by such Purchaser in writing, and (b) nosuch amendment or waiver may, without the written consent of the holder of eachNote at the time outstanding affected thereby, (i) subject to theprovisions of Section 12 relating to acceleration or rescission, changethe amount or time of any prepayment or payment of principal of, or reduce therate or change the time of payment or method of computation of interest or ofthe Make-Whole Amount on, the Notes, (ii) change the percentage of theprincipal amount of the Notes the holders of which are required to consent toany such amendment or waiver, or (iii) amend any of Sections 8,11(a), 11(b), 12, 17 or 20.

   *Section 17.2.Solicitation of Holders of Notes*.

           (a)  *Solicitation*.  The Company will provide each holder of theNotes (irrespective of the amount of Notes then owned by it) with sufficientinformation, sufficiently far in advance of the date a decision is required, toenable such holder to make an informed and considered decision with respect toany proposed amendment, waiver or consent in respect of any of the provisionshereof or of the Notes.  The Companywill deliver executed or true and correct copies of each amendment, waiver orconsent effected pursuant to the provisions of this Section 17 to eachholder of outstanding Notes promptly following the date on which it is executedand delivered by, or receives the consent or approval of, the requisite holdersof Notes.

           (b)  *Payment*.  The Company will not directly or indirectlypay or cause to be paid any remuneration, whether by way of supplemental oradditional interest, fee or otherwise, or grant any security, to any holder ofNotes as consideration for or as an inducement to the entering into by anyholder of Notes of any waiver or amendment of any of the terms and provisionshereof or of the Notes unless such remuneration is concurrently paid, orsecurity is concurrently granted, on the same terms, ratably to each holder ofNotes then outstanding whether or not such holder consented to such waiver oramendment.

   *Section 17.3.   Binding Effect, etc*.  Any amendment or waiver consented to asprovided in this Section 17 applies equally to all holders of Notes and isbinding upon them and upon each future holder of any Note and upon the Companywithout regard to whether such Note has been marked to indicate such amendmentor waiver.  No such amendment or waiverwill extend to or affect any obligation, covenant, agreement, Default or Eventof Default not expressly amended or waived or impair any right consequentthereon.  No course of dealing betweenthe Company and the holder of any Note nor any delay in exercising any rightshereunder or under any Note shall operate as a waiver of any rights of anyholder of such Note.  As used herein,the term "this Agreement" and references thereto shall mean this Agreement asit may from time to time be amended or supplemented.

   *Section 17.4.   Notes Held by Company, etc*.  Solely for the purpose of determiningwhether the holders of the requisite percentage of the aggregate principalamount of Notes then outstanding approved or consented to any amendment, waiveror consent to be given under this Agreement or the Notes, or have directed thetaking of any action provided herein or in the Notes to be taken upon thedirection of the holders of a specified percentage of the aggregate principal amountof Notes then outstanding, Notes directly or indirectly owned by the Company orany of its Affiliates shall be deemed not to be outstanding.

Section 18.        Notices.

All notices and communications provided for hereunder shallbe in writing and sent (a) by telefacsimile if the sender on the same daysends a confirming copy of such notice by a recognized overnight deliveryservice (charges prepaid), or (b) by registered or certified mail withreturn receipt requested (postage prepaid), or (c) by a recognizedovernight delivery service (with charges prepaid).  Any such notice must be sent:

         (i)  if to a Purchaser or such Purchaser's nominee,to such Purchaser or such Purchaser's nominee at the address specified for suchcommunications in Schedule A, or at such other address as such Purchaseror such Purchaser's nominee shall have specified to the Company in writing,

        (ii)  if to any other holder of any Note, to suchholder at such address as such other holder shall have specified to the Companyin writing, or

       (iii)  if to the Company, to the Company at itsaddress set forth at the beginning hereof to the attention of the Treasurer, orat such other address as the Company shall have specified to the holder of eachNote in writing.

Notices under this Section 18 will be deemed given onlywhen actually received.

Section 19.        Reproduction of Documents.

This Agreement and all documents relating thereto,including, without limitation, (a) consents, waivers and modificationsthat may hereafter be executed, (b) documents received by each Purchaserat the Closing (except the Notes themselves), and (c) financialstatements, certificates and other information previously or hereafter furnishedto each Purchaser, may be reproduced by such Purchaser by any photographic,photostatic, microfilm, microcard, miniature photographic or other similarprocess and such Purchaser may destroy any original document so reproduced.  The Company agrees and stipulates that, tothe extent permitted by applicable law, any such reproduction shall beadmissible in evidence as the original itself in any judicial or administrativeproceeding (whether or not the original is in existence and whether or not suchreproduction was made by such Purchaser in the regular course of business) andany enlargement, facsimile or further reproduction of such reproduction shalllikewise be admissible in evidence. This Section 19 shall not prohibit the Company or any other holderof Notes from contesting any such reproduction to the same extent that it couldcontest the original, or from introducing evidence to demonstrate theinaccuracy of any such reproduction.

