[Conformed Copy]
      




 

 

 

NEW JERSEY NATURAL
GAS COMPANY 

 

$125,000,000 3.63% Senior
Notes due June 21, 2046 

 


____________________


NOTE PURCHASE AGREEMENT 
____________________


 

 

Dated as of June 21, 2016


 

 

	
       










TABLE OF CONTENTS


(Not a part of the
Agreement) 

	SECTION		HEADING	PAGE
		 
	SECTION 1.
      AUTHORIZATION OF NOTES	1
	     	
	SECTION 2.
      SALE
      AND PURCHASE OF NOTES AND SECURITY FOR THE NOTES	1
				     		
		Section	2.1.		Sale and Purchase
      of Notes	1
		Section 	2.2.		Security for the Notes; First Mortgage
      Bonds	1
		 
	SECTION 3.
      CLOSING	2
		 
	SECTION 4.
      CONDITIONS TO CLOSING	3
	 	
		Section	4.1.		Representations
      and Warranties	3
		Section	4.2.		Performance; No Default	3
		Section	4.3.		Compliance
      Certificates	3
		Section	4.4.		Opinions of Counsel	3
		Section	4.5.		Purchase
      Permitted by Applicable Law, Etc.	4
		Section	4.6.		Related Transactions	4
		Section	4.7.		Payment of
      Special Counsel Fees	4
		Section	4.8.		Private Placement Number	4
		Section	4.9.		Changes in
      Corporate Structure	4
		Section	4.10.		Funding Instructions	4
		Section	4.11		Board
      Approval	5
		Section	4.12.		First Mortgage Bonds and Supplemental
      Indenture	5
		Section	4.13.		Proceedings and
      Documents	5
		 
	SECTION 5.
      REPRESENTATIONS AND WARRANTIES OF THE
      COMPANY	5
					 	
		Section	5.1.		Organization;
      Power and Authority	5
		Section	5.2.		Authorization, Etc.	6
		Section	5.3.		Disclosure	6
		Section	5.4.		Organization and Ownership of Shares of
      Subsidiaries	6
		Section	5.5.		Financial
      Statements	7
		Section	5.6.		Compliance with Laws, Other Instruments,
      Etc.	7
		Section	5.7.		Governmental
      Authorizations, Etc.	7
		Section	5.8.		Litigation; Observance of Statutes and
      Orders	7
		Section	5.9.		Taxes	8
		Section	5.10.		Title to Property; Leases	8
		Section	5.11.		Licenses,
      Permits, Etc.	8
		Section	5.12.		Compliance with ERISA	8



-i-







		Section 	5.13.		Private Offering
      by the Company	9
		Section	5.14.		Use of Proceeds;
      Margin Regulations	10
		Section	5.15.	 	Existing
      Debt	10
		Section	5.16.		Foreign Assets
      Control Regulations, Etc.	10
		Section	5.17.		Status under
      Certain Statutes	11
		Section	5.18.		Environmental
      Matters	12
		Section	5.19.		Perfection of
      Liens	12
		Section	5.20.		First Mortgage
      Bonds Pari Passu	12
	 	Section	5.21.		No Event of
      Default	12
	     			     		
	SECTION 6. REPRESENTATIONS OF THE
    PURCHASERS	13
	 	
		Section	6.1.		Purchase for
      Investment	13
		Section	6.2.		Source of
      Funds	13
					 	
	SECTION 7. INFORMATION AS TO COMPANY	15
	 	
		Section	7.1.		Financial and
      Business Information	15
		Section	7.2.		Officer’s
      Certificate	17
		Section	7.3.		Inspection	18
		Section	7.4.		Electronic
      Delivery	18
					 	
	SECTION 8. PREPAYMENT OF THE NOTES	19
	 	
		Section	8.1.		Required
      Prepayments	19
		Section	8.2.		Required
      Prepayment—Condemnation; Required Sale	19
		Section	8.3.		Optional
      Prepayments with and Without Make-Whole Amount	19
		Section	8.4.		Allocation of
      Partial Prepayments	20
		Section	8.5.		Maturity;
      Surrender, Etc.	20
		Section	8.6.		Purchase of
      Notes	20
		Section	8.7.		Make-Whole Amount
      for Notes	21
		Section	8.8.		Offer to Prepay
      upon Asset Disposition	22
		Section	8.9.		Offer to Prepay
      in the Event of a Change of Control	23
					 	
	SECTION 9. AFFIRMATIVE COVENANTS	24
	 	
		Section	9.1.		Compliance with
      Laws	24
		Section	9.2.		Insurance	24
		Section	9.3.		Maintenance of
      Properties	24
		Section	9.4.		Payment of Taxes
      and Claims	24
		Section	9.5.		Corporate
      Existence, Etc.	25
		Section	9.6.		Regulated
      Nature	25
					 	
	SECTION 10. NEGATIVE COVENANTS	25
	 	
		Section	10.1.		[Reserved]	25
		Section	10.2.		Liens	25
		Section	10.3.		Restricted
      Payments	27



-ii-







		Section 	10.4.		Restrictions on
      Dividends of Subsidiaries, Etc.	28
		Section	10.5.		Sale of Assets,
      Etc.	28
		Section	10.6.	 	Merger,
      Consolidation, Etc.	29
		Section	10.7.		Disposal of
      Ownership of a Restricted Subsidiary	29
		Section	10.8.		Limitations on
      Subsidiaries, Partnerships and Joint Ventures	30
	 	Section	10.9.	 	Limitation on
      Certain Leases	30
		Section	10.10.		Nature of
      Business	30
		Section	10.11.		Transactions with
      Affiliates	30
		Section	10.12.		Designation of
      Restricted and Unrestricted Subsidiaries	31
		Section	10.13.		Terrorism
      Sanctions Regulations	31
	     			     		
	SECTION 11. EVENTS OF DEFAULT	32
		 
	SECTION 12. REMEDIES ON DEFAULT, ETC.	34
	 	
		Section	12.1.		Acceleration	34
		Section	12.2.		Other
      Remedies	35
		Section	12.3.		Rescission	35
		Section	12.4.		No Waivers or
      Election of Remedies, Expenses, Etc.	36
		 
	SECTION 13. REGISTRATION; EXCHANGE;
      SUBSTITUTION OF NOTES	36
	 	
		Section	13.1.		Registration of
      Notes	36
		Section	13.2.		Transfer and
      Exchange of Notes	36
		Section	13.3.		Replacement of
      Notes	37
		 
	SECTION 14. PAYMENTS ON NOTES	37
	 	
		Section	14.1.		Place of
      Payment	37
		Section	14.2.		Home Office
      Payment	37
		 
	SECTION 15. EXPENSES, ETC.	38
	 	
		Section	15.1.		Transaction
      Expenses	38
		Section	15.2.		Survival	38
		 
	SECTION 16. SURVIVAL OF REPRESENTATIONS AND
      WARRANTIES; ENTIRE AGREEMENT	38
					 	
	SECTION 17. AMENDMENT AND WAIVER	39
	 	
		Section	17.1.		Requirements	39
		Section	17.2.		Solicitation of
      Holders of Notes	39
		Section	17.3.		Binding Effect,
      Etc.	40
		Section	17.4.		Notes Held by
      Company, Etc.	40
		 
	SECTION 18. NOTICES	40



-iii-







	SECTION 19. REPRODUCTION OF DOCUMENTS	41
		 
	SECTION 20. CONFIDENTIAL INFORMATION	41
		 
	SECTION 21. SUBSTITUTION OF PURCHASER	42
		 
	SECTION 22. MISCELLANEOUS	43
	 	
		Section 	22.1.		Successors and
      Assigns	43
		Section	22.2.		Submission to
      Jurisdiction; Waiver of Jury Trial	43
	 	Section	22.3.		Payments Due on
      Non-Business Days	43
		Section	22.4.		Accounting
      Terms	43
		Section	22.5.		Severability	44
		Section	22.6.		Construction	44
		Section	22.7.		Counterparts	44
		Section	22.8.		Governing
      Law	45
	     			     	 	
	SECTION 23. APPOINTMENT AND DIRECTION OF
      COLLATERAL AGENT	45
	 	
		Section	23.1.		Appointment and
      Authority; Direction	45
		Section	23.2.		Limited
      Agency	45
		Section	23.3.		Delegation of
      Duties	45
		Section	23.4.		Exculpatory
      Provisions	45
		Section	23.5.		Reliance by
      Collateral Agent	46
		Section	23.6.		Indemnification	46
	 	Section	23.7.	 	Duties;
      Obligations	47
		Section	23.8.		Requesting
      Instructions	47
		Section	23.9.		Administrative
      Actions	47
		Section	23.10.		Exercise of
      Remedies	47
		Section	23.11.		Sharing and
      Application of Proceeds	47
		Section	23.12.		Resignation or
      Termination of Collateral Agent	48
		Section	23.13.		Succession of
      Successor Collateral Agent	48
		Section	23.14.		Eligibility of
      Collateral Agent	49
		Section	23.15.		Successor
      Collateral Agent by Merger	49
		Section	23.16.		Compensation and
      Reimbursement of Collateral Agent	49
		Section	23.17.		Self
      Dealing	50
		Section	23.18.		Third Party
      Beneficiary	50
		 
	Signature	



-iv-







	
      ATTACHMENTS TO NOTE PURCHASE AGREEMENT 

	 
	SCHEDULE A	     	—	     	Information Relating to Purchasers
	 	 	 	 	 
	SCHEDULE B		—		Defined Terms
	 	 	 	 	 
	SCHEDULE 4.9		—		Changes in Corporate Structure
	 	 	 	 	 
	SCHEDULE 5.3		—		Disclosure Materials
	 	 	 	 	 
	SCHEDULE 5.4		—		Subsidiaries of the Company and Ownership of
      Subsidiary Stock
	 	 	 	 	 
	SCHEDULE 5.5		—	 	Financials
	 	 	 	 	 
	SCHEDULE 5.8		—		Certain Litigation
	 	 	 	 	 
	SCHEDULE 5.11	 	—		Patents, Etc.
	 	 	 	 	 
	SCHEDULE 5.14		—		Use of Proceeds
	 	 	 	 	 
	SCHEDULE 5.15		—		Existing Debt
	 	 	 	 	 
	EXHIBIT 1		—		Form of 3.63% Senior Notes due June 21,
      2046
	 	 	 	 	 
	EXHIBIT 2		—		Form of Supplemental Indenture
	 	 	 	 	 
	EXHIBIT 4.4(a)		—		Form of Opinion of Special Counsel to the
      Company
	 	 	 	 	 
	EXHIBIT 4.4(b)		—		Form of Opinion of Special Counsel to the
      Purchasers



-v-







NEW JERSEY
NATURAL GAS COMPANY
1415 WYCKOFF
ROAD 
WALL, NEW JERSEY 07719 

$125,000,000 3.63% Senior
Notes due June 21, 2046 

Dated as of June 21, 2016


TO THE PURCHASERS LISTED IN
  THE ATTACHED SCHEDULE A:


Ladies and Gentlemen:


NEW JERSEY NATURAL
GAS COMPANY, a New Jersey corporation (the “Company”), agrees with the purchasers listed in the attached Schedule A (each a “Purchaser” and
collectively, the “Purchasers”) as follows:


SECTION 1.
AUTHORIZATION OF
NOTES. 

The Company will authorize
the issue and sale of $125,000,000 aggregate principal amount of its 3.63%
Senior Notes due June 21, 2046 (the “Notes,” the term Notes
shall also include any such notes issued in substitution for the Notes pursuant
to Section 13 of this Agreement). The Notes shall be
substantially in the form set out in Exhibit 1, with such
changes therefrom, if any, as may be approved by the Purchasers and the Company.
Certain capitalized terms used in this Agreement are defined in Schedule B; references to a “Schedule” or an “Exhibit” are, unless otherwise
specified, to a Schedule or an Exhibit attached to this Agreement. References to
a “Section” are references to a Section of this Agreement unless otherwise
specified. 

SECTION 2.
SALE AND
PURCHASE OF NOTES
AND SECURITY FOR
THE NOTES.


Section 2.1 Sale and
Purchase of Notes. Subject to the
terms and conditions of this Agreement, the Company will issue and sell to each
Purchaser and each Purchaser will purchase from the Company, at the Closing
provided for in Section
3, Notes in the principal amount
specified opposite such Purchaser’s name in Schedule A at the purchase price of 100% of the principal amount thereof. Each
Purchaser’s obligations hereunder are several and not joint and no Purchaser
shall have any obligation or liability to any Person for the performance or
nonperformance by any other Purchaser hereunder. 

Section 2.2 Security for
the Notes; First Mortgage Bonds.
(a) The Notes shall be secured by an equal principal amount of First Mortgage
Bonds issued by the Company under the Mortgage Indenture to U.S. Bank National
Association, as collateral agent for the holders of the Notes. The First
Mortgage Bonds will rank pari
passu with all other existing and
future first mortgage bonds issued pursuant to the Mortgage Indenture.








(b) Terms of First Mortgage Bonds. The First Mortgage Bonds will have the same stated
interest rate, interest payment dates, stated maturity and redemption provisions
(including Make-Whole Amount, if any), and will be in the same aggregate
principal amount, as the Notes. Payments of the principal of, Make-Whole Amount,
if any, and interest on the Notes shall be deemed to satisfy and discharge the
Company’s obligation to make such payments on the First Mortgage Bonds.
Principal of, Make-Whole Amount, if any, and interest on the First Mortgage
Bonds are payable at the principal office of the Mortgage Trustee in Morristown,
New Jersey or at the Company’s option at the principal office of the Collateral
Agent. 

(c) Parallel Payments of Notes and First Mortgage
Bonds. The First Mortgage Bonds
shall contain optional and mandatory redemption provisions (including Make-Whole
Amount, if any) which correspond to the optional and mandatory prepayment
provisions of the Notes. In addition, the First Mortgage Bonds shall be subject
to mandatory redemption if the Company or the Mortgage Trustee is notified that
an Event of Default under this Agreement has occurred and is continuing and that
the principal amount of all Notes then outstanding has become due and payable in
accordance with this Agreement.

(1) In the event the
Company elects to or is required to prepay the Notes, in whole or in part, in
accordance with the provisions of this Agreement, the Company’s obligations with
respect to a principal amount of First Mortgage Bonds equal to the principal
amount of such Notes being prepaid will, upon prepayment of such Notes, be
satisfied and discharged, and the Collateral Agent shall deliver corresponding
First Mortgage Bonds in a principal amount equal to the principal amount of the
Notes so prepaid to the Company for further delivery to the Mortgage Trustee for
cancellation. 

(2) In the event the
Company elects to or is required to redeem First Mortgage Bonds in whole or in
part, in accordance with the provisions of the Mortgage Indenture, the Company
shall prepay a principal amount of Notes equal to the principal amount of such
First Mortgage Bonds being redeemed in accordance with the provisions of
Section 8.2 or Section 8.3, as
applicable, and the Company’s obligation in respect of First Mortgage Bonds
equal to the principal amount of such prepaid Notes will be satisfied and
discharged, and the Collateral Agent shall deliver corresponding First Mortgage
Bonds in a principal amount equal to the principal amount of such Notes so
prepaid to the Company for further delivery to the Mortgage Trustee for
cancellation. 

SECTION 3.
CLOSING. 

The sale and purchase of
the Notes to be purchased by the Purchasers shall occur at the offices of Schiff
Hardin LLP, 666 Fifth Avenue, 17th Floor, New York, New York 10103, at 11:00 a.m.,
New York, New York time, at a closing (the “Closing”) on June 21, 2016 or on such other Business Day thereafter on or prior
to June 23, 2016 as may be agreed upon by the Company and the Purchasers. At the
Closing, the Company will deliver to each Purchaser the Notes to be purchased by
such Purchaser in the form of a single Note (or such greater number of Notes in
denominations of at least $100,000 as such Purchaser may request) dated the date
of the Closing and registered in such Purchaser’s name (or in the name of its
nominee), against delivery by such Purchaser to the Company or its order of
immediately available funds in the amount of the purchase price therefor by wire
transfer of immediately available funds for the account of the Company in
accordance with the funding instructions provided pursuant to Section 4.10. If at the Closing the Company shall fail to
tender such Notes to any Purchaser as provided above in this Section 3, or any of the conditions specified in Section 4 shall not have been fulfilled to any Purchaser’s satisfaction, such
Purchaser shall, at its election, be relieved of all further obligations under
this Agreement, without thereby waiving any rights such Purchaser may have by
reason of such failure or such nonfulfillment. 

-2-







SECTION 4.
CONDITIONS TO
CLOSING. 

Each Purchaser’s obligation
to purchase and pay for the Notes to be sold to such Purchaser at the Closing is
subject to the fulfillment to such Purchaser’s satisfaction, prior to or at the
Closing, of the following conditions: 

Section 4.1
Representations and Warranties.
(a) The representations and warranties of the Company in this Agreement shall be
true and correct at the time of the Closing, except for any representation or
warranty that by its terms speaks as of a particular time, in which case such
representation or warranty shall have been correct as of that time, and (b) the
representations and warranties of the Company in the Mortgage Indenture
(including the Supplemental Indenture) and the First Mortgage Bond Documents to
which it is a party shall be correct upon execution and delivery of the First
Mortgage Bond Documents at the time of the Closing. 

Section 4.2 Performance;
No Default. The Company shall
have performed and complied with all agreements and conditions contained in this
Agreement, the Mortgage Indenture (including the Supplemental Indenture) and the
First Mortgage Bond Documents to which it is a party required to be performed or
complied with by it prior to or at the Closing, and after giving effect to the
issue and sale of the Notes (and the application of the proceeds thereof as
contemplated by Schedule
5.14) and the issue of the First
Mortgage Bonds, no Default or Event of Default shall have occurred and be
continuing. 

Section 4.3 Compliance
Certificates. 

(a) Officer’s Certificate. The Company shall have delivered to such
Purchaser an Officer’s Certificate, dated the date of the Closing, certifying
that the conditions specified in Sections 4.1, 4.2 and
4.9 have been fulfilled. 

(b) Secretary’s Certificate. The Company shall have delivered to such
Purchaser a certificate of its Secretary or Assistant Secretary, dated the date
of Closing, certifying as to (i) the resolutions attached thereto and other
corporate proceedings relating to the authorization, execution and delivery of
this Agreement, the Supplemental Indenture, the First Mortgage Bond Documents to
which it is a party, the Notes and the First Mortgage Bonds and (ii) the
Company’s organizational documents as then in effect. 

Section 4.4 Opinions of
Counsel. Such Purchaser shall
have received opinions in form and substance satisfactory to such Purchaser,
dated the date of the Closing (a) from Chapman and Cutler LLP, special counsel
for the Company, covering the matters set forth in Exhibit 4.4(a) and covering such other matters incident to the
transactions contemplated hereby as such Purchaser or special counsel to the
Purchasers may reasonably request (and the Company hereby instructs its counsel
to deliver such opinion to such Purchaser) and (b) from Schiff Hardin LLP,
special counsel to the Purchasers in connection with such transactions,
substantially in the form set forth in Exhibit 4.4(b) and
covering such other matters incident to such transactions as such Purchaser may
reasonably request. 

-3-







Section 4.5 Purchase
Permitted by Applicable Law, Etc.
On the date of the Closing, such Purchaser’s purchase of Notes shall (a) be
permitted by the laws and regulations of each jurisdiction to which such
Purchaser is subject, without recourse to provisions (such as Section 1405(a)(8)
of the New York Insurance Law) permitting limited investments by insurance
companies without restriction as to the character of the particular investment,
(b) not violate any applicable law or regulation (including, without limitation,
Regulation T, U or X of the Board of Governors of the Federal Reserve System)
and (c) not subject such Purchaser to any tax, penalty or liability under or
pursuant to any applicable law or regulation. If requested by any Purchaser,
such Purchaser shall have received an Officer’s Certificate certifying as to
such matters of fact as such Purchaser may reasonably specify to enable it to
determine whether such purchase is so permitted. 

Section 4.6 Related
Transactions. The Company shall
have consummated the sale of the entire principal amount of the Notes scheduled
to be sold on the date of the Closing pursuant to this Agreement and delivered
the First Mortgage Bonds to the Collateral Agent pursuant to this Agreement and
the Supplemental Indenture. 

Section 4.7 Payment of
Special Counsel Fees. Without
limiting the provisions of Section
15.1, the Company shall have paid
on or before the Closing the reasonable fees, charges and disbursements of the
Purchasers’ special counsel referred to in Section 4.4(b) to the extent reflected in a statement of such
counsel rendered to the Company at least one Business Day prior to the Closing.


Section 4.8 Private
Placement Number. A Private
Placement Number issued by Standard & Poor’s CUSIP Service Bureau (in
cooperation with the Securities Valuation Office of the National Association of
Insurance Commissioners) shall have been obtained for 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 a party to any merger or
consolidation and shall not have succeeded to all or any substantial part of the
liabilities of any other entity, at any time following the date of the most
recent financial statements referred to in Schedule 5.5. 

Section 4.10 Funding
Instructions. At least three
Business Days prior to the date of the Closing, such Purchaser shall have
received written instructions executed by an authorized financial officer of the
Company on letterhead of the Company directing the manner of the payment of
funds and setting forth (a) the name of the transferee bank, (b) such transferee
bank’s ABA number, (c) the account name and number into which the purchase price
for the Notes is to be deposited and (d) the name and telephone number of the
account representative responsible for verifying receipt of such funds.


-4-







Section 4.11 Board
Approval. The New Jersey Board of
Public Utilities shall have entered an appropriate order authorizing the
issuance and sale of the Notes to the Purchasers and the delivery of the First
Mortgage Bonds to the Collateral Agent as security for the Notes, upon terms not
inconsistent with this Agreement, the Supplemental Indenture, the Notes and the
First Mortgage Bonds and such order shall not be subject to
appeal. 

Section 4.12 First
Mortgage Bonds and Supplemental Indenture. (a) All conditions precedent set forth in the
Mortgage Indenture with respect to the execution and delivery of the
Supplemental Indenture and the issuance of the First Mortgage Bonds shall have
been satisfied. 

(b) The First Mortgage
Bonds, the Supplemental Indenture and the First Mortgage Bond Documents shall
have been duly authorized, executed, authenticated in the case of the First
Mortgage Bonds and delivered by the respective parties thereto, shall constitute
legal, valid and binding contracts and agreements of such parties, and such
Purchaser shall have received true, complete, executed copies thereof and a
certified copy of the Mortgage Indenture. 

(c) The Mortgage Indenture
and the Supplemental Indenture shall have been duly recorded as an indenture on
real property and duly filed, recorded or indexed as a security interest in
personal property so as to constitute a valid, perfected first Lien on all of
the Company’s property covered by the Mortgage Indenture and the Supplemental
Indenture, all in accordance with applicable law, and the Company shall have
caused satisfactory evidence thereof to be furnished to such Purchaser and
special counsel to the Purchasers. 

Section 4.13 Proceedings
and Documents. All corporate and
other proceedings in connection with the transactions contemplated by this
Agreement and all documents and instruments incident to such transactions shall
be satisfactory to such Purchaser and special counsel to the Purchasers, and
such Purchaser and special counsel to the Purchasers shall have received all
such counterpart originals or certified or other copies of such documents as
such Purchaser or special counsel to the Purchasers may reasonably request.


SECTION 5.
REPRESENTATIONS AND
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 of incorporation, and is duly
qualified as a foreign corporation and is in good standing 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 in good standing would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. The Company has the corporate power and authority to own or hold
under lease the properties it purports to own or hold under lease, to transact
the business it transacts and proposes to transact, to execute and deliver this
Agreement, the Supplemental Indenture, the First Mortgage Bond Documents to
which it is a party, the Notes and the First Mortgage Bonds, and to perform the
provisions hereof, thereof and of the Mortgage Indenture.  

-5-







Section 5.2
Authorization, Etc. This
Agreement, the Mortgage Indenture (including the Supplemental Indenture), the
First Mortgage Bond Documents to which the Company is a party, the Notes, and
the First Mortgage Bonds have been duly authorized by all necessary corporate
action on the part of the Company, and this Agreement and the Mortgage Indenture
constitute, and upon execution and delivery thereof the Supplemental Indenture,
the First Mortgage Bond Documents to which the Company is a party, each Note and
each First Mortgage Bond constitutes, a legal, valid and binding obligation of
the Company enforceable against the Company in accordance with its respective
terms, except as such enforceability may be limited by (a) applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors’ rights generally and (b) general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law). 

Section 5.3
Disclosure. The Company, through
its agents, Wells Fargo Securities, LLC and TD Securities (USA) LLC, has
delivered to each Purchaser a copy of a Private Placement Memorandum, dated May
2016 (the “Memorandum”), relating to
the transactions contemplated hereby. Except as disclosed in Schedule 5.3, this Agreement, the Supplemental Indenture, the
Memorandum, the documents, certificates or other writings identified in
Schedule 5.3 and the financial statements listed in
Schedule 5.5 (collectively, the “Disclosure Documents”), taken as a whole, do not contain any untrue
statement of a material fact or omit to state any material fact necessary to
make the statements therein not misleading in light of the circumstances under
which they were made. Except as disclosed in the Disclosure Documents, since
September 30, 2015, there has been no change in the financial condition,
operations, business or properties of the Company or any of its Restricted
Subsidiaries except changes that, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect. 

Section 5.4 Organization
and Ownership of Shares of Subsidiaries. (a) Schedule
5.4 is (except as noted therein) a
complete and correct list of the Company’s Subsidiaries, showing, as to each
Subsidiary, the correct name thereof, the jurisdiction of its organization, the
percentage of shares of each class of its capital stock or similar equity
interests outstanding owned by the Company and each other Subsidiary and whether
or not such Subsidiary is a Restricted Subsidiary and/or an Inactive Subsidiary.


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

(c) Each Restricted
Subsidiary identified in Schedule
5.4 is a corporation or other
legal entity duly organized, validly existing and in good standing under the
laws of its jurisdiction of organization, and is duly qualified as a foreign
corporation or other legal entity and is in good standing 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 in good standing would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. Each such Restricted Subsidiary has the corporate or other power
and authority to own or lease the properties it purports to own or hold under
lease and to transact the business it transacts and proposes to transact. 


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Section 5.5 Financial
Statements. The Company has
delivered to each Purchaser copies of the financial statements of the Company
and its Subsidiaries listed on Schedule 5.5. All of said
financial statements (including in each case the related schedules and notes)
fairly present in all material respects the consolidated financial position of
the Company and its Subsidiaries as of the respective dates specified in such
Schedule and the consolidated results of their operations and cash flows for the
respective periods so specified and have been prepared in accordance with GAAP
consistently applied throughout the periods involved except as set forth in the
notes thereto (subject, in the case of any interim financial statements, to
normal year-end adjustments). The Company and its Subsidiaries do not have any
Material liabilities that are not disclosed on such financial statements or
otherwise disclosed in the Disclosure Documents. 

Section 5.6 Compliance
with Laws, Other Instruments, Etc. Neither the execution and delivery by the Company of this Agreement,
the Supplemental Indenture, the First Mortgage Bond Documents to which it is a
party, the Notes or the First Mortgage Bonds nor the performance by the Company
of this Agreement, the Mortgage Indenture (including the Supplemental
Indenture), the First Mortgage Bond Documents to which it is a party, the Notes
or the First Mortgage Bonds will (a) contravene, result in any breach of, or
constitute a default under, or result in the creation of any Lien (other than
the Liens contemplated thereby) in respect of any property of the Company or any
Restricted Subsidiary under, any indenture, mortgage, deed of trust, loan,
purchase or credit agreement, lease corporate charter or by-laws, or any other
Material agreement or instrument to which the Company or any Restricted
Subsidiary is bound or by which the Company or any Restricted Subsidiary or any
of their respective properties may be bound or affected, (b) conflict with or
result in a breach of any of the terms, conditions or provisions of any order,
judgment, decree or ruling of any court, arbitrator or Governmental Authority
applicable to the Company or any Restricted Subsidiary or (c) violate any
provision of any statute or other rule or regulation of any Governmental
Authority applicable to the Company or any Restricted Subsidiary. 

Section 5.7 Governmental
Authorizations, Etc. No consent,
approval or authorization of, or registration, filing or declaration with, any
Governmental Authority is required in connection with the execution and delivery
by the Company of this Agreement, the Supplemental Indenture, the First Mortgage
Bond Documents to which it is a party, the Notes or the First Mortgage Bonds or
the performance by the Company of this Agreement, the Mortgage Indenture
(including the Supplemental Indenture), the First Mortgage Bond Documents to
which it is a party, the Notes or the First Mortgage Bonds other than such
consents, approvals, authorizations, registrations, filings or declarations that
have been or will be obtained or made prior to the date of the Closing.


Section 5.8 Litigation;
Observance of 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,
threatened against or affecting the Company or any Restricted Subsidiary or any
property of the Company or any Restricted Subsidiary in any court or before any
arbitrator of any kind or before or by any Governmental Authority that,
individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect.  

-7-







(b) Neither the Company nor
any Restricted Subsidiary is in default under 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, ERISA, Environmental Laws or the USA Patriot Act) of any
Governmental Authority, which default or violation, individually or in the
aggregate, would reasonably be expected to have a Material Adverse Effect.


Section 5.9
Taxes. The Company and its
Subsidiaries have filed all income tax returns that are required to have been
filed in any jurisdiction, and have paid all taxes shown to be due and payable
on such returns and all other taxes and assessments payable by them, to the
extent such taxes and assessments have become due and payable and before they
have become delinquent, except for any taxes and assessments (a) the amount of
which is not, individually or in the aggregate, Material or (b) the amount,
applicability or validity of which is currently being contested in good faith by
appropriate proceedings and with respect to which the Company or a Subsidiary,
as the case may be, has established adequate reserves in accordance with GAAP.
The charges, accruals and reserves on the books of the Company and its
Subsidiaries in respect of Federal, state or other taxes for all fiscal periods
are adequate. The Federal income tax liabilities of the Company and its
Subsidiaries have been determined by the Internal Revenue Service and paid for
all fiscal years up to and including the fiscal year ended September 30, 2010.


Section 5.10 Title to
Property; Leases. The Company and
its Restricted Subsidiaries have good and sufficient title related to the
ownership of their respective Material properties, including all such properties
reflected in the most recent audited balance sheet referred to in
Section 5.5 or purported to have been acquired by the Company
or any Restricted Subsidiary after said date (except as sold or otherwise
disposed of in the ordinary course of business), in each case free and clear of
Liens prohibited by this Agreement or the Mortgage Indenture (including the
Supplemental Indenture), except for those defects in title and Liens that,
individually or in the aggregate, would not have a Material Adverse Effect. All
Material leases are valid and subsisting and are in full force and effect in all
material respects. 

Section 5.11 Licenses,
Permits, Etc. Except as disclosed
in Schedule 5.11, the Company and its Restricted Subsidiaries own
or possess all licenses, permits, franchises, authorizations, patents,
copyrights, proprietary software, service marks, trademarks, trade names and
domain names or rights thereto, that are Material, without known conflict with
the rights of others, except for those conflicts that, individually or in the
aggregate, would not have a Material Adverse Effect. 

Section 5.12 Compliance
with ERISA. (a) The Company and
each ERISA Affiliate have operated and administered each Plan in compliance with
all applicable laws except for such instances of noncompliance as have not
resulted in and would not reasonably be expected to result in a Material Adverse
Effect. Neither the Company nor any ERISA Affiliate has incurred any liability
pursuant to Title I or IV of ERISA or the penalty or excise tax provisions of
the Code relating to employee benefit plans (as defined in section 3 of ERISA),
and no event, transaction or condition has occurred or exists that would
reasonably be expected to result in the incurrence of any such liability by the
Company or any 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
case pursuant to Title I or IV of ERISA or to section 430(k) of the Code or to
any such penalty or excise tax provisions under the Code or federal law or
section 4068 of ERISA or by the granting of a security interest in connection
with the amendment of a Plan, other than such liabilities or Liens as would not
be, individually or in the aggregate, Material.  

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(b) The present value of
the aggregate benefit liabilities under each of the Plans which are subject to
Title IV of ERISA (other than Multiemployer Plans), determined as of the
beginning of such Plan’s most recently ended plan year on the basis of the
actuarial assumptions specified for funding purposes in such Plan’s most recent
actuarial valuation report, did not exceed the market value, including accrued
contributions, of the assets of such Plan allocable to such benefit liabilities.
The term “benefit liabilities” has the meaning specified in section 4001 of
ERISA and the term “present value” has the meaning specified in section 3 of
ERISA. The terms “market value” and “accrued contributions” shall have the
meanings set forth in applicable Financial Accounting Standards Board standards.