Section 20.        Confidential Information

For the purposes of this Section 20, *"Confidential Information"* meansinformation delivered to any holder of any Note by or on behalf of the Companyor any Subsidiary in connection with the transactions contemplated by orotherwise pursuant to this Agreement that is proprietary in nature and that wasclearly marked or labeled or otherwise adequately identified when received bysuch holder as being confidential information of the Company or suchSubsidiary, *provided* that such termdoes not include information that (a) was publicly known or otherwiseknown to such holder prior to the time of such disclosure,(b) subsequently becomes publicly known through no act or omission by suchholder or any Person acting on such holder's behalf, (c) otherwise becomesknown to such holder other than through disclosure by the Company, anySubsidiary or another holder of a Note, (d) constitutes financialstatements delivered to such holder under Section 7.1 that are otherwisepublicly available or (e) independently developed by such holder or itsAffiliates or professional advisors without the use of ConfidentialInformation.  Each holder of a Note willmaintain the confidentiality of such Confidential Information in accordancewith procedures adopted by such holder in good faith to protect confidentialinformation of third parties delivered to such holder, *provided* that such holder may deliver or disclose ConfidentialInformation to (i) such holder's directors, trustees, officers, employees,agents, attorneys and affiliates (to the extent such disclosure reasonablyrelates to the administration of the investment represented by such holder'sNotes and is in compliance with such procedures), (ii) such holder'sfinancial advisors and other professional advisors who agree to holdconfidential the Confidential Information substantially in accordance with theterms of this Section 20, (iii) any other holder of any Note,(iv) any Institutional Investor to which such holder sells or offers tosell such Note or any part thereof or any participation therein (if such Personhas agreed in writing prior to its receipt of such Confidential Information tobe bound by the provisions of this Section 20), (v) any Person fromwhich such holder offers to purchase any security of the Company (if suchPerson has agreed in writing prior to its receipt of such ConfidentialInformation to be bound by the provisions of this Section 20),(vi) any federal or state regulatory authority having jurisdiction oversuch holder, (vii) the National Association of Insurance Commissioners orany similar organization, or any nationally recognized rating agency thatrequires access to information about such holder's investment portfolio, or(viii) any other Person to which such delivery or disclosure may be necessaryor appropriate (w) to effect compliance with any law, rule, regulation ororder applicable to such holder, (x) in response to any subpoena or otherlegal process, (y) in connection with any litigation to which such holderis a party or (z) if an Event of Default has occurred and is continuing,to the extent such holder may reasonably determine such delivery and disclosureto be necessary or appropriate in the enforcement or for the protection of therights and remedies under such holder's Notes or this Agreement.  Each holder of a Note, by its acceptance ofa Note, will be deemed to have agreed to be bound by and to be entitled to thebenefits of this Section 20 as though it were a party to this Agreement.  On reasonable request by the Company in connectionwith the delivery to any holder of a Note of information required to bedelivered to such holder under this Agreement or requested by such holder(other than a holder that is a party to this Agreement or its nominee or anyother holder that shall have previously delivered such a confirmation), suchholder will confirm in writing that it is bound by the provisions of thisSection 20.

Section 21.        Substitution of Purchaser.

Each Purchaser shall have the right to substitute any oneof its Affiliates as the purchaser of the Notes that such Purchaser has agreedto purchase hereunder, by written notice to the Company, which notice shall besigned by both such Purchaser and such Affiliate, shall contain suchAffiliate's agreement to be bound by this Agreement and shall contain aconfirmation by such Affiliate of the accuracy with respect to it of therepresentations set forth in Section 6. Upon receipt of such notice, wherever the word "Purchaser" is used inthis Agreement (other than in this Section 21), such word shall be deemedto refer to such Affiliate in lieu of such Purchaser.  In the event that such Affiliate is so substituted as a purchaserhereunder and such Affiliate thereafter transfers to such Purchaser all of theNotes then held by such Affiliate, upon receipt by the Company of notice ofsuch transfer, wherever the word "Purchaser" is used in this Agreement (otherthan in this Section 21), such word shall no longer be deemed to refer tosuch Affiliate, but shall refer to such Purchaser, and such Purchaser shallhave all the rights of an original holder of the Notes under this Agreement.

Section 22.        Miscellaneous.

   *Section 22.1.       Successors and Assigns*.  All covenants and other agreements containedin this Agreement by or on behalf of any of the parties hereto bind and inureto the benefit of their respective successors and assigns (including, withoutlimitation, any subsequent holder of a Note) whether so expressed or not.

   *Section 22.2    .Payments Due on Non-Business Days*.  Anything in this Agreement or the Notes tothe contrary notwithstanding, any payment of principal of or Make-Whole Amountor interest on any Note that is due on a date other than a Business Day shallbe made on the next succeeding Business Day without including the additionaldays elapsed in the computation of the interest payable on such next succeedingBusiness Day.

   *Section 22.3.    Severability*.  Any provision of this Agreement that isprohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,be ineffective to the extent of such prohibition or unenforceability withoutinvalidating the remaining provisions hereof, and any such prohibition orunenforceability in any jurisdiction shall (to the full extent permitted bylaw) not invalidate or render unenforceable such provision in any otherjurisdiction.

   *Section 22.4.  Construction*.  Each covenant contained herein shall beconstrued (absent express provision to the contrary) as being independent ofeach other covenant contained herein, so that compliance with any one covenantshall not (absent such an express contrary provision) be deemed to excusecompliance with any other covenant. Where any provision herein refers to action to be taken by any Person,or which such Person is prohibited from taking, such provision shall beapplicable whether such action is taken directly or indirectly by such Person.

   *Section 22.5.   Counterparts*.  This Agreement may be executed in any numberof counterparts, each of which shall be an original but all of which togethershall constitute one instrument.  Eachcounterpart may consist of a number of copies hereof, each signed by fewer thanall, but together signed by all, of the parties hereto.

  *Section 22.6.   Governing Law*.  This Agreement shall beconstrued and enforced in accordance with, and the rights of the parties shallbe governed by, the law of the State of New York excluding choice-of-lawprinciples of the law of such State that would require the application of thelaws of a jurisdiction other than such State.

   *Section 22.7.   Consent to Jurisdiction and Service of Process*.  (a) To the extent permitted by applicablelaw, the Company (i) hereby irrevocably submits to the nonexclusivejurisdiction of the Supreme Court of the State of New York, New York County(without prejudice to the rights of any holder of a Note to remove to theUnited States District Court for the Southern District of New York) and to thenonexclusive jurisdiction of the United States District Court for the SouthernDistrict of New York, for the purposes of any suit, action or other proceedingarising out of this Agreement, or the subject matter hereof or any of thetransactions contemplated hereby or thereby brought by any holder of the Notes,(ii) hereby irrevocably agrees that all claims in respect of such action orproceeding may be heard and determined in such New York State court or, to thefullest extent permitted by applicable law, in such federal court, and (iii)hereby irrevocably waives, and agrees not to assert, by way of motion, as adefense, or otherwise, in any such suit, action or proceeding any claim that isnot personally subject to the jurisdiction of the above-named courts, that thesuit, action or proceeding is improper or that this Agreement, or the subjectmatter hereof may not be enforced in or by such court.

           (b)     A final judgment obtained in respect of anyaction, suit or proceeding referred to in this Section 22.7 shall be conclusiveand may be enforced in other jurisdictions by suit or judgment or in any manneras provided by applicable law.  TheCompany hereby consents to service of process by registered mail, FederalExpress, or similar courier at its address set forth in Section 18, it beingagreed that service in such manner shall constitute valid service upon or itsrespective successors or assigns in connection with any such action orproceeding only; *provided, however,*that nothing in this Section 22.7 shall affect the right of any holder of theNotes to serve legal process in any other manner permitted by applicable law.

*     *     *     *     *

The execution hereof by thePurchasers shall constitute a contract among the Company and the Purchasers forthe uses and purposes hereinabove set forth.

 

 Very truly yours,

NUI Corporation

By:  /S/  ROBERT F. LURIE 

Name:   Robert F. Lurie

Title:     Vice President, Corporate Development &Treasurer

 

Accepted as of August __, 2001

AIG Life InsuranceCompany

By:         AIG GlobalInvestment Corp., as investment adviser

By:       /S/ GERALD F. HERMAN 

Name:  Gerald F.Herman 

Title:     Vice President

SunAmerica LifeInsurance Company

By:  /S/    GERALD F. HERMAN 

Name:  Gerald F. Herman

Title:    Authorized Signatory

United of Omaha LifeInsurance Company

By:  /S/  EDWIN H. GARRISON, JR. 

Name:   Edwin S. Garrison, Jr.

 Title:     First Vice President

Pacific Life andAnnuity Company

By:  /S/  PETER S. FIEK 

Name:   Peter S. Fiek

Title:     Assistant Vice President

By:  /S/  DIANE W. DALES 

Name:  Diane W. Dales 

 Title:   Assistant Secretary 

Pacific LifeInsurance Company

By:  /S/  PETER S. FIEK 

 Name:   Peter S. Fiek

 Title:     Assistant Vice President

By:  /S/  DIANE W. DALES 

 Name:  Diane W. Dales 

  Title:   Assistant Secretary 

 

Provident Mutual LifeInsurance Company

By:  /S/  JAMES D. KESTNER 

Name:  James D. Kestner

Title:    Vice President

InformationRelating to Purchasers

   Principal Amount ofName and Address of Purchaser                                                                               Notesto Be Purchased

                      

AIG Life Insurance Company                                   Series A Notes:                        $5,000,000175Water Street, 25th Floor                                   SeriesB Notes:                        $            -0-NewYork, NY  10038                                           Series C Notes:                        $             -0-Attention:  Gerald Herman                                       Series D Notes:                        $             -0-Payments

All payments on or in respect of the Certificates/Notesshall be by bank wire transfer of Federal or other immediately available fundsto:

Fed Reserve Bank of Boston011001234 / BOS SAFE DEPDDA #169064Cost Center 1178Reference:  AIG Life Insurance CompanyReference:  AGIFALI0012Reference:  NUIReference:  PPN #629431 A*8, Principal __________ Interest __________

Notices

All notices on or in respect to the Notes and writtenconfirmation of each such payment to be addressed to:

AIG Global Investment Corp.175 Water Street, 25thFloorNew York, New York  10038Attention:  Ms. Cathy CosgroveReference:  AIG Life Insurance CompanyReference:  AGIFALI0012

All other notices and communications to be addressed asfirst provided above.

Name of Nominee in which Notes are to be issued:  None

Taxpayer I.D. Number: 25-1118523

                                                                                      Principal Amount ofName and Address of Purchaser                                    Notesto Be Purchased

                      

United of Omaha LifeInsurance Company                        Series A Notes:                                 -0-Mutualof Omaha Plaza                                                   SeriesB Notes:                 $15,000,000Omaha,Nebraska  68175-1011                                     Series C Notes:                                 -0-Attention:  4-Investment Loan Administration                    Series D Notes:                                -0-

Payments

All payments on or in respect of the Notes to be by bankwire transfer of Federal or other immediately available funds (identifying eachpayment as "NUI Corporation, 6.884% Senior Notes, Series B, due 2008,PPN 629431 A@ 6, principal, premium or interest") to:

Chase Manhattan BankABA #021-000-021Private Income Processing

for credit to:  United of Omaha Life Insurance CompanyAccount Number 900-9000200a/c G07097PPN: 629431 A@ 6InterestAmount:  ___Principal Amount:  ___

Notices

All notices of payments, on or in respect of the Notes andwritten confirmation of each such payment, corporate actions and reorganizationnotifications to:

The Chase Manhattan Bank4 New York Plaza-11th FloorNew York, New York  10004Attention:  Investment Processing-J. Pipperatoa/c: G07097

All other notices and communications (*i.e.*, quarterly/annual reports, tax filings, modifications, waiversregarding the indenture) to be addressed as first provided above.