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

(d) The accumulated
post-retirement benefit obligation (determined as of the last day of the
Company’s most recently ended fiscal year in accordance with Financial
Accounting Standards Board Accounting Standards Codification Topic 715-60,
without regard to liabilities attributable to continuation coverage mandated by
section 4980B of the Code) of the Company and its Restricted Subsidiaries is not
Material. 

(e) The execution and
delivery of this Agreement and the issuance and sale of the Notes hereunder will
not involve any transaction that is subject to the prohibitions of section 406
of ERISA or in connection with which a tax could be imposed pursuant to section
4975(c)(1)(A)-(D) of the Code. The representation by the Company in the first
sentence of this Section
5.12(e) with respect to each
Purchaser is made in reliance upon and subject to the accuracy of such
Purchaser’s representation in Section 6.2 as to the
sources of the funds used to pay the purchase price of the Notes to be purchased
by such Purchaser. 

Section 5.13 Private
Offering by the Company. Neither
the Company nor anyone authorized to act on its behalf has offered the Notes,
the First Mortgage Bonds or any similar securities for sale to, or solicited any
offer to buy any of the same from, or otherwise approached or negotiated in
respect thereof with, any Person other than the Purchasers and not more than
twenty-six (26) other Institutional Investors of the type described in clause
(c) of the definition thereof, each of which has been offered the Notes at a
private sale for investment. Neither the Company nor anyone acting on its behalf
has taken, or will take, any action that would subject the issuance or sale of
the Notes to the registration requirements of section 5 of the Securities
Act.  

-9-







Section 5.14 Use of
Proceeds; Margin Regulations. The
Company will apply the proceeds of the sale of the Notes hereunder as set forth
in Schedule 5.14. No part of the proceeds from the sale of the
Notes hereunder will be used, directly or indirectly, for the purpose of buying
or carrying any margin stock within the meaning of Regulation U of the Board of
Governors of the Federal Reserve System (12 CFR 221), or for the purpose of
buying or carrying or trading in any securities under such circumstances as to
involve the Company in a violation of Regulation X of said Board (12 CFR 224) or
to involve any broker or dealer in a violation of Regulation T of said Board (12
CFR 220). Margin stock does not constitute more than 25% of the value of the
consolidated assets of the Company and its Subsidiaries and the Company does not
have any present intention that margin stock will constitute more than 25% of
the value of such assets. As used in this 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
Debt. (a) Except as described
therein, Schedule
5.15 sets forth a complete and
correct list of all outstanding Debt of the Company and its Restricted
Subsidiaries as of March 31, 2016, since which date there has been no Material
change in the amounts, interest rates, sinking funds, installment payments or
maturities of the Debt of the Company or its Restricted Subsidiaries. Neither
the Company nor any Restricted Subsidiary is in default and no waiver of default
is currently in effect, in the payment of any principal or interest on any Debt
of the Company or such Restricted Subsidiary and no event or condition exists
with respect to any Debt of the Company or any Restricted Subsidiary the
outstanding principal amount of which exceeds $10,000,000 that would permit (or
that with notice or the lapse of time, or both, would permit) one or more
Persons to cause such Debt to become due and payable before its stated maturity
or before its regularly scheduled dates of payment. 

(b) Neither the Company nor
any Subsidiary is a party to, or otherwise subject to any provision contained
in, any instrument evidencing Debt of the Company or such Subsidiary, any
agreement relating thereto or any other agreement (including, but not limited
to, its charter or other organizational document) which limits the amount of, or
otherwise imposes restrictions on the incurring of, Debt of the Company, except
as provided in the Mortgage Indenture and any Bank Credit Agreement and as
otherwise specifically indicated in Schedule 5.15. 

Section 5.16 Foreign Assets Control Regulations,
Etc. (a) Neither the Company nor
any Controlled Entity (i) is a Blocked Person, (ii) has been notified that its
name appears or may in the future appear on a State Sanctions List or (iii) is a
target of sanctions that have been imposed by the United Nations or the European
Union. 

(b) Neither the Company nor
any Controlled Entity (i) has violated, been found in violation of, or been
charged or convicted under, any applicable U.S. Economic Sanctions Laws,
Anti-Money Laundering Laws or Anti-Corruption Laws or (ii) to the Company’s
knowledge, is under investigation by any Governmental Authority for possible
violation of any U.S. Economic Sanctions Laws, Anti-Money Laundering Laws or
Anti-Corruption Laws. 

-10-







(c) No part of the proceeds
from the sale of the Notes hereunder: 

(i) constitutes or will
constitute funds obtained on behalf of any Blocked Person or will otherwise be
used by the Company or any Controlled Entity, directly or indirectly, (A) in
connection with any investment in, or any transactions or dealings with, any
Blocked Person, (B) for any purpose that would cause any Purchaser to be in
violation of any U.S. Economic Sanctions Laws or (C) otherwise in violation of
any U.S. Economic Sanctions Laws; 

(ii) will be used, directly
or indirectly, in violation of, or cause any Purchaser to be in violation of,
any applicable Anti-Money Laundering Laws; or 

(iii) will be used,
directly or indirectly, for the purpose of making any improper payments,
including bribes, to any Governmental Official or commercial counterparty in
order to obtain, retain or direct business or obtain any improper advantage, in
each case which would be in violation of, or cause any Purchaser to be in
violation of, any applicable Anti-Corruption Laws. 

(d) The Company has
established procedures and controls which it reasonably believes are adequate
(and otherwise comply with applicable law) to ensure that the Company and each
Controlled Entity is and will continue to be in compliance with all applicable
U.S. Economic Sanctions Laws, Anti-Money Laundering Laws and Anti-Corruption
Laws. 

Section 5.17 Status
under Certain Statutes. Neither
the Company nor any Subsidiary is an “investment company” registered or required
to be registered under the Investment Company Act of 1940 or an “affiliated
person” of an “investment company” or an “affiliated person” of such “affiliated
person” or under the “control” of an “investment company” as such terms are
defined in the Investment Company Act of 1940, as amended, and shall not become
such an “investment company” or such an “affiliated person” or under such
“control.” Neither the Company nor any Subsidiary is a “holding company” or a
“subsidiary company” of a “holding company,” or an “affiliate” of a “holding
company” or of a “subsidiary company” of a “holding company” within the meaning
of the Public Utility Holding Company Act of 2005, as amended. Based upon the
immediately preceding sentence, neither the Company nor the issue and sale of
the Notes or the issuance of the First Mortgage Bonds pursuant to the
Supplemental Indenture is subject to regulation under the Public Utility Holding
Company Act of 2005, as amended. Neither the Company nor any Subsidiary is
subject to the ICC Termination Act of 1995, as amended, or the Federal Power
Act, as amended. Neither the Company nor any Subsidiary is subject to any
Federal or state statute or regulation limiting its ability to incur Debt except
for rules and regulations of the New Jersey Board of Public Utilities.


-11-







Section 5.18
Environmental Matters. Except as
disclosed in Schedule
5.8, neither the Company nor any
Restricted Subsidiary has knowledge of any claim or has received any notice of
any claim, and no proceeding has been instituted raising any claim against the
Company or any of its Restricted Subsidiaries or any of their respective real
properties now or formerly owned, leased or operated by any of them or other
assets, alleging any damage to the environment or violation of any Environmental
Laws, except, in each case, such as would not reasonably be expected to result
in a Material Adverse Effect. Except as otherwise disclosed in Schedule 5.8: 

(a) neither the Company nor
any Restricted Subsidiary has knowledge 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, in each case, such as would not reasonably be
expected to result in a Material Adverse Effect; 

(b) neither the Company nor
any of its Restricted Subsidiaries has stored any Hazardous Materials on real
properties now or formerly owned, leased or operated by any of them or has
disposed of any Hazardous Materials in a manner contrary to any Environmental
Laws in each case in any manner that would reasonably be expected to result in a
Material Adverse Effect; and 

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

Section 5.19 Perfection
of Liens. (a) Each of the
Mortgage Indenture and the Supplemental Indenture has been duly recorded and
filed in each place in which such recording or filing is required to protect and
preserve the Lien of the Mortgage Indenture and the Supplemental Indenture, as
the case may be, in and to the Trust Estate and such Lien constitutes a valid,
fully perfected and continuing first priority Lien in and to, all right, title
and interest of the Company in the Trust Estate and all taxes and recording or
filing fees required to be paid in connection with the execution, recording or
filing of the Mortgage Indenture and the Supplemental Indenture have been duly
paid. 

(b) The Lien of the
Collateral Agent in the First Mortgage Bonds constitutes a valid, fully
perfected and continuing first priority Lien. 

Section 5.20 First Mortgage Bonds Pari Passu.
The Company’s obligations under
the Supplemental Indenture and the First Mortgage Bonds rank pari passu in right of payment, without preference or priority, with its obligations
under each other series of first mortgage bonds issued and outstanding under the
Mortgage Indenture. 

Section 5.21 No Event of Default. No “Event of Default” under the Mortgage Indenture
exists on the date of execution and delivery of this Agreement or, upon the
execution and delivery thereof, the Supplemental Indenture, or will exist
immediately after giving effect to the transactions contemplated by this
Agreement or the Supplemental Indenture and the applications of the proceeds
from the issue and sale of the Notes and the issuance of the First Mortgage
Bonds. 

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SECTION 6.
REPRESENTATIONS OF
THE PURCHASERS. 

Section 6.1 Purchase for
Investment. Each Purchaser
severally represents that it is purchasing the Notes for its own account or for
one or more separate accounts maintained by such Purchaser or for the account of
one or more pension or trust funds and not with a view to the distribution
thereof, provided that the disposition of such Purchaser’s or such
pension or trust fund’s property shall at all times be within such Purchaser’s
or such pension or trust fund’s control. Each Purchaser represents that it is an
“accredited investor,” as defined in Rule 501(a)(1), (2), (3) or (7) of
Regulation D under the Securities Act. Each Purchaser understands that the Notes
have not been registered under the Securities Act and may be resold only if
registered pursuant to the provisions of the Securities Act or if an exemption
from registration is available, except under circumstances where neither such
registration nor such an exemption is required by law, and that the Company is
not required to register the Notes. 

Section 6.2 Source of Funds. Each Purchaser severally represents that at
least one of the following statements is an accurate representation as to each
source of funds (a “Source”) to be used by
such Purchaser to pay the purchase price of the Notes to be purchased by such
Purchaser hereunder: 

(a) the Source is an
“insurance company general account” (as the term is defined in the United States
Department of Labor’s Prohibited Transaction Exemption (“PTE”) 95-60) in respect of which the reserves and liabilities (as defined by
the annual statement for life insurance companies approved by the National
Association of Insurance Commissioners (the “NAIC Annual Statement”)) for the general account contract(s) held by or
on behalf of any employee benefit plan together with the amount of the reserves
and liabilities for the general account contract(s) held by or on behalf of any
other employee benefit plans maintained by the same employer (or affiliate
thereof as defined in PTE 95-60) or by the same employee organization in the
general account do not exceed 10% of the total reserves and liabilities of the
general account (exclusive of separate account liabilities) plus surplus as set
forth in the NAIC Annual Statement filed with such Purchaser’s state of
domicile; or 

(b) the Source is a
separate account that is maintained solely in connection with such Purchaser’s
fixed contractual obligations under which the amounts payable, or credited, to
any employee benefit plan (or its related trust) that has any interest in such
separate account (or to any participant or beneficiary of such plan (including
any annuitant)) are not affected in any manner by the investment performance of
the separate account; or 

(c) the Source is either
(i) an insurance company pooled separate account, within the meaning of PTE 90-1
or (ii) a bank collective investment fund, within the meaning of the PTE 91-38
and, except as disclosed by such Purchaser to the Company in writing pursuant to
this clause (c), no employee benefit plan or group of plans maintained by the
same employer or employee organization beneficially owns more than 10% of all
assets allocated to such pooled separate account or collective investment fund;
or 

-13-







(d) the Source constitutes
assets of an “investment fund” (within the meaning of Part VI of PTE 84-14 (the
“QPAM Exemption”)) managed by a “qualified professional asset
manager” or “QPAM” (within the meaning of Part VI of the QPAM Exemption), no
employee benefit plan’s assets that are managed by the QPAM in such investment
fund, when combined with the assets of all other employee benefit plans
established or maintained by the same employer or by an affiliate (within the
meaning of Part VI(c)(1) of the QPAM Exemption) of such employer or by the same
employee organization and managed by such QPAM, represent more than 20% of the
total client assets managed by such QPAM, the conditions of Part I(c) and (g) of
the QPAM Exemption are satisfied, neither the QPAM nor a person controlling or
controlled by the QPAM maintains an ownership interest in the Company that would
cause the QPAM and the Company to be “related” within the meaning of Part VI(h)
of the QPAM Exemption and (i) the identity of such QPAM and (ii) the names of
any employee benefit plans whose assets in the investment fund, when combined
with the assets of all other employee benefit plans established or maintained by
the same employer or by an affiliate (within the meaning of Part VI(c)(1) of the
QPAM Exemption) of such employer or by the same employee organization, represent
10% or more of the assets of such investment fund, have been disclosed to the
Company in writing pursuant to this clause (d); or 

(e) the Source constitutes
assets of a “plan(s)” (within the meaning of Part IV(h) of PTE 96-23
(the “INHAM Exemption”)) managed by an “in-house asset manager” or
“INHAM” (within the meaning of Part IV(a) of the INHAM Exemption), the
conditions of Part I(a), (g) and (h) of the INHAM Exemption are satisfied,
neither the INHAM nor a person controlling or controlled by the INHAM (applying
the definition of “control” in Part IV(d)(3) of the INHAM Exemption) owns a 10%
or more interest in the Company and (i) the identity of such INHAM and (ii) the
name(s) of the employee benefit plan(s) whose assets constitute the Source have
been disclosed to the Company in writing pursuant to this clause (e); or


(f) the Source is a
governmental plan; or 

(g) the Source is one or
more employee benefit plans, or a separate account or trust fund comprised of
one or more employee benefit plans, each of which has been identified to the
Company in writing pursuant to this clause (g); or 

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

As used in this
Section 6.2, the terms “employee benefit plan,”
“governmental plan,”
and “separate account” shall have
the respective meanings assigned to such terms in section 3 of ERISA.


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SECTION 7.
INFORMATION AS
TO COMPANY. 

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


(a) Quarterly Statements — within 55 days after the end of each quarterly
fiscal period in each fiscal year of the Company (other than the last quarterly
fiscal period of each such fiscal year), duplicate copies of: 

(1) a consolidated and
consolidating balance sheet of the Company and its Subsidiaries as at the end of
such quarter, and 

(2) consolidated and
consolidating statements of income, changes in shareholders’ equity and cash
flows of the Company and its Subsidiaries for such quarter and (in the case of
the second and third quarters) for the portion of the fiscal year ending with
such quarter, 

setting forth in each case
in comparative form the figures for the corresponding periods in the previous
fiscal year, all in reasonable detail, prepared in accordance with GAAP
applicable to quarterly financial statements generally, and certified by a
Senior Financial Officer as fairly presenting, in all material respects, the
financial position of the companies being reported on and their results of
operations and cash flows, subject to changes resulting from normal year-end
adjustments; 

(b) Annual Statements — within 100 days after the end of each fiscal
year of the Company, duplicate copies of, 

(1) a consolidated and
consolidating balance sheet of the Company and its Subsidiaries, as at the end
of such year, and 

(2) consolidated and
consolidating statements of income, changes in shareholders’ equity and cash
flows of the Company and its Subsidiaries, for such year, 

setting forth in each case
in comparative form the figures for the previous fiscal year, all in reasonable
detail, prepared in accordance with GAAP, and accompanied by an opinion thereon
(without a “going concern” or similar qualification or exception and without any
qualification or exception as to the scope of the audit on which such opinion is
based) of independent certified public accountants of recognized national
standing, which opinion shall state that such financial statements present
fairly, in all material respects, the financial position of the companies being
reported upon and their results of operations and cash flows and have been
prepared in conformity with GAAP, and that the examination of such accountants
in connection with such financial statements has been made in accordance with
generally accepted auditing standards, and that such audit provides a reasonable
basis for such opinion in the circumstances; 

-15-







(c) SEC and Other Reports — with reasonable promptness, upon their becoming
available, one copy of (1) each financial statement, report, notice or proxy
statement sent by the Company or any Restricted Subsidiary to its principal
lending banks as a whole (excluding information sent to such banks in the
ordinary course of administration of a bank facility, such as information
relating to pricing and borrowing availability) or to its public securities
holders generally and (2) each regular or periodic report, each registration
statement that shall have become effective (without exhibits except as expressly
requested by such holder), and each final prospectus and all amendments thereto
filed by the Company or any Restricted Subsidiary with the Securities and
Exchange Commission; 

(d) Notice of Default or Event of
Default — with reasonable
promptness, and in any event within five days after a Responsible Officer
becoming aware of the existence of any Default or Event of Default, a written
notice specifying the nature and period of existence thereof and what action the
Company is taking or proposes to take with respect thereto; 

(e) ERISA Matters — with reasonable promptness, and in any event
within five days after a Responsible Officer becoming aware of any of the
following, a written notice setting forth the nature thereof and the action, if
any, that the Company or an ERISA Affiliate proposes to take with respect
thereto: 

(1) with respect to any
Plan, any reportable event, as defined in section 4043(c) of ERISA and the
regulations thereunder, for which notice thereof has not been waived pursuant to
such regulations as in effect on the date thereof; or 

(2) the taking by the PBGC
of steps to institute, or the threatening by the PBGC of the institution of,
proceedings under section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Plan, or the receipt by the Company
or any ERISA Affiliate of a notice from a Multiemployer Plan that such action
has been taken by the PBGC with respect to such Multiemployer Plan; or


(3) any event, transaction
or condition that could result in the incurrence of any liability by the Company
or any ERISA Affiliate pursuant to Title I or IV of ERISA or the penalty or
excise tax provisions of the Code relating to employee benefit plans, or in the
imposition of any Lien on any of the rights, properties or assets of the Company
or any ERISA Affiliate pursuant to Title I or IV of ERISA or such penalty or
excise tax provisions, if such liability or Lien, taken together with any other
such liabilities or Liens then existing, would reasonably be expected to have a
Material Adverse Effect; 

-16-







(f) Unrestricted Subsidiaries — at such time as either (1) the aggregate amount
of the total assets of all Unrestricted Subsidiaries exceeds 10% of the
consolidated total assets of the Company and its Subsidiaries determined in
accordance with GAAP or (2) one or more Unrestricted Subsidiaries account for
more than 10% of the consolidated gross revenues of the Company and its
Subsidiaries determined in accordance with GAAP, and within the respective
periods provided in paragraphs (a) and (b) above, financial statements of the
character and for the dates and periods as in said paragraphs (a) and (b)
covering each Unrestricted Subsidiary (or groups of Unrestricted Subsidiaries on
a consolidated basis) together with consolidating statements reflecting
eliminations or adjustments required in order to reconcile such financial
statements to the corresponding consolidated financial statements of the Company
and its Subsidiaries delivered pursuant to paragraphs (a) and (b) above; and


(g) Requested Information — with reasonable promptness, such other data and
information relating to the business, operations, affairs, financial condition,
assets or properties of the Company or any of its Restricted Subsidiaries or
relating to the ability of the Company to perform its obligations hereunder,
under the Notes, the Mortgage Indenture (including the Supplemental Indenture),
the First Mortgage Bond Documents to which the Company is a party and the First
Mortgage Bonds, as from time to time may be reasonably requested by any such
holder of Notes. 

Section 7.2 Officer’s
Certificate. Each set of
financial statements delivered to 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 Officer setting
forth: 

(a) Covenant Compliance — the information (including reasonably detailed
calculations) required in order to establish whether the Company was in
compliance with the requirements of Section 10.2 through
Section 10.5, inclusive, and Section 10.9 during the quarterly or annual period covered by
the statements then being furnished (including with respect to each such
Section, where applicable, the calculations of the maximum or minimum amount,
ratio or percentage, as the case may be, permissible under the terms of such
Sections, and the calculation of the amount, ratio or percentage then in
existence); and 

(b) Event of Default — a statement that such Senior Financial Officer
has reviewed the relevant terms hereof, the Mortgage Indenture (including the
Supplemental Indenture), and the First Mortgage Bond Documents to which the
Company is a party, and has made, or caused to be made, under his or her
supervision, a review of the transactions and conditions of the Company and its
Subsidiaries from the beginning of the quarterly or annual period covered by the
statements then being furnished to the date of the certificate and that such
review shall not have disclosed the existence during such period of any
condition or event that constitutes a Default or an Event of Default or, if any
such condition or event existed or exists (including, without limitation, any
such event or condition resulting from the failure of the Company or any
Subsidiary to comply with any Environmental Law), specifying the nature and
period of existence thereof and what action the Company shall have taken or
proposes to take with respect thereto. 

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

(a) No Default — if no Default or Event of Default then exists, at the expense of such
holder and upon reasonable prior written notice to the Company, to visit the
principal executive office of the Company, to discuss the affairs, finances and
accounts of the Company and its Restricted Subsidiaries with the Company’s
officers, and, with the consent of the Company (which consent will not be
unreasonably withheld) to visit the other offices and properties of the Company
and each Restricted Subsidiary, all at such reasonable times during normal
business hours 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
any Restricted Subsidiary, to examine all their respective books of account,
records, reports and other papers, to make copies and extracts therefrom, and to
discuss their respective affairs, finances and accounts with their respective
officers and independent public accountants (and by this provision the Company
authorizes said accountants to discuss the affairs, finances and accounts of the
Company and its Restricted Subsidiaries), all at such times and as often as may
be requested. 

Section 7.4 Electronic Delivery. Financial statements, opinions of independent
certified public accountants, other information and Officer’s Certificates that
are required to be delivered by the Company pursuant to Sections 7.1(a), (b) or
(c) and Section 7.2 shall be deemed to have been delivered if the Company
satisfies any of the following requirements with respect thereto: 

(a) such financial
statements satisfying the requirements of Section 7.1(a) or (b) and related
Officer’s Certificate satisfying the requirements of Section 7.2 and any other
information required under Section 7.1(c) are delivered to each holder of a Note
by e-mail at the e-mail address set forth in Schedule A or as communicated from
time to time in a separate writing delivered to the Company;

(b) the Company shall have
timely filed such Form 10–Q or Form 10–K, satisfying the requirements of Section
7.1(a) or Section 7.1(b), as the case may be, with the SEC on EDGAR and shall
have made such form and the related Officer’s Certificate satisfying the
requirements of Section 7.2 available on its home page on the internet, which is
located at http://investor.njresources.com/njng-reports.cfm as of the date of
this Agreement;

(c) such financial
statements satisfying the requirements of Section 7.1(a) or Section 7.1(b) and
related Officer’s Certificate(s) satisfying the requirements of Section 7.2 and
any other information required under Section 7.1(c) are timely posted by or on
behalf of the Company on IntraLinks or on any other similar website to which
each holder of Notes has free access; or

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(d) the Company shall have
timely filed any of the items referred to in Section 7.1(c) with the SEC on
EDGAR and shall have made such items available on its home page on the internet
or on IntraLinks or on any other similar website to which each holder of Notes
has free access; 

provided
however, that in no case shall
access to such financial statements, other information and Officer’s
Certificates be conditioned upon any waiver or other agreement or consent (other
than confidentiality provisions consistent with Section 20 of this Agreement);
provided further, that in the case of any of clauses (b), (c) or
(d), the Company shall have given each holder of a Note prior written notice,
which may be by e-mail or in accordance with Section 18, of such posting or
filing in connection with each delivery, provided further, that
upon request of any holder to receive paper copies of such forms, financial
statements, other information and Officer’s Certificates or to receive them by
e-mail, the Company will promptly e-mail them or deliver such paper copies, as
the case may be, to such holder. 

SECTION 8.
PREPAYMENT OF
THE NOTES.


Section 8.1 Required
Prepayments. Subject to
Section 8.2, the Notes shall not be subject to required
prepayments. The entire unpaid principal balance of the Notes shall be due and
payable on the stated maturity date thereof. 

Section 8.2 Required
Prepayment—Condemnation; Required Sale. In the event that, pursuant to the terms of section 8.08 of the Mortgage
Indenture, the First Mortgage Bonds are called for redemption, in whole or in
part, then the Company shall, (i) at least 30 days and not more than 60 days
prior to the redemption date of the First Mortgage Bonds pursuant to section
8.08 of the Mortgage Indenture, give written notice to the Collateral Agent, as
the registered holder of the First Mortgage Bonds, and each holder of Notes, of
the redemption of all or a portion of the First Mortgage Bonds and the
corresponding prepayment of all or a portion of the Notes, and (ii) on the
redemption date of the First Mortgage Bonds so called for redemption, prepay the
Notes in an aggregate principal amount equal to the amount of First Mortgage
Bonds called for redemption at a prepayment price equal to 100% of the First
Mortgage Bonds being redeemed, together with interest accrued thereon to the
date of such prepayment, but without any Make-Whole Amount. The notice described
in (i) above shall specify the prepayment date (which shall be a Business Day),
the aggregate principal amount of the Notes to be prepaid on such 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 paid on
the prepayment date with respect to such principal amount being prepaid.


Section 8.3 Optional
Prepayments with and Without Make-Whole Amount. The Company may, at its option, upon notice as
provided below, prepay at any time all, or from time to time any part of, the
Notes, in an amount not less than $1,000,000 in aggregate principal amount of
the Notes then outstanding in the case of a partial prepayment, at 100% of the
aggregate principal amount so prepaid together with interest accrued thereon to
the date of such prepayment and the Make-Whole Amount, if any, determined for
the prepayment date with respect to such principal amount; provided, that at any time on or after December 21, 2045 the Company may, at its
option, upon notice as provided below, prepay all or any part of the Notes at
100% of the aggregate principal amount so prepaid together with interest accrued
thereon to the date of such prepayment. The Company will give each holder of
Notes written notice of each optional prepayment under this Section 8.3 not less than 30 days and not more than 60 days prior to the date fixed
for such prepayment. Each such notice shall specify such date (which shall be a
Business Day), the aggregate principal amount of the Notes to be prepaid on such
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 paid on the prepayment date with respect to such principal amount
being prepaid, and shall be accompanied by a certificate of a Senior Financial
Officer as to the estimated Make-Whole Amount, if any, due in connection with
such prepayment (calculated as if the date of such notice were the date of the
prepayment), setting forth the details of such computation. Two Business Days
prior to such prepayment, the Company shall deliver to each holder of Notes a
certificate of a Senior Financial Officer specifying the calculation of such
Make-Whole Amount, if any, as of the specified prepayment date. 

-19-







Section 8.4 Allocation
of Partial Prepayments. In the
case of each partial prepayment of the Notes pursuant to Section 8.2 or Section 8.3 hereof, the
principal amount of the Notes to be prepaid shall be allocated among all the
Notes at the time outstanding in proportion, as nearly as reasonably
practicable, to the respective unpaid principal amounts thereof not theretofore
called for prepayment. All partial prepayments or purchases made pursuant to
Section 8.6(b), Section 8.8 or
Section 8.9 shall be applied only to the Notes of the holders
who have elected to participate in such prepayment or purchase. 

Section 8.5 Maturity;
Surrender, Etc. In the case of
each prepayment of Notes pursuant to this Section 8, the principal
amount of each Note to be prepaid shall mature and become due and payable on the
date fixed for such prepayment, together with interest on such principal amount
accrued to such date and the applicable Make-Whole Amount, if any. From and
after such date, unless the Company shall fail to pay such principal amount when
so due and payable, together with the interest and Make-Whole Amount, if any, as
aforesaid, interest on such principal amount shall cease to accrue. Any Note
paid or prepaid in full shall be surrendered to the Company and cancelled and
shall not be reissued, and no Note shall be issued in lieu of any prepaid
principal amount of any Note. 

Section 8.6 Purchase of
Notes. The Company will not, and
will not permit any Affiliate to, purchase, redeem, prepay or otherwise acquire,
directly or indirectly, any of the outstanding Notes except (a) upon the payment
or prepayment of the Notes in accordance with the terms of this Agreement and
the Notes or (b) pursuant to an offer to purchase made by the Company or an
Affiliate pro rata to the holders of all Notes at the time
outstanding upon the same terms and conditions. Any such offer shall provide
each holder with sufficient information to enable it to make an informed
decision with respect to such offer, and shall remain open for at least 15
Business Days. If the holders of more than 50% of the principal amount of the
Notes then outstanding accept such offer, the Company shall promptly notify the
remaining holders of such fact and the expiration date for the acceptance by
holders of Notes of such offer shall be extended by the number of days necessary
to give each such remaining holder at least 10 Business Days from its receipt of
such notice to accept such offer. The Company will promptly cancel all Notes
acquired by it or any Affiliate pursuant to any payment, prepayment or purchase of Notes pursuant
to any provision of this Agreement and no Notes may be issued in substitution or
exchange for any such Notes.


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Section 8.7 Make-Whole
Amount for Notes. The term
“Make-Whole
Amount” shall mean, with respect
to any Note, an amount equal to the excess, if any, of the Discounted Value of
the Remaining Scheduled Payments with respect to the Called Principal of such
Note over the amount of such Called Principal, provided that the Make-Whole Amount may in no event be less than zero. For the
purposes of determining the Make-Whole Amount, the following terms have the
following meanings: 

“Called Principal”
shall mean, with respect to any
Note, the principal of such Note that is to be prepaid pursuant to
Section 8.3 or has become or is declared to be immediately
due and payable pursuant to Section 12.1, as the
context requires. 

“Discounted Value”
shall mean, with respect to the
Called Principal of any Note, the amount obtained by discounting all Remaining
Scheduled Payments with respect to such Called Principal from their respective
scheduled due dates to the Settlement Date with respect to such Called
Principal, in accordance with accepted financial practice and at a discount
factor (applied on the same periodic basis as that on which interest on the
Notes is payable) equal to the Reinvestment Yield with respect to such Called
Principal. 

“Reinvestment Yield”
shall mean, with respect to the
Called Principal of any Note, 0.50% over the yield to maturity implied by (a)
the ask side yield(s) reported, as of 10:00 a.m. (New York, New York time) on
the second Business Day preceding the Settlement Date with respect to such
Called Principal, on the display designated as “Page PX1” (or such other display
as may replace Page PX1) on the Bloomberg Financial Markets Services Screen) for
the most recently issued actively traded on the run U.S. Treasury securities
having a maturity equal to the Remaining Average Life of such Called Principal
as of such Settlement Date, or (b) if such yields are not reported as of such
time or the yields reported as of such time are not ascertainable (including by
way of interpolation), the Treasury Constant Maturity Series Yields reported,
for the latest day for which such yields have been so reported as of the second
Business Day preceding the Settlement Date with respect to such Called
Principal, in Federal Reserve Statistical Release H.15 (or any comparable
successor publication) for U.S. Treasury securities having a constant maturity
equal to the Remaining Average Life of such Called Principal as of such
Settlement Date. 

In the case of each
determination under clause (a) or clause (b), as the case may be, of the
preceding paragraph, such implied yield will be determined, if necessary, by (1)
converting U.S. Treasury bill quotations to bond-equivalent yields in accordance
with accepted financial practice and (2) interpolating linearly between (i) the
applicable U.S. Treasury security with the maturity closest to and greater than
such Remaining Average Life and (ii) the applicable U.S. Treasury security with
the maturity closest to and less than such Remaining Average Life. The
Reinvestment Yield shall be rounded to the number of decimal places as appears
in the interest rate of the applicable Note. 

-21- 







“Remaining Average
Life” shall mean, with respect to
any Called Principal, the number of years (calculated to the nearest one-twelfth
year) obtained by dividing (a) such Called Principal into (b) the sum of the
products obtained by multiplying (1) the principal component of each Remaining
Scheduled Payment with respect to such Called Principal by (2) the number of
years (calculated to the nearest one-twelfth year) that will elapse between the
Settlement Date with respect to such Called Principal and the scheduled due date
of such Remaining Scheduled Payment (assuming such Notes matured on December
21, 2045). 