Name of Nominee in which Notes are to be issued:  None

Taxpayer I.D. Number: 47-0322111

                                                                                   Principal Amount ofName and Address of Purchaser                                 Notesto Be Purchased

                      

Provident Mutual LifeInsurance Company                        Series A Notes:                        $                -0-P.O.Box 1717                                                               Series BNotes:                        $                -0-ValleyForge, Pennsylvania  19482-1717                        Series C Notes:                        $7,000,000Attention:  Securities Investment Department                    Series D Notes:                        $                        -0-

Telefacsimile:  (610)407-1322

Payments

All payments on or in respect of the Notes to be by bankwire transfer of Federal or other immediately available funds (identifying eachpayment as "NUI Corporation, 6.884% Senior Notes, Series C, due 2011,PPN 629431 A# 4, principal, premium or interest") to:

PNC Bank (ABA #031-000-053)Broad and Chestnut StreetsPhiladelphia, Pennsylvania  19101

for credit to:  Provident Mutual Life Insurance CompanyAccount Number 85-4084-2176

Notices

All notices and communications requiring overnight expressdelivery service should be addressed to:

1000 Chesterbrook BoulevardBerwyn, Pennsylvania  19312Attention:  Treasurer

Name of Nominee in which Notes are to be issued:  None

Taxpayer I.D. Number: 23-0990450

                                                                                Principal Amount ofName and Address of Purchaser                              Notesto Be Purchased

                      

SunAmerica Life InsuranceCompany                        Series A Notes:                        $             -0-SunAmericaInvestments, Inc.                                  SeriesB Notes:                        $              -0-c/oAIG Global Investment Corp.                            SeriesC Notes:                        $              -0-175Water Street, 25th Floor                                  SeriesD Notes:                        $10,000,000NewYork, NY  10038     Attention:  Gerald F. HermanTelephone:  (212) 458-2068Fax:  (212) 458-2247

Payments

All payments on or in respect of the Certificates/Notesshall be by bank wire transfer of Federal or other immediately available fundsto:

Bankers Trust CompanyABA #021-001-033Account Number:  99-911-145For further credit to account#099530Ref:  NUIPPN #629431 B* 7 Principal $____________, Interest $__________

Notices

All notices of payment on or in respect of the Notes andwritten confirmation of each such payment, to be addressed to:

SunAmerica Investments, Inc.700 Louisiana, Suite 3905Houston, Texas  77002Phone:  (713) 546-1111Fax:  (713) 222-1402

All other notices and communications including monthlyreports to be addressed as first provided above.

Name of Nominee in which Notesare to be issued:  OKGBD & Co.

Taxpayer I.D. Number for OKGBD & Co.:  13-3020293

Taxpayer I.D. Number for Sun America Life InsuranceCompany:  52-0502540

                                                                         Principal Amount ofName and Address of Purchaser                       Notesto Be Purchased

                      

Pacific Life and AnnuityCompany                        Series A Notes:                        $             -0-700Newport Center Drive                                 SeriesB Notes:                        $              -0-NewportBeach, California  92660-6397             Series C Notes:                        $              -0-Attention:  Securities Department                        Series D Notes:                        $13,000,000Fax:  (949) 219-5406

Payments

All payments on or in respect of the Certificates/Notesshall be by bank wire transfer of Federal or other immediately available fundsto:

Federal Reserve Bank of BostonABA #0110-0123-4/BOS SAFE DEPDDA 125261Attention:  MBS Income CC:  1253A/C Name:  Pacific Life and Annuity Company/PLCF1811612Regarding:  SecurityDescription and PPN 629431 B* 7

Notices

All notices and communications to be addressed as firstprovided above, except notices with respect to payments and writtenconfirmation of each such payment, to be addressed:

Mellon TrustAttention:  Pacific Life Accounting TeamOne Mellon Bank CenterRoom 0930Pittsburgh, Pennsylvania  15258-0001Fax:  (412) 236-7529

            and

Pacific Life Insurance CompanyAttention:  Securities Administration - Cash Team700 Newport Center DriveNewport Beach, California  92660-6397Fax:  (949) 640-4013

Name of Nominee in which Notes are to be issued:  Mac & Co.

General Taxpayer I.D. Number:  95-3769814

                                                                     Principal Amount ofName and Address of Purchaser                   Notesto Be Purchased

                      

Pacific Life InsuranceCompany                         Series A Notes:                        $              -0-700Newport Center Drive                                SeriesB Notes:                        $              -0-NewportBeach, California  92660-6397            Series C Notes:                        $              -0-Attention:  Securities Department                        Series D Notes:                        $10,000,000Fax:  (949) 219-5406

Payments

All payments on or in respect of the Certificates/Notesshall be by bank wire transfer of Federal or other immediately available fundsto:

Federal Reserve Bank of BostonABA #0110-0123-4/BOS SAFE DEPDDA 125261Attention:  MBS Income CC:  1253A/C Name:  Pacific Life and General Account/PLCF1810132Regarding:  SecurityDescription and PPN 629431 B* 7

Notices

All notices and communications to be addressed as firstprovided above, except notices with respect to payments and written confirmationof each such payment, to be addressed:

Mellon TrustAttention:  Pacific Life Accounting TeamOne Mellon Bank CenterRoom 0930Pittsburgh, Pennsylvania  15258-0001Fax:  (412) 236-7529

            and

Pacific Life Insurance CompanyAttention:  Securities Administration - Cash Team700 Newport Center DriveNewport Beach, California  92660-6397Fax:  (949) 640-4013

Name of Nominee in which Notes are to be issued:  Mac & Co.

General Taxpayer I.D. Number:  95-1079000

 

**Defined****Terms**

**General Provisions**

Where the character or amount of any asset or liability oritem of income or expense is required to be determined or any consolidation orother accounting computation is required to be made for the purposes of thisAgreement, the same shall be done in accordance with GAAP, to the extentapplicable, except where such principles are inconsistent with the expressrequirements of this Agreement.

**Definitions**

As used herein, the following terms have the respectivemeanings set forth below or set forth in the Section hereof following suchterm:

*"Affiliate"*means, at any time, and with respect to any Person, (a) any other Personthat at such time directly or indirectly through one or more intermediariesControls, or is Controlled by, or is under common Control with, such first Person,and (b) any Person beneficially owning or holding, directly or indirectly,10% or more of any class of voting or equity interests of the Company or anySubsidiary or any corporation of which the Company and its Subsidiariesbeneficially own or hold, in the aggregate, directly or indirectly, 10% or moreof any class of voting or equity interests. As used in this definition, *"Control"*means the possession, directly or indirectly, of the power to direct or causethe direction of the management and policies of a Person, whether through theownership of voting securities, by contract or otherwise.  Unless the context otherwise clearlyrequires, any reference to an *"Affiliate"*is a reference to an Affiliate of the Company.

*"Brokers"* meansNUI Energy Brokers, Inc., a Delaware corporation.

*"Business Day"*means (a) for the purposes of Section 8.7 only, any day other than aSaturday, a Sunday or a day on which commercial banks in New York City arerequired or authorized to be closed, and (b) for the purposes of any otherprovision of this Agreement, any day other than a Saturday, a Sunday or a dayon which commercial banks in New York, New York, Pittsburgh, Pennsylvania orBedminster, New Jersey are required or authorized to be closed.

*"Capital Lease"*means, at any time, a lease with respect to which the lessee is requiredconcurrently to recognize the acquisition of an asset and the incurrence of aliability in accordance with GAAP.

*"Capital LeaseObligation"* means, with respect to any Person and a Capital Lease, theamount of the obligation of such Person as the lessee under such Capital Leasewhich would, in accordance with GAAP, appear as a liability on a balance sheetof such Person.

*"Closing"* isdefined in Section 3.

*"Code"* means theInternal Revenue Code of 1986, as amended from time to time, and the rules andregulations promulgated thereunder from time to time.

*"Company"* meansNUI Corporation, a New Jersey corporation, or any successor thereto that shallhave become such in the manner specified in Section 10.8.

*"ConfidentialInformation"* is defined in Section 20.

*"Consolidated Debt"*means, as of any date of determination, the sum of all Debt of the Company andits Restricted Subsidiaries outstanding on such date, after eliminating alloffsetting debits and credits between the Company and its RestrictedSubsidiaries and all other items required to be eliminated in the course of thepreparation of consolidated financial statements of the Company and itsRestricted Subsidiaries in accordance with GAAP.

*"Consolidated FixedCharges"*means, with respect to any period, the sum of  (a) Interest Charges for such periodand (b) Lease Rentals for such period.

*"Consolidated IncomeAvailable for Fixed Charges"* means, with respect to any period,Consolidated Net Income for such period *plus*all amounts deducted in the computation thereof on account of (a) ConsolidatedFixed Charges and (b) taxes imposed on or measured by income or excess profits.

*"Consolidated NetIncome*" means, with reference to any period, the net income (or loss) ofthe Company and its Restricted Subsidiaries for such period (taken as acumulative whole), as determined in accordance with GAAP, after eliminating alloffsetting debits and credits between the Company and its RestrictedSubsidiaries and all other items required to be eliminated in the course of thepreparation of consolidated financial statements of the Company and itsRestricted Subsidiaries in accordance with GAAP, *provided* that there shall be excluded:

        (a)       the income (or loss) of any Person accruedprior to the date it becomes a Restricted Subsidiary or is merged into orconsolidated with the Company or a Restricted Subsidiary, and the income (orloss) of any Person, substantially all of the assets of which have beenacquired in any manner, realized by such other Person prior to the date ofacquisition,

       (b)       the income (or loss) of any Person (otherthan a Restricted Subsidiary) in which the Company or any Restricted Subsidiaryhas an ownership interest, except to the extent that any such income has beenactually received by the Company or such Restricted Subsidiary in the form ofcash dividends or similar cash distributions,

        (c)       the undistributed earnings of anyRestricted Subsidiary to the extent that the declaration or payment ofdividends or similar distributions by such Restricted Subsidiary is not at thetime permitted by the terms of its charter or any agreement, instrument,judgment, decree, order, statute, rule or governmental regulation applicable tosuch Restricted Subsidiary,

       (d)       any aggregate net gain (but not anyaggregate net loss) during such period arising from the sale, conversion,exchange or other disposition of capital assets (such term to include, withoutlimitation, (i) all non-current assets and, without duplication,(ii) the following, whether or not current:  all fixed assets, whether tangible or intangible, all inventorysold in conjunction with the disposition of fixed assets, and all Securities),

        (e)       any gains resulting from any write-up ofany assets (but not any loss resulting from any write-down of any assets),

       (f)        any net gain from the collection of theproceeds of life insurance policies,

        (g)       any gain arising from the acquisition ofany Security, or the extinguishment, under GAAP, of any Debt, of the Company orany Restricted Subsidiary, and

        (h)       any deferred credit representing theexcess of equity in any Restricted Subsidiary at the date of acquisition overthe cost of the investment in such Restricted Subsidiary.

*"Consolidated NetWorth"* means, at any time, 

        (a)   the sum of (i) the par value (or value statedon the books of the corporation) of the capital stock (but excluding treasurystock and capital stock subscribed and unissued) of the Company and itsRestricted Subsidiaries plus (ii) the amount of the paid-in capital andretained earnings of the Company and its Restricted Subsidiaries, in each caseas such amounts would be shown on a consolidated balance sheet of the Companyand its Restricted Subsidiaries as of such time prepared in accordance withGAAP, *minus*

       (b)   to the extent included in clause (a), allamounts properly attributable to minority interests, if any, in the stock andsurplus of Restricted Subsidiaries.

*"Consolidated TotalAssets"* means, at any time, 

        (a)     total assets of the Company and itsRestricted Subsidiaries determined as of the end of the immediately precedingfiscal year on a consolidated basis in accordance with GAAP, *minus*

       (b)   to the extent included in clause (a),(i) all amounts properly attributable to minority interests, if any, inthe stock and surplus of such Restricted Subsidiaries and (ii) all assetsand Subsidiary Stock of Brokers sold, lease, transferred or otherwise disposedof since the end of the immediately preceding fiscal year through and includingsuch time.

*"Consolidated TotalCapitalization"* means as of the date of any determination thereof, the sumof (a) Consolidated Debt *plus*(b) Consolidated Net Worth.