“Remaining Scheduled
Payments” shall mean, with
respect to the Called Principal of any Note, all payments of such Called
Principal and interest thereon that would be due after the Settlement Date with
respect to such Called Principal if such Note matured on December
21, 2045
and if no
payment of such Called Principal were made prior to its scheduled due date,
provided that if such Settlement Date is not a date on
which interest payments are due to be made under the terms of the Notes, then
the amount of the next succeeding scheduled interest payment will be reduced by
the amount of interest accrued to such Settlement Date and required to be paid
on such Settlement Date pursuant to Section 8.3 or
Section 12.1. 

“Settlement
Date” shall mean, with respect to
the Called Principal of any Note, the date on which such Called Principal is to
be prepaid pursuant to Section
8.3 or has become or is declared
to be immediately due and payable pursuant to Section 12.1, as the context requires. 

Section 8.8 Offer to
Prepay upon Asset Disposition. 

(a)
Notice and Offer. In the event of
a Transfer where the Company has elected to apply all or a portion of the Net
Proceeds Amount of such Transfer as a Debt Prepayment Application pursuant to
Section 10.5(b), the Company shall, no later than the
305th day following the date of such Transfer, give written notice of
such event (an “Asset Disposition
Prepayment Event”) to each holder
of Notes. Such notice shall contain, and shall constitute, an irrevocable offer
to prepay a Ratable Portion of the Notes held by such holder on the date (which
shall be a Business Day) specified in such notice (the “Asset Disposition Prepayment
Date”) which date shall be not
less than 30 days and not more than 60 days after such notice. 

(b)
Acceptance and Payment. A holder
of Notes may accept or reject the offer to prepay pursuant to this
Section 8.8 by causing a notice of such acceptance or
rejection to be delivered to the Company at least 10 days prior to the Asset
Disposition Prepayment Date. A failure by a holder of the Notes to respond to an
offer to prepay made pursuant to this Section 8.8 shall be
deemed to constitute a rejection of such offer by such holder. If so accepted,
such offered prepayment in respect of the Ratable Portion of the Notes of each
holder that has accepted such offer shall be due and payable on the Asset
Disposition Prepayment Date. Such offered prepayment shall be made at 100% of
the aggregate Ratable Portion of the Notes of each holder that has accepted such
offer, together with interest on that portion of the Notes then being prepaid
accrued to the Asset Disposition Prepayment Date, but without any Make-Whole
Amount. If any holder of a Note rejects or
is deemed to have rejected such offer of prepayment, the Company may use the
Ratable Portion for such Note for general corporate purposes. 

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(c)
Officer’s Certificate. Each offer
to prepay the Notes pursuant to this Section 8.8 shall be
accompanied by a certificate, executed by a Senior Financial Officer and dated
the date of such offer, specifying: (1) the Asset Disposition Prepayment Date;
(2) that such offer is being made pursuant to this Section 8.8 and that the failure by a holder to respond to such offer by the
deadline established in Section
8.8(b) shall result in such offer
to such holder being deemed rejected; (3) the Ratable Portion of each such Note
offered to be prepaid; (4) the interest that would be due on the Ratable Portion
of each such Note offered to be prepaid, accrued to the Asset Disposition
Prepayment Date; (5) that the conditions of this Section 8.8 have been satisfied and (6) in reasonable detail, a description of the
nature and date of the Asset Disposition Prepayment Event giving rise to such
offer of prepayment. 

Section 8.9 Offer to Prepay in the Event of a
Change of Control. 

(a) Notice of Change of Control. The Company will, at least 30 days prior to any Change of Control, give
written notice of such Change of Control to each holder of the Notes. Such
notice shall contain and constitute an offer to prepay the Notes as described in
Section 8.9(c) and shall be accompanied by the certificate
described in Section 8.9(f). 

(b) Notice of Acceptance of Offer under Section 8.9(a). If the Company shall at any time receive an
acceptance to an offer to prepay Notes under Section 8.9(a) from some, but not all, of the holders of the
Notes, then the Company will, within two Business Days after the receipt of such
acceptance, give written notice of such acceptance to each other holder of the
Notes. 

(c) Offer to Prepay Notes. The
offer to prepay Notes contemplated by Section 8.9(a) shall be an
offer to prepay, in accordance with and subject to this Section 8.9, all, but not less than all, of the Notes held by each holder (in this
case only, “holder” in respect of any Note registered in the name of a nominee
for a disclosed beneficial owner shall mean such beneficial owner) at the time
of the occurrence of the Change of Control. 

(d) Rejection; Acceptance. A
holder of Notes may accept or reject the offer to prepay made pursuant to this
Section 8.9 by causing a notice of such acceptance or
rejection to be delivered to the Company prior to the prepayment date. A failure
by a holder of Notes to so respond to an offer to prepay made pursuant to this
Section 8.9(d) shall be deemed to constitute an acceptance of
such offer by such holder. 

(e) Prepayment. Prepayment of
the Notes to be prepaid pursuant to this Section 8.9 shall be at
100% of the principal amount of such Notes, together with interest on such Notes
accrued to the date of prepayment, but without any Make-Whole Amount. The
prepayment shall be made at the time of occurrence of a Change of Control.


(f) Officer’s Certificate. Each offer to prepay the Notes pursuant to this Section 8.9 shall be accompanied by a certificate, executed by a Responsible Officer
of the Company and dated the date of such
offer, specifying (i) the proposed prepayment date (which shall be the date of
the Change of Control), (ii) that such offer is made pursuant to this
Section 8.9, (iii) the principal amount of each Note offered
to be prepaid, (iv) the interest that would be due on each Note offered to be
prepaid, accrued to the prepayment date, (v) that the conditions of this
Section 8.9 have been fulfilled, and (vi) in reasonable
detail, the nature and anticipated date of the Change of Control.


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SECTION 9.
AFFIRMATIVE COVENANTS. 

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

Section 9.1 Compliance with Laws. Without limiting Section 10.13, the Company will, and will cause each of its
Subsidiaries to, comply with all laws, ordinances or governmental rules or
regulations to which each of them is subject, including, without limitation,
ERISA, Environmental Laws, the USA PATRIOT Act and the other laws and
regulations that are referred to in Section 5.16, and will
obtain and maintain in effect all licenses, certificates, permits, franchises
and other governmental authorizations necessary to the ownership of their
respective properties or to the conduct of their respective businesses, in each
case to the extent necessary to ensure that non-compliance with such laws,
ordinances or governmental rules or regulations or failures to obtain or
maintain in effect such licenses, certificates, permits, franchises and other
governmental authorizations would not reasonably be expected, individually or in
the aggregate, to have a Material Adverse Effect. 

Section 9.2
Insurance. The Company will, and
will cause each of its Restricted Subsidiaries to, maintain, with financially
sound and reputable insurers, insurance with respect to their respective
properties and businesses against such casualties and contingencies, of such
types, on such terms and in such amounts (including deductibles, co-insurance
and self-insurance, if adequate reserves are maintained with respect thereto) as
is customary in the case of entities of established reputations engaged in the
same or a similar business and in the same industry and similarly situated.


Section 9.3 Maintenance
of Properties. The Company will,
and will cause each of its Restricted Subsidiaries to, maintain and keep, or
cause to be maintained and kept, their respective properties in good repair,
working order and condition (other than ordinary wear and tear), so that the
business carried on in connection therewith may be properly conducted at all
times, provided that this Section shall not prevent the Company
or any Restricted Subsidiary from discontinuing the operation and the
maintenance of any of its properties if such discontinuance is desirable in the
conduct of its business and the Company has concluded that such discontinuance
would not reasonably be expected, individually or in the aggregate, to have a
Material Adverse Effect. 

Section 9.4 Payment of
Taxes and Claims. The Company
will, and will cause each of its Subsidiaries to, file all income tax or similar
tax returns required to be filed in any jurisdiction and to pay and discharge
all taxes shown to be due and payable on such returns and all other taxes,
assessments, governmental charges or levies payable by any of them, to the
extent the same have become due and payable and before they have become
delinquent, provided that neither the Company nor any Subsidiary need pay
any such tax, assessment, governmental charge or levy if (1) the amount,
applicability or validity thereof is contested by the Company or such Subsidiary
on a timely basis in good faith and in appropriate proceedings, and the Company
or a Subsidiary has established adequate reserves therefor in accordance with
GAAP on the books of the Company or such Subsidiary or (2) the nonpayment of all
such taxes, assessments, governmental charges and levies in the aggregate would
not reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect. 

-24- 







Section 9.5 Corporate
Existence, Etc. Subject to
Section 10.6, the Company will at all times preserve and keep
in full force and effect its corporate existence. Subject to Sections 10.5, 10.6 and 10.7, the Company will at all times preserve and keep in full force and
effect the corporate existence of each of its Restricted Subsidiaries (unless
merged into the Company or a Wholly-Owned Restricted Subsidiary) and all rights
and franchises of the Company and its Restricted Subsidiaries unless, in the
good faith judgment of the Company, the termination of or failure to preserve
and keep in full force and effect such corporate existence, right or franchise
would not reasonably be expected, individually or in the aggregate, to have a
Material Adverse Effect. 

Section 9.6 Regulated
Nature. The Company will at all
times be and remain a Person that is subject under law to regulation by a public
utility commission or other governmental regulatory body with oversight
responsibilities for utilities. 

SECTION 10. NEGATIVE
COVENANTS. 

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

Section 10.1
[Reserved].

Section 10.2
Liens. The Company will not, and
will not permit any of its Restricted Subsidiaries to, directly or indirectly
create, incur, assume or permit to exist (upon the happening of a contingency or
otherwise) any Lien on or with respect to any property or asset (including,
without limitation, any document or instrument in respect of goods or accounts
receivable) of the Company or any such Restricted Subsidiary, whether now owned
or held or hereafter acquired, or any income or profits therefrom, or assign or
otherwise convey any right to receive income or profits, except: 

(a) Liens for taxes,
assessments or other governmental charges which are not yet due and payable or
the payment of which is not at the time required by Section 9.4; 

(b) statutory Liens of
landlords and Liens of carriers, warehousemen, mechanics, materialmen and other
similar Liens, in each case, incurred in the ordinary course of business for
sums not yet due and payable or the payment of which is not at the time required
by Section 9.4; 

(c) Liens (other than any
Lien imposed by ERISA) incurred or deposits made in the ordinary course of
business in connection with workers’ compensation, unemployment insurance and other types of social security or retirement
benefits, or to secure (or to obtain letters of credit that secure) the
performance of tenders, statutory obligations, surety bonds, appeal bonds, bids,
leases (other than Capital Leases), performance bonds, purchase, construction or
sales contracts, and other similar obligations, in each case not incurred or
made in connection with the borrowing of money, the obtaining of advances or
credit or the payment of the deferred purchase price of property;


-25- 







(d) subject to
Section 11(k), any attachment or judgment Lien, unless the
judgment it secures shall not, within 30 days after the entry thereof, have been
discharged or execution thereof stayed pending appeal, or shall not have been
discharged within 30 days after the expiration of any such stay; 

(e) leases or subleases
granted to others, easements, rights-of-way, restrictions and other similar
charges or encumbrances or minor survey exceptions, in each case incidental to,
and not interfering with, the ordinary conduct of the business of the Company or
any of its Restricted Subsidiaries, provided that such Liens
do not, in the aggregate, materially detract from the value of such property;


(f) Liens on property or
assets of any Restricted Subsidiary securing Debt owing to the Company or to a
Wholly-Owned Restricted Subsidiary; 

(g) Liens existing on the
date of the Closing and described on Schedule 5.15 hereto
(other than Liens on “Excepted
Property” of the Company as
defined in the Mortgage Indenture as in effect on the date of the Closing);


(h) Liens on accounts
receivable owned by Securitization Subsidiaries that are Restricted Subsidiaries
and incurred pursuant to Receivables Securitization Transactions; 

(i) any Lien created to
secure all or any part of the purchase price, or to secure Debt incurred or
assumed to pay all or any part of the purchase price or cost of construction, of
property (or any improvement thereon) acquired or constructed by the Company or
a Restricted Subsidiary after the date of the Closing, provided that: 

(1) any such Lien shall
extend solely to the item or items of such property (or improvement thereon) so
acquired or constructed and, if required by the terms of the instrument
originally creating such Lien, other property (or improvement thereon) which is
an improvement to or is acquired for specific use in connection with such
acquired or constructed property (or improvement thereon) or which is real
property being improved by such acquired or constructed property (or improvement
thereon); 

(2) the principal amount of
the Debt secured by any such Lien shall at no time exceed an amount equal to the
lesser of (i) the cost to the Company or such Restricted Subsidiary of the
property (or improvement thereon) so acquired or constructed and (ii) the Fair
Market Value (as determined in good faith by one or more officers of the
Company to whom authority to enter into the subject transaction has been
delegated by the board of directors of the Company) of such property (or
improvement thereon) at the time of such acquisition or construction; and 

-26- 








(3) any such Lien shall be
created contemporaneously with, or within 180 days after, the acquisition or
construction of such property; 

(j) any Lien existing on
property of a Person immediately prior to its being consolidated with or merged
into the Company or a Restricted Subsidiary or its becoming a Subsidiary, or any
Lien existing on any property acquired by the Company or any Restricted
Subsidiary at the time such property is so acquired (whether or not the Debt
secured thereby shall have been assumed), provided that (1) no such
Lien shall have been created or assumed in contemplation of such consolidation
or merger or such Person becoming a Subsidiary or such acquisition of property,
and (2) each such Lien shall extend solely to the item or items of property so
acquired and, if required by the terms of the instrument originally creating
such Lien (i) other property which is an improvement to or is acquired for
specific use in connection with such acquired property or (ii) other property
that does not constitute property or assets of the Company or any of its
Restricted Subsidiaries; 

(k) Liens on assets of the
Company (other than Liens on “Excepted Property” as defined in the Mortgage
Indenture as in effect on the date of the Closing) which Liens secure Debt
outstanding as of the date of the Closing under the Mortgage Indenture and any
additional Debt that is issued in accordance with Article Two of the Mortgage
Indenture (as in effect on the date of the Closing); provided that such additional Debt shall not contain covenants, defaults and
other terms and conditions more restrictive than or in addition to those
contained in this Agreement; 

(l) any Lien renewing,
extending or refunding any Lien permitted by paragraphs (g), (i), (j) or (k) of
this Section 10.2, provided that (1) the
principal amount of Debt secured by such Lien immediately prior to such
extension, renewal or refunding is not increased or the maturity thereof
reduced, (2) such Lien is not extended to any other property and (3) immediately
after such extension, renewal or refunding no Default or Event of Default would
exist; and 

(m) other Liens not
otherwise permitted by paragraphs (a) through (l), inclusive, of this
Section 10.2 securing Debt. 

Section 10.3 Restricted
Payments. (a) The Company will
not, and will not permit any Restricted Subsidiary to, declare or make or incur
any liability to declare or make any Restricted Payment unless immediately after
giving effect to such action no Default or Event of Default would exist.


(b) The Company will not,
and will not permit any Restricted Subsidiary to, declare a Restricted Payment
that is not payable within 60 days of such declaration. 

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Section 10.4
Restrictions on Dividends of Subsidiaries, Etc. The Company will not, and will not permit any
Subsidiary to, enter into any agreement which would restrict any Restricted
Subsidiary’s ability or right to pay dividends to, or make advances to or
investments in, the Company or, if such Restricted Subsidiary is not directly
owned by the Company, the “parent” Restricted Subsidiary of such Restricted
Subsidiary; provided that the
foregoing shall not apply to restrictions and conditions imposed by law or this
Agreement, any Existing Note Purchase Agreement, any Bank Credit Agreement or
the Mortgage Indenture (in each case, as in effect on the date of Closing).


Section 10.5 Sale of
Assets, Etc. (a) Except as
permitted under Section 10.6
and Section 10.7, the Company will not, and will not permit any of
its Restricted Subsidiaries to, make any Asset Disposition unless: 

(1) in the good faith
opinion of the Company, the Asset Disposition is in the best interest of the
Company or such Restricted Subsidiary; 

(2) immediately after
giving effect to the Asset Disposition, no Default or Event of Default would
exist; and 

(3) immediately after
giving effect to the Asset Disposition the Disposition Value of all property
that was the subject of any Asset Disposition occurring in the immediately
preceding 12 consecutive month period would not exceed 10% of Consolidated
Tangible Assets as of the end of the then most recently ended fiscal year of the
Company. 

(b) If the Net Proceeds
Amount for any Transfer is, within 365 days after such Transfer, (1) applied to
a Debt Prepayment Application, (2) applied to or would otherwise constitute a
Property Reinvestment Application or (3) applied to any combination of the
foregoing clauses (1) and (2), then such Transfer, only for the purpose of
determining compliance with subsection (3) of Section 10.5(a) as of a date on or after the Net Proceeds Amount
is so applied, shall be deemed not to be an Asset Disposition. 

(c) Notwithstanding the
foregoing, the sale of accounts receivable to a Securitization Subsidiary in
connection with a Receivables Securitization Transaction shall not be considered
an Asset Disposition for purposes of this Section 10.5;
provided, that, to the extent any such sale results in the
aggregate amount of Debt of all Securitization Subsidiaries under all
Receivables Securitization Transactions being in excess of $100,000,000, the
Company shall treat that portion of such sale resulting in the aggregate amount
of Debt of all Securitization Subsidiaries under all Receivables Securitization
Transactions being in excess of $100,000,000 as an Asset Disposition subject to
this Section 10.5 without application of this clause (c).



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Section 10.6 Merger,
Consolidation, Etc. The Company
will not, and will not permit any Restricted Subsidiary to, consolidate with or
merge with any other Person or convey, transfer or lease all or substantially
all of its assets in a single transaction or series of transactions to any
Person (except that a Restricted Subsidiary may (x) consolidate with or merge
with, or convey, transfer or lease all or substantially all of its assets in a
single transaction or series of transactions to, the Company or another Restricted Subsidiary or any other Person so
long as such Restricted Subsidiary is the surviving Person and (y) convey,
transfer or lease all of its assets in compliance with the provisions of
Section 10.5 or 10.7), provided that the foregoing restriction does not apply to the consolidation or
merger of the Company with, or the conveyance, transfer or lease of all or
substantially all of the assets of the Company in a single transaction or series
of transactions to, any Person so long as: 

(a) the successor formed by
such consolidation or the survivor of such merger or the Person that acquires by
conveyance, transfer or lease all or substantially all of the assets of the
Company as an entirety, as the case may be (the “Successor Corporation”), shall be a solvent Person organized and
existing under the laws of the United States or any State thereof (including the
District of Columbia); 

(b) if the Company is not
the Successor Corporation, (1) such Person shall have executed and delivered to
each holder of the Notes its assumption of the due and punctual performance and
observance of each covenant and condition of this Agreement and the Notes and
the Mortgage Indenture (including the Supplemental Indenture), the First
Mortgage Bond Documents to which it is a party and the First Mortgage Bonds
(pursuant to such agreements or instruments as shall be reasonably satisfactory
to the Required Holders), and (2) such Person shall have caused to be delivered
to each holder of the Notes an opinion of nationally recognized independent
counsel, or other independent counsel reasonably satisfactory to the Required
Holders, to the effect that all agreements or instruments effecting such
assumption are enforceable in accordance with their terms and comply with the
terms hereof; and 

(c) immediately after
giving effect to such transaction, no Default or Event of Default would exist.


No such conveyance,
transfer or lease of all or substantially all of the assets of the Company shall
have the effect of releasing the Company or any Successor Corporation that shall
theretofore have become such in the manner prescribed in this Section 10.6 from its liability under this Agreement or the
Notes or the Mortgage Indenture (including the Supplemental Indenture), the
First Mortgage Bond Documents to which it is a party or the First Mortgage
Bonds. 

Section 10.7 Disposal of
Ownership of a Restricted
Subsidiary. The Company will not, and will not permit any
Restricted Subsidiary to, sell or otherwise dispose of any shares of Restricted
Subsidiary Stock, nor will the Company permit any such Restricted Subsidiary to
issue, sell or otherwise dispose of any shares of its own Restricted Subsidiary
Stock, provided that the foregoing restrictions do not apply to:


(a) the issue of directors’
qualifying shares by any such Restricted Subsidiary; 

(b) any such Transfer of
Restricted Subsidiary Stock constituting a Transfer described in clause (a) of
the definition of “Asset Disposition”; and 

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(c) the Transfer of the
Restricted Subsidiary Stock of a Restricted Subsidiary owned by the Company and
its other Subsidiaries; provided
that such Transfer satisfies the
requirements of Section
10.5. 

Section 10.8 Limitations
on Subsidiaries, Partnerships and Joint Ventures. The Company will not, and will not permit any of
its Restricted Subsidiaries to, own or create directly or indirectly any
Subsidiaries without the prior written consent of the Required Holders other
than one or more Securitization Subsidiaries in connection with a transaction
permitted under Section 10.5(c). The Company shall not, and
shall not permit any Restricted Subsidiary to, become or agree to become (a) a
general or limited partner in any general or limited partnership, except that
the Company may be a general or limited partner in any Subsidiary and any
Restricted Subsidiary may be a general or limited partner in any other
Subsidiary and except that the Company and its Restricted Subsidiaries may be a
limited partner in a Permitted Related Business Opportunity, (b) a member or
manager of, or hold a limited liability company interest in, a limited liability
company, except that the Company may be a member or manager of, or hold limited
liability company interests in, its Subsidiaries and Restricted Subsidiaries may
be members or managers of, or hold limited liability company interests in, other
Subsidiaries and except that the Company and its Restricted Subsidiaries may be
members or managers of, or hold limited liability company interests in a
Permitted Related Business Opportunity or (c) a joint venturer or hold a joint
venture interest in any joint venture, except that the Company and its
Restricted Subsidiaries may become a joint venturer in or hold a joint venture
interest in any joint venture that is a Permitted Related Business Opportunity.


Section 10.9 Limitation
on Certain Leases. The Company
will not, and will not permit any of its Restricted Subsidiaries to, engage in
any off-balance sheet transaction (i.e., the liabilities in
respect of which do not appear on the liability side of the balance sheet, with
such balance sheet prepared in accordance with GAAP) providing the functional
equivalent of borrowed money (including asset securitizations, sale/leasebacks
or Synthetic Leases (other than any sale/leaseback transaction or Synthetic
Lease entered into, in either case, with respect to meter assets and which
transaction is otherwise permitted by this Agreement)) with liabilities in
excess, in the aggregate for the Company and its Restricted Subsidiaries as of
any date of determination, of 5% of the Consolidated Tangible Assets.


For purposes of this
Section 10.9, the amount of any lease which is not a Capital
Lease is the aggregate amount of minimum lease payments due pursuant to such
lease for any non-cancelable portion of its term. 

Section 10.10 Nature of
Business. The Company will not,
and will not permit any of its Restricted Subsidiaries to, engage in any
business if, as a result, the general nature of the business in which the
Company and its Restricted Subsidiaries, taken as a whole, would then be engaged
would be substantially and materially changed from the general nature of the
business in which the Company and its Restricted Subsidiaries are engaged on the
date of this Agreement. 

Section 10.11
Transactions with Affiliates.
Except in the case of a Permitted Related Business Opportunity, the Company will
not, and will not permit any Restricted Subsidiary to, enter into, directly or
indirectly, any Material transaction or group of related transactions (including, without limitation, the purchase,
lease, sale or exchange of properties of any kind or the rendering of any
service) with any Affiliate (other than the Company or a Restricted Subsidiary),
except in the ordinary course and pursuant to the reasonable requirements of the
Company’s or such Restricted Subsidiary’s business and upon fair and reasonable
terms no less favorable to the Company or such Restricted Subsidiary than would
be obtainable in a comparable arm’s-length transaction with a Person not an
Affiliate. 

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Section 10.12
Designation of Restricted and Unrestricted Subsidiaries. The Company may designate any Subsidiary to be a
Restricted Subsidiary and may designate any Restricted Subsidiary to be an
Unrestricted Subsidiary by giving written notice to each holder of Notes that
the Board of Directors of the Company has made such designation, provided, however, that no Subsidiary may be designated a Restricted
Subsidiary and no Restricted Subsidiary may be designated an Unrestricted
Subsidiary unless, at the time of such action and after giving effect thereto,
(a) solely in the case of a Restricted Subsidiary being designated an
Unrestricted Subsidiary, such Restricted Subsidiary being designated an
Unrestricted Subsidiary shall not have any continuing Investment in the Company
or any other Restricted Subsidiary and (b) no Default or Event of Default shall
have occurred and be continuing. Any Restricted Subsidiary which has been
designated an Unrestricted Subsidiary and which has then been redesignated a
Restricted Subsidiary, in each case in accordance with the provisions of the
first sentence of this Section
10.12, shall not at any time
thereafter be redesignated an Unrestricted Subsidiary without the prior written
consent of the Required Holders. Any Unrestricted Subsidiary which has been
designated a Restricted Subsidiary and which has then been redesignated an
Unrestricted Subsidiary, in each case in accordance with the provisions of the
first sentence of this Section
10.12, shall not at any time
thereafter be redesignated a Restricted Subsidiary without the prior written
consent of the Required Holders. 

Section 10.13 Terrorism Sanctions
Regulations. The Company will not
and will not permit any Controlled Entity (a) to become (including by virtue of
being owned or controlled by a Blocked Person), own or control a Blocked Person
or any Person that is the target of sanctions imposed by the United Nations or
by the European Union, or (b) directly or indirectly to have any investment in
or engage in any dealing or transaction (including, without limitation, any
investment, dealing or transaction involving the proceeds of the Notes) with any
Person if such investment, dealing or transaction (i) would cause any holder to
be in violation of any law or regulation applicable to such holder, or (ii) is
prohibited by or subject to sanctions under any U.S. Economic Sanctions, or (c)
to engage, nor shall any Affiliate of either engage, in any activity that could
subject such Person or any holder to sanctions under CISADA or any similar law
or regulation with respect to Iran or any other country that is subject to U.S.
Economic Sanctions. 

-31- 







SECTION 11.
EVENTS OF
DEFAULT. 

An “Event of Default” shall exist if any of the following conditions or
events shall occur and be continuing: 

(a) the Company defaults in
the payment of any principal or Make-Whole Amount on any Note when the same
becomes due and payable, whether at maturity or at a date fixed for prepayment
or by declaration or otherwise; or 

(b) the Company defaults in
the payment of any interest on any Note for more than five (5) Business Days
after the same becomes due and payable; or 

(c) the Company defaults in
the performance of or compliance with any term contained in Section 9.6, Section 10.2 through Section 10.9, inclusive,
or Section 10.13; or 

(d) the Company defaults in
the performance of or compliance with any term contained herein (other than
those referred to in paragraphs (a), (b) and (c) of this Section 11) and such default is not remedied within 30 days after the earlier of
(1) a Responsible Officer obtaining actual knowledge of such default and (2) the
Company receiving written notice of such default from any holder of a Note (any
such written notice to be identified as a “notice of default” and to refer
specifically to this paragraph (d) of Section 11); or


(e) any representation or
warranty made in writing by or on behalf of the Company or by any officer of the
Company in this Agreement or in the Mortgage Indenture (including the
Supplemental Indenture) or in any writing furnished in connection with the
transactions contemplated hereby or thereby proves to have been false or
incorrect in any material respect on the date as of which made; or 

(f) (1) the Company or any
Significant Subsidiary is in default (as principal or as guarantor or other
surety) in the payment of any principal of or premium or make-whole amount or
interest on any Debt that is outstanding in an aggregate principal amount of at
least $30,000,000 beyond any period of grace provided with respect thereto or
(2) the Company or any Significant Subsidiary is in default in the performance
of or compliance with any term of any evidence of any Debt in an aggregate
outstanding principal amount of at least $30,000,000 or of any mortgage,
indenture or other agreement relating thereto or any other condition exists, and
as a consequence of such default or condition such Debt has become, or has been
declared (or one or more Persons are entitled to declare such Debt to be), due
and payable before its stated maturity or before its regularly scheduled dates
of payment or (3) as a consequence of the occurrence or continuation of any
event or condition (other than the passage of time or the right of the holder of
Debt to convert such Debt into equity interests), (i) the Company or any
Significant Subsidiary has become obligated to purchase or repay Debt before its
regular maturity or before its regularly scheduled dates of payment in an
aggregate outstanding  principal amount
of at least $30,000,000 or (ii) one or more Persons have the right to require
the Company or any Significant Subsidiary so to purchase or repay such Debt; or


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(g) an “Event of Default”
under the Mortgage Indenture shall have occurred and be continuing;
provided, however, that anything in this Agreement to the contrary
notwithstanding, the waiver or cure of such default under the Mortgage Indenture
and the rescission and annulment of the consequences thereof under the Mortgage
Indenture shall constitute a waiver of the corresponding Event of Default
hereunder and a rescission and annulment of the consequences thereof hereunder;
or 

(h) the Company or any
Significant Subsidiary is in default under the terms of any agreement involving
any off-balance sheet transaction (including any asset securitization,
sale/leaseback transaction or Synthetic Lease) with obligations in the aggregate
thereunder for which the Company or any Significant Subsidiary may be obligated
in an amount in excess of $30,000,000, and such breach, default or event of
default consists of the failure to pay (beyond any period of grace permitted
with respect thereto) any obligation when due (whether at stated maturity, by
acceleration or otherwise) or if such breach or default permits or causes the
acceleration of any obligation or the termination of such agreement; or


(i) the Company or any
Significant Subsidiary (1) is generally not paying, or admits in writing its
inability to pay, its debts as they become due, (2) files, or consents by answer
or otherwise to the filing against it of, a petition for relief or
reorganization or arrangement or any other petition in bankruptcy, for
liquidation or to take advantage of any bankruptcy, insolvency, reorganization,
moratorium or other similar law of any jurisdiction, (3) makes an assignment for
the benefit of its creditors, (4) consents to the appointment of a custodian,
receiver, trustee or other officer with similar powers with respect to it or
with respect to any substantial part of its property, (5) is adjudicated as
insolvent or to be liquidated or (6) takes corporate action for the purpose of
any of the foregoing; or 

(j) a court or other
Governmental Authority of competent jurisdiction enters an order appointing,
without consent by the Company or any of its Significant Subsidiaries, a
custodian, receiver, trustee or other officer with similar powers with respect
to it or with respect to any substantial part of its property, or constituting
an order for relief or approving a petition for relief or reorganization or any
other petition in bankruptcy or for liquidation or 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 of its Significant Subsidiaries,
or any such petition shall be filed against the Company or any of its
Significant Subsidiaries and such petition shall not be dismissed within 60
days; or 

(k) a final judgment or
judgments for the payment of money aggregating in excess of $30,000,000
(exclusive of amounts fully covered by valid and collectible insurance in
respect thereof subject to customary deductibles) are rendered against one or
more of the Company and its Significant Subsidiaries and which judgments are
not, within 45 days after entry thereof (or
such shorter period as judgment creditors are stayed pursuant to applicable law
from executing on such judgment or judgments), bonded, discharged or stayed
pending appeal, or are not discharged within 45 days after the expiration of
such stay (or such shorter period as judgment creditors are stayed pursuant to
applicable law from executing on such judgment or judgments); or


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(l) if (1) any Plan shall
fail to satisfy the minimum funding standards of Title IV of ERISA or the Code
for any plan year or part thereof or a waiver of such standards is sought or
granted under section 412 of the Code, (2) a notice of intent to terminate any
Plan on other than a standard basis shall have been or is reasonably expected to
be filed with the PBGC or the PBGC shall have instituted proceedings under
section 4042 of ERISA to terminate or appoint a trustee to administer any Plan
or the PBGC shall have notified the Company or any ERISA Affiliate that a Plan
may become a subject of any such proceedings, (3) the present value of the
aggregate “amount of unfunded benefit liabilities” within the meaning of section
4001(a)(18) of ERISA under all Plans (determined in accordance with Title IV of
ERISA as of the end of the most recent Plan year on the basis of the actuarial
assumptions specified for funding purposes in the most recent actuarial
valuation), shall exceed the aggregate actuarial value of their assets by an
amount equal to 10% of Consolidated Tangible Net Worth, (4) the Company or any
ERISA Affiliate shall have incurred or is reasonably expected to incur any
liability pursuant to Title I or IV of ERISA or the penalty or excise tax
provisions of the Code relating to employee benefit plans, (5) the Company or
any ERISA Affiliate withdraws from any Multiemployer Plan or (6) the Company or
any Subsidiary establishes or amends any employee welfare benefit plan that
provides post-employment welfare benefits in a manner that would increase the
liability of the Company or any Subsidiary thereunder; and any such event or
events described in clauses (1) through (6) above, either individually or
together with any other such event or events, would reasonably be expected to
have a Material Adverse Effect. 

As used in Section 11(l), the terms “employee benefit plan” and “employee
welfare benefit plan” shall have 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 respect to the Company described in paragraph (i) or (j) of
Section 11 (other than an Event of Default described in
clause (1) of paragraph (i) or described in clause (6) of paragraph (i) by
virtue of the fact that such clause encompasses clause (1) of paragraph (i)) has
occurred, all the Notes then outstanding shall automatically become immediately
due and payable. 

(b) If any other Event of
Default has occurred and is continuing, the Required Holders may at any time at
its or their option, by notice or notices to the Company, declare all the Notes
then outstanding to be immediately due and payable. 

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


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Upon any Note becoming due
and payable under this Section
12.1, whether automatically or by
declaration, such Note will forthwith mature and the entire unpaid principal
amount of such Note, plus (1) all accrued and unpaid interest thereon and (2)
the Make-Whole Amount, if any, determined in respect of such principal amount
(to the full extent permitted by applicable law) shall all be immediately due
and payable, in each and every case without presentment, demand, protest or
further notice, all of which are hereby waived. The Company acknowledges, and
the parties hereto agree, that each holder of a Note has the right to maintain
its investment in the Notes free from repayment by the Company (except as herein
specifically provided for), and that the provision for payment of the Make-Whole
Amount by the Company in the event that the Notes are prepaid or are accelerated
as a result of an Event of Default, is intended to provide compensation for the
deprivation of such right under such circumstances. 

Section 12.2 Other
Remedies. (a) If any Default or
Event of Default has occurred and is continuing, and irrespective of whether any
Notes have become or have been declared immediately due and payable under
Section 12.1, the holder of any Note at the time outstanding
may proceed to protect and enforce the rights of such holder by an action at
law, suit in equity or other appropriate proceeding, whether for the specific
performance of any agreement contained herein or in any Note, or for an
injunction against a violation of any of the terms hereof or thereof, or in aid
of the exercise of any power granted hereby or thereby or by law or otherwise.


(b) If any Event of Default
has occurred and is continuing and the Notes then outstanding have become due
and payable pursuant to Section
12.1, the holders of the Notes
may immediately proceed to exercise their rights pursuant to section 10.29 of
the Mortgage Indenture (added by section 3.1 of the Supplemental Indenture) and
section 10.31 of the Mortgage Indenture (added by section 5.1 of the
Supplemental Indenture), as the case may be, to require the redemption of the
First Mortgage Bonds and, upon any failure of the Company to so redeem the First
Mortgage Bonds, to exercise all rights as beneficial owners of the First
Mortgage Bonds under the Mortgage Indenture. 

Section 12.3
Rescission. At any time after any
Notes have been declared due and payable pursuant to clause (b) or (c) of
Section 12.1, the Required Holders, by written notice to the
Company, may rescind and annul any such declaration and its consequences if (a)
the Company has paid all overdue interest on the Notes, all principal of and
Make-Whole Amount, if any, on any Notes that are due and payable and are unpaid
other than by reason of such declaration, and all interest on such overdue
principal and Make-Whole Amount, if any, and (to the extent permitted by
applicable law) any overdue interest in respect of the Notes, at the Default
Rate, (b) neither the Company nor any other Person shall have paid any amounts
which have become due solely by reason of such declaration, (c) all Events of
Default and Defaults, other than non-payment of amounts that have become due
solely by reason of such declaration, have been cured or have been waived
pursuant to Section
17 and (d) no judgment or decree
has been entered for the payment of any monies due pursuant hereto or to the
Notes. No rescission and annulment under this Section 12.3 will extend to or affect any subsequent Event of
Default or Default or impair any right consequent thereon. 

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Section 12.4 No Waivers
or Election of Remedies, Expenses, Etc. No course of dealing and no delay on the part of any holder of any Note
in exercising any right, power or remedy shall operate as a waiver thereof or
otherwise prejudice such holder’s rights, powers or remedies. No right, power or
remedy conferred by this Agreement or by any Note upon any holder thereof shall
be exclusive of any other right, power or remedy referred to herein or therein
or now or hereafter available at law, in equity, by statute or otherwise.
Without limiting the obligations of the Company under Section 15, the Company will pay to the holder of each Note on demand such further
amount as shall be sufficient to cover all costs and expenses of such holder
incurred in any enforcement or collection under this Section 12, including, without limitation, reasonable attorneys’ fees, expenses and
disbursements. 

SECTION 13.
REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES. 

Section 13.1
Registration of Notes. The
Company shall cause its transfer agent to keep at its office designated pursuant
to Section 13.2 a register for the registration and registration
of transfers of Notes. The name and address of each holder of one or more Notes,
each transfer thereof and the name and address of each transferee of one or more
Notes shall be registered in such register. If any holder of one or more Notes
is a nominee, then (a) the name and address of the beneficial owner of such Note
or Notes shall also be registered in such register as an owner and holder
thereof and (b) at any such beneficial owner’s option, either such beneficial
owner or its nominee may execute any amendment, waiver or consent pursuant to
this Agreement. Prior to due presentment for registration of transfer, the
Person(s) in whose name any Note(s) shall be registered shall be deemed and
treated as the owner and holder thereof for all purposes hereof, and the Company
shall not be affected by any notice or knowledge to the contrary. The Company
shall give to any holder of a Note that is an Institutional Investor promptly
upon request therefor, a complete and correct copy of the names and addresses of
all registered holders of Notes. 

Section 13.2 Transfer
and Exchange of Notes. Upon
surrender of any Note at the corporate trust office of the Company’s transfer
agent, U.S. Bank National Association by mail at U.S. Bank Global Corporate
Trust Services, Attention: Transfers — EP-MN-WS2N, 60 Livingston Avenue, St.
Paul, Minnesota 55107-2292 or by hand at U.S. Bank Global Corporate Trust
Services, Attention: Transfers, 1st Floor, 60 Livingston Avenue, St. Paul,
Minnesota 55107-2292, or at such other addresses as may be provided in writing
to the holders of the Notes, for registration of transfer or exchange (and in
the case of a surrender for registration of transfer, duly endorsed or
accompanied by a written instrument of transfer duly executed by the registered
holder of such Note or its attorney duly authorized in writing and accompanied
by the address for notices of each transferee of such Note or part thereof),
within 10 Business Days thereafter, the Company shall execute and deliver, at
the Company’s expense (except as provided below), one or more new Notes (as
requested by the holder thereof) in exchange therefor, in an aggregate principal
amount equal to the unpaid principal amount of the surrendered Note. Each such
new Note shall be payable to such Person as such holder may request and shall be
substantially in the form of Exhibit 1. Each such new
Note shall be dated and bear interest from the date to which interest shall have
been paid on the surrendered Note or dated the date of the surrendered Note if
no interest shall have been paid thereon. The Company may require payment of a
sum sufficient to cover any stamp tax or governmental charge imposed in respect of any such transfer of Notes. Notes
shall not be transferred in denominations of less than $100,000, provided that if necessary to enable the registration of transfer by a holder of
its entire holding of Notes, one Note may be in a denomination of less than
$100,000. Any transferee, by its acceptance of a Note registered in its name (or
the name of its nominee), shall be deemed to have made the representation set
forth in Section
6.2. 

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


(a) in the case of loss,
theft or destruction, of indemnity reasonably satisfactory to it
(provided that if the holder of such Note is, or is a
nominee for, an original Purchaser or another holder of a Note with a minimum
net worth of at least $50,000,000, such Person’s own unsecured agreement of
indemnity shall be deemed to be satisfactory), or 

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

within 10 Business Days
thereafter, the Company at its own expense shall execute and deliver, in lieu
thereof, a new Note, dated and bearing interest from the date to which interest
shall have been paid on such lost, stolen, destroyed or mutilated Note or dated
the date of such lost, stolen, destroyed or mutilated Note if no interest shall
have been paid thereon. 

SECTION 14.
PAYMENTS ON
NOTES. 

Section 14.1 Place of
Payment. Subject to
Section 14.2, payments of principal, Make-Whole Amount, if
any, and interest becoming due and payable on the Notes shall be made in New
York, New York at the principal office of U.S. Bank National Association in such
jurisdiction. The Company may at any time, by notice to each holder of a Note,
change the place of payment of the Notes so long as such place of payment shall
be either the principal office of the Company in such jurisdiction or the
principal office of a bank or trust company in such jurisdiction. 

Section 14.2 Home Office
Payment. So long as any Purchaser
or its nominee shall be the holder of any Note, and notwithstanding anything
contained in Section 14.1
or in such Note to the contrary,
the Company will pay all sums becoming due on such Note for principal,
Make-Whole Amount, if any, interest and all other amounts due hereunder by the
method and at the address specified for such purpose below such Purchaser’s name
in Schedule A, or by such other method or at such other address
as such Purchaser shall have from time to time specified to the Company in
writing for such purpose, without the presentation or surrender of such Note or
the making of any notation thereon, except that upon written request of the
Company made concurrently with or reasonably promptly after payment or
prepayment in full of any Note, such Purchaser shall surrender such Note for
cancellation, reasonably promptly after any such request, to the Company at its
principal executive office or at the place of payment most recently designated
by the Company pursuant to Section
14.1. Prior to any sale or other
disposition of any Note held by any
Purchaser or its nominee such Purchaser will, at its election, either endorse
thereon the amount of principal paid thereon and the last date to which interest
has been paid thereon or surrender such Note to the Company in exchange for a
new Note or Notes pursuant to Section 13.2. The Company
will afford the benefits of this Section 14.2 to any
Institutional Investor that is the direct or indirect transferee of any Note
purchased by any Purchaser under this Agreement and that has made the same
agreement relating to such Note as such Purchaser have made in this
Section 14.2. 

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SECTION 15.
EXPENSES, ETC. 

Section 15.1 Transaction
Expenses. Whether or not the
transactions contemplated hereby are consummated, the Company will pay the costs
and expenses incurred in connection with the initial filing of this Agreement
and all related documents and financial information, provided, that such costs and expenses in connection with the initial filing shall
not exceed $3,500, with the Securities Valuation Office of the National
Association of Insurance Commissioners or any successor organization, and all
costs and expenses (including reasonable attorneys’ fees of a special counsel
and, if reasonably required, local or other counsel) incurred by the Purchasers
or any other holder of a Note in connection with the transactions contemplated
hereby and in connection with any amendments, waivers or consents under or in
respect of this Agreement, the Notes, the Mortgage Indenture (including the
Supplemental Indenture) and the First Mortgage Bonds (whether or not such
amendment, waiver or consent becomes effective), including, without limitation:
(a) the costs and expenses incurred in enforcing or defending (or determining
whether or how to enforce or defend) any rights under this Agreement, the Notes,
the Mortgage Indenture (including the Supplemental Indenture) and the First
Mortgage Bonds, or in responding to any subpoena or other legal process or
informal investigative demand issued in connection with this Agreement, the
Notes, the Mortgage Indenture (including the Supplemental Indenture) and the
First Mortgage Bonds, or by reason of being a holder of any Note and (b) the
costs and expenses, including financial advisors’ fees, incurred in connection
with the insolvency or bankruptcy of the Company or any Subsidiary or in
connection with any work-out or restructuring of the transactions contemplated
hereby, by the Notes, by the Mortgage Indenture (including the Supplemental
Indenture) or by the First Mortgage Bonds. The Company will pay, and will save
the Purchasers and each other holder of a Note harmless from, all claims in
respect of any fees, costs or expenses, if any, of brokers and finders (other
than those retained by such Person). 

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

SECTION 16.
SURVIVAL OF
REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT. 

All representations and
warranties contained herein shall survive the execution and delivery of this
Agreement and the Notes, the purchase or transfer by any Purchaser of any Note
or portion thereof or interest therein and the payment of any Note, and may be
relied upon by any subsequent holder of a Note, regardless of any investigation
made at any time by or on behalf of any
Purchaser or any other holder of a Note. All statements contained in any
certificate or other instrument delivered by or on behalf of the Company
pursuant to this Agreement shall be deemed representations and warranties of the
Company under this Agreement. Subject to the preceding sentence, this Agreement
and the Notes embody the entire agreement and understanding between the
Purchasers and the Company and supersede all prior agreements and understandings
relating to the subject matter hereof. 

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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 (either retroactively or prospectively), with (and only with) the
written consent of the Company and the Required Holders, except that (a) no
amendment or waiver 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 any Purchaser or holder of
a Note unless consented to by such holder or Purchaser in writing and (b) no
such amendment or waiver may, without the written consent of each Purchaser or
the holder of each Note at the time outstanding affected thereby, (1) subject to
the provisions of Section
12 relating to acceleration or
rescission, change the amount or time of any prepayment or payment of principal
of, or reduce the rate or change the time of payment or method of computation of
interest or of the Make-Whole Amount on, the Notes, (2) change the percentage of
the principal amount of the Notes the holders of which are required to consent
to any such amendment or waiver or (3) amend any of Sections 8, 11(a), 11(b), 12, 17, 20 or 23.


Section 17.2 Solicitation of Holders of
Notes. 

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

(b) Payment. The Company will not, directly or indirectly, pay or cause to be paid
any remuneration, whether by way of supplemental or additional interest, fee or
otherwise, or grant any security or provide any other credit support, to any
holder of a Note as consideration for or as an inducement to the entering into
by such holder of any waiver or amendment of any of the terms and provisions
hereof unless such remuneration is concurrently paid, or security is
concurrently granted or other credit support concurrently provided, on the same
terms, ratably to each holder of Notes then outstanding even if such holder did
not consent to such waiver or amendment. 

(c) Consent in Contemplation of
Transfer. Any consent made
pursuant to this Section
17 by a holder of a Note that has
transferred or has agreed to transfer all or a portion of its Notes to the
Company, any Subsidiary or any Affiliate of the Company and has provided or
has agreed to provide such written consent
as a condition to such transfer shall be void and of no force and effect except
solely as to such holder, and any amendments effected or waivers granted or to
be effected or granted that would not have been or be so effected or granted but
for such consent (and the consents of all other holders of Notes that were
acquired under the same or similar conditions) shall be void and of no force or
effect except solely as to such holder. 

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Section 17.3 Binding
Effect, Etc. Any amendment or
waiver consented to as provided in this Section 17 applies equally
to all holders of Notes and is binding upon them and upon each future holder of
any Note and upon the Company without regard to whether such Note has been
marked to indicate such amendment or waiver. No such amendment or waiver will
extend to or affect any obligation, covenant, agreement, Default or Event of
Default not expressly amended or waived or impair any right consequent thereon.
No course of dealing between the Company and any holder of any Note nor any
delay in exercising any rights hereunder or under any Note shall operate as a
waiver of any rights of any holder of such Note. As used herein, the term “this
Agreement” and references thereto shall mean this Agreement as it may from time
to time be amended or supplemented. 

Section 17.4 Notes Held
by Company, Etc. Solely for the
purpose of determining whether the holders of the requisite percentage of the
aggregate principal amount of Notes then outstanding approved or consented to
any amendment, waiver or consent to be given under this Agreement or the Notes,
or have directed the taking of any action provided herein or in the Notes to be
taken upon the direction of the holders of a specified percentage of the
aggregate principal amount of Notes then outstanding, Notes directly or
indirectly owned by the Company or any of its Affiliates shall be deemed not to
be outstanding. 

SECTION 18.
NOTICES. 

Except to the extent
otherwise provided in Section
7.4, all notices and
communications provided for hereunder shall be in writing and sent (a) by
telefacsimile if the sender on the same day sends a confirming copy of such
notice by a recognized overnight delivery service (charges prepaid), (b) by
registered or certified mail with return receipt requested (postage prepaid) or
(c) by a recognized overnight delivery service (charges prepaid). Any such
notice must be sent: 

(1) if to any Purchaser or
its nominee, to such Purchaser or its nominee at the address specified for such
communications in Schedule
A, or at such other address as
such Purchaser or its nominee shall have specified to the Company in writing,


(2) if to any other holder
of any Note, to such holder at such address as such other holder shall have
specified to the Company in writing, or 

(3) if to the Company, to
the Company at its address set forth at the beginning hereof to the attention of
the Chief Financial Officer of the Company, or at such other address as the
Company shall have specified to the holder of each Note in writing. 

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


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SECTION 19.
REPRODUCTION OF
DOCUMENTS. 

This Agreement or the
Mortgage Indenture (including the Supplemental Indenture), as the case may be,
and all documents relating hereto and thereto, including, without limitation,
consents, waivers and modifications that may hereafter be executed, documents
received by the Purchasers at the Closing (except the Notes themselves) and
financial statements, certificates and other information previously or hereafter
furnished to any holder of the Notes, may be reproduced by such holder by any
photographic, photostatic, microfilm, microcard, miniature photographic or other
similar process and such holder may destroy any original document so reproduced.
The Company agrees and stipulates that, to the extent permitted by applicable
law, any such reproduction shall be admissible in evidence as the original
itself in any judicial or administrative proceeding (whether or not the original
is in existence and whether or not such reproduction was made by any holder of
the Notes in the regular course of business) and any enlargement, facsimile or
further reproduction of such reproduction shall likewise be admissible in
evidence. This Section 19
shall not prohibit the Company or
any other holder of Notes from contesting any such reproduction to the same
extent that it could contest the original, or from introducing evidence to
demonstrate the inaccuracy of any such reproduction. 

SECTION 20.
CONFIDENTIAL INFORMATION. 

For the purposes of this
Section 20, “Confidential Information”
shall mean information delivered to any Purchaser by or on behalf of the Company
or any Subsidiary in connection with the transactions contemplated by or
otherwise pursuant to this Agreement that is proprietary in nature and that was
clearly marked or labeled or otherwise adequately identified when received by
such Purchaser as being confidential information of the Company or such
Subsidiary, provided that such term
does not include information that (a) was publicly known or otherwise known to
such Purchaser prior to the time of such disclosure (provided, however, that to such Purchaser’s actual knowledge, the
source of such information was not, at the time of disclosure to such Purchaser,
bound by a confidentiality agreement with the Company or its Subsidiaries
relating to such information), (b) subsequently becomes publicly known through
no act or omission by such Purchaser or any Person acting on such Purchaser’s
behalf, (c) otherwise becomes known to such Purchaser other than through
disclosure by the Company or any Subsidiary (provided, however, that to such Purchaser’s actual knowledge, the
source of such information was not, at the time of disclosure to such Purchaser,
bound by a confidentiality agreement with the Company or its Subsidiaries
relating to such information) or (d) constitutes financial statements delivered
to such Purchaser under Section
7.1 that are otherwise publicly
available. Each Purchaser will maintain the confidentiality of such Confidential
Information in accordance with procedures adopted by such Purchaser in good
faith to protect confidential information of third parties delivered to such
Purchaser, provided that such
Purchaser may deliver or disclose Confidential Information to (1) its directors,
officers, trustees, employees, agents, attorneys and affiliates (to the extent
such disclosure reasonably relates to the administration of the investment
represented by its Notes and such individuals are bound by the terms of this
Section 20 or agree to hold confidential the Confidential
Information substantially in accordance with the terms of this Section 20), (2) its financial advisors and other professional advisors who agree
to hold confidential the Confidential Information substantially in accordance
with the terms of this Section
20, (3) any other holder of any
Note, (4) any Institutional Investor to
which such Purchaser sells or offers to sell such Note or any part thereof or
any participation therein (if such Person has agreed in writing prior to its
receipt of such Confidential Information to be bound by the provisions of this
Section 20), (5) any Person from which such Purchaser offers
to purchase any security of the Company (if such Person has agreed in writing
prior to its receipt of such Confidential Information to be bound by the
provisions of this Section
20), (6) any Federal or state
regulatory authority having jurisdiction over such Purchaser, (7) the National
Association of Insurance Commissioners or any similar organization, or any
nationally recognized rating agency that requires access to information about
such Purchaser’s investment portfolio or (8) any other Person to which such
delivery or disclosure may be necessary or appropriate (i) to effect compliance
with any law, rule, regulation or order applicable to such Purchaser, (ii) in
response to any subpoena or other legal process, (iii) in connection with any
litigation to which such Purchaser is a party or (iv) if an Event of Default has
occurred and is continuing, to the extent such Purchaser may reasonably
determine such delivery and disclosure to be necessary or appropriate in the
enforcement or for the protection of the rights and remedies under such
Purchaser’s Notes and this Agreement (provided with respect to
subclauses (i) (except where required disclosure of the purchase of the Notes is
to be made to any supervisory or regulatory body during the normal course of its
exercise of its regulatory or supervisory function over such Purchaser and
consistent with such Purchaser’s usual practice), (ii) and (iii) that, to the
extent not prohibited by applicable law, rule, regulation or order, such
Purchaser shall use commercially reasonable efforts to notify the Company of
such pending disclosure so that the Company may seek a protective order or to
pursue such further legal action as may be necessary to preserve the privileged
nature and confidentiality of the Confidential Information). Each holder of a
Note, by its acceptance of a Note, will be deemed to have agreed to be bound by
and to be entitled to the benefits of this Section 20 as though it were a party to this Agreement. On reasonable request by
the Company in connection with the delivery to any holder of a Note of
information required to be delivered 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), such holder will enter into an agreement with the Company
embodying the provisions of this Section 20.


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In the event that as a
condition to receiving access to information relating to the Company or its
Subsidiaries in connection with the transactions contemplated by or otherwise
pursuant to this Agreement, any Purchaser or holder of a Note is required to
agree to a confidentiality undertaking (whether through IntraLinks, another
secure website, a secure virtual workspace or otherwise) which is different from
this Section 20, this Section 20 shall not be
amended thereby and, as between such Purchaser or such holder and the Company,
this Section 20 shall supersede any such other confidentiality
undertaking. 

SECTION 21.
SUBSTITUTION OF
PURCHASER. 

Each Purchaser shall have
the right to substitute any one of its Affiliates as the purchaser of the Notes
that such Purchaser has agreed to purchase hereunder, by written notice to the
Company, which notice shall be signed by both such Purchaser and such Affiliate,
shall contain such Affiliate’s agreement to be bound by this Agreement and shall
contain a confirmation by such Affiliate of the accuracy with respect to it of
the representations set forth in Section 6. Upon receipt of
such notice, wherever the word “Purchaser” is used in this Agreement (other than
in this Section 21), such word shall be deemed to refer to such
Affiliate in lieu of such Purchaser. In the
event that such Affiliate is so substituted as a purchaser hereunder and such
Affiliate thereafter transfers to such Purchaser all of the Notes then held by
such Affiliate, upon receipt by the Company of notice of such transfer, wherever
the word “Purchaser” is used in this Agreement (other than in this
Section 21), such word shall no longer be deemed to refer to
such Affiliate, but shall refer to such Purchaser, and such Purchaser shall have
all the rights of an original holder of the Notes under this Agreement.


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SECTION 22.
MISCELLANEOUS. 

Section 22.1 Successors
and Assigns. All covenants and
other agreements contained in this Agreement by or on behalf of any of the
parties hereto bind and inure to the benefit of their respective successors and
assigns (including, without limitation, any subsequent holder of a Note) whether
so expressed or not. 

Section 22.2 Submission
to Jurisdiction; Waiver of Jury Trial. (a) The Company hereby irrevocably submits to the non-exclusive
jurisdiction of any State of New York court or any Federal court located in New
York County, New York, New York for the adjudication of any matter arising out
of or relating to this Agreement, and consents to the service of all writs,
process and summonses by registered or certified mail out of any such court or
by service of process on the Company at its address to which notices are to be
given pursuant to Section 18
hereof and hereby waives any
requirement to have an agent for service of process in the State of New York.
Nothing contained herein shall affect the right of any holder of the Notes to
serve legal process in any other manner or to bring any proceeding hereunder in
any jurisdiction where the Company may be amenable to suit. The Company hereby
irrevocably waives any objection to any suit, action or proceeding in any New
York court or Federal court located in New York County, New York, New York on
the grounds of venue and hereby further irrevocably waives any claim that any
such suit, action or proceeding brought in any such court has been brought in an
inconvenient forum. 

(b) THE PARTIES HERETO
HEREBY WAIVE TRIAL
BY JURY IN ANY
ACTION BROUGHT ON
OR WITH RESPECT TO
THIS AGREEMENT, THE
NOTES OR ANY
OTHER DOCUMENT EXECUTED IN CONNECTION HEREWITH OR THEREWITH. 

Section 22.3 Payments
Due on Non-Business Days.
Anything in this Agreement or the Notes to the contrary notwithstanding (but
without limiting the requirement in Section 8.5 that the
notice of any optional prepayment specify a Business Day as the date fixed for
such prepayment), any payment of principal of or Make-Whole Amount, if any, or
interest on any Note that is due on a date other than a Business Day shall be
made on the next succeeding Business Day without including the additional days
elapsed in the computation of the interest payable on such next succeeding
Business Day; provided
that if the maturity date of any
Note is a date other than a Business Day, the payment otherwise due on such
maturity date shall be made on the next succeeding Business Day and shall
include the additional days elapsed in the computation of interest payable on
such next succeeding Business Day. 

Section 22.4 Accounting
Terms. All accounting terms used
herein which are not expressly defined in this Agreement have the meanings
respectively given to them in accordance with GAAP. Except as otherwise specifically provided herein, (i) all
computations made pursuant to this Agreement shall be made in accordance with
GAAP and (ii) all financial statements shall be prepared in accordance with
GAAP; provided that, if the Company notifies the holders of
Notes that the Company requests an amendment to any provision hereof to
eliminate the effect of any change occurring after the date hereof in GAAP or in
the application thereof on the operation of such provision, regardless of
whether any such notice is given before or after such change in GAAP or in the
application thereof (or if the Required Holder(s) notify the Company that the
Required Holder(s) request an amendment to any provision hereof for such
purposes), then (i) such provision shall be interpreted on the basis of GAAP as
in effect and applied immediately before such change shall have become effective
until such notice shall have been withdrawn or such provision amended in
accordance herewith and (ii) the Company shall provide to the holders financial
statements and other documents required by this Agreement or requested by any
holder setting forth reconciliations between the computations relating to the
compliance with the provisions hereof and financial statements provided
hereunder made before and after giving effect to such changes in GAAP or the
application thereof. Any reference herein to any specific citation, section or
form of law, statute, rule or regulation shall refer to such new, replacement or
analogous citation, section or form should such citation, section or form be
modified, amended or replaced. Notwithstanding the foregoing or any other
provision of this Agreement providing for any amount to be determined in
accordance with GAAP, for purposes of determining compliance with the covenants
contained in this Agreement, any election by the Company to measure an item of
Debt using fair value (as permitted by Financial Accounting Standards Board
Accounting Standards Codification Topic No. 825-10-25 — Fair Value Option, International Accounting
Standard 39 — Financial Instruments: Recognition and Measurement or any similar accounting standard) shall be
disregarded and such determination shall be made as if such election had not
been made. 

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Section 22.5
Severability. Any provision of
this Agreement that is prohibited or unenforceable in any jurisdiction shall, as
to such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall (to the full
extent permitted by law) not invalidate or render unenforceable such provision
in any other jurisdiction. 

Section 22.6
Construction. Each covenant
contained herein shall be construed (absent express provision to the contrary)
as being independent of each other covenant contained herein, so that compliance
with any one covenant shall not (absent such an express contrary provision) be
deemed to excuse compliance 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 be applicable whether such action is taken
directly or indirectly by such Person. 

For the avoidance of doubt,
all Schedules and Exhibits attached to this Agreement shall be deemed to be a
part hereof. 

Section 22.7
Counterparts. This Agreement may
be executed in any number of counterparts, each of which shall be an original
but all of which together shall constitute one instrument. Each counterpart may
consist of a number of copies hereof, each signed by less than all, but together
signed by all, of the parties hereto. 

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Section 22.8 Governing
Law. This Agreement shall be
construed and enforced in accordance with, and the rights of the parties shall
be governed by, the law of the State of New York excluding choice-of-law
principles of the law of such State that would require the application of the
laws of a jurisdiction other than such State. 

SECTION 23.
APPOINTMENT AND
DIRECTION OF COLLATERAL AGENT. 

Section 23.1 Appointment
and Authority; Direction. Each
holder of the Notes, by its acceptance thereof, designates and appoints U.S.
Bank National Association to act as Collateral Agent for it under this
Agreement, and authorizes U.S. Bank National Association, as the Collateral
Agent acting on behalf of and for such holder’s benefit, to (a) accept delivery
of the First Mortgage Bonds, issued in the name of the Collateral Agent, and to
hold the First Mortgage Bonds for the benefit of the holders of the Notes in
accordance with this Agreement in a collateral account established by the
Collateral Agent, (b) execute and deliver the Collateral Agent Acceptance in
connection with the Closing (the “First Mortgage Bond Documents”) and (c) enter into each and all other instruments relating to the
security for the Notes and to take such action under the provisions of the this
Agreement, the Mortgage Indenture and all other instruments relating hereto and
thereto, and to exercise such powers and perform such duties as are expressly
delegated to the Collateral Agent by the terms hereof and thereof. 

Section 23.2 Limited Agency. Notwithstanding any provision to the contrary
set forth elsewhere in this Agreement or any document related hereto, the
Collateral Agent shall not have any duties or responsibilities in its capacity
as Collateral Agent except those expressly set forth herein or therein, and no
implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or the First Mortgage Bond
Documents or otherwise exist against the Collateral Agent. 

Section 23.3 Delegation of Duties. The Collateral Agent may exercise its powers and
execute any of its duties under this Agreement and the First Mortgage Bond
Documents by or through employees, agents or attorneys-in-fact and shall be
entitled to take and to rely on advice of counsel concerning all matters
pertaining to such powers and duties. The Collateral Agent shall not be
responsible for the negligence or misconduct of any agents or attorneys-in-fact
selected by it with reasonable care. The Collateral Agent may utilize the
services of such Persons as the Collateral Agent in its sole discretion may
determine, and all reasonable fees and expenses of such Persons shall be borne
by the Company. 

Section 23.4 Exculpatory
Provisions. (a) The Collateral
Agent or any of its officers, directors, employees, agents, attorneys-in-fact or
affiliates shall not be (1) liable for any action lawfully taken or omitted to
be taken by it or such Person under or in connection with this Agreement or the
First Mortgage Bond Documents (except for its or such Person’s personal
liability for its own or such Person’s own gross negligence or willful
misconduct) or (2) responsible in any manner to any of the holders for any
recitals, statements, representations or warranties made by the Company or any
officer thereof contained herein or in any First Mortgage Bond Document or in
any certificate, report, statement or other document referred to or provided for
in, or received by, the Collateral Agent under or in connection with this
Agreement or any First Mortgage Bond Document, or for the value, validity,
effectiveness, genuineness, enforceability
or sufficiency of the First Mortgage Bond Documents or for any failure of the
Company to perform its obligations thereunder. The Collateral Agent shall not be
under any obligation to the holders to ascertain or to inquire as to the
observance or performance of any of the agreements contained in, or conditions
of, the First Mortgage Bond Documents. 

-45- 







(b) The Collateral Agent
shall be deemed to have exercised reasonable care in the custody of any First
Mortgage Bonds in its possession if the First Mortgage Bonds are accorded
treatment substantially equal to that which it accords its own property.


(c) The Collateral Agent
shall not be liable for any action taken, suffered, or omitted to be taken by it
in good faith and reasonably believed by it to be authorized or within the
rights or powers conferred upon it by this Agreement. 

(d) In no event shall the
Collateral Agent be responsible or liable for special, indirect, or
consequential loss or damage of any kind whatsoever (including, but not limited
to, loss of profit). 

Section 23.5 Reliance by Collateral
Agent. The Collateral Agent shall
be entitled to conclusively rely, and shall be fully protected in relying, upon
any writing, resolution, notice, consent, certificate, affidavit, letter,
telecopy, telex or facsimile message, statement, order or other document or
conversation believed by it to be genuine and correct and to have been signed,
sent or made by the proper Person or Persons and upon advice and statements of
legal counsel (including, without limitation, counsel to the Company),
independent accountants and other experts selected by the Collateral Agent. The
Collateral Agent shall be fully justified in failing or refusing to take action
under this Agreement or the First Mortgage Bond Documents unless it shall first
receive such advice or concurrence of the Required Holders and it shall first be
indemnified to its reasonable satisfaction by the holders against any and all
liability and expense which may be incurred by it by reason of taking,
continuing to take or refraining from taking any such action. The Collateral
Agent, in all cases, shall be fully protected in acting, or in refraining from
acting, under this Agreement and the First Mortgage Bond Documents if such
acting or refraining from acting is in accordance with the provisions hereof,
and any action taken or failure to act pursuant hereto shall be binding upon all
the holders. 