*"Current Debt"*means, with respect to any Person, all Debt of such Person which by its termsor by the terms of any instrument or agreement relating thereto matures ondemand or within one year from the date of the creation thereof and is notdirectly or indirectly renewable or extendible at the option of the obligor inrespect thereof to a date one year or more from such date, *provided* that (a) Debt outstanding under a revolving credit orsimilar agreement which obligates the lender or lenders to extend credit over aperiod of one year or more and (b) Current Maturities of Funded Debt shallconstitute Funded Debt and not Current Debt, even though such Debt by its termsmatures on demand or within one year from such date.

*"Current Maturitiesof Funded Debt"* means, at any time and with respect to any item of FundedDebt, the portion of such Funded Debt outstanding at such time which by theterms of such Funded Debt or the terms of any instrument or agreement relatingthereto is due on demand or within one year from such time (whether by sinkingfund, other required prepayment or final payment at maturity) and is not directlyor indirectly renewable, extendible or refundable at the option of the obligorunder an agreement or firm commitment in effect at such time to a date one yearor more from such time.

*"Debt"* means,with respect to any Person, without duplication,

        (a)         its liabilities for borrowed money;

       (b)         its liabilities for the deferredpurchase price of property acquired by such Person (excluding accounts payablearising in the ordinary course of business but including, without limitation,all liabilities created or arising under any conditional sale or other titleretention agreement with respect to any such property);

        (c)         its Capital Lease Obligations;

       (d)         all liabilities for borrowed moneysecured by any Lien with respect to any property owned by such Person (whetheror not it has assumed or otherwise become liable for such liabilities); and

        (e)       any Guaranty of such Person with respectto liabilities of a type described in any of clauses (a) through (d) hereof.

Debt of any Person shall include all obligations of suchPerson of the character described in clauses (a) through (e) to the extent suchPerson remains legally liable in respect thereof notwithstanding that any suchobligation is deemed to be extinguished under GAAP.

*"Default"* meansan event or condition the occurrence or existence of which would, with thelapse of time or the giving of notice or both, become an Event of Default.

*"Default Rate"*with respect to a series of Notes, means that rate of interest that is thegreater of (i) 2% per annum above the rate of interest stated in clause(a) of the first paragraph of such series of Notes or (ii) 2% over therate of interest publicly announced by PNC Bank, National Association inPittsburgh, Pennsylvania as its "base" or "prime" rate.

*"Environmental Laws"*means any and all federal, state, local, and foreign statutes, laws,regulations, ordinances, rules, judgments, orders, decrees, permits,concessions, grants, franchises, licenses, agreements or governmentalrestrictions relating to pollution and the protection of the environment or therelease of any materials into the environment, including but not limited tothose related to hazardous substances or wastes, air emissions and dischargesto waste or public systems.

*"ERISA"* means theEmployee Retirement Income Security Act of 1974, as amended from time to time,and the rules and regulations promulgated thereunder from time to time ineffect.

*"ERISA Affiliate"*means any trade or business (whether or not incorporated) that is treated as asingle employer together with the Company under section 414 of the Code.

*"Event of Default"*is defined in Section 11.

*"Exchange Act"*means the Securities Exchange Act of 1934, as amended.

*"Excluded Assets"*means any assets of the Valley Cities Gas and Waverly Gas Company divisions ofNUI Utilities, Inc., a New Jersey corporation subject, as of the date hereof,to that certain Asset Sale Agreement dated as of October 4, 2000 betweenthe Company and C&T Enterprises, Inc. of Pennsylvania, as amended as of thedate hereof.

*"Fiscal Quarter"* means the three month fiscal period of theCompany beginning on each October 1,   January 1, April 1 and July 1 of each yearand ending on the succeeding December 31, March 31, June 30 and September 30,respectively.

*"Fiscal Year"*means the fiscal year of the Company beginning on October 1 of each year andending on the succeeding September 30.

*"Fixed ChargesCoverage Ratio"*means, at any time, the ratio of (a) Consolidated IncomeAvailable for Fixed Charges for the period of four consecutive fiscal quartersending on or most recently ended prior to such time to (b) ConsolidatedFixed Charges for such period.

*"Funded Debt"*means, with respect to any Person, all Debt of such Person which by its termsor by the terms of any instrument or agreement relating thereto matures, orwhich is otherwise payable or unpaid, one year or more from, or is directly orindirectly renewable or extendible at the option of the obligor in respectthereof to a date one year or more (including, without limitation, an option ofsuch obligor under a revolving credit or similar agreement obligating thelender or lenders to extend credit over a period of one year or more) from, thedate of the creation thereof, *provided*that Funded Debt shall include, as at any date of determination, CurrentMaturities of Funded Debt.

*"GAAP"* meansgenerally accepted accounting principles as in effect from time to time in theUnited States of America.

*"Governmental Authority"* means

        (a)       the government of

(i)  the United States of America or any State orother political subdivision thereof, or

(ii)  any jurisdiction in which the Company or anySubsidiary conducts all or any part of its business, or which assertsjurisdiction over any properties of the Company or any Subsidiary, or

       (b)       any entity exercising executive,legislative, judicial, regulatory or administrative functions of, or pertainingto, any such government.

*"Guaranty"* means,with respect to any Person, any obligation (except the endorsement in theordinary course of business of negotiable instruments for deposit orcollection) of such Person guaranteeing or in effect guaranteeing anyIndebtedness, dividend or other obligation of any other Person in any manner,whether directly or indirectly, including (without limitation) obligations incurredthrough an agreement, contingent or otherwise, by such Person:

        (a)         to purchase such Indebtedness orobligation or any property constituting security therefor;

       (b)         to advance or supply funds (i) forthe purchase or payment of such Indebtedness or obligation, or (ii) tomaintain any working capital or other balance sheet condition or any incomestatement condition of any other Person or otherwise to advance or makeavailable funds for the purchase or payment of such Indebtedness or obligation;

        (c)    to lease properties or to purchase propertiesor services primarily for the purpose of assuring the owner of suchIndebtedness or obligation of the ability of any other Person to make paymentof the Indebtedness or obligation; or

       (d)    otherwise to assure the owner of suchIndebtedness or obligation against loss in respect thereof.