Section 23.6 Indemnification. Each holder severally agrees to indemnify the
Collateral Agent in its capacity as such (to the extent not reimbursed by the
Company (and without limiting the Company’s obligation to do so) within 45 days
after the Collateral Agent’s written request therefor), ratably according to its
respective share of the outstanding principal amount of the Notes held thereby,
from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind whatsoever which may at any time (including, without limitation, at any
time following the payment of the Notes) be imposed on, incurred by or asserted
against the Collateral Agent in any way relating to or arising out of actions or
omissions of the Collateral Agent specifically required or permitted by this
Agreement or by written instructions of the Required Holders, delivered pursuant
thereto, provided that no holder shall be liable for the payment of
any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements to the extent
resulting from the Collateral Agent’s own gross negligence or willful
misconduct. The agreements in this Section 23.6 shall survive
the payment of the Notes.

-46- 








Section 23.7 Duties; Obligations. The only duties and obligations which the
Collateral Agent shall have are those set forth in this Agreement and in the
First Mortgage Bond Documents. 

Section 23.8 Requesting
Instructions. The Collateral
Agent may at any time request directions in writing from the holders as to any
course of action or other matter relating to the performance of its duties under
this Agreement and the First Mortgage Bond Documents and the holders shall
promptly comply with such request. Directions given to the Collateral Agent by
the Required Holders shall be binding on each of the holders. 

Section 23.9 Administrative
Actions. The Collateral Agent
shall have the right to take such actions, or omit to take such actions,
hereunder and under the First Mortgage Bond Documents not inconsistent with the
written instructions of the requisite holders or the terms of the First Mortgage
Bond Documents and this Agreement, including without limitation actions the
Collateral Agent deems necessary or appropriate to perfect or continue the
perfection of the Liens on the First Mortgage Bonds for the benefit of the
holders or to protect the First Mortgage Bonds. Except as provided above and as
otherwise provided pursuant to applicable law, the Collateral Agent shall have
no duty as to the collection or protection of the First Mortgage Bonds or any
income thereon, nor as to the preservation of rights against prior parties, nor
as to the preservation of rights pertaining to the First Mortgage Bonds beyond
the safe custody of any First Mortgage Bonds in the Collateral Agent’s
possession. 

Section 23.10 Exercise of Remedies. Except as otherwise provided in Section 23.9, the Collateral Agent shall only be authorized to
take such actions under the First Mortgage Bond Documents and to enforce or
prepare to enforce the remedies available under such First Mortgage Bond
Documents as are approved in a written notice by the Required Holders;
provided, however,
that no notice to release First
Mortgage Bonds shall be effective unless signed by all of the holders. In
furtherance of the foregoing, the Collateral Agent agrees to make such demands
and give such notices under the First Mortgage Bond Documents as may be
requested by, and to take such action to enforce the First Mortgage Bond
Documents and to foreclose upon, collect and dispose of the First Mortgage Bonds
or any portion thereof as may be directed by the Required Holders;
provided, however, that the Collateral Agent shall not be required
to take any action that is in its opinion contrary to law or the terms of this
Agreement or the First Mortgage Bond Documents and the Collateral Agent shall
not be required to take any action unless indemnified in accordance with the
provisions of Section
23.6 hereof. 

Section 23.11 Sharing and Application of
Proceeds. The holders agree all
amounts owing with respect to the Notes shall be secured pro rata by the Collateral Agent without distinction. Upon any realization upon
the First Mortgage Bonds by the Collateral Agent, the holders agree that the
proceeds thereof shall be applied (i) first, to the payment of
expenses incurred by and amounts owed to the Collateral Agent with respect to
maintenance and protection of the First Mortgage Bonds and of expenses incurred
with respect to the sale of or realization upon any of the First Mortgage Bonds
or the perfection, enforcement or protection of the rights of the holders (including reasonable attorneys’ fees and expenses
of every kind, including, without limitation, reasonable allocated costs of
staff counsel); (ii) second, equally and
ratably to the payment of all amounts of interest on the Notes, according to the
aggregate amounts thereof owing to each holder; (iii) third, equally and ratably to the payment of all amounts of principal on the
Notes according to the aggregate amounts thereof owing to each holder; (iv)
fourth, equally and ratably to the payment of all
Make-Whole Amounts according to the aggregate amounts thereof owing to each
holder; (v) fifth,
equally and ratably to the
payment of other amounts then due to the holders under this Agreement (including
but not limited to all fees and expenses) with amounts prorated, if necessary,
based on the aggregate amounts thereof then owing to each holder, and (vi)
sixth, the balance, if any, shall be returned to the
Company. 

-47- 







Section 23.12 Resignation or Termination of
Collateral Agent. The Collateral
Agent may resign as Collateral Agent upon not less than 60 days’ written notice
to each of the holders (with a copy to the Company), such resignation to take
effect upon the acceptance by a successor Collateral Agent of its appointment as
the Collateral Agent hereunder. In addition, the Required Holders may remove the
Collateral Agent, with or without cause, each at any time by giving written
notice thereof to the Collateral Agent, such resignation to take effect upon the
acceptance by a successor Collateral Agent of its appointment as the Collateral
Agent hereunder. Upon any such resignation or removal, the Required Holders
shall have the right to appoint a successor Collateral Agent which meets the
eligibility requirements of Section 23.14. If no
successor Collateral Agent shall have been so appointed and shall have accepted
such appointment in writing within 60 days after the retiring Collateral Agent’s
giving of notice of resignation or its removal, then any holder or the retiring
Collateral Agent (unless the Collateral Agent is being removed), on behalf of
the holders, may petition at the expense of the Company a court of competent
jurisdiction for the appointment of a successor Collateral Agent. Such court
shall, after such notice as it may deem proper, appoint a successor Collateral
Agent meeting the qualifications specified in Section 23.14. The holders of the Notes hereby consent to such
petition and appointment so long as such criteria are met. Upon acceptance of
appointment as Collateral Agent, such successor shall thereupon and forthwith
succeed to and become vested with all the rights, powers and privileges,
immunities and duties of the retiring Collateral Agent, and the retiring
Collateral Agent, upon the signing, transferring and setting over to such
successor Collateral Agent all rights, moneys and other collateral held by it in
its capacity as Collateral Agent, shall be discharged from its duties and
obligations hereunder. After any retiring Collateral Agent’s resignation or
removal as Collateral Agent, the provisions of this Section 23, shall inure to its benefit as to any actions taken or omitted to be
taken by it while it acted as Collateral Agent. 

Section 23.13 Succession of Successor Collateral
Agent. Any successor Collateral
Agent appointed hereunder shall execute, acknowledge and deliver to the holders
and the predecessor Collateral Agent an instrument accepting such appointment,
and thereupon such successor Collateral Agent, without any further act, deed,
conveyance or transfer, shall become vested with the title to the First Mortgage
Bonds, and with all the rights, powers, duties and obligations of the
predecessor Collateral Agent in the First Mortgage Bonds and the First Mortgage
Bond Documents, with like effect as if originally named as Collateral Agent
herein. 

-48- 







Upon the request of any
such successor Collateral Agent, however, the holders and the predecessor
Collateral Agent shall promptly execute and deliver such instruments of
conveyance and further assurance reflecting terms consistent with the terms of
this Agreement and the First Mortgage Bond Documents then in effect and do such
other things as may reasonably be required for more fully and certainly vesting
and confirming in such successor Collateral Agent its interest in the First
Mortgage Bonds and all such rights, powers, duties and obligations of the
predecessor Collateral Agent hereunder, and the predecessor Collateral Agent
shall also promptly assign and deliver to the successor Collateral Agent any
First Mortgage Bonds which may then be in its possession. The Company, to the
extent requested by any holder of the Notes or the Collateral Agent shall
procure any and all documents, conveyances or instruments and execute the same,
to the extent required, in order to reflect the transfer to the successor
Collateral Agent. 

Section 23.14 Eligibility of Collateral
Agent. Any successor Collateral
Agent shall be (a) a state or national bank or trust company in good standing,
organized under the laws of the United States of America or of any state, having
capital, surplus and undivided profits aggregating at least $500,000,000 and
subject to supervision or examination by a Federal or state banking authority
and (b) authorized under the laws of the jurisdiction of its incorporation or
organization to assume the functions of the Collateral Agent, if there be such a
bank or trust company willing and able to accept the duties hereunder upon
reasonable and customary terms. 

Section 23.15 Successor Collateral Agent by
Merger. Any corporation into
which the Collateral Agent may be merged or with which it may be consolidated,
or any corporation resulting from any merger or consolidation to which the
Collateral Agent shall be a party, or any state or national bank or trust
company in any manner succeeding to the corporate trust business of the
Collateral Agent as a whole or substantially as a whole, if eligible as provided
in Section 23.14, shall be the successor of the Collateral Agent
hereunder without the execution or filing of any paper or any further act on the
part of any of the parties hereto, anything to the contrary contained herein
notwithstanding. 

Section 23.16 Compensation and Reimbursement of
Collateral Agent. The Company
agrees: 

(a) to pay to the
Collateral Agent all of its out-of-pocket expenses in connection with the
preparation, execution and delivery of this Agreement and the First Mortgage
Bond Documents and the transactions contemplated hereby, including but not
limited to the reasonable charges and disbursements of its special counsel;


(b) to pay to the
Collateral Agent from time to time reasonable compensation for all services
rendered by it hereunder; 

(c) to reimburse the
Collateral Agent upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Collateral Agent in accordance with any
provision of this Agreement (including the reasonable compensation and the
expenses and disbursements of its agents and counsel), except any such expense,
disbursement or advance as shall have been caused by its own gross negligence or
willful misconduct; and  

-49- 







(d) to indemnify the
Collateral Agent for, and to hold it harmless against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, claims,
costs or disbursements of any kind whatsoever imposed on, incurred by or
asserted against the Collateral Agent without gross negligence or willful
misconduct on its part, at any time (including without limitation, at any time
following the payment of the Notes), arising out of or in connection with this
Agreement or any First Mortgage Bond Document or any action taken or omitted by
it thereunder or in connection therewith, including, but not limited to, the
costs and expenses of defending itself against any claim or liability in
connection with the exercise or performance of any of its powers or duties
hereunder, and any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs or disbursements of any kind whatsoever or
claims arising out of its possession or control, of the First Mortgage Bonds.


Notwithstanding any other
provision of this Agreement or the First Mortgage Bond Documents, the Collateral
Agent shall in all cases be fully justified in failing or refusing to act
hereunder unless it shall be indemnified to its satisfaction by the Company or,
to the extent it is not satisfactorily indemnified by the Company, the holders
of the Notes against any and all liability and expense that may be incurred by
it by reason of taking or continuing to take any such action. 

Section 23.17 Self Dealing. In the event that a holder serves as the
Collateral Agent, such holder acting in its capacity as such shall have the same
rights and powers under this Agreement and the Notes as any other holder and may
exercise or refrain from exercising the same as though it were not the
Collateral Agent. Without limiting the generality of the foregoing, the
Collateral Agent or any holding company, trust company or corporation in or with
which the Collateral Agent or the Collateral Agent’s stockholders may be
interested or affiliated, or any officer or director of the Collateral Agent, or
of any other such entity, or any agent appointed by the Collateral Agent, may
have commercial relations or otherwise deal with any of the holders, or with any
other corporation having relations with any of the holders, and with any other
entity, whether or not affiliated with the Collateral Agent. 

Section 23.18 Third Party
Beneficiary. The Collateral Agent
is hereby deemed a third party beneficiary of Section 23 of this Agreement.


-50- 







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


	
      Very truly
      yours,

	 
	
      NEW JERSEY NATURAL GAS COMPANY

	 	
	 	
	By: 	/s/ James W.
  Kent
		Name:    	James W. Kent
		Title:	Treasurer




Signature Page to Note
Purchase Agreement 







The foregoing is hereby
agreed
to as of the date thereof. 


	
      NEW YORK LIFE
      INSURANCE COMPANY

	 	
	By: 	/s/ Jessica L. Maizel
		Name:     	Jessica L. Maizel
		Title:	Corporate Vice President
	 
	NEW YORK LIFE INSURANCE AND ANNUITY
	       CORPORATION



	By:     	NYL Investors LLC, its Investment Manager



	By: 	/s/ Jessica L. Maizel
		Name: 	Jessica L. Maizel
		Title:	Senior Director
	 
	JOHN HANCOCK LIFE INSURANCE
	       COMPANY
  (U.S.A.)
	 
	By:	/s/ Recep
    Kendircioglu
		Name:	Recep Kendircioglu
		Title:	Managing Director
	 
	VOYA RETIREMENT INSURANCE AND
	       ANNUITY
  COMPANY
	RELIASTAR LIFE INSURANCE COMPANY
	VOYA INSURANCE AND ANNUITY
	       COMPANY
	SECURITY LIFE OF DENVER INSURANCE
	       COMPANY



	By:     	Voya Investment Management LLC, as
Agent



	By: 	/s/ Christopher P.
      Lyons
		Name: 	Christopher P. Lyons
		Title:	Managing Director




Signature Page to Note
Purchase Agreement 







The foregoing is hereby
agreed
to as of the date thereof. 


	THE LINCOLN NATIONAL LIFE INSURANCE
	       COMPANY
	 
	By:    	Delaware Investment Advisers, a series of
		Delaware
      Management Business Trust,
	 	Attorney in Fact



	By: 	/s/ Karl H. Spaeth
    Jr.
	 	Name:     	Karl
      H. Spaeth Jr.
		Title:	Vice
      President
	 
	AMERICAN EQUITY INVESTMENT LIFE
	       INSURANCE COMPANY
	 
	By:	/s/ Jeffrey A.
    Fossell
		Name:	Jeffrey A. Fossell
		Title:	Authorized Signatory
	 
	GENWORTH LIFE INSURANCE COMPANY
	 
	By:	/s/ Eric M.
Boyd
		Name:	Eric
      M. Boyd
		Title:	Investment Officer




Signature Page to Note
Purchase Agreement 







INFORMATION
RELATING TO PURCHASERS 

				Principal
      Amount of	
	     	Name and Address of Purchaser 	 	     	Notes to be Purchased	     
	 	New York Life Insurance
    Company		$9,400,000.00	






SCHEDULE A
(to Note Purchase
Agreement) 







				Principal
      Amount of	
		Name and Address of Purchaser 	 	     	Notes to be Purchased	     
	        	New York Life Insurance and Annuity
      Corporation		$18,600,000.00	






A-2 







				Principal
      Amount of	
		Name and Address of Purchaser 	 	     	Notes to be Purchased	     
	        	John Hancock Life Insurance Company
      (U.S.A.)		$28,000,000.00	
		197 Clarendon Street
Boston, MA
      02116			



	(1)	     	All
      payments to be by bank wire transfer of immediately available funds
      to:
	 
			          	Bank Name:	Bank of New York
      Mellon
				ABA Number:	011001234
				Account
    Number:	JPPF10010002
				Account
    Name:	US PP Collector
      F008
				For Further Credit
      to:  	DDA Number
    0000048771
				On Order
of:	New Jersey Natural
      Gas, CUSIP/PPN: 645869 E#1, and
					P&I Breakdown
      New Jersey Natural Gas Company, 3.63%
					Senior Note due
      June 21, 2046
	 
	(2)		All
      notices with respect to payments, prepayments (scheduled and unscheduled,
      whether partial or in full) and audit requests shall be sent
  to:
	 
				John
      Hancock Financial Services
				197
      Clarendon Street
				Boston, MA 02116
				Attention: Investment Administration
				Fax
      Number: (617) 572-1799
				Email: InvestmentAdministration@jhancock.com
	 
	(3)		All
      notices and communication with respect to compliance reporting, financial
      statements and related certifications shall be sent to:
	 
				John
      Hancock Financial Services
				197
      Clarendon Street
				Boston, MA 02116
				Attention: Bond and Corporate Finance, C-2
				Email
      Address: powerteam@jhancock.com
	 
	(4)		All other notices shall be sent
  to:
	 
				John
      Hancock Financial Services
				197
      Clarendon Street
				Boston, MA 02116
				Attention: Investment Law, C-3
				Fax
      Number: (617) 572-9269



A-3







				And
 
John Hancock
      Financial Services
	 			197 Clarendon
      Street
		     	          	Boston, MA 02116
				Attention: Bond and
      Corporate Finance, C-2
				Email Address: powerteam@jhancock.com
	 
	(4)		Address for Delivery of Notes:
	 
				John Hancock
      Financial Services
				197 Clarendon Street,
      C-3
				Boston, MA
      02116
				Attn: Amy Modzelesky;
      John Hieber
	 
	(5)		Tax
      Identification Number: 01-0233346
	 
	(6)		Name
      of Nominee in Which the Notes are to be Issued:
None



A-4







				Principal
      Amount of	
		Name and Address of Purchaser 	 	     	Notes to be Purchased	     
	        	Voya Insurance and Annuity
      Company		$900,000.00	
		5780 Powers Ferry Road NW, Suite 300
Atlanta, GA
      30327-4347			


 

	(1)	     	All payments related to scheduled and
      unscheduled principal and interest, premiums and fees on account of Notes
      held by such purchaser should be made by wire transfer of immediately
      available funds for credit to:
	 
			          	The Bank of New York Mellon
				ABA#: 021000018
	 
				For scheduled principal and interest payments:
				BNF: GLA111566
				Attn: Income Collection Department
				For further credit to:    VOYA Ins and Ann Co GEN
      AC/Acct. 136373
				Reference: CUSIP:
      645869 E#1
	 
				For all payments other than scheduled principal and
    interest:
				Account Number: 1363738400
				Account Name: Voya Ins and Ann Co GEN AC
				Reference: CUSIP:
      645869 E#1
	 			
			
      Each such wire
      transfer should set forth the name of the issuer, the full title
      (including the coupon rate, issuance date, and final maturity date) of the
      Notes on account of which such payment is made, and the due date and
      application (as among principal, interest, premiums and fees) of the
      payment being made. 

	 			
	(2)		Address for all notices relating to payments:
	 			
				Voya Investment Management LLC
				5780 Powers Ferry Road NW, Suite 300
				Atlanta, GA 30327-4347
				Attn: Operations/Settlements
				Email: VoyaIMCashOperations@Voya.com
	 			
	(3)		Address for all other communications and notices:
	 			
				Voya Investment Management LLC
				5780 Powers Ferry Road NW, Suite 300
				Atlanta, GA 30327-4347
				Attn: Private Placements
				Fax:   (770) 690-5342
				Email: Private.Placements@Voya.com



A-5 







	(4)	     	Address for Delivery of Notes:
	 
			          	The Depository Trust Company
				570 Washington Blvd - 5th floor
				Jersey City, NJ 07310
				Attn:  	BNY Mellon/Branch Deposit Department
					Reference: Voya Pension Fund; Acct# 569961
					(together with the “BNY Mellon Transmittal Letter”; the
      “BNYM Participant Number” is 901)
				 	
				
      with a copy
      to:

      Voya Investment
      Management LLC
5780 Powers Ferry Road NW, Suite 300
Atlanta, GA
      30327-4347 
Attn: Linda H.
      Freitag 
Email: Lindy.Freitag@voya.com

      The cover letter
      accompanying the Note should set forth the name of the issuer, a
      description of the Note (including the interest rate, maturity date and
      private placement number), and the name of the purchaser and its account
      number and the following information:

      The contact person
      at the Issuer of the Notes related to payments on the Notes is:
Name:
      Jamie Kent
Telephone #: (732) 938-1093
E-mail: jkent@njresources.com 

				 	
	(5)		Tax Identification Number:
  41-0991508
				 	
	(6)		Name of Nominee in Which the Notes are to be Issued:
  None



A-6 







				Principal
      Amount of	
		Name and Address of Purchaser 	 	     	Notes to be Purchased	     
	        	Security Life of Denver Insurance
      Company		$8,300,000.00	
		5780 Powers Ferry Road NW, Suite
      300
Atlanta, GA 30327-4347			


 

	(1)	     	All payments related to scheduled and
      unscheduled principal and interest, premiums and fees on account of Notes
      held by such purchaser should be made by wire transfer of immediately
      available funds for credit to:
			          	
				
      The Bank of New York
      Mellon
ABA#: 021000018

      For scheduled
      principal and interest payments:
BNF: GLA111566
Attn: Income
      Collection Department
For further credit to: SLD/Acct.
      178157
Reference: CUSIP:
      645869 E#1 

      For all payments
      other than scheduled principal and interest:
Account Number:
      1781578400
Account Name: SLD 
Reference: CUSIP:
      645869 E#1 

			 	
			Each such
      wire transfer should set forth the name of the issuer, the full title
      (including the coupon rate, issuance date, and final maturity date) of the
      Notes on account of which such payment is made, and the due date and
      application (as among principal, interest, premiums and fees) of the
      payment being made. 
			 	
	(2)		Address
      for all notices relating to payments:
				 
			 	Voya Investment
      Management LLC
5780 Powers Ferry Road NW, Suite 300
Atlanta, GA
      30327-4347
Attn: Operations/Settlements
Email: VoyaIMCashOperations@Voya.com
				 
	(3)		Address
      for all other communications and notices:
				 
				Voya Investment
      Management LLC
5780 Powers Ferry Road NW, Suite 300
Atlanta, GA
      30327-4347
Attn: Private Placements
Fax: (770) 690-5342
Email:
      Private.Placements@Voya.com



A-7 








	(4)		Address for Delivery of Notes:
	 
		     	          	The Depository Trust Company
				570 Washington Blvd - 5th floor
				Jersey City, NJ 07310
				Attn: 	BNY
      Mellon/Branch Deposit Department
Reference: Voya Pension Fund; Acct#
      569961
(together with the “BNY Mellon Transmittal Letter”; the
      “BNYM Participant Number” is 901)
				 
				
      with a copy to:
      

      Voya Investment
      Management LLC
5780 Powers Ferry Road NW, Suite 300
Atlanta, GA
      30327-4347 
Attn: Linda H.
      Freitag 
Email:
      Lindy.Freitag@voya.com 

      The cover letter
      accompanying the Note should set forth the name of the issuer, a
      description of the Note (including the interest rate, maturity date and
      private placement number), and the name of the purchaser and its account
      number and the following information:

      The contact person
      at the Issuer of the Notes related to payments on the Notes is:
Name:
      Jamie Kent
Telephone #: (732) 938-1093
E-mail: jkent@njresources.com 

				 
	(5)		Tax
      Identification Number: 84-0499703
				 
	(6)		Name of Nominee in Which the Notes are to be Issued:
  None



A-8 







				Principal
      Amount of	
		Name and Address of Purchaser 	 	     	Notes to be Purchased	     
	        	Security Life of Denver Insurance
      Company		$100,000.00	
		5780 Powers Ferry Road NW, Suite 300
Atlanta, GA
      30327-4347			


 

	(1)	     	All payments related to scheduled and
      unscheduled principal and interest, premiums and fees on account of Notes
      held by such purchaser should be made by wire transfer of immediately
      available funds for credit to:
			          	
				
      The Bank of New York
      Mellon
ABA#: 021000018

      For scheduled
      principal and interest payments:
BNF: GLA111566
Attn: Income
      Collection Department
For further credit to: SLD/Acct.
      178165
Reference: CUSIP:
      645869 E#1 

      For all payments
      other than scheduled principal and interest:
Account Number:
      1781658400
Account Name: SLD
Reference: CUSIP:
      645869 E#1 

				 
			
      Each such wire
      transfer should set forth the name of the issuer, the full title
      (including the coupon rate, issuance date, and final maturity date) of the
      Notes on account of which such payment is made, and the due date and
      application (as among principal, interest, premiums and fees) of the
      payment being made. 

			 	
	(2)		Address
      for all notices relating to payments:
			 	
				Voya Investment
      Management LLC
5780 Powers Ferry Road NW, Suite 300
Atlanta, GA
      30327-4347
Attn: Operations/Settlements
Email: VoyaIMCashOperations@Voya.com
			 	
	(3)		Address
      for all other communications and notices:
			 	
				Voya Investment
      Management LLC
5780 Powers Ferry Road NW, Suite 300
Atlanta, GA
      30327-4347
Attn: Private Placements
Fax:   (770)
      690-5342
Email: Private.Placements@Voya.com



A-9







	(4)	     	Address for Delivery of Notes:
	 
			          	The Depository Trust Company
570 Washington Blvd - 5th
      floor
Jersey City, NJ 07310
				Attn: 	BNY Mellon/Branch Deposit Department
Reference: Voya Pension
      Fund; Acct# 569961
(together with the “BNY Mellon Transmittal
      Letter”; the “BNYM Participant Number” is 901) 
				 
				
      with a copy to:
      

      Voya Investment
      Management LLC
5780 Powers Ferry Road NW, Suite 300
Atlanta, GA
      30327-4347 
Attn: Linda H.
      Freitag 
Email: Lindy.Freitag@voya.com

      The cover letter
      accompanying the Note should set forth the name of the issuer, a
      description of the Note (including the interest rate, maturity date and
      private placement number), and the name of the purchaser and its account
      number and the following information: 

      The contact person
      at the Issuer of the Notes related to payments on the Notes is:
Name:
      Jamie Kent
Telephone #: (732) 938-1093
E-mail: jkent@njresources.com 

				 
	(5)		Tax
      Identification Number: 84-0499703
	 			
	(6)		Name of Nominee in Which the Notes are to be Issued:
  None



A-10 







				Principal
      Amount of	
		Name and Address of Purchaser 	 	     	Notes to be Purchased	     
	        	Voya Insurance and Annuity
      Company		$4,400,000.00	
		5780 Powers Ferry Road NW, Suite 300
Atlanta, GA
      30327-4347			


 

	(1)		All payments related to scheduled and
      unscheduled principal and interest, premiums and fees on account of Notes
      held by such purchaser should be made by wire transfer of immediately
      available funds for credit to:
		     	          	
				
      The Bank of New York
      Mellon
ABA#: 021000018

      For scheduled
      principal and interest payments:
BNF: GLA111566
Attn: Income
      Collection Department 
For
      further credit to: VOYA Ins and Ann Co SLDI/Acct. 179369
Reference:
      CUSIP: 645869 E#1

      For all payments
      other than scheduled principal and interest:
Account Number:
      1793698400
Account Name: VOYA Ins and Ann Co- SLDI 
Reference: CUSIP: 645869 E#1
      

				 
			
      Each such wire
      transfer should set forth the name of the issuer, the full title
      (including the coupon rate, issuance date, and final maturity date) of the
      Notes on account of which such payment is made, and the due date and
      application (as among principal, interest, premiums and fees) of the
      payment being made. 

				 
	(2)		Address
      for all notices relating to payments:
				 
				Voya Investment
      Management LLC
5780 Powers Ferry Road NW, Suite 300
Atlanta, GA
      30327-4347
Attn: Operations/Settlements
Email: VoyaIMCashOperations@Voya.com
				 
	(3)		Address
      for all other communications and notices:
	 			
				Voya Investment
      Management LLC
5780 Powers Ferry Road NW, Suite 300
Atlanta, GA
      30327-4347
Attn: Private Placements
Fax:   (770)
      690-5342
Email: Private.Placements@Voya.com



A-11 







	(4)	 	Address for Delivery of Notes:
	 
		     	          	The Depository Trust Company
570
      Washington Blvd - 5th floor
Jersey City, NJ 07310
				Attn:
        	BNY Mellon/Branch Deposit Department
Reference: Voya Pension Fund; Acct#
      569961
(together with the “BNY Mellon Transmittal Letter”; the
      “BNYM Participant Number” is 901)
				 
				
      with a copy to:
      

      Voya Investment
      Management LLC
5780 Powers Ferry Road NW, Suite 300
Atlanta, GA
      30327-4347 
Attn: Linda H.
      Freitag 
Email: Lindy.Freitag@voya.com

      The cover letter
      accompanying the Note should set forth the name of the issuer, a
      description of the Note (including the interest rate, maturity date and
      private placement number), and the name of the purchaser and its account
      number and the following information: 

      The contact person
      at the Issuer of the Notes related to payments on the Notes is:
Name:
      Jamie Kent
Telephone #: (732) 938-1093
E-mail: jkent@njresources.com 

				 
	(5)		Tax Identification Number: 41-0991508
				 
	(6)		Name of Nominee in Which the Notes are to be Issued:
  None



A-12 







				Principal
      Amount of	
		Name and Address of Purchaser 	 	     	Notes to be Purchased	     
	        	ReliaStar Life Insurance
      Company		$5,600,000.00	
		5780 Powers Ferry Road NW, Suite 300
Atlanta, GA
      30327-4347			


 

	(1)	     	All payments related to scheduled and
      unscheduled principal and interest, premiums and fees on account of Notes
      held by such purchaser should be made by wire transfer of immediately
      available funds for credit to:
				 
			          	
      The Bank of New York
      Mellon
ABA#: 021000018

      For scheduled
      principal and interest payments:
BNF: GLA111566
Attn: Income
      Collection Department
For further credit to: RLIC/ACCT #
      187035
Reference: CUSIP:
      645869 E#1 

      For all payments
      other than scheduled principal and interest:
Account Number:
      1870358400
Account Name: RLIC 
Reference: CUSIP:
      645869 E#1 

				 
			
      Each such wire
      transfer should set forth the name of the issuer, the full title
      (including the coupon rate, issuance date, and final maturity date) of the
      Notes on account of which such payment is made, and the due date and
      application (as among principal, interest, premiums and fees) of the
      payment being made.

			 	
	(2)		Address
      for all notices relating to payments:
			 	
				Voya Investment
      Management LLC
5780 Powers Ferry Road NW, Suite 300
Atlanta, GA
      30327-4347
Attn: Operations/Settlements
Email: VoyaIMCashOperations@Voya.com
			 	
	(3)		Address
      for all other communications and notices:
			 	
				Voya Investment
      Management LLC
5780 Powers Ferry Road NW, Suite 300
Atlanta, GA
      30327-4347
Attn: Private Placements
Fax: (770) 690-5342
Email:
      Private.Placements@Voya.com



A-13 







	(4)		Address for Delivery of Notes:
	 
		     	          	The Depository Trust Company
				570 Washington Blvd - 5th floor
				Jersey City, NJ 07310
				Attn:  
	BNY Mellon/Branch Deposit Department
Reference: Voya Pension
      Fund; Acct# 569961
(together with the “BNY Mellon Transmittal
      Letter”; the “BNYM Participant Number” is 901)
				 
				
      with a copy to:
      

      Voya Investment
      Management LLC
5780 Powers Ferry Road NW, Suite 300
Atlanta, GA
      30327-4347 
Attn: Linda H.
      Freitag 
Email: Lindy.Freitag@voya.com

      The cover letter
      accompanying the Note should set forth the name of the issuer, a
      description of the Note (including the interest rate, maturity date and
      private placement number), and the name of the purchaser and its account
      number and the following information: 

      The contact person
      at the Issuer of the Notes related to payments on the Notes is:
Name:
      Jamie Kent
Telephone #: (732) 938-1093
E-mail: jkent@njresources.com 

				 
	(5)		Tax
      Identification Number: 41-0451140
				 
	(6)		Name of Nominee in Which the Notes are to be Issued:
  None



A-14 







				Principal
      Amount of	
		Name and Address of Purchaser 	 	     	Notes to be Purchased	     
	        	ReliaStar Life Insurance
      Company		$100,000.00	
		5780 Powers Ferry Road NW, Suite 300
Atlanta, GA
      30327-4347			



	(1)	     	All payments on account of Notes held by
      such purchaser should be made by wire transfer of immediately available
      funds for credit to:
			          	 
				
      The Bank of New York
      Mellon
ABA#: 021000018

      For scheduled
      principal and interest payments:
BNF: GLA111566
Attn: Income
      Collection Department
For further credit to: RLIC/Acct.
      187038
Reference: CUSIP:
      645869 E#1 

      For all payments
      other than scheduled principal and interest:
Account Number: 1870388400
Account Name:
      RLIC 
Reference:
      CUSIP: 645869 E#1
      

				 
			
      Each such wire
      transfer should set forth the name of the issuer, the full title
      (including the coupon rate, issuance date, and final maturity date) of the
      Notes on account of which such payment is made, and the due date and
      application (as among principal, premium and interest) of the payment
      being made. 

			 	
	(2)		Address
      for all notices relating to payments:
				 
				Voya Investment
      Management LLC
5780 Powers Ferry Road NW, Suite 300
Atlanta, GA
      30327-4347
Attn: Operations/Settlements
Email: VoyaIMCashOperations@Voya.com
				 
	(3)		Address
      for all other communications and notices:
				 
				Voya Investment
      Management LLC
5780 Powers Ferry Road NW, Suite 300
Atlanta, GA
      30327-4347
Attn: Private Placements
Fax: (770) 690-5342
Email:
      Private.Placements@Voya.com



A-15 







	(4)	 	Address for Delivery of Notes:
	 
		     	          	The Depository Trust Company
				570 Washington Blvd - 5th floor
				Jersey City, NJ 07310
				Attn:  	BNY Mellon/Branch Deposit Department
Reference: Voya Pension
      Fund; Acct# 569961
(together with the “BNY Mellon Transmittal
      Letter”; the “BNYM Participant Number” is 901)
				 
				
      with a copy to:
      

      Voya Investment
      Management LLC
5780 Powers Ferry Road NW, Suite 300 
Atlanta, GA
      30327-4347 
Attn: Linda H.
      Freitag 
Email: Lindy.Freitag@voya.com

      The cover letter
      accompanying the Note should set forth the name of the issuer, a
      description of the Note (including the interest rate, maturity date and
      private placement number), and the name of the purchaser and its account
      number and the following information: 

      The contact person
      at the Issuer of the Notes related to payments on the Notes is:
Name:
      Jamie Kent
Telephone #: (732) 938-1093
E-mail: jkent@njresources.com 

				 
	(5)		Tax
      Identification Number: 41-0451140
				 
	(6)		Name of Nominee in Which the Notes are to be Issued:
  None



A-16 







				Principal
      Amount of	
		Name and Address of Purchaser 	 	     	Notes to be Purchased	     
	        	Voya Retirement Insurance and Annuity
      Company		$8,600,000.00	
		5780 Powers Ferry Road NW, Suite
      300
Atlanta, GA 30327-4347			



	(1)		All payments on account of Notes held by such purchaser should be
      made by wire transfer of immediately available funds for credit
    to:
		     	          	
				
      The Bank of New York
      Mellon
ABA#: 021000018

      For scheduled
      principal and interest payments:
BNF: GLA111566
Attn: Income
      Collection Department 
For
      further credit to: VOYA Retiremt Ins and Ann Co/Acct. 216101
Reference:
      CUSIP: 645869 E#1
      

      For all payments
      other than scheduled principal and interest:
Account Number:
      2161018400
Account Name: VOYA Retiremt Ins and Ann Co
Reference:
      CUSIP: 645869 E#1
      

				 
			
      Each such wire
      transfer should set forth the name of the issuer, the full title
      (including the coupon rate, issuance date, and final maturity date) of the
      Notes on account of which such payment is made, and the due date and
      application (as among principal, premium and interest) of the payment
      being made. 

				 
	(2)		Address for all
      notices relating to payments:
				 
				Voya Investment Management
      LLC
5780 Powers Ferry Road NW, Suite 300
Atlanta, GA
      30327-4347
Attn: Operations/Settlements
Email: VoyaIMCashOperations@Voya.com
				 
	(3)		Address for all
      other communications and notices:
				 
				Voya Investment Management
      LLC
5780 Powers Ferry Road NW, Suite 300
Atlanta, GA
      30327-4347
Attn: Private Placements
Fax: (770) 690-5342
Email:
      Private.Placements@Voya.com



A-17 







	(4)	 	Address for Delivery of Notes:
	 
		     	          	The Depository Trust Company
				570 Washington Blvd - 5th floor
				Jersey City, NJ 07310
				Attn:  	BNY
      Mellon/Branch Deposit Department
Reference: Voya Pension Fund; Acct#
      569961
(together with the “BNY Mellon Transmittal Letter”; the
      “BNYM Participant Number” is 901)
				 
				
      with a copy to:
      

      Voya Investment
      Management LLC
5780 Powers Ferry Road NW, Suite 300
Atlanta, GA
      30327-4347 
Attn: Linda H.
      Freitag 
Email: Lindy.Freitag@voya.com

      The cover letter
      accompanying the Note should set forth the name of the issuer, a
      description of the Note (including the interest rate, maturity date and
      private placement number), and the name of the purchaser and its account
      number and the following information: 

      The contact person
      at the Issuer of the Notes related to payments on the Notes is:
Name:
      Jamie Kent
Telephone #: (732) 938-1093
E-mail:
      jkent@njresources.com 

				 
	(5)		Tax
      Identification Number: 71-0294708
				 
	(6)		Name of Nominee in Which the Notes are to be Issued:
  None



A-18 







				Principal
      Amount of	
		Name and Address of Purchaser 	 	     	Notes to be Purchased	     
	        	The Lincoln National Life Insurance
      Company		$3,000,000.00	
		2005 Market Street, Mail Stop
      41-104
Philadelphia, PA 19103			



	(1)	 	Principal & Interest
  Payments:
		     	          	
				
      The Bank of New York
      Mellon
(via Fed Wire) 
One Wall Street, New York, NY 10286
ABA #:
      021000018
BENEFICIARY/Account #: GLA 111566
      
Acct Name: The Bank of New
      York Mellon Private Placement P & I Income Collections
Bank to Bank
      Information: The Lincoln
      National Life Insurance Company – Seg 66; 215733;
      PPN#: 645869 E#1/Sec Desc: New Jersey Natural Gas Company 3.63% Senior
      Note due June 21, 2046/P&I Details
Reference Registered Holder: The
      Lincoln National Life Insurance Company 

				 
	(2)		
      Investment Adviser
      Address -All Communications: 

				 
				
      Delaware Investment
      Advisers
2005 Market Street, Mail Stop 41-104
Philadelphia, PA
      19103
Attn: Fixed Income Private Placements 
Email: delawareprivateplacements@delinvest.com

				 
	(3)		
      Treasury Operations
      Notice of Payment Only: 

				 
				
      Lincoln Financial
      Group
1300 South Clinton Street
Fort Wayne, IN 46802
      
Attn: Inv Acctg-Treasury
      Operations
Email: securities_data_rese@lfg.com 

				 
	(4)		
      Bank Address Notice
      of Payment Only: 

				 
				
      The Bank of New York
      Mellon
P. O. Box 392003
Pittsburgh, PA 15251-9003
Attn: Private
      Placement P & I Dept 
Ref: Registered Holder/Sec Desc/PPN#: 645869 E#1
Email:
      ppservicing@bnymellon.com 




A-19 








	(5)	Address for Delivery
      of Notes:
		 
		      	
      The Depository Trust
      Company
570 Washington Blvd. – 5th  Floor
Jersey City,
      New Jersey 07310
Attention: BNY
      Mellon/Branch Deposit Department
Ref: The Lincoln National Life
      Insurance Company – Seg 66; 215733

			 
	(6)	
      Tax Identification
      Number: 35-0472300 

			 
	(7)     	Name of Nominee in Which the Notes are to be
      Issued: None 


A-20 







				Principal
      Amount of	
		Name and Address of Purchaser 	 	     	Notes to be Purchased	     
	        	The Lincoln
      National Life Insurance Company		$6,000,000.00	
	 	2005 Market Street, Mail Stop 41-104
Philadelphia, PA 19103
      	 	 	 


	        	 
	(1)     	Principal
      & Interest Payments:
		  
		       	
      The Bank of New York
      Mellon 
(via Fed Wire) 
One Wall Street, New York, NY 10286
ABA
      #: 021000018
BENEFICIARY/Account #: GLA 111566 
Acct Name: The Bank of New York Mellon Private Placement P & I
      Income Collections
Bank to Bank Information: The Lincoln National Life Insurance Company
      – Seg 16; 216625; PPN#: 645869 E#1/Sec Desc:
      New Jersey Natural Gas Company 3.63% Senior Note due June 21, 2046/P&I
      Details
Reference Registered Holder: The Lincoln National Life
      Insurance Company 

			 
	(2)	
      Investment Adviser
      Address -All Communications: 

		 
			
      Delaware Investment
      Advisers
2005 Market Street, Mail Stop 41-104
Philadelphia, PA
      19103
Attn: Fixed Income Private Placements 
Email:delawareprivateplacements@delinvest.com

			 
	(3)	
      Treasury Operations
      Notice of Payment Only: 

		 
			
      Lincoln Financial
      Group
1300 South Clinton Street
Fort Wayne, IN 46802
      
Attn: Inv Acctg-Treasury
      Operations
Email: securities_data_rese@lfg.com 

			 
	(4) 	
      Bank Address Notice
      of Payment Only: 

		 
			
      The Bank of New York
      Mellon
P. O. Box 392003
Pittsburgh, PA 15251-9003
Attn: Private
      Placement P & I Dept 
Ref: Registered Holder/Sec Desc/PPN#: 645869 E#1
Email:
      ppservicing@bnymellon.com 



A-21 







	(5)	Address for
      Delivery of Notes:
		 
		      	The
      Depository Trust Company
570 Washington Blvd. – 5th
      Floor
Jersey City, New Jersey 07310 
Attention: BNY Mellon/Branch Deposit
      Department 
Ref: The Lincoln
      National Life Insurance Company – Seg 16; 216625  
			 
	(6)	Tax Identification
      Number: 35-0472300 
		 
	(7)     	Name of Nominee in
      Which the Notes are to be Issued: None 





      A-22







				Principal Amount of	
		Name and
      Address of Purchaser 	 	     	Notes to be
      Purchased	     
	 	The Lincoln
      National Life Insurance Company		$8,000,000.00	
	        	2005 Market Street,
      Mail Stop 41-104
Philadelphia, PA 19103 			


	        	 
	(1)	Principal
      & Interest Payments:
		 
		       	
      The Bank of New York
      Mellon
(via Fed Wire)
One Wall Street, New York, NY 10286
ABA #:
      021000018
BENEFICIARY/Account #: GLA 111566
      
Acct Name: The Bank of New
      York Mellon Private Placement P & I Income Collections
Bank to Bank
      Information: The Lincoln
      National Life Insurance Company – Seg 11; 215715;
      PPN#: 645869 E#1/Sec Desc: New Jersey Natural Gas Company 3.63% Senior
      Note due June 21, 2046/P&I Details
Reference Registered Holder: The
      Lincoln National Life Insurance Company 

			 
	(2)	
      Investment Adviser
      Address -All Communications: 

		  
			
      Delaware Investment
      Advisers
2005 Market Street, Mail Stop 41-104
Philadelphia, PA
      19103
Attn: Fixed Income Private Placements 
Email:delawareprivateplacements@delinvest.com

			 
	(3)	
      Treasury Operations
      Notice of Payment Only: 

		 
			
      Lincoln Financial
      Group
1300 South Clinton Street
Fort Wayne, IN 46802 
Attn: Inv Acctg-Treasury
      Operations
Email: securities_data_rese@lfg.com 

			 
	(4)	
      Bank Address Notice
      of Payment Only: 

	 	 
			
      The Bank of New York
      Mellon
P. O. Box 392003
Pittsburgh, PA 15251-9003
Attn: Private
      Placement P & I Dept 
Ref: Registered Holder/Sec Desc/PPN#: 645869 E#1
Email:
      ppservicing@bnymellon.com 



A-23 







	(5)     	Address for
      Delivery of Notes:
		 
		      	
      The Depository Trust
      Company
570 Washington Blvd. – 5th Floor
Jersey City, New
      Jersey 07310 
Attention: BNY
      Mellon/Branch Deposit Department 
Ref: The Lincoln National Life Insurance Company – Seg 11; 215715 
      

			 
	(6) 	
      Tax Identification
      Number: 35-0472300 

		 
	(7) 	Name of Nominee in
      Which the Notes are to be Issued: None 


A-24 







				Principal Amount of	
		Name and
      Address of Purchaser 	 	     	Notes to be
      Purchased	     
	 	American Equity Investment Life		$12,000,000.00	
	        	     Insurance Company			
	 	6000 Westown
      Parkway
West Des Moines, IA 50266 	 	 	 


	        	 
	(1)	All payments on or in
      respect of the Notes shall be made in immediately available funds
      to:
		 
		     	State Street Bank
      & Trust Company
ABA # 011000028 
Account # 00076026, Income Collection, BEV3
      
REFERENCE: (PPN/CUSIP:
      645869 E#1, New Jersey Natural Gas Company 3.63% Senior Note due June 21,
      2046, Interest Amount, Principal and Premium Amount) 
			 
	(2) 	Address for all
      notices relating to payments: 
		 
		          
    	
      American Equity
      Investment Life Insurance Co.
Attn: Asset Administration
6000
      Westown Parkway
West Des Moines, IA 50266 
515-221-0329 fax 

			 
	(3)	
      Address for financial
      information, covenant compliance and all other non-payment notices and
      communications: 

		 
			
      6000 Westown
      Parkway
West Des Moines, IA 50266 
Attention: Investment Department - Private
      Placements
888-221-1234
515-221-0329 (fax)
PrivatePlacements@american-equity.com 

			 
	(4)	
      Address for Delivery
      of Notes: 

		 
			
      DTCC 
Newport Office Center
570 Washington
      Blvd
Jersey City, NJ 07310 
5th Floor/NY Window/Robert Mendez
FBO State Street Bank & Trust for
      account BEV3
CUSIP/PPN: 645869 E#1 
Security Description: New Jersey Natural Gas
      Company 3.63% Senior Note due June 21, 2046




A-25 







	(5)     	Tax Identification
      Number: 65-1186810
	 
	(6)	Name of Nominee in
      Which the Notes are to be Issued: CHIMEFISH &
CO


A-26 







				Principal
      Amount of	
		Name and Address of Purchaser 	 	     	Notes to be Purchased	     
	 	Genworth
      Life Insurance Company		$5,000,000.00	
	        	3001 Summer Street,
    4th Floor		$5,000,000.00	
		Stamford, CT 06905		$2,000,000.00	



	(1)	All payments on or in
      respect of the Notes to be by bank wire transfer of Federal or other
      immediately available funds to:
		 
	        	          	
      Bank of New
      York
ABA
      #:            021000018
Account
      #:       GLA111566
SWIFT Code:
      IRVTUS3N
Ins and Ann Co 

Reference: CUSIP: 645869 E#1

			Acct. Name: 	Income Collection Dept
CUSIP/PPN: 645869 E#1 & New Jersey
      Natural Gas Company 3.63% Senior Note due June 21, 2046, and Identify
      Principal & Interest Amounts 
			And by Email: 	treasppbkoffice@genworth.com 
			Fax:	(804) 662-7777 
				 
	(2)	
      Notices with respect
      to payments and written confirmation of each such payment, including
      interest payments, redemptions, premiums, make wholes, and fees addressed
      to: 

		 
			
      Genworth Financial,
      Inc. 
Account:
              Genworth Life Insurance
      Company
3001 Summer Street, 4th Floor
Stamford, CT 06905
      
Attn: Private
      Placements
Telephone No: (203)708-3300
Fax No: (203)708-3308
      
If available, an electronic
      copy is additionally requested. Please send to the following e-mail
      address : GNW.privateplacements@genworth.com

      With copies to:
      

      Genworth Financial,
      Inc. 
Account:         Genworth
      Life Insurance Company
3001 Summer Street
Stamford, CT 06905
      
Attn: Trade
      Operations
Telephone No: (203)708-3300
Fax No: (203)708-3308
      
If available, an
      electronic copy is additionally requested. Please send to the following e-mail
      address :
      GNWInvestmentsOperations@genworth.com



A-27








			

      And additional copies to: 

      The Depository Trust Co Income Collection Department P.O.
      Box 19266
Newark, NJ 07195 
Attn:     Income Collection Department
Ref:      GLIC LILTCNEW
      
Account 364781 CUSIP/PPN:
      645869 E#1 & New Jersey Natural Gas Company 3.63% Senior Note due June
      21, 2046
P&I Contact: Purisima Teylan - (718) 315-3035
    

			 
	(3)     	All corporate actions,
      including payments and prepayments, address to:
		 
		          
    	
      Genworth Financial,
      Inc. 
Account:         Genworth Life
      Insurance Company
3001 Summer Street, 4th Floor
Stamford, CT 06905
      
Attn: Private
      Placements
Telephone No: (203)708-3300
Fax No: (203)708-3308
      
If available, an
      electronic copy is additionally requested. Please send to the following
      e-mail address :
      GNW.privateplacements@genworth.com 

      With copies to:
      

      Genworth Financial,
      Inc. 
Account:         Genworth Life
      Insurance Company
3001 Summer Street
Stamford, CT 06905
      
Attn: Trade
      Operations
Telephone No: (203)708-3300
Fax No: (203)708-3308
      
If available, an
      electronic copy is additionally requested. Please send to the following
      e-mail address :
      GNWInvestmentsOperations@genworth.com 

			 
	(4)	
      All notices and
      communications including original note agreement, conformed copy of the
      note agreement, amendment requests, financial statements and other general
      information addressed to: 

		 
			
      Genworth Financial,
      Inc.
Account:         Genworth Life
      Insurance Company
3001 Summer Street, 4th Floor
Stamford, CT 06905
      
Attn: Private Placements
      

      Telephone No: (203)708-3300
Fax
      No: (203)708-3308 
If
      available, an electronic copy is additionally requested. Please send to
      the following e-mail address : GNW.privateplacements@genworth.com 



A-28 







	(4)	Address for
      Delivery of Notes:
		 
		         	The
      Depository Trust Co
570 Washington Blvd 
BNY Mellon /Branch Deposit Dept 5th
      FLR
Jersey City, NJ 07310
Ref: GLIC/LILTCNEW 
Account #: 364781
	 		 
	(5)	
      Tax Identification
      Number: 91-6027719

		 
	(6)     	
      Name of Nominee in
      Which the Notes are to be Issued: HARE & CO.,
  LLC



CH2\18393932.1\06:04

A-29







DEFINED
TERMS 

As used herein, the
following terms have the respective meanings set forth below or set forth in the
Section hereof following such term: 

“Affiliate” shall mean,
(a) at any time, and with respect to any Person, any other Person that at such
time directly or indirectly through one or more intermediaries Controls, 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 equity or Voting Stock of the Company or any Subsidiary or any
Person of which the Company and its Subsidiaries beneficially own or hold, in
the aggregate, directly or indirectly, 10% or more of any class of equity or
Voting Stock. As used in this definition, “Control” shall mean the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership of Voting
Stock, by contract or otherwise. Unless the context otherwise clearly requires,
any reference to an “Affiliate” is a reference to an Affiliate of the Company.


“Anti-Corruption
Laws” shall mean any law or
regulation in a U.S. or any non-U.S. jurisdiction regarding bribery or any other
corrupt activity, including the U.S. Foreign Corrupt Practices Act and the U.K.
Bribery Act 2010. 

“Anti-Money Laundering
Laws” shall mean any law or
regulation in a U.S. or any non-U.S. jurisdiction regarding money laundering,
drug trafficking, terrorist-related activities or other money laundering
predicate crimes, including the Currency and Foreign Transactions Reporting Act
of 1970 (otherwise known as the Bank Secrecy Act) and the USA PATRIOT Act.


“Asset
Disposition” shall mean any
Transfer except: 

(a) any 

(1) Transfer from a
Restricted Subsidiary to the Company or a Wholly-Owned Restricted Subsidiary;
and 

(2) Transfer from the
Company to a Wholly-Owned Restricted Subsidiary; 

so long as immediately
before and immediately after the consummation of any such Transfer and after
giving effect thereto, no Default or Event of Default shall exist; and


(b) any Transfer made in
the ordinary course of business and involving only property that is either (1)
inventory held for sale or (2) equipment, fixtures, supplies or materials no
longer required in the operation of the business of the Company or any of its
Restricted Subsidiaries or that is obsolete. 

“Asset Disposition
Prepayment Date” is defined in
Section 8.8(a).


“Asset Disposition
Prepayment Event” is defined in
Section 8.8(a).


SCHEDULE B
(to Note Purchase Agreement) 







“Bank Credit
Agreements” shall mean that
certain Credit Agreement by and among the Company, PNC Bank, National,
Association, as Administrative Agent, the banks party thereto, Wells Fargo Bank,
National Association, as Syndication Agent, Santander Bank, N.A., U.S. Bank
National Association and TD Bank, N.A., as Documentation Agents, and PNC Capital
Markets LLC and Wells Fargo Bank National Association, as Co-Lead Arrangers,
dated as of May 15, 2014, as the same may be amended, restated, increased,
refinanced, replaced or otherwise modified or any successor
thereto. 

“Blocked
Person” shall mean (a) a Person
whose name appears on the list of Specially Designated Nationals and Blocked
Persons published by OFAC, (b) a Person, entity, organization, country or regime
that is blocked or a target of sanctions that have been imposed under U.S.
Economic Sanctions Laws or (c) a Person that is an agent, department or
instrumentality of, or is otherwise beneficially owned by, controlled by or
acting on behalf of, directly or indirectly, any Person, entity, organization,
country or regime described in clause (a) or (b). 

“Business
Day” shall mean (a) for purposes
of Section 8.7 only, any day other than a Saturday, a Sunday or
a day on which commercial banks in New York, New York are required or authorized
to be closed and (b) for the purposes of any other provision of this Agreement,
any day other than a Saturday, a Sunday or a day on which commercial banks in
Wall, New Jersey or New York, New York are required or authorized to be closed.


“Capital
Lease” shall mean, at any time, a
lease with respect to which the lessee is required concurrently to recognize the
acquisition of an asset and the incurrence of a liability in accordance with
GAAP. 

“Change of
Control” shall mean an event or
series of events by which New Jersey Resources Corporation shall cease to own
100% of the issued and outstanding common stock of the Company and 51% of the
Voting Stock of the Company. 

“CISADA” shall mean the Comprehensive Iran Sanctions,
Accountability and Divestment Act. 

“Closing” is defined in
Section 3. 

“Code” shall mean the Internal Revenue Code of 1986, as
amended from time to time, and the rules and regulations promulgated thereunder
from time to time. 

“Collateral
Agent” shall mean the party
identified as collateral agent for the holders of the Notes in Section 2.2(a). 

“Company” shall mean New
Jersey Natural Gas Company, a New Jersey corporation, or any Successor
Corporation. 

“Confidential
Information” is defined in
Section 20. 

B-2 







“Consolidated
Shareholders’ Equity” shall mean,
as of any date of determination, the sum of the amounts under the headings
“Common Shareholders’ Equity” and “Preferred Shareholders’ Equity” on the
balance sheet, prepared in accordance with GAAP, for the Company and its
Restricted Subsidiaries on a consolidated basis. 

“Consolidated Tangible
Assets” shall mean, as of any
date of determination, the total assets of the Company and its Restricted
Subsidiaries that would be shown as assets on a consolidated balance sheet of
the Company and its Restricted Subsidiaries as of such time determined on a
consolidated basis in accordance with GAAP after subtracting therefrom the
aggregate amount of all intangible assets of the Company and its Restricted
Subsidiaries, including, without limitation, all goodwill, franchises, licenses,
patents, trademarks, trade name, copyrights, service marks and brand names.


“Consolidated Tangible
Net Worth” shall mean, as of any
date of determination, (a) Consolidated Shareholders’ Equity minus (b) the net book amount of all assets of the Company and its Restricted
Subsidiaries (after deducting reserves applicable thereto) that would be shown
as intangible assets on a balance sheet, prepared in accordance with GAAP, for
the Company and its Restricted Subsidiaries on a consolidated basis as of such
date of determination. 

“Control”
shall mean the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership of voting
securities, by contract or otherwise; and the terms “Controlled” and “Controlling” shall have
meanings correlative to the foregoing. 

“Controlled Entity”
shall mean (a) any of the
Subsidiaries of the Company and any of their or the Company’s respective
Controlled Affiliates and (b) if the Company has a parent company, such parent
company and its Controlled Affiliates. 

“Debt” as to any Person at any time, shall mean, without
duplication, any and all indebtedness, obligations or liabilities (whether
matured or unmatured, liquidated or unliquidated, direct or indirect, absolute
or contingent, or joint or several) of such Person for or in respect of: (a)
borrowed money, (b) amounts raised under or liabilities in respect of any note
purchase or acceptance credit facility, (c) reimbursement obligations
(contingent or otherwise) under any letter of credit, currency swap agreement,
interest rate swap, cap, collar or floor agreement or other interest rate or
currency exchange rate management device, (d) any other transaction (including
forward sale or purchase agreements, Capital Leases, Synthetic Leases and
conditional sales agreements) having the commercial effect of a borrowing of
money entered into by such Person to finance its operations or capital
requirements (but not including trade payables and accrued expenses incurred in
the ordinary course of business which are not represented by a promissory note
or other evidence of indebtedness and which are not more than 30 days past due),
(e) any Hedging Contract, to the extent that any net indebtedness, obligations
or liabilities of such Person in respect thereof constitutes “indebtedness” as
determined in accordance with GAAP, (f) any Guaranty of any Hedging Contract
described in the immediately preceding clause (e), (g) any Guaranty of Debt for
borrowed money, (h) any Hybrid Security described in clause (a) of the
definition of Hybrid Security or (i) the mandatory repayment obligation of the issuer of
any Hybrid Security described in clause (b) of the definition of Hybrid
Security. 

B-3 








“Debt Prepayment
Application” shall mean, with
respect to any Transfer of property, the application by the Company or its
Restricted Subsidiaries of cash in an amount equal to the Net Proceeds Amount
with respect to such Transfer to pay Senior Debt of the Company (other than
Senior Debt owing to any of its Subsidiaries or any Affiliate and Senior Debt in
respect of any revolving credit or similar credit facility providing the Company
with the right to obtain loans or other extensions of credit from time to time,
except to the extent that in connection with such payment of Senior Debt the
availability of credit under such credit facility is permanently reduced by an
amount not less than the amount of such proceeds applied to the payment of such
Senior Debt); provided that in the
course of making such application the Company shall offer to prepay each
outstanding Note in accordance with Section 8.8 in a principal
amount that equals the Ratable Portion for such Note. 

“Default” shall mean an
event or condition the occurrence or existence of which would, with the lapse of
time or the giving of notice or both, become an Event of Default. 

“Default
Rate” as of any date shall mean
that rate of interest that is the greater of (a) 5.63% per annum or (b) 2.0% per
annum over the rate of interest publicly announced by PNC Bank, National
Association as its “base” or “prime” rate. 

“Disclosure
Documents” is defined in
Section 5.3. 

“Disposition
Value” shall mean, at any time,
with respect to any property: 

(a) in the case of property
that does not constitute Subsidiary Stock, the book value thereof, valued at the
time of such disposition in good faith by the Company, and 

(b) in the case of property
that constitutes Subsidiary Stock, an amount equal to that percentage of book
value of the assets of the Subsidiary that issued such stock as is equal to the
percentage that the book value of such Subsidiary Stock represents of the book
value of all of the outstanding capital stock of such Subsidiary (assuming, in
making such calculations, that all securities convertible into such capital
stock are so converted and giving full effect to all transactions that would
occur or be required in connection with such conversion) determined at the time
of the disposition thereof, in good faith by the Company. 

“Distribution” shall mean,
in respect of any corporation, association or other business entity: (a)
dividends or other distributions or payments on capital stock or other equity
interests of such corporation, association or other business entity (except
distributions in such stock or other equity interests); and (b) the redemption
or acquisition of such stock or other equity interests (except when solely in
exchange for such stock or other equity interests) unless made,
contemporaneously, from the net proceeds of a sale of such stock or other equity
interests. 


B-4 







“Environmental
Laws” shall mean any and all
Federal, state, local, and foreign statutes, laws, regulations, ordinances,
rules, judgments, orders, decrees, permits, concessions, grants, franchises, licenses,
agreements or governmental restrictions relating to pollution and the protection
of the environment or the release of any materials into the environment,
including but not limited to those related to Hazardous Materials. 

“ERISA” shall mean the Employee Retirement Income
Security Act of 1974, as amended from time to time, and the rules and
regulations promulgated thereunder from time to time in effect. 

“ERISA
Affiliate” shall mean any trade
or business (whether or not incorporated) that is treated as a single employer
together with the Company under Section 414 of the Code. 

“Event of
Default” is defined in
Section 11. 

“Exchange
Act” shall mean the Securities
Exchange Act of 1934, as amended. 

“Existing Note Purchase
Agreements” shall mean (i) that
certain Note Purchase Agreement dated as of May 15, 2008, among the Company and
the Purchasers party thereto, as amended, (ii) that certain Note Purchase
Agreement dated as of February 8, 2013, among the Company and the Purchasers
party thereto, (iii) that certain Note Purchase Agreement dated as of February
7, 2014 among the Company and the Purchasers party thereto, and (iv) that
certain Note Purchase Agreement dated as of February 7, 2015 among the Company
and the Purchasers party thereto. 

“Fair Market
Value” shall mean, at any time
and with respect to any property, the sale value of such property that would be
realized in an arm’s-length sale at such time between an informed and willing
buyer and an informed and willing seller (neither being under a compulsion to
buy or sell). 

“First Mortgage Bond
Documents” is defined in
Section 23.1. 

“First Mortgage
Bonds” shall mean the series of
first mortgage bonds designated the “First Mortgage Bonds, Series UU due 2046”
issued by the Company pursuant to the Mortgage Indenture, as security for the
Notes. 

“GAAP” shall mean generally accepted accounting
principles as in effect from time to time in the United States of America.


“Gas
Business” shall
mean the business of generating, manufacturing,
purchasing, transmitting, distributing, selling and/or supplying gas and any
by-products thereof as a public utility. 

“Governmental
Authority” shall mean 

(a) the government of


(1) the United States of
America or any State or other political subdivision thereof, or 

B-5 







(2) any jurisdiction in
which the Company or any Subsidiary conducts all or any part of its business, or
which asserts jurisdiction over any properties of the Company or any Subsidiary,
or 

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

“Governmental
Official” shall mean any
governmental official or employee, employee of any government-owned or
government-controlled entity, political party, any official of a political
party, candidate for political office, official of any public international
organization or anyone else acting in an official capacity. 

“Guaranty” shall mean,
with respect to any Person, any obligation (except the endorsement in the
ordinary course of business of negotiable instruments for deposit or collection)
of such Person guaranteeing or in effect guaranteeing any Debt, dividend or
other obligation of any other Person in any manner, whether directly or
indirectly, including, without limitation, obligations incurred through an
agreement, contingent or otherwise, by such Person: (a) to purchase such Debt or
obligation or any property constituting security therefor; (b) to advance or
supply funds (1) for the purchase or payment of such Debt or obligation, or (2)
to maintain any working capital or other balance sheet condition or any income
statement condition of any other Person or otherwise to advance or make
available funds for the purchase or payment of such Debt or obligation; (c) to
lease properties or to purchase properties or services primarily for the purpose
of assuring the owner of such Debt or obligation of the ability of any other
Person to make payment of such Debt or obligation; or (d) otherwise to assure
the owner of such Debt or obligation against loss in respect thereof. In any
computation of the Debt or other liabilities of the obligor under any Guaranty,
the Debt obligations that are the subject of such Guaranty shall be assumed to
be direct obligations of such obligor. 

“Hazardous
Materials” shall mean any and all
pollutants, toxic or hazardous wastes or any other substances that might pose a
hazard to health or safety, the removal of which may be required 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, petroleum, petroleum
products, lead based paint, radon gas or similar restricted, prohibited or
penalized substances). 

“Hedging
Contract” shall mean any
transaction entered into by the Company or any of its Restricted Subsidiaries
with respect to hedging or trading of gas contracts or other commodity, hedging
contracts of any kind, or any derivatives or other similar financial instruments
of the Company and its Restricted Subsidiaries. 

“holder” shall mean, with respect to any Note, the Person
in whose name such Note is registered in the register maintained by the Company
pursuant to Section
13.1. 


B-6 






“Hybrid
Security” shall mean any of the
following: (a) beneficial interests issued by a trust which constitutes a
Subsidiary of the Company or any Restricted Subsidiary substantially all of the assets of which
trust are unsecured Debt of the Company or any Restricted Subsidiary or any
Subsidiary of the Company or any Restricted Subsidiary or proceeds thereof, and
all payments of which Debt are required to be, and are, distributed to the
holders of beneficial interests in such trust promptly after receipt by such
trust, or (b) any shares of capital stock or other equity interests that, other
than solely at the option of the issuer thereof, by their terms (or by the terms
of any security into which they are convertible or exchangeable) are, or upon
the happening of an event or the passage of time would be, required to be
redeemed or repurchased, in whole or in part, or have, or upon the happening of
an event or the passage of time would have, a redemption or similar payment.