In any computation of the Indebtedness or other liabilitiesof the obligor under any Guaranty, the Indebtedness or other obligations thatare the subject of such Guaranty shall be assumed to be direct obligations ofsuch obligor.

*"Hazardous Material"*means any and all pollutants, toxic or hazardous wastes or any other substancesthat might pose a hazard to health or safety, the removal of which may berequired or the generation, manufacture, refining, production, processing,treatment, storage, handling, transportation, transfer, use, disposal, release,discharge, spillage, seepage, or filtration of which is or shall be restricted,prohibited or penalized by any applicable law (including, without limitation,asbestos, urea formaldehyde foam insulation and polychlorinated biphenyls).

*"holder"* means,with respect to any Note, the Person in whose name such Note is registered inthe register maintained by the Company pursuant to Section 13.1.

*"Indebtedness"*with respect to any Person means, at any time, without duplication,

        (a)         its liabilities for borrowed money andits redemption obligations in respect of mandatorily redeemable PreferredStock;

       (b)         its liabilities for the deferred purchaseprice of property acquired by such Person (excluding accounts payable arisingin the ordinary course of business but including all liabilities created orarising under any conditional sale or other title retention agreement withrespect to any such property);

        (c)         all liabilities appearing on itsbalance sheet in accordance with GAAP in respect of Capital Leases;

       (d)         all liabilities for borrowed moneysecured by any Lien with respect to any property owned by such Person (whetheror not it has assumed or otherwise become liable for such liabilities);

        (e)     all its liabilities in respect of letters ofcredit or instruments serving a similar function issued or accepted for itsaccount by banks and other financial institutions whether or not representingobligations for borrowed;

        (f)  Swaps of such Person; and

        (g)       any Guaranty of such Person with respectto liabilities of a type described in any of clauses (a) through (f) hereof.

Indebtedness of any Person shall include all obligations ofsuch Person of the character described in clauses (a) through (g) to the extentsuch Person remains legally liable in respect thereof notwithstanding that anysuch obligation is deemed to be extinguished under GAAP.

*"InstitutionalInvestor"* means (a) any original purchaser of a Note, (b) anyholder of a Note holding more than 5% of the aggregate principal amount of theNotes then outstanding, and (c) any bank, trust company, savings and loanassociation or other financial institution, any pension plan, any investmentcompany, any insurance company, any broker or dealer, or any other similarfinancial institution or entity, regardless of legal form.

*"Interest Charges"*means, with respect to any period, the sum (without duplication) of thefollowing (in each case, eliminating all offsetting debits and credits betweenthe Company and its Subsidiaries and all other items required to be eliminatedin the course of the preparation of consolidated financial statements of theCompany and its Subsidiaries in accordance with GAAP): (a) all interest inrespect of Indebtedness of the Company and its Subsidiaries (including imputedinterest on Capital Lease Obligations) deducted in determining Consolidated NetIncome for such period, together with all interest capitalized or deferred duringsuch period and not deducted in determining Consolidated Net Income for suchperiod, and (b) all debt discount and expense amortized or required to beamortized in the determination of Consolidated Net Income for such period.

*"Investment"*means any investment, made in cash or by delivery of property, by the Companyor any of its Subsidiaries (i) in any Person, whether by acquisition ofstock, indebtedness or other obligation or Security, or by loan, Guaranty,advance, capital contribution or otherwise, or (ii) in any property.

*"Lease Rentals"*means, with respect to any period, the sum of the rental and other obligationsrequired to be paid during such period by the Company or any Subsidiary aslessee under all leases of real or personal property (other than CapitalLeases), excluding any amount required to be paid by the lessee (whether or nottherein designated as rental or additional rental) on account of maintenanceand repairs, insurance, taxes, assessments, water rates and similar charges, *provided* that, if at the date ofdetermination, any such rental or other obligations (or portion thereof) arecontingent or not otherwise definitely determinable by the terms of the relatedlease, the amount of such obligations (or such portion thereof) (i) shallbe assumed to be equal to the amount of such obligations for the period of 12consecutive calendar months immediately preceding the date of determination or(ii) if the related lease was not in effect during such preceding 12-monthperiod, shall be the amount estimated by a Senior Financial Officer of theCompany on a reasonable basis and in good faith.

*"Lien"* means,with respect to any Person, any mortgage, lien, pledge, charge, securityinterest or other encumbrance, or any interest or title of any vendor, lessor,lender or other secured party to or of such Person under any conditional saleor other title retention agreement or Capital Lease, upon or with respect toany property or asset of such Person (including in the case of stock,stockholder agreements, voting trust agreements and all similar arrangements).

*"Make-Whole Amount"*is defined in Section 8.7.

*"Material"* meansmaterial in relation to the business, operations, affairs, financial condition,assets, properties, or prospects of the Company and its Restricted Subsidiariestaken as a whole.

*"Material AdverseEffect"* means a material adverse effect on (a) the business,operations, affairs, financial condition, assets or properties of the Companyand its Restricted Subsidiaries taken as a whole, or (b) the ability ofthe Company to perform its obligations under this Agreement and the Notes, or(c) the validity or enforceability of this Agreement or the Notes.

*"Memorandum"* isdefined in Section 5.3.

*"Moody's"* meansMoody's Investors Service, Inc.

*"Multiemployer Plan"*means any Plan that is a "multiemployer plan" (as such term is defined insection 4001(a)(3) of ERISA).

*"Notes"* isdefined in Section 1.

*"Officer'sCertificate"* means a certificate of a Senior Financial Officer or of anyother officer of the Company whose responsibilities extend to the subjectmatter of such certificate.

*"PBGC"* means thePension Benefit Guaranty Corporation referred to and defined in ERISA or anysuccessor thereto.

*"Person"* means anindividual, partnership, corporation, limited liability company, association,trust, unincorporated organization, or a government or agency or politicalsubdivision thereof.