“Inactive
Subsidiary” shall mean, at any
time, any Subsidiary of any Person, which Subsidiary (a) does not conduct any
business or have operations and (b) does not have total assets with a net book
value, as of any date of determination, in excess of $100,000. 

“INHAM
Exemption” is defined in
Section 6.2(e). 

“Institutional
Investor” shall mean (a) any
original purchaser of a Note, (b) any holder of a Note holding (together with
one or more of its affiliates) more than 5% of the aggregate principal amount of
the Notes then outstanding (c) any bank, trust company, savings and loan
association or other financial institution, any pension plan, any investment
company, any insurance company, any broker or dealer, or any other similar
financial institution or entity, regardless of legal form and (d) any Related
Fund of any holder of any Note. 

“Investment” shall mean
any investment, made in cash or by delivery of property, by the Company or any
of its Restricted Subsidiaries (a) in any Person, whether by acquisition of
stock, Debt or other obligation or security, or by loan, Guaranty, advance,
capital contribution or otherwise, or (b) in any property. 

“Lien” shall mean, with respect to any Person, any
mortgage, lien, pledge, charge, security interest, or other encumbrance, or any
interest or title of any vendor, lessor, lender or secured party to or of such
Person under any conditional sale or other title retention agreement or Capital
Lease or Synthetic Lease, upon or with respect to any 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” shall mean
material in relation to the business, operations, affairs, financial condition,
assets or properties of the Company and its Restricted Subsidiaries, taken as a
whole. 

“Material Adverse
Effect” shall mean a material
adverse effect on (a) the business, operations, affairs, financial condition,
assets or properties of the Company and its Restricted Subsidiaries, taken as a
whole, or (b) the ability of the Company to perform its obligations under this
Agreement and the Notes, (c) the validity or enforceability of this Agreement or
the Notes, (d) the ability of the Company to perform its obligations under the
Mortgage Indenture or the First Mortgage Bonds, or (e) the validity or the
enforceability of the Mortgage Indenture or the First Mortgage Bonds.


B-7 







“Memorandum” is defined in
Section 5.3. 

“Moody’s” shall mean
Moody’s Investors Service, Inc. 

“Mortgage
Indenture” shall
mean the Amended and Restated Indenture of Mortgage,
Deed of Trust and Security Agreement, dated September 1, 2014, between the
Company and the Mortgage Trustee, as supplemented and amended by the First
Supplemental Indenture dated as of April 1, 2015, between the Company and the
Mortgage Trustee, as further supplemented and amended by the Supplemental
Indenture, and as further supplemented and amended from time to time.


“Mortgage
Trustee” shall mean U.S. Bank
National Association, as trustee under the Mortgage Indenture. 

“Multiemployer
Plan” shall mean any Plan that is
a “multiemployer plan” (as such term is defined in Section 4001(a)(3) of ERISA).


“NAIC Annual
Statement” is defined in
Section 6.2(a). 

“Net Proceeds
Amount” shall mean, with respect
to any Transfer of any Property by any Person, an amount equal to the difference
of 

(a) the aggregate amount of
the consideration (valued at the Fair Market Value of such consideration at the
time of the consummation of such Transfer) received by such Person in respect of
such Transfer, minus


(b) all ordinary and
reasonable out-of-pocket costs and expenses actually incurred by such Person in
connection with such Transfer. 

“Net Tangible
Assets” shall mean the amount
shown as total assets on the Company’s consolidated balance sheet, less (a)
intangible assets including, but without limitation, such items as goodwill,
trademarks, trade names, patents, unamortized debt discount and expense and
certain regulatory assets, and (b) appropriate adjustments, if any, on account
of minority interests. Net Tangible Assets shall be determined in accordance
with GAAP and practices applicable to the type of business in which the Company
is engaged and approved by the independent accountants regularly retained by the
Company, and may be determined as of a date not more than 60 days prior to the
happening of the event for which such determination is being made. 

“New Jersey Resources
Corporation” shall mean New
Jersey Resources Corporation, a New Jersey corporation. 

“Notes” is defined in Section 1. 

“OFAC” shall mean the Office of Foreign Assets Control
of the United States Department of the Treasury. 

B-8 







“OFAC Sanctions
Program” shall mean any economic
or trade sanction that OFAC is responsible for administering and enforcing. A
list of OFAC Sanctions Programs may be found at http://www.treasury.gov/resource-center/sanctions/Programs/Pages/Programs.aspx. 

“Officer’s
Certificate” shall mean a
certificate of a Senior Financial Officer or of any other officer of the Company
whose responsibilities extend to the subject matter of such certificate.


“PBGC” shall mean the Pension Benefit Guaranty
Corporation referred to and defined in ERISA or any successor thereto.


“Permitted Related
Business Opportunity” shall mean
any transaction with another Person (other than any Inactive Subsidiary of New
Jersey Resources Corporation) involving business activities or assets reasonably
related or complementary to the business of the Company and its Restricted
Subsidiaries as conducted at Closing or as may be conducted pursuant to
Section 10.10, including, without limitation, the management
and marketing of storage, capacity and transportation of gas and other forms of
energy, the generation, transmission or storage of gas and other forms of
energy, or the access to gas and energy transmission lines, and business
initiatives for the conservation and efficiency of gas and energy. 

“Person” shall mean an individual, partnership,
corporation, limited liability company, association, trust, unincorporated
organization or a government or agency or political subdivision thereof.


“Plan” shall mean an “employee benefit plan” (as defined
in section 3(3) of ERISA) subject to Title I of ERISA that is or, within the
preceding five years, has been established or maintained, or to which
contributions are or, within the preceding five years, have been made or
required to be made, by the Company or any ERISA Affiliate or with respect to
which the Company or any ERISA Affiliate may have any liability. 

“property” or
“properties” shall mean, unless otherwise specifically
limited, real or personal property of any kind, tangible or intangible, choate
or inchoate. 

“Property Reinvestment
Application” shall mean, with
respect to any Transfer of property, the application of an amount equal to the
Net Proceeds Amount with respect to such Transfer to the acquisition by the
Company or any Restricted Subsidiary of operating assets of the Company or any
Restricted Subsidiary to be used in the principal business of such Person.


“PTE” is defined in Section 6.2(a). 

“Purchaser” is defined in
the first paragraph of this Agreement. 

“QPAM
Exemption” is defined in
Section 6.2(d). 


B-9 







“Ratable
Portion” for any Note shall mean
an amount equal to the product of (a) the Net Proceeds Amount from a Transfer
being applied to a Debt Prepayment Application pursuant to Section 10.5(b) multiplied by (b) a
fraction, the numerator of which is the aggregate outstanding principal amount of such
Note and the denominator of which is the aggregate outstanding principal amount
of all Senior Debt of the Company (other than Senior Debt owing to any of its
Subsidiaries or any Affiliate).


“Receivables
Securitization Transaction” shall
mean any transaction pursuant to which the Company or any Restricted Subsidiary
Transfers accounts receivable to a Securitization Subsidiary and such
Securitization Subsidiary incurs Debt in connection with the purchase of such
accounts receivable and grants a security interest in such accounts receivable
as collateral security for such Debt; provided that such Debt is
non-recourse to the Company and the other Restricted Subsidiaries other than
with respect to representations, warranties and indemnities entered into by the
Company or the applicable Restricted Subsidiary in connection with such
transaction that are customary in non-recourse securitization of receivables
transactions. 

“Related Fund”
shall mean, with respect to any
holder of any Note, any fund or entity that (a) invests in securities or bank
loans and (b) is advised or managed by such holder, the same investment advisor
as such holder or by an Affiliate of such holder or such investment advisor.


“Required
Holders” shall mean, at any time,
the holders of more than 50% in principal amount of the Notes at the time
outstanding (exclusive of Notes then owned by the Company or any of its
Affiliates). 

“Required Rating
Agency” shall mean any nationally
recognized statistical rating organization, as recognized and accepted as such
by the Securities Valuation Office of the National Association of Insurance
Commissioners or any successor organization. 

“Responsible
Officer” shall mean any Senior
Financial Officer and any other officer of the Company with responsibility for
the administration of the relevant portion of this Agreement. 

“Restricted
Payment” shall mean any
Distribution in respect of the Company or any Restricted Subsidiary (other than
on account of capital stock or other equity interests of a Restricted Subsidiary
owned legally and beneficially by the Company or another Restricted Subsidiary),
including, without limitation, any Distribution resulting in the acquisition by
the Company or any Restricted Subsidiary of securities that would constitute
treasury stock. For purposes of this Agreement, the amount of any Restricted
Payment made in property shall be the greater of (a) the Fair Market Value of
such property (determined in good faith by the Board of Directors (or equivalent
governing body) of the Person making such Restricted Payment) and (b) the net
book value thereof on the books of such Person, in each case determined as of
the date on which such Restricted Payment is made. 

“Restricted
Subsidiary” shall mean each
Subsidiary that is either (a) designated as a Restricted Subsidiary on
Schedule 5.4 or (b) designated as a Restricted Subsidiary by
the Board of Directors of the Company in accordance with Section 10.12. 

“Restricted Subsidiary
Stock” shall mean Subsidiary
Stock of any Restricted Subsidiary. 

B-10 







“Securities
Act” shall mean the Securities
Act of 1933, as amended from time to time and the rules and regulations
promulgated thereunder from time to time in effect. 

“Securitization
Subsidiary” shall mean any
Restricted Subsidiary that (a) has been created for the sole purpose and
business of purchasing and owning the accounts receivable of the Company or any
other Restricted Subsidiary, (b) has no Debt outstanding other than Debt
incurred in connection with the purchase of such accounts receivable and (c)
does not, and by the terms of its organizational documents or contractual
obligations to which it or its property is then bound can not, own or hold any
other assets or participate in any other business or incur any other Debt.


“Senior
Debt” shall mean any Debt of the
Company other than Debt that is in any manner subordinated in right of payment
or security in any respect to the Debt evidenced by the Notes. 

“Senior Financial
Officer” shall mean the chief
financial officer, principal accounting officer, treasurer or comptroller of the
Company. 

“Significant
Subsidiary” shall mean at any
time each Restricted Subsidiary that would at such time constitute a
“significant subsidiary” (as such term is defined in Regulation S-X of the
Securities and Exchange Commission as in effect on the date of the Closing) of
the Company. 

“Source” is defined in Section 6.2. 

“Standard &
Poor’s” shall mean Standard &
Poor’s Ratings Group, a division of The McGraw-Hill Companies, Inc. 

“State Sanctions
List” shall mean a list that is
adopted by any state Governmental Authority within the United States of America
pertaining to Persons that engage in investment or other commercial activities
in Iran or any other country that is a target of economic sanctions imposed
under U.S. Economic Sanctions Laws. 

“Subsidiary” shall mean,
as to any Person, any corporation, association, or other business entity in
which such Person or one or more of its Subsidiaries or such Person and one or
more of its Subsidiaries owns sufficient Voting Stock to enable it or them (as a
group) ordinarily, in the absence of contingencies, to elect a majority of the
directors (or Persons performing similar functions) of such entity, and any
partnership or joint venture if more than a 50% interest in the profits or
capital thereof is owned by such Person or one or more of its Subsidiaries or
such Person and one or more of its Subsidiaries (unless such partnership or
joint venture can and does ordinarily take major business actions without the
prior approval of such Person or one or more of its Subsidiaries). Unless the
context otherwise clearly requires, any reference to a “Subsidiary” is a
reference to a Subsidiary of the Company. 

“Subsidiary
Stock” shall mean, with respect
to any Person, the stock (or any options or warrants to purchase stock or other
securities exchangeable for or convertible into stock) of any Subsidiary of such
Person. 

B-11 







“Supplemental
Indenture” shall mean the Second
Supplemental Indenture to the Mortgage Indenture, to be entered into between the
Company and the Mortgage Trustee, pursuant to which the First Mortgage Bonds
shall have been issued, in substantially the form set out in Exhibit 2. 

“Synthetic
Lease” shall mean any lease
transaction under which the parties intend that (a) the lease will be treated as
an “operating lease” by the lessee pursuant to Statement of Financial Accounting
Standards No. 13, as amended, or appropriate successor thereto, and (b) the
lessee will be entitled to various tax benefits ordinarily available to owners
(as opposed to lessees) of like property. 

“Transfer” shall mean,
with respect to any Person, any transaction in which such Person sells, conveys,
transfers or leases (as lessor) any of its property, including, without
limitation, Subsidiary Stock. For purposes of determining the application of the
Net Proceeds Amount in respect of any Transfer, the Company may designate any
Transfer as one or more separate Transfers each yielding a separate Net Proceeds
Amount. In any such case, (a) the Disposition Value of any property subject to
each such separate Transfer and (b) the amount of Consolidated Tangible Assets
attributable to any property subject to each such separate Transfer shall be
determined by ratably allocating the aggregate Disposition Value of, and the
aggregate Consolidated Tangible Assets attributable to, all property subject to
all such separate Transfers to each such separate Transfer on a proportionate
basis. 

“Trust
Estate” shall mean substantially all operating properties and franchises (other than
excepted property, such as cash in hand, chooses in action, securities, rent,
and certain materials, supplies, appliances and vehicles) that the Company
currently owns or that it will acquire in the future, subject to certain
permitted encumbrances and any pre-existing Liens at the time of such
acquisition, that serve as collateral under the Mortgage Indenture. 

“Unrestricted
Subsidiary” shall mean each
Subsidiary that is either (a) designated as an Unrestricted Subsidiary on
Schedule 5.4 or (b) designated as an Unrestricted Subsidiary
by the Board of Directors of the Company in accordance with Section 10.12. Any Subsidiary which has not been designated as
either a Restricted Subsidiary or Unrestricted Subsidiary shall be deemed to be
an Unrestricted Subsidiary. 

“USA Patriot
Act” shall mean United States
Public Law 107-56, Uniting and Strengthening America by Providing Appropriate
Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT ACT) Act of 2001
and the rules and regulations promulgated thereunder from time to time in
effect. 

“U.S. Economic Sanctions
Laws” shall mean those laws,
executive orders, enabling legislation or regulations administered and enforced
by the United States pursuant to which economic sanctions have been imposed on
any Person, entity, organization, country or regime, including the Trading with
the Enemy Act, the International Emergency Economic Powers Act, the Iran
Sanctions Act, the Sudan Accountability and Divestment Act and any other OFAC
Sanctions Program. 

B-12 







“Voting
Stock” shall mean any securities
of any class of a Person whose holders are entitled under ordinary circumstances
to vote for the election of directors of such Person (or Persons performing
similar functions) irrespective of whether at the time securities of any other
class shall have or might have voting power by reason of the happening of any
contingency. 

“Wholly-Owned Restricted
Subsidiary” shall mean, at any
time, any Restricted Subsidiary one hundred percent (100%) of all of the equity
interests (except directors’ qualifying shares) and voting interests of which
are owned by any one or more of the Company and the Company’s other Wholly-Owned
Restricted Subsidiaries at such time. 

B-13 







CHANGES
IN CORPORATE
STRUCTURE 

None. 





























SCHEDULE 4.9
(to Note Purchase Agreement) 







DISCLOSURE
MATERIALS 

None. 



























SCHEDULE 5.3
(to Note Purchase Agreement) 







SUBSIDIARIES
OF THE COMPANY AND
OWNERSHIP
OF SUBSIDIARY
STOCK 

None. 



























SCHEDULE 5.4
(to Note Purchase Agreement) 









FINANCIALS


NEW JERSEY NATURAL
GAS COMPANY 

Annual Reports for each of
the Fiscal Years Ended September 30, 2011 through September 30,
2015. 

SCHEDULE 5.5
(to Note Purchase Agreement) 







CERTAIN
LITIGATION 

Actions, suits and
proceedings described under the heading “Manufactured Gas Plant Remediation” in
Note 12 to New Jersey Resources Corporation’s Quarterly Report on Form 10-Q for
the quarterly period ended March 31, 2016.

SCHEDULE 5.8
(to Note Purchase Agreement) 







PATENTS,
ETC. 

None. 

SCHEDULE 5.11
(to Note Purchase Agreement) 







USE OF PROCEEDS 

The Company will apply the
proceeds of the sale of the Notes for its general corporate purposes, including,
but not limited to, refinancing or retiring short-term debt and funding capital
expenditures. 

SCHEDULE 5.14
(to Note Purchase Agreement) 







EXISTING
DEBT 

March 31, 2016 

					Maturity		Principal
			Rate		Date		Amt.
	First Mortgage Bonds (Secured)	     		     		     		
	 
	Series II		4.5%		8/1/2023		$	10,300,000
	Series JJ		4.6%		8/1/2024			10,500,000
	Series KK		4.9%		10/1/2040			15,000,000
	Series LL		5.6%		5/15/2018			125,000,000
	Series MM		Var.		9/1/2027			9,545,000
	Series NN		Var.		8/1/2035			41,000,000
	Series OO		Var.		8/1/2041			46,500,000
	Series PP		3.15%		4/15/2028			50,000,000
	Series QQ		3.58%		3/13/2024			70,000,000
	Series RR		4.61%		3/13/2044			55,000,000
	Series SS		2.82%		4/15/2025			50,000,000
	Series TT		3.66%		4/15/2045			100,000,000
	Sub-total First Mortgage Bonds						$	582,845,000
	Capital Lease Obligation -
Building				6/1/21			15,506,000
	Capital Lease Obligation - Meters				Var. Dates			32,723,000
	Commercial Paper (Unsecured)							37,000,000
	Letters of Credit							731,000
	Less: Current Maturities of Long-term
      Debt							(11,683,000)
	Total						$	657,122,000



SCHEDULE 5.15
(to Note Purchase Agreement) 







FORM OF
NOTE 

NEW JERSEY NATURAL GAS
COMPANY


3.63% Senior Note due June 21, 2046 

	No.
      R-[_______]	June 21,
      2016
	$[____________]	PPN[_________]



FOR VALUE RECEIVED, the
undersigned, NEW JERSEY NATURAL GAS COMPANY (herein called the “Company”), a corporation organized and existing under the laws of the State of
New Jersey, hereby promises to pay to ________________, or registered
assigns, the principal sum of ________________ DOLLARS on June 21, 2046, with
interest (computed on the basis of a 360-day year of twelve 30-day months) (a)
on the unpaid balance thereof at the rate of 3.63% per annum from the date
hereof, payable semiannually, on the 21st day of June and December in each year,
commencing with December 21, 2016, and on June 21, 2046, until the principal
hereof shall have become due and payable, and (b) to the extent permitted by law
on any overdue payment (including any overdue prepayment) of principal, any
overdue payment of interest and any overdue payment of any Make-Whole Amount (as
defined in the Note Purchase Agreement referred to below), payable semiannually
as aforesaid (or, at the option of the registered holder hereof, on demand), at
a rate per annum from time to time equal to the Default Rate (as defined in the
Note Purchase Agreement referred to below). 

Payments of principal of,
interest on and any Make-Whole Amount with respect to this Note are to be made
in lawful money of the United States of America at the office of U.S. Bank
National Association designated pursuant to the Note Purchase Agreement or at
such other place as the Company shall have designated by written notice to the
holder of this Note as provided in the Note Purchase Agreement referred to
below. 

This Note is one of a
series of 3.63% Senior Notes (herein called the “Notes”) issued pursuant to that certain Note Purchase Agreement dated as of
June 21, 2016 (as from time to time amended, the “Note Purchase Agreement”), between the Company and the respective
Purchasers named therein and is entitled to the benefits thereof. Each holder of
this Note will be deemed, by its acceptance hereof, (1) to have agreed to the
confidentiality provisions set forth in Section 20 of the Note Purchase
Agreement and (2) to have made the representation set forth in Section 6.2 of
the Note Purchase Agreement. Unless otherwise indicated, capitalized terms used
in this Note shall have the respective meanings ascribed to such terms in the
Note Purchase Agreement.

EXHIBIT 1

(to Note Purchase Agreement)








This Note is a registered
Note and, as provided in the Note Purchase Agreement, upon surrender of this
Note for registration of transfer, duly endorsed, or accompanied by a written
instrument of transfer duly executed, by the registered holder hereof or such
holder’s attorney duly authorized in writing, a new Note for a like principal
amount will be issued to, and registered in the name of, the transferee. Prior
to due presentment for registration of transfer, the Company may treat the
person in whose name this Note is registered as the owner hereof for the purpose
of receiving payment and for all other purposes, and the Company will not be
affected by any notice to the contrary. 

This Note is subject to
prepayment, in whole or from time to time in part, at the times and on the terms
specified in the Note Purchase Agreement, but not otherwise. 

If an Event of Default, as
defined in the Note Purchase Agreement, occurs and is continuing, the principal
of this Note may be declared or otherwise become due and payable in the manner,
at the price (including any applicable Make-Whole Amount) and with the effect
provided in the Note Purchase Agreement. 

This Note shall be
construed and enforced in accordance with, and the rights of the parties shall
be governed by, the laws of the State of New York excluding the choice of law
principles of the law of such State that would require the application of the
laws of a jurisdiction other than such State. 


	
      NEW JERSEY NATURAL
      GAS COMPANY 

		 
	By:	 	            
    
		
      Its Treasurer
      





E-1-2 







	 


MORTGAGE 

 

NEW JERSEY NATURAL GAS
COMPANY 

 

To 

 

U.S. BANK NATIONAL
ASSOCIATION,
As Trustee 
 

_____________________________________

 
SECOND SUPPLEMENTAL
INDENTURE 

 

Dated as of June 1, 2016


_____________________________________

Supplemental to Amended and
Restated Indenture of Mortgage,
Deed of Trust and Security Agreement Dated as
of September 1, 2014,
As Supplemented and Amended 

	 



	Prepared by:   	William M. Libit	      	Record and Return to:    	Richard Reich, Esq.
		Chapman and Cutler LLP	 	 	NJR
      Service Corporation
		111
      W. Monroe Street			1415
      Wyckoff Road
		Chicago, Illinois 60603			Wall, New Jersey 07719



EXHIBIT 2 
(to Note Purchase Agreement) 







MORTGAGE 

SECOND SUPPLEMENTAL
INDENTURE, dated as of June 1, 2016, between NEW JERSEY NATURAL GAS COMPANY, a
corporation organized and existing under the laws of the State of New Jersey
(hereinafter called the “Company”), having its
principal office at 1415 Wyckoff Road, Wall, New Jersey, and U.S. BANK NATIONAL
ASSOCIATION, a national banking association (hereinafter called the
“Trustee”), having a principal office at 21 South Street,
Morristown, New Jersey 07960, as Trustee under the Amended and Restated
Indenture of Mortgage, Deed of Trust and Security Agreement hereinafter
mentioned. 

WHEREAS, the Company has
heretofore executed and delivered to the Trustee its Amended and Restated
Indenture of Mortgage, Deed of Trust and Security Agreement, dated as of
September 1, 2014 (the “Amended
and Restated Indenture” and, as
originally executed or as the same may from time to time be supplemented,
modified or amended by any supplemental indenture entered into pursuant to the
provisions thereof, the “Indenture”), to secure the
payment of the principal of and the interest and premium (if any) on all Bonds
at any time issued and outstanding thereunder, and to declare the terms and
conditions upon which Bonds are to be issued thereunder; and 

WHEREAS, the Amended and
Restated Indenture completely restated and amended the Indenture of Mortgage and
Deed of Trust, dated April 1, 1952, as heretofore supplemented and amended (the
“Original
Indenture”) without any
interruption of the Lien of the Original Indenture; and 

WHEREAS, Bonds in the
aggregate principal amount of $10,300,000, originally issued under and in
accordance with the terms of the Original Indenture, as supplemented and
amended, as a series designated “First Mortgage Bonds, Series II due 2023,”
herein sometimes called “2023
Series II Bonds,” have been
designated as Existing Bonds in Section 3.01 of the Indenture and are
outstanding at the date hereof and secured by the Indenture; and 

WHEREAS, Bonds in the
aggregate principal amount of $10,500,000, originally issued under and in
accordance with the terms of the Original Indenture, as supplemented and
amended, as a series designated “First Mortgage Bonds, Series JJ due 2024,”
herein sometimes called “2024
Series JJ Bonds,” have been
designated as Existing Bonds in Section 3.02 of the Indenture and are
outstanding at the date hereof and secured by the Indenture; and 

WHEREAS, Bonds in the
aggregate principal amount of $15,000,000, originally issued under and in
accordance with the terms of the Original Indenture, as supplemented and
amended, as a series designated “First Mortgage Bonds, Series KK due 2040,”
herein sometimes called “2040
Series KK Bonds,” have been
designated as Existing Bonds in Section 3.03 of the Indenture and are
outstanding at the date hereof and secured by the Indenture; and 

WHEREAS, Bonds in the
aggregate principal amount of $125,000,000, originally issued under and in
accordance with the terms of the Original Indenture, as supplemented and
amended, as a series designated “First Mortgage Bonds, Series LL due 2018,”
herein sometimes called “2018 Series LL Bonds,” have been designated as Existing Bonds in
Section 3.04 of the Indenture and are outstanding at the date hereof and secured
by the Indenture; and 

E-2-2 







WHEREAS, Bonds in the
aggregate principal amount of $9,545,000, originally issued under and in
accordance with the terms of the Original Indenture, as supplemented and
amended, as a series designated “First Mortgage Bonds, Series MM due 2027,”
herein sometimes called “2027
Series MM Bonds,” have been
designated as Existing Bonds in Section 3.05 of the Indenture and are
outstanding at the date hereof and secured by the Indenture; and 

WHEREAS, Bonds in the
aggregate principal amount of $41,000,000, originally issued under and in
accordance with the terms of the Original Indenture, as supplemented and
amended, as a series designated “First Mortgage Bonds, Series NN due 2035,”
herein sometimes called “2035
Series NN Bonds,” have been
designated as Existing Bonds in Section 3.06 of the Indenture and are
outstanding at the date hereof and secured by the Indenture; and 

WHEREAS, Bonds in the
aggregate principal amount of $46,500,000, originally issued under and in
accordance with the terms of the Original Indenture, as supplemented and
amended, as a series designated “First Mortgage Bonds, Series OO due 2041,”
herein sometimes called “2041
Series OO Bonds,” have been
designated as Existing Bonds in Section 3.07 of the Indenture and are
outstanding at the date hereof and secured by the Indenture; and 

WHEREAS, Bonds in the
aggregate principal amount of $50,000,000, originally issued under and in
accordance with the terms of the Original Indenture, as supplemented and
amended, as a series designated “First Mortgage Bonds, Series PP due 2028,”
herein sometimes called “2028
Series PP Bonds,” have been
designated as Existing Bonds in Section 3.08 of the Indenture and are
outstanding at the date hereof and secured by the Indenture; and 

WHEREAS, Bonds in the
aggregate principal amount of $70,000,000, originally issued under and in
accordance with the terms of the Original Indenture, as supplemented and
amended, as a series designated “First Mortgage Bonds, Series QQ due 2024,”
herein sometimes called “2024
Series QQ Bonds,” have been
designated as Existing Bonds in Section 3.09 of the Indenture and are
outstanding at the date hereof and secured by the Indenture; and 

WHEREAS, Bonds in the
aggregate principal amount of $55,000,000, originally issued under and in
accordance with the terms of the Original Indenture, as supplemented and
amended, as a series designated “First Mortgage Bonds, Series RR due 2044,”
herein sometimes called “2044
Series RR Bonds,” have been
designated as Existing Bonds in Section 3.10 of the Indenture and are
outstanding at the date hereof and secured by the Indenture; and 

WHEREAS, the Amended and
Restated Indenture provides that, subject to certain exceptions not presently
relevant, such changes in or additions to the provisions of the Indenture (terms
used herein having the meanings assigned thereto in the Amended and Restated
Indenture except as herein expressly modified) may be made to add to the
covenants and agreements of the Company in the Indenture contained other
covenants and agreements thereafter to be observed by the Company; and to
provide for the creation of any series of Bonds, designating the series to be created and specifying the form and provisions
of the Bonds of such series as in the Indenture provided or permitted; and


E-2-3 







WHEREAS, the Indenture
further provides that the Company and the Trustee may enter into indentures
supplemental to the Indenture to assign, convey, mortgage, pledge, transfer and
set over unto the Trustee and to subject to the lien of the Indenture additional
property of the Company; and 

WHEREAS, pursuant to the
Amended and Restated Indenture as amended by the First Supplemental Indenture,
dated as of April 1, 2015, between the Company and the Trustee, the Company
determined to amend certain provisions of the Amended and Restated Indenture and
to create an eleventh and a twelfth series of Bonds under the Indenture, known
as (i) “First Mortgage Bonds, Series SS due 2025,” herein sometimes called
“2025 Series SS
Bonds,” and (ii) “First Mortgage
Bonds, Series TT due 2045,” herein sometimes called “2045 Series TT Bonds,” respectively; and 

WHEREAS, the 2025 Series SS
Bonds were issued in and are currently outstanding under the Indenture in the
aggregate principal amount of $50,000,000 and the 2045 Series TT Bonds were
issued in and are currently outstanding under the Indenture in the aggregate
principal amount of $100,000,000; and 

WHEREAS, the Company has
entered into a Note Purchase Agreement dated as of June 21, 2016 (the
“Note Purchase
Agreement”) with the Purchasers
identified in Schedule A attached thereto, pursuant to which the Company issued
its senior notes designated “3.63% Senior Notes due June 21, 2046” in the
aggregate principal amount of $125,000,000 (the “Senior Notes due June 21, 2046”); and 

WHEREAS, the Company has
duly determined to create a thirteenth series of Bonds under the Indenture, to
be known as “First Mortgage Bonds, Series UU due 2046,” herein sometimes called
“2046 Series UU
Bonds”, to be delivered and
pledged to U.S. Bank National Association, as collateral agent (the
“Collateral Agent”) pursuant to the Note Purchase Agreement for the
benefit and security of the holders of the Senior Notes due June 21, 2046, all
as herein provided and as provided in the Note Purchase Agreement, and to add to
the covenants and agreements contained in the Indenture, the covenants and
agreements hereinafter set forth; and 

WHEREAS, the Company, in
the exercise of the powers and authority conferred upon and reserved to it under
the provisions of the Indenture and pursuant to appropriate resolutions of its
Board of Directors, has duly resolved and determined to make, execute and
deliver to the Trustee a Second Supplemental Indenture in the form hereof for
the purposes herein provided; and 

WHEREAS, all conditions and
requirements necessary to make this Second Supplemental Indenture a valid,
binding and legal instrument have been done, performed and fulfilled and the
execution and delivery hereof have been in all respects duly authorized.


E-2-4 







NOW, THEREFORE, THIS
INDENTURE WITNESSETH: 

That NEW JERSEY NATURAL GAS
COMPANY, by way of further assurance and in consideration of the premises and of
the acceptance by the Trustee of the trusts hereby created and of One Dollar to
it duly paid by the Trustee at or before the ensealing and delivery of these
presents, the receipt whereof is hereby acknowledged, and in order to secure the
payment of principal of and any premium which may be due and payable on and the
interest on all Bonds at any time issued and outstanding under the Indenture
according to their tenor and effect, and the performance and observance by the
Company of all the covenants and conditions herein and therein contained, has
granted, bargained, sold, warranted, aliened, remised, released, conveyed,
assigned, transferred, mortgaged, pledged, set over and confirmed, and by these
presents does grant, bargain, sell, warrant, alien, remise, release, convey,
assign, transfer, mortgage, pledge, set over and confirm, unto the Trustee, and
to its successors in the trust, and to it and its assigns forever, and has
granted and does hereby grant thereunto a security interest in, all of the
property, real, personal and mixed, now owned by the Company and situated in the
Counties of Burlington, Middlesex, Monmouth, Morris, Ocean, Passaic, Somerset
and Sussex in the State of New Jersey, or wherever situate (except Excepted
Property and property released from the lien of the Indenture by the terms of
the Indenture) and also all of the property, real, personal and mixed, hereafter
acquired by the Company wherever situate (except Excepted Property and property
released from the lien of the Indenture by the terms of the Indenture),
including both as to property now owned and property hereafter acquired, without
in any way limiting or impairing the enumeration of the same, the scope and
intent of the foregoing or of any general or specific description contained in
the Indenture, the following: 

I. FRANCHISES


All and singular, the
franchises, grants, permits, immunities, privileges and rights of the Company
owned and held by it at the date of the execution hereof or hereafter acquired
for the construction, maintenance, and operation of the gas plants and systems
now or hereafter subject to the lien hereof, as well as all certificates,
franchises, grants, permits, immunities, privileges, and rights of the Company
used or useful in the operation of the property now or hereafter mortgaged
hereunder, including all and singular the franchises, grants, permits,
immunities, privileges, and rights of the Company granted by the governing
authorities of any municipalities or other political subdivisions and all
renewals, extensions and modifications of said certificates, franchises, grants,
permits, privileges, arid rights or any of them. 

II.
GAS DISTRIBUTION SYSTEMS
AND RELATED
PROPERTY 

All gas generating plants,
gas storage plants and gas manufacturing plants of the Company, all the
buildings, erections, structures, generating and purifying apparatus, holders,
engines, boilers, benches, retorts, tanks, instruments, appliances, apparatus,
facilities, machinery, fixtures, and all other property used or provided for use
in the generation, manufacturing and purifying of gas, together with the land on
which the same are situated, and all other lands and easements, rights-of-way,
permits, privileges, and sites forming a part of such plants or any of them or
occupied, enjoyed or used in connection therewith. 

E-2-5 







All gas distribution or gas
transmission systems of the Company, all buildings, erections, structures,
generating and purifying apparatus, holders, engines, boilers, benches, retorts,
tanks, pipe lines, connections, service pipes, meters, conduits, tools,
instruments, appliances, apparatus, facilities, machinery, fixtures, and all
other property used or provided for use in the construction, maintenance, repair
or operations of such distribution or transmission systems, together with all
the certificates, rights, privileges, rights-of-way, franchises, licenses,
easements, grants, liberties, immunities, permits of the Company, howsoever
conferred or acquired, under, over, or upon any private property or any public
streets or highways within as well as without the corporate limits of any
municipal corporation. Without limiting the generality of the foregoing, there
are expressly included the gas distribution or gas transmission systems located
in the Counties of Burlington, Middlesex, Monmouth, Morris, Ocean, Passaic,
Somerset and Sussex in the State of New Jersey, and in the following
municipalities in said State and Counties: Aberdeen Township (formerly Matawan
Township), Allenhurst Borough, City of Asbury Park, Atlantic Highlands Borough,
Avon By the Sea Borough, Barnegat Light Borough, Barnegat Township (formerly
named Union Township), Bay Head Borough, Beach Haven Borough, Beachwood Borough,
Belmar Borough, Berkeley Township, Boonton Town, Boonton Township, Bradley Beach
Borough, Brick Township, Brielle Borough, Colts Neck Township, Deal Borough,
Denville Township, Dover Town, Dover Township, Eagleswood Township, East
Brunswick Township, Eatontown Borough, Englishtown Borough, Fair Haven Borough,
Farmingdale Borough, Franklin Township in Somerset County, Freehold Borough,
Freehold Township, Hanover Township, Harvey Cedars Borough, Hazlet Township,
Highlands Borough, Holmdel Township, Hopatcong Borough, Howell Township,
Interlaken Borough, Island Heights Borough, Jackson Township, Jefferson
Township, Keansburg Borough, Keyport Borough, Lacey Township, Lakehurst Borough,
Lakewood Township, Lavallette Borough, Lincoln Park Borough, Little Egg Harbor
Township, Little Silver Borough, Loch Arbour Village, Long Beach Township, Long
Branch City, Manalapan Township, Manasquan Borough, Manchester Township,
Mantoloking Borough, Marlboro Township, Matawan Borough, Middletown Township,
Milltown Borough, Mine Hill Township, Monmouth Beach Borough, Monroe Township,
Montville Township, Morris Plains Borough, Mount Arlington Borough, Mount Olive
Township, Mountain Lakes Borough, Neptune City Borough, Neptune Township,
Netcong Borough, New Brunswick City, North Brunswick Township, Ocean Township in
Monmouth County, Ocean Township in Ocean County, Ocean Gate Borough, Oceanport
Borough, Old Bridge Township (formerly named Madison Township), Parsippany-Troy
Hills Township, Pine Beach Borough, Point Pleasant Borough, Point Pleasant Beach
Borough, Randolph Township, Red Bank Borough, Rockaway Borough, Rockaway
Township, Roxbury Township, Rumson Borough, Sayreville Borough, Sea Bright
Borough, Sea Girt Borough, Seaside Heights Borough, Seaside Park Borough, Ship
Bottom Borough, Shrewsbury Borough, Shrewsbury Township, South Belmar Borough,
South Brunswick Township, South River Borough, South Toms River Borough, Spring
Lake Borough, Spring Lake Heights Borough, Stafford Township, Surf City Borough,
Tinton Falls Borough (formerly named New Shrewsbury Borough), Tuckerton Borough,
Union Beach Borough, Union Township, Victory Gardens Borough, Wall Township,
Washington Township in Burlington County, Washington Township in Morris County,
West Long Branch Borough, West Milford Township and Wharton Borough. 

E-2-6 







III. CONTRACTS


All of the Company’s right,
title and interest in and under all contracts, licenses or leases for the
purchase of gas, either in effect at the date of execution hereof or hereafter
made and any extension or renewal thereof. 

TOGETHER WITH ALL AND
SINGULAR the tenements, hereditaments and appurtenances belonging or in anywise
appertaining to the Trust Estate, or any part thereof, with the reversion or
reversions, remainder and remainders, rents, issues, income and profits thereof,
and all the right, title, interest and claim whatsoever, at law or in equity,
which the Company now has or which it may hereafter acquire in and to the Trust
Estate and every part and parcel thereof, 

TO HAVE AND TO HOLD the
Trust Estate and all and singular the lands, properties, estates, rights,
franchises, privileges and appurtenances hereby mortgaged, conveyed, pledged or
assigned, or intended so to be, together with all the appurtenances thereto
appertaining, unto the Trustee and its successors and assigns forever;


SUBJECT, HOWEVER, as to
property hereby conveyed, to Permitted Encumbrances; 

BUT IN TRUST, NEVERTHELESS,
under and subject to the terms and conditions hereafter set forth, for the equal
and proportionate use, benefit, security and protection of each and every person
who may be or become the holders of the Bonds hereby secured without preference,
priority or distinction as to the lien or otherwise of one Bond over or from the
others by reason of priority in the issue or negotiation thereof, or by reason
of the date of maturity thereof, or otherwise (except as any sinking,
amortization, improvement, renewal or other analogous fund, established in
accordance with the provisions of the Indenture, may afford additional security
for the Bonds of any particular series), and for securing the observance and
performance of all the terms, provisions and conditions of the Indenture.


THIS INDENTURE FURTHER
WITNESSETH, that the Company has agreed and covenanted, and hereby does agree
and covenant, with the Trustee and its successors and assigns and with the
respective holders from time to time of the Bonds, or any thereof, as follows:


ARTICLE
I 

CERTAIN
AMENDMENTS OF INDENTURE 

§ 1.1. The Indenture be and it hereby is amended in the following respects, the
section numbers specified below being the sections of the Indenture in which
such amendments occur: 


     § 1.01. The following definitions were added to the end of § 1.01 in error
in the First Supplemental Indenture, dated as of April 1, 2015, and such
definitions be and they hereby are removed from § 1.01 and are added at the
end of § 1.02: 

“(mmmm) “First Supplemental Indenture” shall mean the
First Supplemental Indenture, dated as of April 1, 2015, supplemental to the
Indenture.” 


E-2-7 




     




“(nnnn) “2025 Series SS Bond” shall mean one of the First
Mortgage Bonds, Series SS due 2025, issued hereunder.” 

“(oooo) “2045 Series
TT Bond” shall mean one of the First Mortgage Bonds, Series TT due 2045,
issued hereunder.” 

§ 1.02. The
following definitions be and they hereby are added at the end of § 1.02:


“(pppp)
“Second Supplemental Indenture” shall mean the Second Supplemental
Indenture, dated as of June 1, 2016, supplemental to the Indenture.”

 “(qqqq)
“2046 Series UU Bond” shall mean one of the First Mortgage Bonds,
Series UU due 2046, issued hereunder.” 

§
2.11. The following be and it
hereby is added at the end of § 2.11: 

“No charge except for taxes or governmental
charges shall be made against any holder of any 2046 Series UU Bond for the
exchange, transfer or registration of transfer thereof.” 

§
8.08. The period at the end of
the first paragraph of § 8.08 be and it hereby is deleted and the following
words and figures be and they hereby are added thereto: 
 “, and the 2046 Series UU
Bonds shall be redeemed at the redemption price specified in § 10.30.” 
 ARTICLE
II 
 2046 SERIES
UU BONDS 
 § 2.1. There shall be a thirteenth series of Bonds under
the Indenture, known as and entitled “First Mortgage Bonds, Series UU due
2046” or “First Mortgage Bonds, Series UU” (herein and in the
Indenture referred to as the “2046 Series UU Bonds”), and the form thereof shall contain suitable provisions with
respect to the matters hereinafter in this Section specified and shall in other
respects be substantially as set forth in Exhibit A to the Indenture.

 The aggregate
principal amount of 2046 Series UU Bonds which may be authenticated and
delivered and outstanding under the Indenture is $125,000,000. 
 The 2046 Series UU Bonds shall
be payable to the Collateral Agent, and shall be nontransferable except to a
successor of the Collateral Agent, in accordance with the Note Purchase
Agreement. 
 E-2-8

 





The 2046 Series UU Bonds
shall bear interest at the rate of 3.63% per annum, computed on the basis of a
360-day year of twelve 30-day months, until the principal thereof is paid or
made available for payment, and shall mature on June 21, 2046, subject to prior
redemption as described herein; provided that any principal, Make-Whole Amount
(as defined in the Note Purchase Agreement), and any such installment of
interest which is overdue shall bear interest at a rate of interest that is the
greater of (i) 5.63% per annum or (ii) 2.0% per annum over the rate of interest
publicly announced by PNC Bank, National Association as its “base” or “prime”
rate (to the extent that payment of such interest is enforceable under
applicable law). 

The 2046 Series UU Bonds
shall be in the form of registered Bonds without coupons of denominations of
$1,000 and any integral multiple thereof which may be authorized by the Company,
the issue of a registered Bond without coupons in any such denomination to be
conclusive evidence of such authorization. Any 2046 Series UU Bonds shall be
dated (i) as of the semi-annual interest payment date (as specified in the first
paragraph of the 2046 Series UU Bonds) next preceding the date on which such
2046 Series UU Bonds shall be authenticated, unless such 2046 Series UU Bonds
are authenticated before December 21, 2016, in which case such 2046 Series UU
Bonds shall be dated June 21, 2016 or, (ii) if such date of authentication shall
be an interest payment date, such 2046 Series UU Bonds shall be dated such
interest payment date; provided,
however, that, if at the time of
authentication of any 2046 Series UU Bonds interest is in default on the 2046
Series UU Bonds, such 2046 Series UU Bonds shall be dated as of the interest
payment date to which interest has previously been paid or made available for
payment on the 2046 Series UU Bonds. All 2046 Series UU Bonds shall bear
interest from their respective dates, such interest to be payable, upon the
terms of and otherwise in accordance with the 2046 Series UU Bonds, on each date
on which interest shall from time to time be payable on the Senior Notes due
June 21, 2046; provided, that the obligation of the Company to make payments
with respect to the principal of, Make-Whole Amount, if any, and interest on the
2046 Series UU Bonds shall be fully or partially, as the case may be, satisfied
and discharged to the extent that at the time any such payment shall be due, the
then due principal of, Make-Whole Amount, if any, and interest on any of the
Senior Notes due June 21, 2046 shall have been fully or partially paid from
payments made by the Company under the Note Purchase Agreement. The principal
of, Make-Whole Amount, if any, and interest on the 2046 Series UU Bonds shall be
payable at the principal office of the Trustee, in Morristown, New Jersey, or,
at the option of the Company, at the “principal office” (as indicated pursuant
to the Note Purchase Agreement) of the Collateral Agent, in any coin or currency
of the United States of America which at the time of payment shall be legal
tender for the payment of public and private debts. 

Notwithstanding any other
provision of the Indenture or of the 2046 Series UU Bonds, payments of the
principal of, Make-Whole Amount, if any, and interest on any 2046 Series UU Bond
may be made directly to the registered holder thereof without presentation or
surrender thereof or the making of any notation thereon if there shall be filed
with the Trustee a Certificate of the Company to the effect that such registered
holder (or the person for whom such registered holder is a nominee) and the
Company have entered into a written agreement that payment shall be so made;
provided, however, that before such registered holder transfers or otherwise
disposes of any 2046 Series UU Bond, such registered holder will, at its
election, either endorse thereon (or on a paper annexed thereto) the principal
amount thereof redeemed and the last date to which interest has been paid thereon or make such Bond available to the Company
at the principal office of the Trustee for the purpose of making such
endorsement thereon. 

E-2-9 







The 2046 Series UU Bonds
shall be subject to redemption at the option of the Company or otherwise, and
shall be subject to mandatory redemption, in the manner provided in the
applicable provisions of Article Ten of the Indenture, as amended by Article III
of this Second Supplemental Indenture. 

The 2046 Series UU Bonds
shall be excluded from the benefits of, and shall not be subject to redemption
through the operation of, a Mandatory Sinking Fund pursuant to § 11.02 of the
Indenture. 

Notwithstanding the
provisions of § 10.02 or any other provision of the Indenture, the selection of
2046 Series UU Bonds to be redeemed shall, in case fewer than all of the
outstanding 2046 Series UU Bonds are to be redeemed, be made by the Trustee pro
rata (to the nearest multiple of One Thousand Dollars ($1,000)) among the
registered holders of the 2046 Series UU Bonds in proportion, as nearly as
practicable, to the respective unpaid principal amounts of 2046 Series UU Bonds
registered in the names of such holders, with adjustments, to the extent
practicable, to compensate for any prior redemption not made exactly in such
proportion (or otherwise as may be specified by a written order signed by the
registered holders of all outstanding 2046 Series UU Bonds). 

The definitive 2046 Series
UU Bonds may be issued in the form of engraved Bonds or Bonds printed or
lithographed on steel engraved borders or Bonds in typed form on normal bond
paper. Subject to the foregoing provisions of this Section and the provisions of
§ 2.11 of the Indenture, all definitive 2046 Series UU Bonds shall be fully
exchangeable for other Bonds of the same series, of like aggregate principal
amounts, and, upon surrender to the Trustee at its principal office, shall be
exchangeable for other Bonds of the same series of a different authorized
denomination or denominations, as requested by the holder surrendering the same.
The Company will execute, and the Trustee shall authenticate and deliver,
registered Bonds without coupons, whenever the same shall be required for any
such exchange. 

§ 2.2. 2046 Series UU Bonds in the aggregate principal amount of $125,000,000
may forthwith upon the execution and delivery of this Second Supplemental
Indenture, or from time to time thereafter, be executed by the Company and
delivered to the Trustee, and shall thereupon be authenticated and delivered by
the Trustee upon compliance by the Company with the provisions of Articles Four,
Five or Six of the Indenture, without awaiting the filing or recording of this
Second Supplemental Indenture. No additional 2046 Series UU Bonds shall be
issued under Article Four, Five or Six of the Indenture without the consent in
writing of the holders of all the outstanding 2046 Series UU Bonds. 

E-2-10 







ARTICLE
III 

REDEMPTION
OF THE 2046 SERIES
UU BONDS 

§ 3.1. The following § 10.29 and § 10.30 be and they hereby are added to
Article Ten of the Indenture: 

“§ 10.29. The 2046 Series UU Bonds shall be subject to redemption as follows:
payments of principal of, Make-Whole Amount, if any, and interest on the 2046
Series UU Bonds shall be made to the Collateral Agent to redeem 2046 Series UU
Bonds in such amounts as shall be necessary, in accordance with the provisions
of the Note Purchase Agreement, to provide funds under the Note Purchase
Agreement to (a) make, when due, payment at maturity (including, without
limitation, maturity upon acceleration of the Senior Notes due June 21, 2046)
and (b) make, when due, any prepayment required or permitted by the Senior Notes
due June 21, 2046 in connection with any prepayment of the Senior Notes due June
21, 2046; provided, however, that the obligation of the Company to make any
redemption payments under this Section shall be fully or partially, as the case
may be, satisfied and discharged to the extent that at any time such payment
shall be due, the then due payment at maturity or redemption payment on any of
the Senior Notes due June 21, 2046 shall have been fully or partially made from
payments made by the Company on the Notes under the Note Purchase Agreement;
provided, further, however, that any principal, Make-Whole Amount, and any
interest which is overdue shall bear interest at a rate of interest that is the
greater of (i) 5.63% per annum or (ii) 2.0% per annum over the rate of interest
publicly announced by PNC Bank, National Association as its “base” or “prime”
rate (to the extent that payment of such interest is enforceable under
applicable law). Terms used and not defined in this Section and in Section 10.30
shall have the respective meanings given to them in the Second Supplemental
Indenture.” 

“§ 10.30. In the case of the redemption of 2046 Series UU Bonds out of moneys
deposited with the Trustee pursuant to § 8.08, such 2046 Series UU Bonds shall,
upon compliance with provisions of § 10.02, and subject to the provisions of §
2.1 of the Second Supplemental Indenture, be redeemable at the principal amounts
thereof, together with interest accrued thereon to the date fixed for
redemption, without premium or Make-Whole Amount.” 

ARTICLE
IV 

MISCELLANEOUS


§ 4.1. The Company is lawfully seized and possessed of all the real estate,
franchises and other property described or referred to in the Indenture (except
properties released from the lien of the Indenture pursuant to the provisions
thereof) as presently mortgaged, subject to the exceptions stated therein, such
real estate, franchises and other property are free and clear of any lien prior
to the lien of the Indenture except as set forth in the Granting Clauses of the
Indenture and the Company has good right and
lawful authority to mortgage the same as provided in and by the Indenture.


E-2-11 







§ 4.2. The Trustee assumes no duties, responsibilities or liabilities by reason
of this Second Supplemental Indenture other than as set forth in the Indenture,
and this Second Supplemental Indenture is executed and accepted by the Trustee
subject to all the terms and conditions of its acceptance of the trust under the
Indenture, as fully as if said terms and conditions were herein set forth at
length. 

§ 4.3. The terms used in this Second Supplemental Indenture shall have the
meanings assigned thereto in the Indenture. Reference by number in this Second
Supplemental Indenture to Articles or Sections shall be construed as referring
to Articles or Sections contained in the Indenture, unless otherwise stated.


§ 4.4. As amended and modified by this Second Supplemental Indenture, the
Indenture is in all respects ratified and confirmed and the Indenture and this
Second Supplemental Indenture shall be read, taken and construed as one and the
same instrument. 

§ 4.5. Neither the approval by the Board of Public
Utilities of the State of New Jersey of the execution and delivery of this
Second Supplemental Indenture nor the approval by said Board of the issue of any
Bonds under the Indenture shall in any way be construed as the approval by said
Board of any other act, matter or thing which requires approval of said Board
under the laws of the State of New Jersey; nor shall approval by said Board of
the issue of any Bonds under the Indenture bind said Board or any other public
body or authority of the State of New Jersey having jurisdiction in the premises
in any future application for the issue of Bonds under the Indenture or
otherwise. 

§ 4.6. This Second Supplemental Indenture may be executed in any number of
counterparts and all said counterparts executed and delivered each as an
original shall constitute but one and the same instrument. 

E-2-12 







NEW JERSEY NATURAL GAS
COMPANY HEREBY DECLARES THAT IT HAS READ THIS SECOND SUPPLEMENTAL INDENTURE, HAS
RECEIVED A COMPLETELY FILLED-IN TRUE COPY OF IT WITHOUT CHARGE AND HAS SIGNED
THIS SECOND SUPPLEMENTAL INDENTURE ON THE DATE CONTAINED IN ITS ACKNOWLEDGEMENT
HEREOF. 

IN WITNESS WHEREOF, NEW
JERSEY NATURAL GAS COMPANY has caused these presents to be signed in its
corporate name by its President or a Vice President and its corporate seal to be
hereunto affixed and attested by its Secretary or an Assistant Secretary, and
U.S. BANK NATIONAL ASSOCIATION, in evidence of its acceptance of the trust
hereby created, has caused these presents to be signed in its corporate name by
one of its Vice Presidents. 


	
      NEW JERSEY NATURAL
      GAS COMPANY 

		 
	By: 	 
	    Name:    	James W. Kent
	    Title:	Treasurer




[Corporate Seal]

 

ATTEST: 

	 	
	Name:    	Richard Reich
	Title:	Corporate Secretary



E-2-13 








	
      U.S. BANK NATIONAL
      ASSOCIATION,
       as Trustee
      

		 
	By: 	 
	   
      Name:    	Christopher E.
      Golabek
	   
      Title:	Vice
    President



ATTEST: 

	
	Name:   	 


	Title:  
      	 



E-2-14 







	STATE
      OF NEW JERSEY	)
		)
      SS:
	COUNTY OF
      MONMOUTH             
      	)



BE IT REMEMBERED that on
this ___ day of June, 2016, before me, the subscriber, an Attorney-at-Law of the
State of New Jersey, and I hereby certify that I am such an Attorney-at-Law as
witness my hand, personally appeared Richard Reich to me known who, being by me
duly sworn according to law, on his oath, does depose and make proof to my
satisfaction that he is the Corporate Secretary of NEW JERSEY NATURAL GAS
COMPANY, the grantor or mortgagor in the foregoing Supplemental Indenture named;
that he well knows the seal of said corporation; that the seal affixed to said
Supplemental Indenture is the corporate seal of said corporation, and that it
was so affixed in pursuance of resolutions of the Board of Directors of said
corporation; that James W. Kent is Treasurer of said corporation; that he saw
said James W. Kent, as such Treasurer, affix said seal thereto, sign and deliver
said Supplemental Indenture, and heard her declare that she signed, sealed and
delivered the same as the voluntary act and deed of said corporation, in
pursuance of said resolutions, and that this deponent signed his name thereto,
at the same time, as attesting witness. 


	 	
	Name:   	Richard Reich
	Title:	Corporate Secretary




Subscribed and sworn to
before me,
an Attorney-at-Law of the State of
New Jersey, at Wall, New
Jersey,
the day and year aforesaid. 

	 	 
	Name:   	Alexander Gonzalez
		 
		
      Attorney-at-Law of
      the
State of New Jersey 




E-2-15 







ACKNOWLEDGEMENT


	STATE OF NEW
      JERSEY             
      	)
		) ss:
	COUNTY OF
      MORRIS             
      	)



I HEREBY CERTIFY that on
this ___ of June, 2016, before me, a Notary Public for the state aforesaid,
personally appeared Christopher E. Golabek, known to me or satisfactorily proven
to be the Person whose name is subscribed to the Second Supplemental Indenture
dated as of June 1, 2016, who acknowledged that he is an authorized signatory
for U.S. Bank National Association, a national banking association, as Trustee;
that he has been duly authorized to execute, and has executed, such instrument
on its behalf for the purposes therein set forth; and that the same is its act
and deed.

IN WITNESS WHEREOF, I have
set my hand and Notarial Seal, the day and year first above written. 


	 
	Notary Public
	My
      commission expires on    	 




E-2-16 







FORM OF OPINION OF
SPECIAL COUNSEL
TO THE COMPANY


The closing opinion of
Chapman and Cutler LLP, special counsel for the Company, which is called for by
Section 4.4(a) of the Agreement, shall be dated the date of the Closing and
addressed to each Purchaser, shall be satisfactory in scope and form to each
Purchaser, and shall be accompanied by a letter of special counsel authorizing
the Collateral Agent to rely on the opinion as if it were addressed to the
Collateral Agent. The opinion shall be to the effect that: 

1. The Company is a
corporation incorporated, validly existing and in good standing under the laws
of the State of New Jersey, has the corporate power and the corporate authority
to (a) execute the Note Purchase Agreement, the Supplemental Indenture and the
First Mortgage Bond Documents, (b) issue the Notes and the First Mortgage Bonds
and (c) perform its respective obligations under the Note Purchase Agreement,
the Supplemental Indenture, the Notes, the First Mortgage Bonds, the Mortgage
Indenture and the First Mortgage Bond Documents and has the full corporate power
and the corporate authority to conduct the activities in which, to our
knowledge, it is now engaged. Based solely on the Officer’s Certificate, the
Company is licensed or qualified as a foreign corporation in each jurisdiction
in which the character of the properties owned or leased by it or the nature of
the business transacted by it makes such licensing or qualification necessary,
other than those jurisdictions as to which the failure to be so licensed,
qualified or in good standing could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. 

2. The Note Purchase
Agreement has been duly authorized by all necessary corporate action on the part
of the Company, has been duly executed and delivered by the Company and
constitutes the legal, valid and binding contract of the Company enforceable
against it in accordance with its terms. 

3. The Notes have been duly
authorized by all necessary corporate action on the part of the Company, have
been duly executed and delivered by the Company and constitute the legal, valid
and binding obligations of the Company enforceable against it in accordance with
their terms. 

4. The Mortgage Indenture
constitutes the legal, valid and binding obligation of the Company, enforceable
against it in accordance with its terms. 

5. The Supplemental
Indenture has been duly authorized by all necessary corporate action on the part
of the Company, has been duly executed and delivered by the Company, and
constitutes the legal, valid and binding obligation of the Company, enforceable
against it in accordance with its terms. 

6. The First Mortgage Bonds
delivered on the date hereof (a) have been authorized by all necessary corporate
action on the part of the Company, (b) have been duly executed by the Company,
and (c) assuming the due authentication thereof by the Mortgage Trustee under
the Mortgage Indenture, (i) have been duly issued, (ii) constitute the legal,
valid and binding obligations of the Company enforceable against it in
accordance with their terms and (iii) are
entitled to the benefits and security of the Mortgage Indenture, in accordance
with their terms. 

EXHIBIT 4.4(a)
(to Note
Purchase Agreement) 







7. The First Mortgage Bond
Documents have been duly authorized by all necessary corporate action on the
part of the Company, have been duly executed and delivered by the Company, and
constitute the legal, valid and binding obligations of the Company enforceable
against it in accordance with their terms. 

8. The offer, issuance and
sale of the Notes and the issuance of the First Mortgage Bonds have been
duly authorized and approved by the New Jersey Board of Public Utilities (the
“Board”) and, to our knowledge, such authorization and
approval is still in full force and effect. No other approval, consent or
withholding of objection on the part of, or filing, registration or
qualification with, any New York, New Jersey or Federal Governmental Authority
is necessary in connection with (a) the execution or delivery by the Company of
the Note Purchase Agreement, the Supplemental Indenture, the Notes, the First
Mortgage Bonds or the First Mortgage Bond Documents or (b) the performance by
the Company of the Note Purchase Agreement, the Supplemental Indenture, the
Notes, the First Mortgage Bonds, the First Mortgage Bond Documents or the
Mortgage Indenture or such filings as may be necessary to perfect or maintain
the perfection of the Lien created by the Mortgage Indenture, including the
Supplemental Indenture. 

9. The execution and
delivery of the Note Purchase Agreement, the Supplemental Indenture, the Notes, the First Mortgage Bonds and the First
Mortgage Bond Documents, by the Company do not, and the performance of the Note
Purchase Agreement, the Supplemental Indenture, the Notes, the First Mortgage
Bonds, the First Mortgage Bond Documents and the Mortgage Indenture as therein
contemplated will not (a) contravene any applicable New York, New Jersey or
United States statute, rule or regulation that we have, in the exercise of
customary professional diligence, recognized as applicable to the Company in
connection with the execution and delivery by the Company of the Transaction
Documents or the issuance and sale of the Notes, or any Order, (b) violate any
provision of the Organizational Documents, (c) result in a breach of, or
constitute a default under any Specified Agreement, (d) result in the creation
or imposition of any Lien on, or security interest in, any assets of the Company
under any Specified Agreement or under any such applicable New York, New Jersey
or United States statute, rule or regulation (other than the Lien of the
Mortgage Indenture). 

10. To our knowledge, (a)
the Company is not an “investment company,” or a company “controlled” by an
“investment company,” within the meaning of the Investment Company Act of 1940,
as amended, and (b) the issuance of the Notes and the First Mortgage Bonds by
the Company is not subject to regulation under the Public Utility Holding
Company Act of 2005. 

11. The use of the proceeds
of the sale of the Notes in accordance with the provisions of the Note Purchase
Agreement do not violate Regulation T, U or X of the Board of Governors of the
Federal Reserve System. 

E-4.4(a)-2 







12. The issuance, sale and
delivery of the Notes and the issuance of the First Mortgage Bonds under the
circumstances contemplated by the Note Purchase Agreement do not require
the registration of the Notes or the First Mortgage Bonds under the Securities
Act or the qualification of an indenture under the Trust Indenture Act of 1939,
as amended, it being understood that no opinion is expressed as to any
subsequent resale of any Note or the First Mortgage Bonds issued on the date
hereof. 

13. The provisions of the
Supplemental Indenture and the Mortgage Indenture are effective to create, in
favor of the Mortgage Trustee, for the benefit of the holders of the First
Mortgage Bonds, a legal, valid, and enforceable lien and security interest in
all right, title, and interest of the Company in the Trust Estate, entitling
such holders to an equal and ratable share of such Trust Estate with the other
holders of bonds under the Mortgage Indenture. 

14. The Mortgage Indenture
and any necessary related financing statements have been duly filed and recorded
in all jurisdictions in which it is necessary for such instruments to be filed
and recorded in order to constitute a lien of record on the property subject
thereto. No other filing or recordation is presently necessary in order to
perfect the lien of the Mortgage Indenture on such properties. To the best of
our knowledge, all fees or taxes in connection with the filing and recording of
the Mortgage Indenture have been paid. 

With respect to matters of
fact on which such opinion is based, such counsel shall be entitled to rely on
appropriate certificates of public officials, Wells Fargo Securities, LLC, TD
Securities Inc., and officers of the Company and upon representations of the
Company and the Purchasers delivered in connection with the issuance and sale of
the Notes. 

The term “Organizational
Documents,” as used in paragraph number 9 above, means (a) the certificate of
incorporation of the Company furnished to us by the Company; (b) the by-laws of
the Company furnished to us by the Company; and (c) resolutions adopted by the
board of directors of the Company, relating to the offering of the Notes and the
execution and delivery of the Note Purchase Agreement, the Notes, the
Supplemental Indenture, the First Mortgage Bond Documents, the First Mortgage
Bonds and other matters, furnished to us by the Company. 

The term “Specified
Agreements,” as used in paragraph number 9 above, means each of the instruments
and agreements identified on an exhibit to be attached to the opinion letter.


The term “Order,” as used
in paragraph number 9 above, means any written court or administrative order,
writ, judgment or decree to which the Company is subject and which is identified
in the Officer’s Certificate as currently being in effect. 

E-4.4(a)-3 







FORM OF OPINION OF SPECIAL
COUNSEL 

TO THE PURCHASERS 

The closing opinion of
Schiff Hardin LLP, special counsel to the Purchasers, called for by Section
4.4(b) of the Agreement, shall be dated the date of the Closing and addressed to
the Purchasers, shall be satisfactory in form and substance to the Purchasers
and shall be to the effect that: 

1. The Company is a
corporation validly existing and in good standing under the laws of the State of
New Jersey. 

2. The Agreement and the
Notes being delivered on the date hereof constitute the legal, valid and binding
contracts of the Company, enforceable against the Company in accordance with
their respective terms. 

3. The issuance, sale and
delivery of the Notes being delivered on the date hereof under the circumstances
contemplated by this Agreement do not, under existing law, require the
registration of such Notes under the Securities Act or the qualification of an
indenture under the Trust Indenture Act of 1939, as amended. 

The opinion of Schiff
Hardin LLP shall also state that the opinion of Chapman and Cutler LLP is
satisfactory in scope and form to Schiff Hardin LLP and that, in their opinion,
the Purchasers are justified in relying thereon. 

In rendering the opinion
set forth in paragraph 1 above, Schiff Hardin LLP may rely, as to matters
referred to in paragraph 1, solely upon an examination of the Certificate of
Incorporation certified by, and a certificate of good standing of the Company
from, the Secretary of State of the State of New Jersey. The opinion of Schiff
Hardin LLP is limited to the laws of the State of New York and the Federal laws
of the United States. 

With respect to matters of
fact upon which such opinion is based, Schiff Hardin LLP may rely on appropriate
certificates of public officials and officers of the Company and upon
representations of the Company and the Purchasers delivered in connection with
the issuance and sale of the Notes. 

EXHIBIT 4.4(b)
(to Note
Purchase Agreement)