*"Plan"* means an"employee benefit plan" (as defined in section 3(3) of ERISA) that is or,within the preceding five years, has been established or maintained, or towhich contributions are or, within the preceding five years, have been made orrequired to be made, by the Company or any ERISA Affiliate or with respect towhich the Company or any ERISA Affiliate may have any liability.

*"Preferred Stock"*means any class of capital stock of a corporation that is preferred over anyother class of capital stock of such corporation as to the payment of dividendsor the payment of any amount upon liquidation or dissolution of suchcorporation.

*"property"* or *"properties"* means, unless otherwisespecifically limited, real or personal property of any kind, tangible orintangible, choate or inchoate.

*"QPAM Exemption"*means Prohibited Transaction Class Exemption 84‐14 issued by the UnitedStates Department of Labor.

*"Related Industries"*means industries fundamentally related to the business of the Company and itsRestricted Subsidiaries as described in the Memorandum.

*"Required Holders"*means, at any time, the holders of at least 51% in principal amount of theNotes at the time outstanding (exclusive of Notes then owned by the Company orany of its Affiliates).

*"Responsible Officer"*means any Senior Financial Officer and any other officer of the Company withresponsibility for the administration of the relevant portion of thisAgreement.

*"RestrictedSubsidiary"* means at any time any Subsidiary (a) which is organized underthe laws of the United States or any State thereof; (b) which conductssubstantially all of its business and has substantially all of its assetswithin the United States; (c) of which at least a majority (by number of votes)of the Voting Stock is beneficially owned, directly or indirectly, by theCompany or one or more Wholly-Owned Restricted Subsidiaries; and (d) whichis (i) not designated as an Unrestricted Subsidiary on the date of theClosing in Schedule 5.4 or in the most recent notice with respect theretodelivered pursuant to Section 9.8, or (ii) which is designated aRestricted Subsidiary in the most recent notice with respect thereto deliveredpursuant to Section 9.8.

*"RestrictedSubsidiary Stock"* means, with respect to any Person, the stock (or anyoptions or warrants to purchase stock or other Securities exchangeable for orconvertible into stock) of any Restricted Subsidiary of such Person.

*"SEC"* means theSecurities and Exchange Commission or any Governmental Authority succeeding toany of its functions.

*"Security"*shallhave the same meaning as in Section 2(1) of the Securities Act.

*"Securities Act"*means the Securities Act of 1933, as amended from time to time. 

*"Senior FinancialOfficer"* means the chief financial officer or treasurer of the Company.

*"Senior Funded Debt"*means all Funded Debt of the Company which is not expressed to be subordinateto or junior in rank to any other Debt of the Company.

*"Series A Notes"*isdefined in Section 1.

*"Series B Notes"*isdefined in Section 1.

*"Series C Notes"*isdefined in Section 1.

*"Series D Notes"*isdefined in Section 1.

*"S&P"* meansStandard & Poor's Ratings Group, a division of McGraw Hill, Inc.

*"Subsidiary"*means, as to any Person, any corporation, association or other business entityin which such Person or one or more of its Subsidiaries or such Person and oneor more of its Subsidiaries owns sufficient equity or voting interests toenable it or them (as a group) ordinarily, in the absence of contingencies, toelect a majority of the directors (or Persons performing similar functions) ofsuch entity, and any partnership or joint venture if more than a 50% interestin the profits or capital thereof is owned by such Person or one or more of itsSubsidiaries or such Person and one or more of its Subsidiaries (unless suchpartnership or joint venture can and does ordinarily take major businessactions without the prior approval of such Person or one or more of itsSubsidiaries). Unless the context otherwise clearly requires, any reference toa "Subsidiary" is a reference to a Subsidiary of the Company.

*"Subsidiary Stock"*means, with respect to any Person, the stock (or any options or warrants topurchase stock or other Securities exchangeable for or convertible into stock)of any Subsidiary of such Person.

*"Swaps"* means,with respect to any Person, payment obligations with respect to interest rateswaps, currency swaps and similar obligations obligating such Person to makepayments, whether periodically or upon the happening of a contingency.  For the purposes of this Agreement, theamount of the obligation under any Swap shall be the amount determined inrespect thereof as of the end of the then most recently ended fiscal quarter ofsuch Person, based on the assumption that such Swap had terminated at the endof such fiscal quarter, and in making such determination, if any agreementrelating to such Swap provides for the netting of amounts payable by and tosuch Person thereunder or if any such agreement provides for the simultaneouspayment of amounts by and to such Person, then in each such case, the amount ofsuch obligation shall be the net amount so determined.

*"Unrestricted Subsidiary"*means any Subsidiary which is not a Restricted Subsidiary.

*"Voting Stock"*means Securities of any class or classes, the holders of which are ordinarily,in the absence of contingencies, entitled to elect a majority of the corporatedirectors (or Persons performing similar functions).

*"Wholly-OwnedRestricted Subsidiary"* means, at any time, any Restricted Subsidiary onehundred percent (100%) of all of the equity interests (except directors'qualifying shares) and voting interests of which are owned by any one or moreof the Company and the Company's other Wholly-Owned Restricted Subsidiaries atsuch time.

**Changesin Corporate Structure**

** **

** **

None

**Subsidiariesof the Company andOwnership of Subsidiary Stock**

** **

AllSubsidiaries are designated as Restricted Subsidiaries

NUI CORPORATION

                    NUI CAPITAL CORP

                             NUI ENERGY, INC

                             NUI ENERGY BROKERS, INC.

                             NUI ENERGY SOLUTIONS, INC.

                             NUI ENVIRONMENTAL GROUP, INC.

                             NUI INTERNATIONAL, INC.

                                                NUI/CARIRADE INTERNATIONAL, LLC

                             NUI SALES MANAGEMENT

                                                T.I.C. ENTERPRISES, INC.

                             NUI TELECOM, INC.

                             UTILITY BUSINESS SERVICES, INC.